<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 4 (File No. 33-63905) X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 5 (File No. 811-7401) X
STRATEGIST GROWTH FUND, INC.
IDS Tower 10, Minneapolis, Minnesota 55440-0010
Eileen J. Newhouse - IDS Tower 10,
Minneapolis, Minnesota 55440-0010
(612) 671-2772
It is proposed that this filing will become effective (check
appropriate box):
immediately upon filing pursuant to paragraph (b)
X on April 1, 1997 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on (date) pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
on (date) 1996 pursuant to paragraph (a)(2) 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 Rule 24f of
the Investment Company Act of 1940. Registrant's Rule 24f-2 Notice
for the fiscal year ended July 31, 1997 will be filed on or about
Sept. 29, 1997.
Growth Trust has also executed this Amendment to the Registration
Statement.
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Cross reference sheet for the Funds showing the location in the
prospectus and the Statement of Additional Information of the
information called for by the items enumerated in Parts A and B of
Form N-1A.
Negative answers omitted from prospectus are so indicated.
<TABLE><CAPTION>
PART A PART B
Section Section in
Item No. in Prospectus Item No. Statement of Additional Information
<S> <C> <C> <C>
1 Cover page of prospectus 10 Cover page of SAI
2(a) The Funds in brief; Fund expenses 11 Table of Contents
(b) The Funds in brief; Fund expenses
(c) The Funds in brief; Fund expenses 12 NA
3(a) Financial highlights 13(a) Additional Investment Policies; all
(b) NA appendices except Dollar-Cost Averaging
(c) Performance (b) Additional Investment Policies
(d) Financial highlights (c) Additional Investment Policies
(d) Security Transactions
4(a) The Funds in brief; Investment policies
and risks; How the Funds and Portfolios 14(a) Board Members and Officers
are organized (b) Board Members and Officers
(b) Investment policies and risks (c) Board Members and Officers
(c) Investment policies and risks
15(a) NA
5(a) Board members and officers (b) NA
(b)(i) Investment manager; About the Advisor (c) Board Members and Officers
(b)(ii) Investment manager; Administrator and
transfer agent 16(a)(i) How the Funds and Portfolios are organized**;
(b)(iii) Investment manager About the Advisor
(c) Portfolio managers (a)(ii) Agreements: Investment Management Services
(d) Administrator and transfer agent Agreement, Plan and Agreement of
(e) Administrator and transfer agent Distribution/Distribution Agreement
(f) Investment manager; Administrator and (a)(iii) Agreements: Investment Management Services Agreement
transfer agent; Distributor (b) Agreements: Investment Management Services Agreement
(g) About the Advisor (c) Agreements: Total fees and expenses
(d) Agreements: Administrative Services Agreement
5A(a) * (e) NA
(b) NA (f) Agreements: Plan and Agreement of
Distribution/Distribution Agreement
6(a) Shares; Voting rights (g) NA
(b) NA (h) Custodian; Independent Auditors
(c) NA (i) Agreements: Transfer Agency Agreement; Custodian
(d) NA
(e) Cover page; Special shareholder services 17(a) Security Transactions
(f) Dividend and capital gain distributions; (b) Brokerage Commissions Paid to Brokers Affiliated
Reinvestments with the Advisor
(g) Taxes (c) Security Transactions
(h) Special considerations regarding master/ (d) Security Transactions
feeder structure (e) Security Transactions
7(a) Distributor 18(a) Shares; Voting rights**
(b) Valuing Fund shares (b) NA
(c) NA
(d) How to purchase shares 19(a) Investing in the Fund
(e) NA (b) Valuing Fund Shares, Investing in the Funds;
(f) Distributor Redeeming Shares
(c) Redeeming Shares
8(a) How to redeem shares; Special considerations
regarding master/feeder structure 20 Taxes
(b) NA
(c) How to purchase, exchange or redeem shares: 21(a) Agreements: Plan and Agreement of
Other important information Distribution/Distribution Agreement, Placement
(d) How to purchase, exchange or redeem shares: Agency Agreement
How to redeem shares
(b) Agreements: Plan and Agreement of
9 None Distribution/Distribution Agreement, Placement
Agency Agreement
22(a) NA
(b) Performance Information
23 Financial Statements
*Designates information is located in annual report.
**Designates location in prospectus.
/TABLE
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Strategist Growth Fund, Inc.
Prospectus
April 1, 1997
This prospectus describes three diversified, no-load mutual funds.
Strategist Growth Fund, Inc. is a mutual fund with three series of
capital stock representing interests in Strategist Growth Fund,
Strategist Growth Trends Fund and Strategist Special Growth Fund.
Each Fund has its own goal and investment policies.
The goal of each Fund is long-term growth of capital.
Each Fund has chosen to participate in a master/feeder structure.
Each Fund seeks to achieve its goal by investing all of its assets
in a corresponding Portfolio of Growth Trust. Each Portfolio is
managed by American Express Financial Corporation and has the same
goal as the corresponding Fund. This arrangement is commonly known
as a master/feeder structure.
This prospectus contains facts that can help you decide if one or
more of the Funds is the right investment for you. Read it before
you invest and keep it for future reference.
Additional facts about the Funds 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 herein by reference.
For a free copy, contact American Express Financial Direct.
Like all mutual funds, 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 these funds:
o are not bank deposits
o are not federally insured
o are not endorsed by any bank or government agency
o are not guaranteed to achieve their goals
American Express Financial Direct
P.O. Box 59196
Minneapolis, MN
55459-0196
800-AXP-SERV
TTY: 800-710-5260
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Table of contents
The Funds in brief
Goals and types of Fund investments and their risks
Structure of the Funds
Manager and distributor
Portfolio managers
Fund expenses
Performance
Financial highlights
Total returns
Investment policies and risks
Facts about investments and their risks
Valuing Fund shares
How to purchase, exchange or redeem shares
How to purchase shares
How to exchange shares
How to redeem shares
Methods of exchanging or redeeming shares
Systematic purchase plans
Other important information
Special shareholder services
Services
Quick telephone reference
Distributions and taxes
Dividend and capital gain distributions
Reinvestments
Taxes
How to determine the correct TIN
How the Funds and Portfolios are organized
Shares
Voting rights
Shareholder meetings
Special considerations regarding master/feeder structure
Board members and officers
Investment manager
Administrator and transfer agent
Distributor
About the Advisor
Appendix
Descriptions of derivative instruments
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The Funds in brief
Strategist Growth Fund, Inc. (the Company) is a mutual fund with
three series of capital stock representing interests in Strategist
Growth Fund (Growth Fund), Strategist Growth Trends Fund (Growth
Trends Fund) and Strategist Special Growth Fund (Special Growth
Fund) (collectively referred to as the Funds). Each Fund is a
diversified mutual fund with its own goals and investment policies.
Each of the Funds seeks to achieve its goals by investing all of
its assets in a corresponding series (the Portfolio) of Growth
Trust (the Trust) rather than by directly investing in and managing
its own portfolio of securities.
Goals and types of Fund investments and their risks
Growth Fund seeks to provide shareholders with long-term growth of
capital. It does so by investing all of its assets in Growth
Portfolio. Growth Portfolio is a diversified mutual fund that
invests primarily in stocks of U.S. and foreign companies that
appear to offer growth opportunities. Growth Portfolio also may
invest in preferred stocks, convertible securities, debt
securities, derivative instruments and money market investments.
Growth Trends Fund seeks to provide shareholders with long-term
growth of capital. It does so by investing all of its assets in
Growth Trends Portfolio. Growth Trends Portfolio is a diversified
mutual fund that invests primarily in common stocks of U.S. and
foreign companies showing potential for significant growth. These
companies usually operate in areas where dynamic economic and
technological changes are occurring. Growth Trends Portfolio also
may invest in preferred stocks, debt securities, derivative
instruments and money market instruments.
Special Growth Fund seeks to provide shareholders with long-term
growth of capital. It does so by investing all of its assets in
Aggressive Growth Portfolio. Aggressive Growth Portfolio is a
diversified mutual fund that invests primarily in the equity
securities of companies that comprise the Standard & Poor's 500
Composite Stock Price Index (S&P 500). Aggressive Growth Portfolio
does not seek to replicate the S&P 500. Rather, it invests in
those securities within the universe of S&P 500 stocks that
Aggressive Growth Portfolio's advisor believes are undervalued or
that offer potential for long-term capital growth. Ordinarily, at
least 65% of Aggressive Growth Portfolio's total assets will be
invested in equity securities. Aggressive Growth Portfolio will be
managed using a research methodology developed by the Research
Department of American Express Financial Corporation (the Advisor)
that is designed to achieve a return in excess of the return of the
S&P 500. Aggressive Growth Portfolio also may invest in
convertible securities, debt securities, derivative instruments and
money market instruments.
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Undervalued stocks and stock of companies with above-average growth
rates can provide higher returns to investors than stocks of other
companies, although the prices of these stocks can fluctuate more.
Because investments involve risk, a Fund cannot guarantee achieving
its goals. Some of the Portfolios' investments may be considered
speculative and involve additional investment risks.
Structure of the Funds
Each Fund uses what is commonly known as a master/feeder structure.
This means the Fund (the feeder fund) invests all of its assets in
the Portfolio (the master fund). The Portfolio actually invests in
and manages the securities and has the same goal and investment
policies as the Fund. This structure is described in more detail
in the section captioned "Special considerations regarding
master/feeder structure." Here is an illustration of the
structure:
Investors
buy shares in
the Fund
The Fund
invests in
the Portfolio
The Portfolio invests in
securities, such as stocks
or bonds
Manager and distributor
Each Portfolio is managed by American Express Financial Corporation
(the Advisor), a provider of financial services since 1894. The
Advisor currently manages more than $150 billion in assets. These
assets are managed by a team of highly skilled, experienced
professionals, backed by one of the nation's largest investment
departments. Our team of professionals includes portfolio
managers, senior economists and supporting staff, stock and bond
analysts including Chartered Financial Analysts, and investment
managers and researchers based in London and Hong Kong who add a
global dimension to our expertise. These professionals evaluate
thousands of securities.
Shares of the Funds are sold through American Express Service
Corporation (the Distributor), an affiliated company of the
Advisor.
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Portfolio managers
Growth Portfolio
Mitzi Malevich joined the Advisor in 1983 and serves as vice
president and senior portfolio manager. She has managed the assets
of Growth Portfolio and its predecessor fund since 1992 after
having been a portfolio manager of pension fund accounts.
Growth Trends Portfolio
Gordon Fines joined the Advisor in 1981 and serves as vice
president and senior portfolio manager. He has managed the assets
of Growth Trends Portfolio and its predecessor fund since 1991.
Mr. Fines also leads the growth team for the Advisor and serves as
portfolio manager of IDS Life Growth Dimensions Fund.
Aggressive Growth Portfolio
Guru Baliga joined the Advisor in 1991 and serves as senior
portfolio manager. He became portfolio manager of Aggressive
Growth Portfolio and IDS Small Company Index Fund in August 1996.
He has been portfolio manager of IDS Blue Chip Advantage Fund since
1994. He has been a member of the portfolio management team of
Total Return Portfolio and its predecessor fund since 1995, and is
a portfolio manager of IDS Advisory Accounts that are managed
similarly to the Portfolio.
Fund expenses
The purpose of the following table and example is to summarize the
aggregate expenses of each Fund and its corresponding Portfolio and
to assist investors in understanding the various costs and expenses
that investors in each Fund may bear directly or indirectly. The
Company's board believes that, over time, the aggregate per share
expenses of a Fund and its corresponding Portfolio should be
approximately equal to (and may be less than) the per share
expenses a Fund would have if the Company retained its own
investment advisor and the assets of each Fund were invested
directly in the type of securities held by the corresponding
Portfolio. For additional information concerning Fund and
Portfolio expenses, see "How the Funds and Portfolios are
organized."
Shareholder transaction expenses(a)
Maximum sales charge on purchases(b)
(as a percentage of offering price)
Growth Trends Special Growth
Growth Fund Fund Fund
0% 0% 0%
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Annual Fund and allocated Portfolio operating expenses
(as a percentage of average daily net assets):
Growth Trends Special Growth
Growth Fund(c) Fund Fund(c)
Management fee(d) 0.63% 0.59% 0.64%
12b-1 fee 0.25 0.25 0.25
Other expenses(e) 0.21 0.46 0.51
Total (after
reimbursement) 1.09 1.30 1.40
(a)A wire redemption charge, currently $15, is deducted from the
shareholder's Investment Management Account for wire redemptions
made at the request of the shareholder.
(b)There are no sales loads; however, each Fund reserves the right
upon 60 days' advance notice to shareholders to impose a redemption
fee of up to 1% on shares redeemed within one year of purchase.
Special Growth Fund has no present intention to implement a
redemption fee within the first year of operation.
(c)Expenses for Growth Fund are based on actual expenses for the
six months ended Jan. 31, 1997. Expenses for Special Growth Fund
are based on the period from Aug. 19, 1996 (commencement of
operations) to Jan. 31, 1997.
(d)The management fee is paid by the Trust on behalf of each
Portfolio. It includes the impact of a performance fee that
increased the management fee by 0.02% for Growth Fund and 0.01% for
Growth Trends Fund for the period from May 13, 1996 to July 31,
1996.
(e)Other expenses include an administrative services fee, a
transfer agency fee and other nonadvisory expenses.
The Advisor and the Distributor have agreed to waive certain fees
and to absorb certain other Fund expenses until July 31, 1997.
Under this agreement, the ratio of expenses to average daily net
assets would have been 1.14% and 1.86% for Strategist Growth Fund
and 1.39% and 1.76% for Strategist Growth Trends Fund for the
periods ended Jan. 31, 1997 and July 31, 1996, respectively; and
8.12% for Strategist Special Growth Fund for the period ended Jan.
31, 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:
Growth Trends Special Growth
Growth Fund Fund Fund*
1 year $ 11 $13 $14
3 years 35 41 44
5 years 60 71 77
10 years 133 157 168
*Total expenses are based on the period from Aug. 19, 1996 to Jan.
31, 1997.<PAGE>
PAGE 9
The table and example do not represent actual expenses, past or
future. Actual expenses may be higher or lower than those shown.
Because the Funds pay annual distribution (12b-1) fees, long-term
shareholders may indirectly pay an equivalent of more than a 7.25%
sales charge, the maximum permitted by the National Association of
Securities Dealers.
Performance
Financial highlights
<TABLE><CAPTION>
Fiscal period ended July 31,
Per share income and capital changes*
Strategist Strategist
Strategist Growth Growth Trends Special
Fund Fund Growth Fund
1997# 1996** 1997# 1996** 1997***
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $23.15 $25.43 $18.52 $19.00 $5.00
Income from investment operations:
Net investment income (loss) (.04) (.02) .03 .01 .01
Net gains(losses) (both realized 6.70 (2.26) 4.09 (.49) .70
and unrealized)
Total from investment operations 6.66 (2.28) 4.12 (.48) .71
Less distributions:
Dividends from net investment income -- -- (.05) -- (.01)
Distributions from realized gains -- -- -- -- (.01)
Total distributions -- -- (.05) -- (.02)
Net asset value, end of period $29.81 $23.15 $22.59 $18.52 $5.69
Ratios/supplemental data:
Net assets, end of period (in millions) $29 $23 $28 $25 $1
Ratio of expenses to average daily
net assets++ 1.09%+ 1.30%+ 1.30%+ 1.30%+ 1.40%+
Ratio of net income(loss) to average
daily net assets (.26%)+ (.37%)+ .24%+ .39%+ .43%+
Total return 28.8% (9.0%) 22.2% (2.5%) 14.1%
Portfolio turnover rate (excluding short-term
securities) for the underlying Portfolio 10% 5% 15% 7% 82%
Average brokerage commission rate
for the underlying Portfolio## $0.0521 -- $0.0569 -- $0.0358
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Inception date was May 13, 1996.
***Inception date was Aug. 19, 1996. Period from Aug. 19, 1996 to Jan. 31, 1997 is unaudited.
+Adjusted to an annual basis.
++The Advisor and Distributor voluntarily limited total operating expenses to 1.30% (1.40% for Strategist Special Growth Fund)
of average daily net assets. Without this agreement, the ratio of expenses to average daily net assets would have been 1.14%
and 1.86% for Strategist Growth Fund and 1.39% and 1.76% for Strategist Growth Trends Fund for the periods ended 1997 and
1996, respectively; and 8.12% for Strategist Special Growth Fund for the period ended Jan 31, 1997.
#Six months ended Jan. 31, 1997 (Unaudited).
##Each Fund is required to disclose an average brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of portfolio securities for the period by the total number of
related shares purchased and sold.</TABLE>
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The annual information in this table for Growth and Growth Trends
Funds has been audited by KPMG Peat Marwick LLP, independent
auditors. Additional information about the performance of Growth
and Growth Trends Funds are contained in the Funds' annual report
which, if not included with this prospectus, may be obtained
without charge. The six-month information for Growth and Growth
Trends Funds and the information for Special Growth Fund is
unaudited.
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 Jan. 31, 1997
Purchase 1 year 5 years Since 10 years
made ago ago inception ago
Growth Fund(a) +30.75% +18.27% --% +16.00%
Growth Trends Fund(a) +26.82 +16.04 -- +16.76
Lipper Growth Fund Index +20.72 +14.27 -- +13.01
Special Growth Fund(b) -- -- +14.09 --
IDS Advisory Accounts(c) +22.95 +20.35 +20.99 --
S&P 500 +26.33 +17.00 +21.57(d) +14.50
Cumulative total returns as of Jan. 31, 1997
Purchase 1 year 5 years Since 10 years
made ago ago inception ago
Growth Fund(a) +30.75% +131.78% --% +342.22%
Growth Trends Fund(a) +26.82 +111.07 -- +372.85
Lipper Growth Fund Index +20.72 + 94.85 -- +239.65
Special Growth Fund(b) -- -- + 14.09 --
IDS Advisory Accounts(c) +22.95 +152.50 +386.70 --
S&P 500 +26.33 +119.46 + 21.57(d) +287.80
(a) On May 13, 1996, IDS Growth Fund and IDS New Dimensions Fund
(the predecessor funds) converted to a master/feeder structure and
transferred all of their assets to Growth Portfolio and Growth
Trends Portfolio, respectively. The performance information in the
foregoing tables represents performance of the corresponding
predecessor funds prior to March 20, 1995 and of Class A shares of
the corresponding predecessor funds from March 20, 1995 through
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PAGE 11
May 13, 1996, adjusted to reflect the absence of sales charges on
shares of the Funds sold through this prospectus. The historical
performance has not been adjusted for any difference between the
estimated aggregate fees and expenses of the Funds and historical
fees and expenses of the predecessor funds.
(b) Inception date was Aug. 19, 1996.
(c) Inception date for the Advisory Accounts was Oct. 11, 1988.
The examples show combined performance returns for IDS Advisory
Accounts (Advisory Accounts) that are managed by the Advisor using
the same strategy used to manage Special Growth Fund. The Advisory
Accounts' performance reflects reinvestment of dividends and is
calculated net of brokerage commissions and management fees. At
Jan. 31, 1997, the composite included all 24 fully discretionary,
equity Advisory Accounts under management using this strategy with
total assets of $1,232.1 million, which is 67% of the total assets
using this strategy and 4% of total assets under management by the
Advisor. Terminated accounts are not purged from the composite.
Expenses and fees associated with registering a mutual fund have
not been deducted from these returns. The returns for Special
Growth Fund will be lower, initially, due to these expenses and
fees. Returns shown should not be considered a representation of
Special Growth Fund's future performance.
(d) Measurement period started Sept. 1, 1996.
These examples show total returns from hypothetical investments in
each Fund. These returns are compared to those of popular indexes
for the same periods.
For purposes of calculation, information about each Fund makes no
adjustments for taxes an investor may have paid on the reinvested
income and capital gains, and covers a period of widely fluctuating
securities prices. Returns shown should not be considered a
representation of a Fund's future performance.
Lipper Growth Fund Index, an unmanaged index published by Lipper
Analytical Services, Inc., includes 30 funds that are generally
similar to Growth Fund and Growth Trends Fund. Some funds in the
index may have somewhat different investment policies or objectives
than the Portfolios to which they are compared.
Standard & Poor's 500 Stock Index (S&P 500), an unmanaged list of
common stocks, is frequently used as a general measure of market
performance. However, the S&P 500 companies are generally larger
than those in which Growth and Growth Trends Portfolios invest.
The Advisory Accounts, like Aggressive Growth Portfolio, invest in
those stocks included in the S&P 500 that the Advisor believes will
outperform the S&P 500 within the 6- to 12-month period following
investment because, in the Advisor's opinion, such stocks are
undervalued or have above-average growth potential. The index
reflects reinvestment of all distributions and changes in market
prices, but excludes brokerage commissions or other fees.
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Investment policies and risks
The policies described below apply both to the Fund and the
Portfolio.
Growth Fund/Growth Portfolio - Growth Portfolio invests primarily
in common stocks and securities convertible into common stocks of
U.S. and foreign corporations. Growth Portfolio will invest in
companies that appear to offer growth opportunities; companies
that, because of new management, markets or other factors, show
promise of substantially improved results; and companies whose
future may be dependent upon maintaining technological superiority
over their competitors. Other investments include preferred
stocks, convertible securities, debt securities, derivative
instruments or money market instruments.
Growth Trends Fund/Growth Trends Portfolio - Growth Trends
Portfolio invests primarily in common stocks of U.S. and foreign
corporations showing potential for significant growth. These
companies usually operate in areas where dynamic economic and
technological changes are occurring. They also may exhibit
excellence in technology, marketing or management. Other
investments include preferred stocks, debt securities, derivative
instruments and money market instruments.
Special Growth Fund/Aggressive Growth Portfolio - Aggressive Growth
Portfolio invests primarily in equity securities of companies
comprising the S&P 500 that, in the opinion of the Advisor, are
undervalued in relation to their long-term earning power or the
asset value of their issuers or that have above-average growth
potential. Ordinarily, at least 65% of the Portfolio's total
assets will be invested in equity securities consisting of common
stocks, preferred stocks, securities convertible into common
stocks, securities having common stock characteristics such as
rights and warrants and foreign equity securities.
The Advisor's Research Department has designed a proprietary
research rating system that is used as the basis for rating
securities of issuers listed on the S&P 500. The research ratings
range from a "strong buy" to "strong sell." Aggressive Growth
Portfolio will invest primarily in equity securities that the
Research Department rates highly and expects to outperform the S&P
500. The securities in which Aggressive Growth Portfolio invests
will not correspond entirely to the S&P 500 securities recommended
by the Research Department because some of these recommendations
may not be appropriate investments for the Portfolio due to
diversification, liquidity or other requirements that apply to
registered investment companies. In addition, some of the
recommendations may not be appropriate for Aggressive Growth
Portfolio under its investment objective or investment limitations.
Moreover, other Advisor clients who receive the Research
Department's recommendations may place purchase or sale orders that
make it more difficult for Aggressive Growth Portfolio to implement
its own orders to buy or sell the same securities.
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PAGE 13
Aggressive Growth Portfolio may invest more than 25% of its total
assets in equity securities of companies included in the S&P 500
that are primarily engaged in either the utilities or the energy
industry. If Aggressive Growth Portfolio concentrates its
investments in one or both of these industries, the value of its
shares will be especially affected by factors peculiar to these
industries, and may fluctuate more widely than the value of shares
of a fund that invests in a broader range of industries. The
Portfolio will concentrate its investments in either of these
industries only to the extent that the S&P becomes heavily weighted
in that industry. The Portfolio's concentration policy can be
changed only if holders of a majority of the outstanding voting
securities agree to make the change. See "Utilities industry" and
"Energy industry" below.
Securities may be undervalued because of several factors, including
the following: market decline, poor economic conditions, tax-loss
selling or actual or anticipated unfavorable developments affecting
the issuer of the security. Companies also may be undervalued
because they are part of an industry that is out of favor with
investors even though the individual companies may be financially
sound and have high rates of earning growth. Any or all of these
factors may provide buying opportunities at attractive prices
relevant to the long-term prospects for the companies in question.
Companies with above average growth potential generally will have
steady earnings and cash flow growth, good and/or improving balance
sheets, strong positions in their market niches and the ability to
perform well in a stagnant economy.
The various types of investments described above that the portfolio
managers use to achieve investment performance are explained in
more detail in the next section and in the SAI.
Facts about investments and their risks
The Funds are designed for long-term investors who seek above
average investment returns and, in return, are willing to accept a
relatively high degree of short-term price variability and
investment risk.
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 or companies experiencing significant growth and
operating in areas of financial and technological change may be
subject to more abrupt or erratic price movements than stocks of
larger, established companies or the stock market as a whole.
Also, small companies often have limited product lines, smaller
markets or fewer financial resources. Therefore, securities in
which the Portfolios invest involve substantial risk and may be
considered speculative.
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PAGE 14
Preferred stocks: If a company earns a profit, it generally must
pay its preferred stockholders a dividend at a pre-established
rate.
Utilities industry: Utility stocks, including electric, gas,
telephone and other energy-related (e.g., nuclear) utilities stocks
generally offer dividend yields that exceed those of industrial
companies and their prices tend to be less volatile than stocks of
industrial companies. However, utility stocks can still be
affected by the risks of the stock market in general, as well as
factors specific to public utilities companies. Many utility
companies, especially electric utility companies, historically have
been subject to the risk of increases in fuel and other operating
costs, changes in interest rates on borrowing for capital
improvement programs, changes in applicable laws and regulations,
and costs and operating constraints associated with compliance with
environmental regulations. In addition, because securities issued
by utility companies are particularly sensitive to movements in
interest rates, the equity securities of these companies are more
affected by movements in interest rates than the equity securities
of other companies. Each of these risks could adversely affect the
ability of public utilities companies to declare or pay dividends
and the ability of holders of common stock, such as a Portfolio, to
realize any value from the assets of the company upon liquidation
or bankruptcy.
Energy industry: Energy companies include the conventional areas
of oil, gas, electricity and coal, as well as newer sources of
energy such as geothermal, nuclear, oil shale and solar power.
These companies include those that produce, transmit, market or
measure energy, as well as those companies involved in exploring
for new sources of energy. Securities of companies in the energy
field are subject to changes in value and dividend yield which
depend largely on the price and supply of energy fuels. Swift
price and supply fluctuations may be caused by events relating to
international politics, energy conservation, the success of
exploration projects and tax or other governmental regulatory
policies.
Convertible securities: These securities generally are preferred
stocks or bonds that can be exchanged for other securities, usually
common stock, at prestated prices. When the trading price of the
common stock makes the exchange likely, convertible securities
trade more like common stock.
Debt securities: The price of bonds generally falls as interest
rates increase, and rises as interest rates decrease. The price of
bonds also fluctuates if the credit rating is upgraded or
downgraded. The price of bonds below investment grade may react
more to the ability of the issuing company to pay interest and
principal when due. These bonds have greater price fluctuations
and are more likely to experience a default.
<PAGE>
PAGE 15
Growth Portfolio and Aggressive Growth Portfolio invest in bonds
given the four highest ratings 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. Growth Trends
Portfolio, in addition to investing in investment grade bonds, may
invest up to 5% of its net assets in bonds below investment grade.
Securities that are subsequently downgraded in quality may continue
to be held by a Portfolio and will be sold only when the investment
manager believes it is advantageous to do so.
Foreign investments: Securities of foreign companies and
governments may be traded in the United States, but often they are
traded only on foreign markets. Frequently, there is less
information about foreign companies and less government supervision
of foreign markets. Foreign investments are subject to political
and economic risks of the countries in which the investments are
made, including the possibility of seizure or nationalization of
companies, imposition of withholding taxes on income, establishment
of exchange controls or adoption of other restrictions that might
affect an investment adversely. If an investment is made in a
foreign market, the local currency may be purchased using a forward
contract in which the price of the foreign currency in U.S. dollars
is established on the date the trade is made, but delivery of the
currency is not made until the securities are received. As long as
a Portfolio holds foreign currencies or securities valued in
foreign currencies, the value of those assets will be affected by
changes in the value of the currencies relative to the U.S. dollar.
Because of the limited trading volume in some foreign markets,
efforts to buy or sell a security may change the price of the
security, and it may be difficult to complete the transaction.
Growth Portfolio may invest up to 25% of its total assets in
foreign investments. Growth Trends Portfolio may invest up to 30%
of its total assets in foreign investments. Aggressive Growth
Portfolio may invest up to 20% of its total assets in foreign
securities that are included in the S&P 500, or which will be
included in the S&P 500 in the near future, or in Canadian money
market instruments.
Derivative instruments: A portfolio manager may use derivative
instruments in addition to securities to achieve investment
performance. Derivative instruments include futures, options and
forward contracts. Such instruments may be used to maintain cash
reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce
transaction costs or to pursue higher investment returns.
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 <PAGE>
PAGE 16
security, currency or index will cause a sizable gain or loss in
the price of the derivative instrument. Derivative instruments
allow the portfolio manager to change the investment performance
characteristics very quickly and at lower costs. Risks include
losses of premiums, rapid changes in prices, defaults by other
parties and inability to close such instruments. A Portfolio 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 Portfolios will designate cash or appropriate liquid
assets to cover portfolio obligations. No more than 5% of each
Portfolio's net assets can be used at any one time for good faith
deposits on futures and premiums for options on futures that do not
offset existing investment positions. This does not, however,
limit the portion of a Portfolio's assets at risk to 5%. The
Portfolios are not limited as to the percentage of their 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. Each portfolio manager will follow guidelines
established by the board and consider relevant factors such as the
nature of the security and the number of likely buyers when
determining whether a security is illiquid. No more than 10% of a
Portfolio'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 a Portfolio'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
boards.
Lending portfolio securities: Each Portfolio 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 holders of a majority of the
outstanding voting securities approve otherwise, loans may not
exceed 30% of a Portfolio's net assets.
<PAGE>
PAGE 17
Valuing Fund shares
The net asset value (NAV) is the value of a single Fund share. It
is the total value of a Fund's investments in the corresponding
Portfolio and other assets, less any liabilities, divided by the
number of shares outstanding. The NAV is the price at which you
purchase Fund shares and the price you receive when you sell your
shares. It usually changes from day to day, 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 held by a Portfolio are
valued as of the close of each business day. In valuing assets:
o Securities (except bonds) and assets with available market
values are valued on that basis
o Securities maturing in 60 days or less are valued at
amortized cost
o Bonds and assets without readily available market values are
valued according to methods selected in good faith by the
board
How to purchase, exchange or redeem shares
How to purchase shares
You may purchase shares of the Funds through an Investment
Management Account (IMA) maintained with American Express Service
Corporation (the Distributor). There is no fee to open an IMA
account. Payment for shares must be made directly to the
Distributor.
Complete an IMA Account Application (available by calling 1-800-
AXP-SERV) and mail the application to American Express Financial
Direct, P.O. Box 59196, Minneapolis, MN 55459-0196. Corporations
and other organizations should contact the Distributor to determine
which additional forms may be necessary to open an IMA account.
If you already have an IMA account, you may buy shares in the Funds
as described below and need not open a new account.
You may deposit money into your IMA account by check, wire or many
other forms of electronic funds transfer (securities may also be
deposited). All deposit checks should be made payable to the
Distributor. If you would like to wire funds into your existing
IMA account, please contact the Distributor at 1-800-AXP-SERV for
instructions.
<PAGE>
PAGE 18
Minimum Fund investment requirements. Your initial investment in a
Fund may be as low as $2,000 ($1,000 for custodial accounts,
Individual Retirement Accounts and certain other retirement plans).
The minimum subsequent investment is $100. These requirements may
be reduced or waived as described in the SAI.
When and at what price shares will be purchased. You must have
money available in your IMA account in order to purchase Fund
shares. If your request and payment (including money transmitted
by wire) are received and accepted by the Distributor before 2 p.m.
Central time, your money will be invested at the net asset value
determined as of the close of business (normally 3 p.m. Central
time) that day. If your request and payment are received after
that time, your request will not be accepted or your payment
invested until the next business day. (See "Valuing Fund shares")
Methods of purchasing shares. There are three convenient ways to
purchase shares of the Funds. You may choose the one that works
best for you. The Distributor will send you confirmation of your
purchase request.
By phone:
You may use money in your IMA account to make initial and
subsequent purchases. To place your order, call 1-800-AXP-
SERV.
By mail:
Written purchase requests (along with any checks) should be
mailed to American Express Financial Direct, P.O. Box 59196,
Minneapolis, MN 55459-0196, and should contain the following
information:
o your IMA account number (or an IMA Account Application)
o the name of the Fund(s) and the dollar amount of shares
you would like purchased
Your check should be made out to the Distributor. It will be
deposited into your IMA account and used, as necessary, to
cover your purchase request.
By systematic purchase:
Once you have opened an IMA account, you may authorize the
Distributor to automatically purchase shares on your behalf
at intervals and in amounts selected by you. (See
"Systematic purchase plans")
<PAGE>
PAGE 19
Other purchase information. Each Fund reserves the right, in its
sole discretion and without prior notice to shareholders, to
withdraw or suspend all or any part of the offering made by this
prospectus, to reject purchase requests or to change the minimum
investment requirements. All requests to purchase shares of the
Fund are subject to acceptance by the Fund and the Distributor and
are not binding until confirmed or accepted in writing. The
Distributor will charge a $15 service fee against an investor's IMA
account if his or her investment check is returned because of
insufficient or uncollected funds or a stop payment order.
How to exchange shares
The exchange privilege allows you to exchange your investment in a
Fund at no charge for shares of other funds in the Strategist Fund
Group available in your state. For complete information, including
fees and expenses, read the prospectus carefully before exchanging
into a new fund. Any exchange will involve the redemption of Fund
shares and the purchase of shares in another fund on the basis of
the net asset value per share of each fund. An exchange may result
in a gain or loss and is a taxable event for federal income tax
purposes. When exchanging into another fund you must meet that
fund's minimum investment requirements. Each Fund reserves the
right to modify, terminate or limit the exchange privilege. The
current limit is four exchanges per calendar year. The Distributor
and the Funds 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 Funds and their shareholders.
How to redeem shares
The price at which shares will be redeemed. Shares will be
redeemed at the net asset value per share next determined after
receipt by the Distributor of proper redemption instructions, as
described below.
Payment of redemption proceeds. Normally, payment for redeemed
shares will be credited directly to your IMA account on the next
business day. However, the Fund may delay payment, but no later
than seven days after the Distributor receives your redemption
instructions in proper form. Redemption proceeds will be held
there or mailed to you depending on the account standing
instructions you selected.
If you recently purchased shares by check, your redemption proceeds
may be held in your IMA account until your check clears (which may
take up to 10 days from the purchase date) before a check is mailed
to you.
A redemption is a taxable transaction. If your proceeds from your
redemption are more or less than the cost of your shares, you will
have a gain or loss, which can affect your tax liability.
Redeeming shares held in an IRA or qualified retirement account may
subject you to certain federal taxes, penalties and reporting
requirements. Consult your tax advisor.
<PAGE>
PAGE 20
Methods of exchanging or redeeming shares
By phone:
You may exchange or redeem your shares by calling 1-800-AXP-SERV.
Telephone exchanges or redemptions may be difficult to implement
during periods of drastic economic or market changes. If you
experience difficulties in exchanging or redeeming shares by
telephone, you can mail your exchange or redemption requests as
described below.
To properly process your telephone exchange or redemption request
we will need the following information:
o your IMA account number and your name (for exchanges, both
funds must be registered in the same ownership)
o the name of the fund from which you wish to exchange or
redeem shares
o the dollar amount or number of shares you want to exchange or
redeem
o the name of the fund into which shares are to be exchanged,
if applicable
Telephone exchange or redemption requests received before 2 p.m.
(Central time) on any business day, once the caller's identity and
account ownership have been verified by the Distributor, will be
processed at the net asset value determined as of the close of
business (normally 3 p.m. Central time) that day.
By mail:
You may also request an exchange or redemption by writing to
American Express Financial Direct, P.O. Box 59196, Minneapolis, MN
55459-0196. Once an exchange or redemption request is mailed it is
irrevocable and cannot be modified or canceled.
To properly process your mailed exchange or redemption request, we
will need a letter from you that contains the following
information:
o your IMA account number
o the name of the fund from which you wish to exchange or
redeem shares
o the dollar amount or number of shares you want to exchange or
redeem
o the name of the fund into which shares are to be exchanged,
if applicable
o a signature of at least one of the IMA account holders in the
exact form specified on the account
<PAGE>
PAGE 21
Telephone transactions. You may make purchase, redemption and
exchange requests by mail or by calling 1-800-AXP-SERV. The
privilege to initiate transactions by telephone is automatically
available through your IMA account. Each Fund will honor any
telephone transaction believed to be authentic and will use
reasonable procedures to confirm that instructions communicated by
telephone are genuine. This includes asking identifying questions
and tape recording calls. If these procedures are not followed, a
Fund may be liable for losses due to unauthorized or fraudulent
instructions. Telephone privileges may be modified or discontinued
at any time.
Systematic purchase plans
The Distributor offers a Systematic Purchase Plan (SPP) that allows
you to make periodic investments in the Funds automatically and
conveniently. A SPP can be used as a dollar cost averaging program
and saves you the time and expense associated with writing checks
or wiring funds.
Investment minimums: You can make automatic investments in any
amount, from $100 to $50,000.
Investment methods: Automatic investments are made from your IMA
account and you may select from several different investment
methods to make automatic investment(s):
a) Using uninvested cash in your IMA account: If you elect to
use this option to make your automatic investments,
uninvested cash in your IMA account will be used to make the
investment and, if necessary, shares of your Money Market
Fund will be redeemed to cover the balance of the purchase.
b) Using bank authorization or direct deposit: Bank
authorizations (transfers from a bank checking or savings
account) and direct deposit (automatic deposit of all or a
portion of a payroll or government check) are two of the
investment method options that are available through SPP.
Money is transferred into your IMA account and automatic
investments can be made using these amounts.
If you elect to use bank authorizations and/or direct deposit for
your automatic investments, you will select two dates: a transfer
date (when the money is transferred into your IMA account) and your
investment date. The automatic investment date selected may be the
same day of your bank authorization or direct deposit. Your
investment date should be on or close to the transfer/deposit date
in order to minimize uninvested cash in your IMA account.
If you make changes to your bank authorization or direct deposit
date, it may also be necessary to change your automatic investment
date to coincide with the new transfer/deposit date.
<PAGE>
PAGE 22
Investment frequency: You can select the frequency of your
automatic investments (twice monthly, monthly or quarterly) and
choose either the 5th or the 20th of the month for your automatic
investment dates. Quarterly investments are made on the date
selected in the first month of each quarter (January, April, July
and October).
Changing instructions to an already established plan: If you want
to change the fund(s) selected for your SPP you may do so by
calling 1-800-AXP-SERV, or by sending written instructions clearly
outlining the changes to American Express Financial Direct, P.O.
Box 59196, Minneapolis, MN 55459-0196. Written notification must
include the following:
o The funds with SPP that you want to cancel
o The newly selected fund(s) in which you want to begin
making automatic investments and the amount to be
invested in each fund
o The investment frequency and investment dates for your
new automatic investments
Information on changing bank authorization and direct deposit
instructions is included in the Systematic Purchase Plan Terms and
Conditions brochure which you will receive after enrolling in SPP.
Terminating your SPP. If you wish to terminate your SPP, you may
call 1-800-AXP-SERV, or send written instructions to American
Express Financial Direct, P.O. Box 59196, Minneapolis, MN 55459-
0196.
Terminating bank authorizations and direct deposit. If you wish to
terminate your bank authorizations, you may do so at any time by
notifying American Express Financial Direct in writing. You must
notify your employer or government agency to cancel direct deposit.
Your bank authorization and/or direct deposit will not
automatically terminate when you cancel your SPP.
IMPORTANT: If you are canceling your bank authorizations and/or
direct deposit and you wish to cancel your SPP, you must also
provide instructions stating that the Distributor should cancel
your SPP. You may notify the Distributor by sending written
instructions to the address above or telephoning 1-800-AXP-SERV.
Your systematic investments will continue using IMA account assets
if the Distributor does not receive notification to terminate your
systematic investments as well.
To avoid procedural difficulties, the Distributor should receive
instructions to change or terminate your SPP or bank authorizations
at least 10 days prior to your scheduled investment date.
<PAGE>
PAGE 23
Additional information. This information is only a summary of the
Systematic Purchase Plan Terms and Conditions brochure that you
will receive if you choose to enroll in SPP. Please read it
carefully and keep it for future reference.
Other important information
Minimum balance and account requirements. Each Fund reserves the
right to redeem your shares if, as a result of redemptions, the
aggregate value of your holdings in the Fund drops below $1,000
($500 in the case of custodial accounts, IRAs and other retirement
plans). You will be notified in writing 30 days before the Fund
takes such action to allow you to increase your holdings to the
minimum level. If you close your IMA account, the Fund will
automatically redeem your shares.
Wire transfers to your bank. Funds can be wired from your IMA
account to your bank account. Call the Distributor for additional
information on wire transfers. A $15 service fee will be charged
against your IMA account for each wire sent.
No person has been authorized to give any information or to make
any representations not contained in this prospectus in connection
with the offering being made by this prospectus and, if given or
made, such information or representation must not be relied upon as
having been authorized by the Funds or their Distributor. This
prospectus does not constitute an offering by the Funds or by the
Distributor in any jurisdiction in which such offering may not be
lawfully made.
Special shareholder services
Services
To help you track and evaluate the performance of your investments,
you will receive 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.
Quick telephone reference
American Express Financial Direct Team
Fund performance, objectives and account inquiries, redemptions and
exchanges, dividend payments or reinvestments and automatic payment
arrangements
800-AXP-SERV
TTY Service
For the hearing impaired
800-710-5260
<PAGE>
PAGE 24
Distributions and taxes
As a shareholder you are entitled to your share of a Fund's net
income and any net gains realized on its investments. Each 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
A Portfolio allocates investment income from dividends and interest
and net realized capital gains or losses, if any, to a Fund. A
Fund deducts direct and allocated expenses from the investment
income. A Fund's net investment income is distributed to you by
the end of the calendar year as dividends. Short-term capital
gains are included in net investment income. Long-term capital
gains are realized whenever a security held for more than one year
is sold for a higher price than was paid for it. A Fund will
offset any net realized capital gains by any available capital loss
carryovers. Net realized long-term capital gains, if any, are
distributed at the end of the calendar year as capital gain
distributions. Before they're distributed, both net investment
income and net long-term capital gains are included in the value of
each share. After they're distributed, the value of each share
drops by the per-share amount of the distribution. (If your
distributions are reinvested, the total value of your holdings will
not change.)
Reinvestments
Dividends and capital gain distributions are automatically
reinvested in additional shares of a Fund, unless you request the
Fund in writing or by phone to pay distributions to you in cash.
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
The Funds have received a Private Letter Ruling from the Internal
Revenue Service stating that, for purposes of the Internal Revenue
Code, each Fund will be regarded as directly holding its allocable
share of the income and gain realized by the Portfolio.
Distributions are subject to federal income tax and also may be
subject to state and local taxes. Distributions are taxable in the
year the respective Fund declares them regardless of whether you
take them in cash or reinvest them.
<PAGE>
PAGE 25
Each January, you will receive a tax statement showing the kinds
and total amount of all distributions you received during the
previous year. You must report distributions on your tax returns,
even if they are reinvested in additional shares.
Buying a dividend creates a tax liability. This means buying
shares shortly before a net investment income or a capital gain
distribution. You pay the full pre-distribution price for the
shares, then receive a portion of your investment back as a
distribution, which is taxable.
Redemptions and exchanges subject you to a tax on any capital gain.
If you sell shares for more than their cost, the difference is a
capital gain. Your gain may be either short term (for shares held
for one year or less) or long term (for shares held for more than
one year).
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.
If you don't provide the TIN, or the TIN you report is incorrect,
you could be subject to backup withholding of 31% of taxable
distributions and proceeds from certain sales and exchanges. You
also could be subject to further penalties, such as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information
You also could be subject to backup withholding because you failed
to report interest or dividends on your tax return as required.
<TABLE><CAPTION>
How to determine the correct TIN
Use the Social Security or
For this type of account: Employer Identification number
of:
<S> <C>
Individual or joint account The individual or individuals
listed on the account
Custodian account of a minor The minor
(Uniform Gifts/Transfers to Minors
Act)
A living trust The grantor-trustee (the person
who puts the money into the
trust)
<PAGE>
PAGE 26
An irrevocable trust, pension The legal entity (not the
trust or estate personal representative or
trustee, unless no legal entity
is designated in the account
title)
Sole proprietorship The owner
Partnership The partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
</TABLE>
For details on TIN requirements, call 1-800-AXP-SERV for federal
Form W-9, "Request for Taxpayer Identification Number and
Certification."
Important: This information is a brief and selective summary of
certain federal tax rules that apply to each Fund. Tax matters are
highly individual and complex, and you should consult a qualified
tax advisor about your personal situation.
How the Funds and Portfolios are organized
Shares
The Company currently is composed of three Funds, each issuing its
own series of capital stock. Each Fund is owned by its
shareholders. All shares issued by a Fund are of the same class --
capital stock. Par value is 1 cent per share. Both full and
fractional shares can be issued.
The shares of each Fund making up the Company 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.
Voting rights
As a shareholder of a Fund, you have voting rights over that Fund's
management and fundamental policies. You are entitled to one vote
for each share you own. Shares of the Funds have cumulative voting
rights.
Shareholder meetings
The Company 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 Company's outstanding
shares, to elect or remove board members.
<PAGE>
PAGE 27
Special considerations regarding master/feeder structure
Each Fund pursues its goals by investing its assets in a master
fund called the Portfolio. This means that the Funds do not invest
directly in securities; rather their respective Portfolio invests
in and manages their portfolios of securities. The goals and
investment policies of each Portfolio are described under the
captions "Investment policies and risks" and "Facts about
investments and their risks." Additional information on investment
policies may be found in the SAI.
Board considerations: The board considered the advantages and
disadvantages of investing each Fund's assets in the respective
Portfolio. The board believes that the master/feeder structure
will be in the best interest of each Fund and its shareholders
since it offers the opportunity for economies of scale. Each Fund
may redeem all of its assets from the corresponding Portfolio at
any time. Should the board determine that it is in the best
interest of a Fund and its shareholders to terminate its investment
in a Portfolio, it would consider hiring an investment advisor to
manage the Fund's assets, or other appropriate options. The Fund
would terminate its investment if the Portfolio changed its goals,
investment policies or restrictions without the same change being
approved by the Fund.
Other feeders: Each Portfolio sells securities to other affiliated
mutual funds and may sell securities to non-affiliated investment
companies and institutional accounts (known as feeders). These
feeders buy the Portfolios' securities on the same terms and
conditions as the Funds and pay their proportionate share of the
Portfolios' expenses. However, their operating costs and sales
charges are different from those of the Funds. Therefore, the
investment returns for other feeders are different from the returns
of the Funds. Information about other feeders may be obtained by
calling a service representative at 1-800-437-3133.
Each feeder that invests in a Portfolio is different and activities
of its investors may adversely affect all other feeders, including
the Funds. For example, if one feeder decides to terminate its
investment in a Portfolio, that Portfolio may elect to redeem in
cash or in kind. If cash is used, the Portfolio will incur
brokerage, taxes and other costs in selling securities to raise the
cash. This may result in less investment diversification if entire
investment positions are sold, and it also may result in less
liquidity among the remaining assets. If in-kind distribution is
made, a smaller pool of assets remains that may affect brokerage
rates and investment options. In both cases, expenses may rise
since there are fewer assets to cover the costs of managing those
assets.
<PAGE>
PAGE 28
Shareholder meetings: Whenever a Portfolio proposes to change a
fundamental investment policy or to take any other action requiring
approval of its security holders, the corresponding Fund will hold
a shareholder meeting. The Fund will vote for or against the
Portfolio's proposals in proportion to the vote it receives for or
against the same proposals from its shareholders.
Board members and officers
Shareholders of the Company elect a board that oversees the
operations of the Funds and chooses the Company's officers. The
Company's officers are responsible for day-to-day business
decisions based on policies set by the board. Information about
the board members and officers of both the Company and the Trust is
found in the SAI under the caption "Board Members and Officers."
Investment manager
Each Portfolio pays the Advisor for managing its assets. Each Fund
pays its proportionate share of the fee. Under the Investment
Management Services Agreement, the Advisor is paid a fee for these
services based on the average daily net assets of each Portfolio,
as follows:
Growth Portfolio and
Growth Trends Portfolio
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
Aggressive Growth Portfolio
Assets Annual rate at
(billions) each asset level
First $0.25 0.650%
Next 0.25 0.625
Next 0.50 0.600
Next 1.0 0.575
Next 1.0 0.550
Next 3.0 0.525
Over 6.0 0.500
For Growth Portfolio and Growth Trends Portfolio these fees may be
increased or decreased by a performance adjustment based on a
comparison of performance to the Lipper Growth Fund Index. The
maximum adjustment is 0.12% of each Portfolio's average daily net
assets on an annual basis.
Under the agreement, each Portfolio also pays taxes, brokerage
commissions and nonadvisory expenses.
<PAGE>
PAGE 29
Administrator and transfer agent
The Funds pay the Advisor for shareholder accounting and transfer
agent services under two agreements. The first agreement, the
Administrative Services Agreement, has a declining annual rate that
decreases as assets increase. For Growth Fund and Growth Trends
Fund, the fee ranges from 0.05% to 0.03%. For Special Growth Fund,
the fee ranges from 0.06% to 0.03%. The second agreement, the
Transfer Agency Agreement, has an annual fee for each Fund of $20
per shareholder account.
Distributor
The Funds sell shares through the Distributor under a Distribution
Agreement. The Distributor is located at P.O. Box 59196,
Minneapolis, MN 55459-0196 and is a wholly-owned subsidiary of
Travel Related Services, Inc., a wholly-owned subsidiary of
American Express Company, a financial services company with
headquarters at American Express Tower, World Financial Center, New
York, NY 10285. Financial consultants representing the Distributor
provide information to investors about individual investment
programs, the Funds and their operations, new account applications,
exchange and redemption requests. The Funds reserve the right to
sell shares through other financial intermediaries or
broker/dealers. In that event, the account terms would also be
governed by rules that the intermediary may establish.
To help defray costs, including costs for marketing, sales
administration, training, overhead, direct marketing programs,
advertising and related functions, the Funds pay the Distributor a
distribution fee, also known as a 12b-1 fee. This fee is paid
under a Plan and Agreement of Distribution that follows the terms
of Rule 12b-1 of the Investment Company Act of 1940. Under this
Agreement, each Fund pays a distribution fee at an annual rate of
0.25% of that Fund's average daily net assets for distribution-
related services. This fee will not cover all of the costs
incurred by the Distributor.
About the Advisor
The Advisor is located at IDS Tower 10, Minneapolis, MN 55440-0010.
It is a wholly-owned subsidiary of American Express Company. The
Portfolios may pay brokerage commissions to broker-dealer
affiliates of the Advisor.
<PAGE>
PAGE 30
Appendix
Descriptions of derivative instruments
What follows are brief descriptions of derivative instruments a
Portfolio may use. At various times a Portfolio 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 Portfolio'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. A Portfolio 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 a Portfolio's investments against
price fluctuations or to increase market exposure.
Indexed securities. The value of indexed securities is linked to
currencies, interest rates, commodities, indexes or other financial
indicators. Most indexed securities are short- to intermediate-
term fixed income securities whose values at maturity or interest
rates rise or fall according to the change in one or more specified
underlying instruments. Indexed securities may be more volatile
than the underlying instrument itself.
Structured products. Structured products are over-the-counter
financial instruments created specifically to meet the needs of one
or a small number of investors. The instrument may consist of a
warrant, an option or a forward contract embedded in a note or any
of a wide variety of debt, equity and/or currency combinations.
Risks of structured products include the inability to close such
instruments, rapid changes in the market and defaults by other
parties.
<PAGE>
PAGE 31
STATEMENT OF ADDITIONAL INFORMATION
FOR
STRATEGIST GROWTH FUND, INC.
April 1, 1997
This Statement of Additional Information (SAI) is not a prospectus.
It should be read together with the Funds' prospectus and the
financial statements contained in the Annual Report and Semi-Annual
Report which may be obtained by calling American Express Financial
Direct, 1-800-AXP-SERV (TTY: 1-800-710-5260) or by writing to P.O.
Box 59196, Minneapolis, MN 55459-0196.
This SAI is dated April 1, 1997, and it is to be used with the
Funds' prospectus dated April 1, 1997, the Annual Report for the
fiscal period ended July 31, 1996 and the Semi-Annual Report for
the fiscal period ended Jan. 31, 1997.
<PAGE>
PAGE 32
TABLE OF CONTENTS
Goals and Investment Policies......................See Prospectus
Additional Investment Policies.............................p. 3
Security Transactions......................................p. 13
Brokerage Commissions Paid to Brokers Affiliated
with the Advisor...........................................p. 16
Performance Information....................................p. 17
Valuing Fund Shares........................................p. 18
Investing in the Funds.....................................p. 20
Redeeming Shares...........................................p. 20
Pay-out Plans..............................................p. 22
Capital Loss Carryover.....................................p. 23
Taxes......................................................p. 23
Agreements.................................................p. 24
Organizational Information.................................p. 28
Board Members and Officers.................................p. 28
Principal Holders of Securities............................p. 35
Independent Auditors.......................................p. 36
Financial Statements.......................................p. 36
and See Annual and Semi-Annual Report
Prospectus.................................................p. 36
Appendix A: Description of Bond Ratings...................p. 37
Appendix B: Foreign Currency Transactions.................p. 40
Appendix C: Options and Stock Index Futures Contracts.....p. 45
Appendix D: Mortgage-Backed Securities....................p. 52
Appendix E: Dollar-Cost Averaging.........................p. 53
Financial Statements for Special Growth Fund...............p. 54
<PAGE>
PAGE 33
ADDITIONAL INVESTMENT POLICIES
Strategist Growth Fund, Inc. (the Company) is a mutual fund with
three series of capital stock representing interests in Strategist
Growth Fund (Growth Fund), Strategist Growth Trends Fund (Growth
Trends Fund) and Strategist Special Growth Fund (Special Growth
Fund) (Growth Fund, Growth Trends Fund and Special Growth Fund are
collectively referred to herein as the Funds, and individually, a
Fund). Each Fund is a diversified mutual fund with its own goals
and investment policies. Each of the Funds seeks to achieve its
goals by investing all of its assets in a corresponding series
(each a Portfolio) of Growth Trust (the Trust), a separate
investment company, rather than by directly investing in and
managing its own portfolio of securities.
Fundamental investment policies adopted by a Fund or Portfolio
cannot be changed without the approval of a majority of the
outstanding voting securities of the Fund or Portfolio,
respectively, as defined in the Investment Company Act of 1940 (the
1940 Act). Whenever a Fund is requested to vote on a change in the
investment policies of the corresponding Portfolio, the Company
will hold a meeting of Fund shareholders and will cast the Fund's
vote as instructed by the shareholders.
Notwithstanding any of the Funds' other investment policies, each
Fund may invest its assets in an open-end management investment
company having the same investment objectives, policies and
restrictions as that Fund for the purpose of having those assets
managed as part of a combined pool.
Investment Policies applicable to Growth Portfolio:
These are investment policies in addition to those presented in the
prospectus. The policies below are fundamental policies that apply
both to the Fund and its corresponding Portfolio and may be changed
only with shareholder/unitholder approval. Unless holders of a
majority of the outstanding voting securities agree to make the
change, the Portfolio will not:
'Act as an underwriter (sell securities for others). However,
under the securities laws, the Portfolio may be deemed to be an
underwriter when it purchases securities directly from the issuer
and later resells them.
'Make cash loans if the total commitment amount exceeds 5% of the
Portfolio's total assets.
'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 Portfolio has not borrowed in the past
and has no present intention to borrow.
'Concentrate in any one industry. According to the present
interpretation by the Securities and Exchange Commission (SEC), <PAGE>
PAGE 34
this means no more than 25% of the Portfolio's total assets, based
on current market value at time of purchase, can be invested in any
one industry.
'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 Portfolio'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 Portfolio 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 Portfolio 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 (the Advisor), to the board members and
officers of the Advisor or to its own board members and officers.
'Purchase securities of an issuer if the board members and officers
of the Fund, the Portfolio and the Advisor hold more than a certain
percentage of the issuer's outstanding securities. If the holdings
of all board members and officers of the Fund, the Portfolio and
the Advisor who own more than 0.5% of an issuer's securities are
added together, and if in total they own more than 5%, the
Portfolio will not purchase securities of that issuer.
'Lend Portfolio securities in excess of 30% of its net assets. The
current policy of the board is to make these loans, either long- or
short-term, to broker-dealers. In making such loans, the Portfolio
gets 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 Portfolio 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
Portfolio receives cash payments equivalent to all interest or
other distributions paid on the loaned securities. A loan will not
be made unless the Advisor believes the opportunity for additional
income outweighs the risks.
<PAGE>
PAGE 35
The policies below are non-fundamental policies that apply both to
the Fund and its corresponding Portfolio and may be changed without
shareholder/unitholder approval. Unless changed by the board, the
Portfolio will not:
'Buy on margin or sell short, but it may make margin payments in
connection with transactions in stock index futures contracts.
'Pledge or mortgage its assets beyond 15% of total assets. If the
Portfolio were ever to do so, valuation of the pledged or mortgaged
assets would be based on market values. For purposes of this
policy, collateral arrangements for margin deposits on futures
contracts are not deemed to be a pledge of assets.
'Invest more than 5% of its total assets in securities of
companies, including any predecessors, that have a record of less
than three years continuous operations.
'Invest more than 10% of its total assets in securities of
investment companies.
'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 its net assets in securities and other
instruments that are illiquid. For purposes of this policy
illiquid securities include some privately placed securities,
public securities and Rule 144A securities that for one reason or
another may no longer have a readily available market, repurchase
agreements with maturities greater than seven days, non-negotiable
fixed-time deposits and over-the-counter options.
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 Advisor, 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 Advisor, 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 Portfolio may make contracts to purchase securities for a fixed
price at a future date beyond normal settlement time (when-issued <PAGE>
PAGE 36
securities or forward commitments). Under normal market
conditions, the Portfolio does not intend to commit more than 5% of
its total assets to these practices. The Portfolio does not pay
for the securities or receive dividends or interest on them until
the contractual settlement date. The Portfolio will designate cash
or liquid high-grade debt securities at least equal in value to its
commitments to purchase the securities. When-issued securities or
forward commitments are subject to market fluctuations and they may
affect the Portfolio's total assets the same as owned securities.
The Portfolio may maintain a portion of its assets in cash and
cash-equivalent investments. The cash-equivalent investments the
Portfolio 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 investments in foreign
securities will be subject to the limitations on foreign
investments described in the prospectus. The Portfolio also may
purchase 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 Portfolio's
ability to liquidate the security involved could be impaired.
The Portfolio 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
wither 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.
Investment Policies applicable to Growth Trends Portfolio:
These are investment policies in addition to those presented in the
prospectus. The policies below are fundamental policies that apply
both to the Fund and its corresponding Portfolio and may be changed
only with shareholder/unitholder approval. Unless holders of a
majority of the outstanding voting securities agree to make the
change, the Portfolio will not:
<PAGE>
PAGE 37
'Act as an underwriter (sell securities for others). However,
under the securities laws, the Portfolio 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 Portfolio 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
Portfolio's total assets.
'Concentrate in any one industry. According to the present
interpretation by the SEC, this means no more than 25% of the
Portfolio's total assets, based on current market value at time of
purchase, can be invested in any one industry.
'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 Portfolio'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 Portfolio 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 Portfolio 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 the Advisor, to the board
members and officers of the Advisor or to its own board members and
officers.
'Purchase securities of an issuer if the board members and officers
of the Fund, the Portfolio and the Advisor hold more than a certain
percentage of the issuer's outstanding securities. If the holdings
of all board members and officers of the Fund, the Portfolio and
the Advisor who own more than 0.5% of an issuer's securities are
added together, and if in total they own more than 5%, the
Portfolio will not purchase securities of that issuer.
<PAGE>
PAGE 38
'Lend Portfolio securities in excess of 30% of its net assets. The
current policy of the board is to make these loans, either long- or
short-term, to broker-dealers. In making such loans, the Portfolio
gets 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 Portfolio 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
Portfolio receives cash payments equivalent to all interest or
other distributions paid on the loaned securities. A loan will not
be made unless the Advisor believes the opportunity for additional
income outweighs the risks.
The policies below are non-fundamental policies that apply both to
the Fund and its corresponding Portfolio and may be changed without
shareholder/unitholder approval. Unless changed by the board, the
Portfolio will not:
'Buy on margin or sell short, but it may make margin payments in
connection with transactions in stock index futures contracts.
'Pledge or mortgage its assets beyond 15% of total assets. If the
Portfolio were ever to do so, valuation of the pledged or mortgaged
assets would be based on market values. For purposes of this
policy, collateral arrangements for margin deposits on futures
contracts are not deemed to be a pledge of assets.
'Invest more than 5% of its total assets in securities of
companies, including any predecessors, that have a record of less
than three years continuous operations.
'Invest more than 10% of its total assets in securities of
investment companies.
'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 its net assets in securities and other
instruments that are illiquid. For purposes of this policy
illiquid securities include some privately placed securities,
public securities and Rule 144A securities that for one reason or
another may no longer have a readily available market, repurchase
agreements with maturities greater than seven days, non-negotiable
fixed-time deposits and over-the-counter options.
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 Advisor, under guidelines <PAGE>
PAGE 39
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 Advisor, 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 Portfolio may make contracts to purchase securities for a fixed
price at a future date beyond normal settlement time (when-issued
securities or forward commitments). Under normal market
conditions, the Portfolio does not intend to commit more than 5% of
its total assets to these practices. The Portfolio does not pay
for the securities or receive dividends or interest on them until
the contractual settlement date. The Portfolio will designate cash
or liquid high-grade debt securities at least equal in value to its
commitments to purchase the securities. When-issued securities or
forward commitments are subject to market fluctuations and they may
affect the Portfolio's total assets the same as owned securities.
The Portfolio may maintain a portion of its assets in cash and
cash-equivalent investments. The cash-equivalent investments the
Portfolio 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 investments in foreign
securities will be subject to the limitations on foreign
investments described in the prospectus. The Portfolio also may
purchase short-term corporate notes and obligations rated in the
top two classifications by Moody's or 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 Portfolio's ability to
liquidate the security involved could be impaired.
The Portfolio 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
wither 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 <PAGE>
PAGE 40
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.
Investment Policies applicable to Aggressive Growth Portfolio:
These are investment policies in addition to those presented in the
prospectus. The policies below are fundamental policies that apply
both to the Fund and its corresponding Portfolio and may be changed
only with shareholder/unitholder approval. Unless holders of a
majority of the outstanding voting securities agree to make the
change, the Portfolio will not:
'Act as an underwriter (sell securities for others). However,
under the securities laws, the Portfolio 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 Portfolio 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
Portfolio'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 Portfolio'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 Portfolio 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 Portfolio 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 the Advisor, to the board
members and officers of the Advisor or to its own board members and
officers.
<PAGE>
PAGE 41
'Lend Portfolio securities in excess of 30% of its net assets. The
current policy of the board is to make these loans, either long- or
short-term, to broker-dealers. In making such loans, the Portfolio
gets 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 Portfolio 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
Portfolio receives cash payments equivalent to all interest or
other distributions paid on the loaned securities. A loan will not
be made unless the Advisor believes the opportunity for additional
income outweighs the risks.
'Concentrate in any one industry except in either or both the
energy or utilities industries. According to the present
interpretation by the SEC, this means no more than 25% of the
Portfolio's total assets, based on current market value at time of
purchase, can be invested in any one industry other than the energy
and/or utilities industries.
The policies below are non-fundamental policies that apply both to
the Fund and its corresponding Portfolio and may be changed without
shareholder/unitholder approval. Unless changed by the board, the
Portfolio will not:
'Buy on margin or sell short, but it may make margin payments in
connection with transactions in stock index futures contracts.
'Pledge or mortgage its assets beyond 15% of total assets. If the
Portfolio were ever to do so, valuation of the pledged or mortgaged
assets would be based on market values. For purposes of this
policy, collateral arrangements for margin deposits on futures
contracts are not deemed to be a pledge of assets.
'Invest more than 5% of its total assets in securities of
companies, including any predecessors, that have a record of less
than three years continuous operations.
'Invest more than 10% of its total assets in securities of
investment companies.
'Invest in a company to control or manage it.
'Invest in exploration or development programs, such as oil, gas or
mineral leases.
'Purchase securities of an issuer if the board members and officers
of the Fund, the Portfolio and the Advisor hold more than a certain
percentage of the issuer's outstanding securities. If the holdings
of all board members and officers of the Fund, the Portfolio and
the Advisor who own more than 0.5% of an issuer's securities are
added together, and if in total they own more than 5%, the
Portfolio will not purchase securities of that issuer.
<PAGE>
PAGE 42
'Invest more than 5% of its net assets in warrants.
'Invest more than 10% of its net assets in securities and other
instruments that are illiquid. For purposes of this policy
illiquid securities include some privately placed securities,
public securities and Rule 144A securities that for one reason or
another may no longer have a readily available market, repurchase
agreements with maturities greater than seven days, non-negotiable
fixed-time deposits and over-the-counter options.
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 Advisor, 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 Portfolio may make contracts to purchase securities for a fixed
price at a future date beyond normal settlement time (when-issued
securities or forward commitments). Under normal market
conditions, the Portfolio does not intend to commit more than 5% of
its total assets to these practices. The Portfolio does not pay
for the securities or receive dividends or interest on them until
the contractual settlement date. The Portfolio will designate cash
or liquid high-grade debt securities at least equal in value to its
forward commitments to purchase the securities. When-issued
securities or forward commitments are subject to market
fluctuations and they may affect the Portfolio's total assets the
same as owned securities.
The Portfolio may maintain a portion of its assets in cash and
cash-equivalent investments. The cash-equivalent investments the
Portfolio 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 investments in foreign
securities will be subject to the limitations on foreign
investments described in the prospectus. The Portfolio also may
purchase short-term corporate notes and obligations rated in the
top two classifications by Moody's or S&P or the equivalent and may
<PAGE>
PAGE 43
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 Portfolio's ability to
liquidate the security involved could be impaired.
The Portfolio may invest in foreign securities included in the S&P
500 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 wither 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.
For a description of bond ratings, see Appendix A. For a
discussion on foreign currency transactions, see Appendix B. For a
discussion on options and stock index futures contracts, see
Appendix C. For a discussion on mortgage-backed securities, see
Appendix D. For a discussion on dollar-cost averaging, see
Appendix E.
SECURITY TRANSACTIONS
Subject to policies set by the board, the Advisor is authorized to
determine, consistent with each Fund's and Portfolio'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, the Advisor has been directed to use its best efforts to
obtain the best available price and most favorable execution except
where otherwise authorized by the board. In selecting broker-
dealers to execute transactions, the Advisor 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.
The Advisor 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 or trust for which it
acts as investment manager. The Advisor 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 <PAGE>
PAGE 44
policy authorizing the Advisor to do so to the extent authorized by
law, if the Advisor 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 the Advisor's overall responsibilities to
the Portfolios advised by the Advisor.
Research provided by brokers supplements the Advisor'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. The Advisor has obtained, and in
the future may obtain, computer hardware from brokers, including
but not limited to personal computers that will be used exclusively
for investment decision-making purposes, which include the
research, portfolio management and trading functions and other
services to the extent permitted under an interpretation by the
SEC.
When paying a commission that might not otherwise be charged or a
commission in excess of the amount another broker might charge, the
Advisor must follow procedures authorized by the board. To date,
three procedures have been authorized. One procedure permits the
Advisor 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 the
Advisor, 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 the Advisor, in
order to obtain research and brokerage services, to cause the
Portfolio to pay a commission in excess of the amount another
broker might have charged. The Advisor has advised the Trust 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 the
Advisor believes it may obtain better overall execution. The
Advisor has assured the Trust 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 most favorable execution. In so
<PAGE>
PAGE 45
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 by such
person to those firms offering research services. Such services
may be used by the Advisor in providing advice to all the Trusts in
the Preferred Master Trust Group, their corresponding Funds and
other accounts advised by the Advisor, even though it is not
possible to relate the benefits to any particular fund, portfolio
or account.
Each investment decision made for a Portfolio is made independently
from any decision made for other portfolios, funds or other
accounts advised by the Advisor or any of its subsidiaries. When a
Portfolio buys or sells the same security as another portfolio,
fund or account, the Advisor carries out the purchase or sale in a
way the Trust agrees in advance is fair. Although sharing in large
transactions may adversely affect the price or volume purchased or
sold by a Portfolio, a Portfolio hopes to gain an overall advantage
in execution. The Advisor has assured the Trust it will continue
to seek ways to reduce brokerage costs.
On a periodic basis, the Advisor makes a comprehensive review of
the broker-dealers it uses and the overall reasonableness of their
commissions. The review evaluates execution, operational
efficiency and research services.
For the fiscal period from May 13, 1996 to July 31, 1996, Growth
Portfolio and Growth Trends Portfolio paid total brokerage
commissions of $230,628 and $1,488,847, respectively. For the
period from Aug. 19, 1996 to Jan. 31, 1997, Aggressive Growth
Portfolio paid total brokerage commissions of $172,419.
Substantially all firms through whom transactions were executed
provide research services.
No transactions were directed to brokers because of research
services they provided to a Portfolio.
The Portfolios held securities of its regular brokers or dealers or
of the parents of those brokers or dealers that derived more than
15% of gross revenue from securities-related activities as of the
fiscal period ended July 31, 1996 for Growth and Growth Trends
Portfolios and for the period from Aug. 19, 1996 to Jan. 31, 1997
for Aggressive Growth Portfolio as presented below:
Value of Securities
Owned at End of
Name of Issuer Fiscal Period
Growth Portfolio
Merrill Lynch $36,225,000
Morgan Stanley Group 9,964,093
<PAGE>
PAGE 46
Growth Trends Portfolio
Dean Witter $44,496,830
Goldman Sachs 21,494,070
Merrill Lynch 3,686,576
Morgan Stanley Group 64,243,321
NationsBank 22,999,104
Aggressive Growth Portfolio
NationsBank $ 6,566,400
For the fiscal periods 1996 and 1995, the portfolio turnover rates
were 22% and 30% for Growth Portfolio and 41% and 54% for Growth
Trends Portfolio. For the period from Aug. 19, 1996 to Jan. 31,
1997, the portfolio turnover rate was 82% for Aggressive Growth
Portfolio. For periods prior to the commencement of operations of
Growth Portfolio and Growth Trends Portfolio, turnover rates are
based on the turnover rates of the corresponding IDS funds, which
transferred all of their assets to the Portfolios on May 13, 1996.
A high turnover rate (in excess of 100%) results in higher fees and
expenses.
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH THE ADVISOR
Affiliates of American Express Company (American Express) (of which
the Advisor is a wholly-owned subsidiary) may engage in brokerage
and other securities transactions on behalf of a Portfolio
according to procedures adopted by the board and to the extent
consistent with applicable provisions of the federal securities
laws. The Advisor will use an American Express affiliate only if
(i) the Advisor determines that a Portfolio will receive prices and
executions at least as favorable as those offered by qualified
independent brokers performing similar brokerage and other services
for a Portfolio and (ii) the affiliate charges a Portfolio
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.
The Advisor may direct brokerage to compensate an affiliate. The
Advisor will receive research on South Africa from New Africa
Advisors, a wholly-owned subsidiary of Sloan Financial Group. The
Advisor owns 100% of IDS Capital Holdings Inc. which in turn owns
40% of Sloan Financial Group. New Africa Advisors will send
research to the Advisor and in turn the Advisor 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>
PAGE 47
Information about brokerage commissions paid by the Portfolios to
brokers affiliated with the Advisor for the fiscal period from
May 13, 1996 to July 31, 1996 for Growth and Growth Trends
Portfolios and for the period from Aug. 19, 1996 to Jan. 31, 1997
for Aggressive Growth Portfolio is contained in the following
table:
<TABLE><CAPTION>
Aggregate Percent of
Dollar Aggregate Dollar
Amount of Percent of Amount of
Nature Commissions Aggregate Transactions
of Paid to Brokerage Involving Payment
Portfolio Broker Affiliation Broker Commissions of Commissions
<S> <C> <C> <C> <C> <C>
Growth American (1) $189,172 16.93% N/A %
Enterprise
Investment
Services Inc.
Growth Trends American (1) 66,667 1.04 N/A
Enterprise
Investment
Services Inc.
Aggressive Growth American (1) 1,425 .83 1.34
Enterprise
Investment
Services Inc.
(1) Wholly-owned subsidiary of the Advisor.
</TABLE>
PERFORMANCE INFORMATION
The Funds may quote various performance figures to illustrate past
performance. Average annual total return used by the Funds will be
based on standardized methods of computing performance as required
by the SEC. An explanation of the methods used by the Funds to
compute performance follows below.
Average annual total return
A Fund may calculate average annual total return for certain
periods by finding the average annual compounded rates of return
over the period that would equate the initial amount invested to
the ending redeemable value, according to the following formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)
Aggregate total return
A Fund may calculate aggregate total return for certain periods
representing the cumulative change in the value of an investment in<PAGE>
PAGE 48
a 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, a 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.
On May 13, 1996, IDS Growth Fund and IDS New Dimensions Fund (the
IDS Funds), two open-end investment companies managed by the
Advisor, transferred all of their respective assets to Growth
Portfolio and Growth Trends Portfolio, respectively, in exchange
for units of the Portfolios. Also on May 13, 1996, Growth Fund and
Growth Trends Fund transferred all of their respective assets to
the corresponding Portfolio of the Trust in connection with the
commencement of their operations.
On March 20, 1995, the IDS Funds converted to a multiple class
structure pursuant to which three classes of shares are offered:
Class A, Class B and Class Y. Class A shares are sold with a 5%
sales charge, a 0.175% service fee and no 12b-1 fee. Performance
quoted by Growth Fund and Growth Trends Fund is based on
performance of the corresponding IDS Fund prior to March 20, 1995
and to Class A shares of the corresponding IDS Fund from March 20,
1995 through May 13, 1996 adjusted for differences in sales charge.
The historical performance for these periods has not been adjusted
for any difference between the estimated aggregate fees and
expenses of the Funds and historical fees and expenses of the IDS
Funds.
VALUING FUND SHARES
The value of an individual share is determined by using the net
asset value before shareholder transactions for the day and
dividing that figure by the number of shares outstanding at the end
of the previous day.
<PAGE>
PAGE 49
On the first business day following the end of the fiscal period
ended July 31, 1996 for Growth and Growth Trends Funds and the
period ended Jan. 31, 1997 for Special Growth Fund, the
computations looked like this:
<TABLE><CAPTION>
Net assets before Shares outstanding Net asset value
Fund Date shareholder transactions at end of previous day of one share
<S> <C> <C> <C> <C> <C> <C>
Growth Aug. 1, 1996 $23,475,200 divided by 993,449 equals $23.63
Growth Trends Aug. 1, 1996 24,956,901 1,326,084 18.82
Special Growth Feb. 3, 1997 987,491 173,854 5.68
</TABLE>
In determining net assets before shareholder transactions, the
securities held by a Fund's corresponding Portfolio are valued as
follows as of the close of business of the New York Stock Exchange
(the Exchange):
'Securities, except bonds other than convertibles, traded on a
securities exchange for which a last-quoted sales price is readily
available are valued at the last-quoted sales price on the exchange
where such security is primarily traded.
'Securities traded on a securities exchange for which a last-quoted
sales price is not readily available are valued at the mean of the
closing bid and asked prices, looking first to the bid and asked
prices on the exchange where the security is primarily traded and,
if none exist, to the over-the-counter market.
'Securities included in the NASDAQ National Market System are
valued at the last-quoted sales price in this market.
'Securities included in the NASDAQ National Market System for which
a last-quoted sales price is not readily available, and other
securities traded over-the-counter but not included in the NASDAQ
National Market System are valued at the mean of the closing bid
and asked prices.
'Futures and options traded on major exchanges are valued at the
last-quoted sales price on their primary exchange.
'Foreign securities traded outside the United States are generally
valued as of the time their trading is complete, which is usually
different from the close of the Exchange. Foreign securities
quoted in foreign currencies are translated into U.S. dollars at
the current rate of exchange. Occasionally, events affecting the
value of such securities may occur between such times and the close
of the Exchange that will not be reflected in the computation of a
Portfolio's net asset value. If events materially affecting the
value of such securities occur during such period, these securities
will be valued at their fair value according to procedures decided
upon in good faith by the board.
<PAGE>
PAGE 50
'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 maturity value on the
maturity date.
'Securities without a readily available market price, bonds other
than convertibles and other assets are valued at fair value as
determined in good faith by the board. The board is responsible
for selecting methods it believes provide fair value. When
possible, bonds are valued by a pricing service independent from
the Portfolio. If a valuation of a bond is not available from a
pricing service, the bond will be valued by a dealer knowledgeable
about the bond if such a dealer is available.
The Exchange, American Express Service Corporation (AESC) and each
of the Funds 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 FUNDS
A Fund's minimum initial investment requirement is $2,000 ($1,000
for Custodial Accounts, Individual Retirement Accounts and certain
other retirement plans). Subsequent investments of $100 or more
may be made. These minimum investment requirements may be changed
at any time and are not applicable to certain types of investors.
The Securities Investor Protection Corporation (SIPC) will provide
account protection, in an amount up to $500,000, for securities
including Fund shares (up to $100,000 protection for cash), held in
an Investment Management Account maintained with AESC. Of course,
SIPC account protection does not protect shareholders from share
price fluctuations.
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 Funds (or a Fund) to redeem shares for more
than seven days. Such emergency situations would occur if:
<PAGE>
PAGE 51
'The Exchange closes for reasons other than the usual weekend and
holiday closings or trading on the Exchange is restricted, or
'Disposal of a Portfolio's securities is not reasonably practicable
or it is not reasonably practicable for a Fund to determine the
fair value of its net assets, or
'The SEC, under the provisions of the 1940 Act, as amended,
declares a period of emergency to exist.
Should a Fund stop selling shares, the board members 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.
Redemptions by a Fund
Each Fund reserves the right to redeem, involuntarily, the shares
of any shareholder whose account has a value of less than a minimum
amount but only where the value of such account has been reduced by
voluntary redemption of shares. Until further notice, it is the
policy of the Funds not to exercise this right with respect to any
shareholder whose account has a value of $1,000 or more ($500 in
the case of Custodial accounts, IRAs and other retirement plans).
In any event, before a Fund redeems such shares and sends the
proceeds to the shareholder, it will notify the shareholder that
the value of the shares in the account is less than the minimum
amount and allow the shareholder 30 days to make an additional
investment in an amount which will increase the value of the
accounts to at least $1,000.
Redemptions in Kind
The Company has elected to be governed by Rule 18f-1 under the 1940
Act, which obligates each 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 that Fund at the
beginning of such period. Although redemptions in excess of this
limitation would normally be paid in cash, each Fund reserves the
right to make payments in whole or in part in securities or other
assets in case of an emergency, or if the payment of such
redemption in cash would be detrimental to the existing
shareholders of a Fund as determined by the board. In such
circumstances, the securities distributed would be valued as set
forth in the Prospectus. Should a Fund distribute securities, a
shareholder may incur brokerage fees or other transaction costs in
converting the securities to cash.
<PAGE>
PAGE 52
PAY-OUT PLANS
You can use any of several pay-out plans to redeem your investment
in regular installments at no extra cost. 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.
To start any of these plans, please submit an authorization form
supplied by American Express Financial Direct. For a copy, write
or call American Express Financial Direct, 1-800-AXP-SERV (TTY: 1-
800-710-5260), P.O. Box 59196, Minneapolis, MN 55459-0196. 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. 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 will have to send in a
separate redemption request for each pay-out. The Funds reserve
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 net asset value at regular intervals during the time
period you choose. This plan is designed to end in complete re-
demption of all shares in your account with the Fund 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
at net asset value 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 with the Fund.
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 your account with the Fund is closed.
<PAGE>
PAGE 53
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 with the Fund is $10,000 on
the payment date.
CAPITAL LOSS CARRYOVER
For federal income tax purposes, Growth Fund and Growth Trends Fund
had total capital loss carryovers of $2,120,986 and $1,395,162,
respectively, at July 31, 1996 that if not offset by subsequent
capital gains will expire in 2004.
It is unlikely that the board will authorize a distribution of any
net realized capital gains until the available capital loss
carryover has been offset or has expired except as required by
Internal Revenue Service rules.
TAXES
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 Funds' dividend
that is attributable to dividends the Funds have received from
domestic (U.S.) securities. For the fiscal period from May 13,
1996 to July 31, 1996, no distributions were paid for Growth Fund
or Growth Trends Fund. For the period from Aug. 19, 1996 to
Jan. 31, 1997, 100% of Special Growth Fund's net investment income
dividends qualified for the corporate deduction.
Capital gain distributions, if any, received by individual and
corporate shareholders, should be treated as long-term capital
gains regardless of how long they owned their shares. Short-term
capital gains earned by the Funds are paid to shareholders as part
of their ordinary income dividend and are taxable as ordinary
income, not capital gain.
You may be able to defer taxes on current income from a Fund by
investing through an IRA, 401(k) plan account or other qualified
retirement account. If you move all or part of a non-qualified
investment in a Fund to a qualified account, this type of exchange
is considered a sale of shares. You pay no sales charge, but the
exchange may result in a gain or loss for tax purposes, or excess
contributions under IRA or qualified plan regulations.
<PAGE>
PAGE 54
Under federal tax law, by the end of a calendar year a 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. A 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. Each Fund intends to comply with
federal tax law and avoid any excise tax.
A 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 Trust, on behalf of each Portfolio, has an Investment
Management Services Agreement with the Advisor. For managing the
assets of the Portfolios, the Advisor is paid a fee based upon the
following schedule:
Growth Portfolio and
Growth Trends Portfolio Aggressive Growth Portfolio
Assets Annual rate at Assets Annual rate at
(billions) each asset level (billions) each asset level
First $1.0 0.600% First $0.25 0.650%
Next 1.0 0.575 Next 0.25 0.625
Next 1.0 0.550 Next 0.50 0.600
Next 3.0 0.525 Next 1.0 0.575
Over 6.0 0.500 Next 1.0 0.550
Next 3.0 0.525
Over 6.0 0.500
On July 31, 1996, the daily rates applied to Growth and Growth
Trends Portfolios' net assets on an annual basis were equal to
0.584% and 0.535%, respectively. On Jan. 31, 1997, the daily rate
applied to Aggressive Growth Portfolio was 0.650%. The fee is
calculated for each calendar day on the basis of net assets at the
close of business two days prior to the day for which the
calculation is made.
<PAGE>
PAGE 55
Before the fee based on the asset charge is paid for Growth
Portfolio and Growth Trends Portfolio, it is increased or decreased
based on investment performance compared to Lipper Growth Fund
Index (the Index). Solely for purposes of calculating the
performance incentive adjustment, the Index is compared to the
performance of Class A shares of another fund that invests in the
Portfolio (the comparison fund). For Growth Portfolio and Growth
Trends Portfolio, the comparison funds are IDS Growth Fund and IDS
New Dimensions Fund, respectively. The adjustment, determined
monthly, will be calculated using the percentage point difference
between the change in the net asset value of one share of the
comparison fund and the change in the Index. The performance of
the comparison fund is measured by computing the percentage
difference between the opening and closing net asset value of one
share, as of the last business day of the period selected for
comparison, adjusted for dividend or capital gain distributions
which are treated as reinvested at the end of the month during
which the distribution was made. The performance of the Index for
the same period is established by measuring the percentage
difference between the beginning and ending Index for the
comparison period. The performance is adjusted for dividend or
capital gain distributions (on the securities which comprise the
Index), which are treated as reinvested at the end of the month
during which the distribution was made. One percentage point will
be subtracted from the calculation to help assure that incentive
adjustments are attributable to the Advisor's management abilities
rather than random fluctuations and the result multiplied by 0.01%.
That number will be multiplied times the Portfolio's average net
assets for the comparison period and then divided by the number of
months in the comparison period to determine the monthly
adjustment.
Where the comparison fund performance exceeds that of the Index,
the base fee will be increased. Where the performance of the Index
exceeds the performance of the comparison fund, the base fee will
be decreased. The maximum monthly increase or decrease will be
0.12% of average net assets on an annual basis.
The 12 month comparison period rolls over with each succeeding
month, so that it always equals 12 months, ending with the month
for which the performance adjustment is being computed. For the
fiscal period from May 13, 1996 to July 31, 1996, the adjustment
increased the fee by $330,001 for Growth Portfolio and by
$1,130,056 for Growth Trends Portfolio. The amounts are allocated
among the funds investing in Growth and Growth Trends Portfolios.
The management fee is paid monthly. For the fiscal period from May
13, 1996 to July 31, 1996, the total amount paid was $3,271,780 for
Growth Portfolio and $11,544,754 for Growth Trends Portfolio. For
the period from Aug. 19, 1996 to Jan 31, 1997, the total amount
paid was $217,645 for Aggressive Growth Portfolio.
<PAGE>
PAGE 56
Under the Agreement, each Portfolio also pays taxes, brokerage
commissions and nonadvisory expenses, which include custodian fees;
audit and certain legal fees; fidelity bond premiums; registration
fees for units; office expenses; consultants' fees; compensation of
board members, officers and employees; corporate filing fees;
organizational expenses; expenses incurred in connection with
lending portfolio securities; and expenses properly payable by the
Portfolios, approved by the board. For the fiscal period from
May 13, 1996 to July 31, 1996, Growth Portfolio and Growth Fund
paid nonadvisory expenses of $116,459 and Growth Trends Portfolio
and Growth Trends Fund paid nonadvisory expenses of $350,475. For
the period from Aug. 19, 1996 to Jan. 31, 1997, Aggressive Growth
Portfolio and Special Growth Fund paid nonadvisory expenses of
$34,087.
Administrative Services Agreement
The Company, on behalf of each Fund, has an Administrative Services
Agreement with the Advisor. Under this agreement, each Fund pays
the Advisor for providing administration and accounting services.
The fee is payable from the assets of each Fund and is calculated
as follows:
Growth Fund and
Growth Trends Fund Special Growth Fund
Assets Annual rate at Assets Annual rate at
(billions) each asset level (billions) each asset level
First $1.0 0.050% First $0.25 0.060%
Next 1.0 0.045 Next 0.25 0.055
Next 1.0 0.040 Next 0.50 0.050
Next 3.0 0.035 Next 1.0 0.045
Over 6.0 0.030 Next 1.0 0.040
Next 3.0 0.035
Over 6.0 0.030
On July 31, 1996, the daily rates applied to Growth and Growth
Trends Funds' net assets on an annual basis were equal to 0.05%.
For the period from Aug. 19, 1996 to Jan. 31, 1997, the daily rate
applied to Special Growth Fund was 0.06%. 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. For the fiscal period from May 13, 1996 to
July 31, 1996, Growth and Growth Trends Funds paid fees of $2,600
and $2,683, respectively. For the period from Aug. 19, 1996 to
Jan. 31, 1997, Special Growth Fund paid fees of $206.
Under the agreement, each Fund also pays taxes; audit and certain
legal fees; registration fees for shares; office expenses;
consultant's fees; compensation of board members, officers and
employees; corporate filing fees; organizational expenses; and
expenses properly payable by each Fund approved by the board.
<PAGE>
PAGE 57
Transfer Agency Agreement
The Company, on behalf of each Fund, has a Transfer Agency
Agreement with the Advisor. This agreement governs the
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 Funds' shares. The
fee is determined by multiplying the number of shareholder accounts
at the end of the day by a rate of $20 per year and dividing by the
number of days in the year. The fees paid to the Advisor may be
changed from time to time upon agreement of the parties without
shareholder approval. For the fiscal period from May 13, 1996 to
July 31, 1996, Growth and Growth Trends Funds paid fees of $104 and
$72, respectively. For the period from Aug. 19, 1996 to Jan. 31,
1997, Special Growth Fund paid fees of $315.
Placement Agency Agreement
Pursuant to a Placement Agency Agreement, the Distributor acts as
placement agent of the units of the Trust.
Plan and Agreement of Distribution/Distribution Agreement
To help the Distributor defray the costs of distribution and
servicing, the Company and the Distributor have entered into a Plan
and Agreement of Distribution (Plan). These costs cover almost all
aspects of distributing shares of the Funds. Under the Plan, the
Distributor is paid a fee at an annual rate of 0.25% of each Fund's
average daily net assets.
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 the expenditures were made. The Plan and
any agreement related to it may be terminated at any time with
respect to a Fund by vote of a majority of board members who are
not interested persons of the Company and have no direct or
indirect financial interest in the operation of the Plan or in any
agreement related to the Plan, by vote of a majority of the
outstanding voting securities of a Fund or by the Distributor. The
Plan (or any agreement related to it) will terminate in the event
of its assignment, as that term is defined in the 1940 Act, as
amended. The Plan may not be amended to increase the amount to be
spent for distribution without shareholder approval, and all
material amendments to the Plan must be approved by a majority of
the board members, including a majority of the board members who
are not interested persons of the Company and who do not have a <PAGE>
PAGE 58
financial interest in the operation of the Plan or any agreement
related to it. The selection and nomination of such disinterested
board members is the responsibility of such 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 period from May 13, 1996
to July 31, 1996, Growth and Growth Trends Funds paid fees of
$12,999 and $13,414, respectively. For the period from Aug. 19,
1996 to Jan. 31, 1997, Special Growth Fund paid fees of $858.
Custodian Agreement
The Trust'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. Each
Fund also retains the custodian pursuant to 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 Trust pays the custodian a maintenance charge per
Portfolio and a charge per transaction in addition to reimbursing
the custodian's out-of-pocket expenses.
Total fees and expenses
For the fiscal period from May 13, 1996 to July 31, 1996, Growth
and Growth Trends Funds paid total fees and nonadvisory expenses of
$68,418 and $70,812, respectively. For the period from Aug. 19,
1996 to Jan. 31, 1997, Special Growth Fund paid total fees and
nonadvisory expenses of $4,814. The Advisor and the Distributor
have agreed to waive certain fees and to absorb certain other Fund
expenses until July 31, 1997. Under this agreement, Growth and
Growth Trends Funds' total expenses will not exceed 1.30% and
Special Growth Fund's total expenses will not exceed 1.40%
ORGANIZATIONAL INFORMATION
Each Fund is a series of Strategist Growth Fund, Inc., an open-end
management investment company, as defined in the Investment Company
Act of 1940. The Company was incorporated on Sept. 1, 1995 in
Minnesota. The Company's headquarters are at IDS Tower 10,
Minneapolis, MN 55440-0010.
BOARD MEMBERS AND OFFICERS
The following is a list of the Company's board members who are
board members of all 15 funds in the Strategist Fund Group. All
shares of the Funds have cumulative voting rights with respect to
the election of board members.
<PAGE>
PAGE 59
Directors of Strategist Fund Group
Rodney P. Burwell
Born in 1939
Xerxes Corporation
7901 Xerxes Ave. S.
Minneapolis, MN
Chairman, Xerxes Corporation (fiberglass storage tanks). Director,
Children's Broadcasting Network, Vaughn Communications, Sunbelt
Nursery Group, Fairview Corporation.
William J. Heron Jr.*
Born in 1941
American Express Company
World Financial Center
New York, NY
Vice president of all funds in the Strategist Fund Group.
President of American Express Financial Direct since 1995. Chief
executive officer, Swig Investment Company from 1993 to 1995.
Group executive, Citicorp/Citibank from 1985 to 1993.
Jean B. Keffeler
Born in 1945
The Keffeler Company
3033 Excelsior Blvd.
Minneapolis, MN
President, The Keffeler Company (management advisory services).
Director, National Computer Systems, American Paging Systems, Inc.
Thomas R. McBurney
Born in 1938
McBurney Management Advisors
1800 International Centre
900 2nd Ave. S.
Minneapolis, MN
President, McBurney Management Advisors. Director, The Valspar
Corporation (paints), Wenger Corporation, Security American
Financial Enterprises, Allina, Space Center Enterprises,
Greenspring Corporation.
James A. Mitchell*
Born in 1941
2900 IDS Tower
Minneapolis, MN
President of all funds in the Strategist Fund Group. Executive
vice president and director of the Advisor. Chairman of the board
and chief executive officer of IDS Life Insurance Company.
Director, IDS Life Funds.
<PAGE>
PAGE 60
*Interested person of the Company by reason of being an officer,
board member, employee and/or shareholder of the Advisor or
American Express.
In addition to Mr. Mitchell, who is president, and Mr. Heron, who
is vice president, the Funds' other officers are:
Eileen J. Newhouse
Born in 1955
IDS Tower 10
Minneapolis, MN
Secretary of all funds in the Strategist Fund Group. Counsel of
the Advisor.
Melinda S. Urion
Born in 1953
IDS Tower 10
Minneapolis, MN
Treasurer of all funds in the Strategist Fund Group. Director,
senior vice president and chief financial officer of the Advisor.
Director and executive vice president and controller of IDS Life
Insurance Company.
Members of the board who are not officers of the Advisor or an
affiliate receive an annual fee of $1,000 for Growth Fund and
$1,000 for Growth Trends Fund. No fee will be paid for Special
Growth Fund until the Fund reaches $20 million in assets. Once the
assets of all funds in the Strategist Fund Group reach $100
million, members of the board who are not officers of the Advisor
or an affiliate also will receive a fee of $1,000 for attendance at
board meetings. Board members serving more than one fund will
receive an aggregate of $1,000 whether attending one or more
meetings held on the same day. The cost of the fee will be shared
by the funds served by the director.
During the fiscal period from May 13, 1996 to July 31, 1996, the
members of the board for Growth and Growth Trends Funds received no
compensation. On July 31, 1996, Growth and Growth Trends Funds'
board members and officers as a group owned less than 1% of the
outstanding shares of each Fund. During the period from Aug. 19,
1996 to Jan. 31, 1997, the members of the board for Special Growth
Fund received no compensation. On Jan. 31, 1997, Special Growth
Fund's board members and officers as a group owned less than 1% of
the outstanding shares of the Fund.
The following is a list of the Trust'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 units have cumulative voting rights with respect to
the election of board members.
<PAGE>
PAGE 61
Trustees of the Preferred Master Trust Group
H. Brewster Atwater, Jr.
Born in 1941
4900 IDS Tower
Minneapolis, MN
Former Chairman and chief executive officer, General Mills, Inc.
Director, Merck & Co., Ic. and Darden Restaurants, Inc.
Lynne V. Cheney'
Born in 1941
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.
Distinguished Fellow AEI. Former Chair of National Endowment of
the Humanities. Director, The Reader's Digest Association Inc.,
Lockheed-Martin, Union Pacific Resources and FPL Group, Inc.
(holding company for Florida Power and Light).
William H. Dudley**
Born in 1932
2900 IDS Tower
Minneapolis, MN
Executive vice president and director of the Advisor.
Robert F. Froehlke+
Born in 1922
1201 Yale Place
Minneapolis, MN
Former president of all funds in the IDS MUTUAL FUND GROUP.
Director, the ICI Mutual Insurance Co., Institute for Defense
Analyses, Marshall Erdman and Associates, Inc. (architectural
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.
David R. Hubers+**
Born in 1943
2900 IDS Tower
Minneapolis, MN
President, chief executive officer and director of the Advisor.
Previously, senior vice president, finance and chief financial
officer of the Advisor.
Heinz F. Hutter+'
Born in 1929
P.O. Box 2187
Minneapolis, MN
Former president and chief operating officer, Cargill, Incorporated
(commodity merchants and processors).<PAGE>
PAGE 62
Anne P. Jones
Born in 1935
5716 Bent Branch Rd.
Bethesda, MD
Attorney and telecommunications consultant. Former partner, law
firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.
Melvin R. Laird
Born in 1922
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.
Senior counsellor for national and international affairs, The
Reader's Digest Association, Inc. Former nine-term U.S.
Congressman, U.S. Secretary of Defense and Presidential Counsellor.
Director, Metropolitan Life Insurance Co., The Reader's Digest
Association, Inc., Science Applications International Corp.,
Wallace Reader's Digest Funds and Public Oversight Board (SEC
Practice Section, American Institute of Certified Public
Accountants).
William R. Pearce+*
Born in 1927
901 S. Marquette Ave.
Minneapolis, MN
President and director, Board Services Corporation (provides
administrative services to boards). Director, trustee and officer
of registered investment companies whose boards are served by the
company. Former vice chairman of the board, Cargill, Incorporated
(commodity merchants and processors).
Alan K. Simpson
Born in 1931
1201 Sunshine Ave.
Cody, WY
Former three-term United States Senator for Wyoming. Former
Assistant Republican Leader, U.S. Senate. Director, PacifiCorp
(electric power).
Edson W. Spencer+
Born in 1926
4900 IDS Center
80 S. 8th St.
Minneapolis, MN
President, Spencer Associates Inc. (consulting). Former chairman
of the board and chief executive officer, Honeywell Inc. Director,
Boise Cascade Corporation (forest products). Member of
International Advisory Council of NEC (Japan).
<PAGE>
PAGE 63
John R. Thomas**
Born in 1937
2900 IDS Tower
Minneapolis, MN
Senior vice president and director of the Advisor.
Wheelock Whitney+
Born in 1926
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN
Chairman, Whitney Management Company (manages family assets).
C. Angus Wurtele'
Born in 1934
Valspar Corporation
Suite 1700
Foshay Tower
Minneapolis, MN
Chairman of the board and retired chief executive officer, The
Valspar Corporation (paints). Director, Bemis Corporation
(packaging), Donaldson Company (air cleaners & mufflers) and
General Mills, Inc. (consumer foods).
+ Member of executive committee.
' Member of joint audit committee.
* Interested person of the Trust by reason of being an officer and
employee of the Trust.
**Interested person of the Trust by reason of being an officer,
board member, employee and/or shareholder of the Advisor or
American Express.
The board also has appointed officers who are responsible for day-
to-day business decisions based on policies it has established.
In addition to Mr. Pearce, who is president, the Trust's other
officers are:
Leslie L. Ogg
Born in 1938
901 S. Marquette Ave.
Minneapolis, MN
Vice president, treasurer and corporate secretary of Board Services
Corporation. Vice president, general counsel and secretary for the
Trust.
<PAGE>
PAGE 64
Officers who are also officers and/or employees of the Advisor:
Peter J. Anderson
Born in 1942
IDS Tower 10
Minneapolis, MN
Director and senior vice president-investments of the Advisor.
Vice president-investments for the Trust.
Melinda S. Urion
Born in 1953
IDS Tower 10
Minneapolis, MN
Director, senior vice president and chief financial officer of the
Advisor. Director, executive vice president and controller of IDS
Life Insurance Company. Treasurer for the Trust.
Members of the board who are not officers of a Portfolio or of the
Advisor receive an annual fee of $1,500 for Growth Portfolio,
$5,100 for Growth Trends Portfolio and $100 for Aggressive Growth
Portfolio. Aggressive Growth Portfolio will pay no fees and
expenses to board members until the assets of the Portfolio reach
$20 million. They also receive attendance and other fees. These
fees include for each day in attendance at meetings of the board,
$50; for meetings of the Contracts and Investment Review
Committees, $50; meetings of the Audit Committee, $25; for
traveling from out-of-state, $8; and as Chair of the Contracts
Committee, $90. Expenses for attending meetings are reimbursed.
During the fiscal period from May 13, 1996 to July 31, 1996, the
members of the board for Growth and Growth Trends Portfolios, for
attending up to 5 meetings, received the following compensation:
<TABLE><CAPTION>
Compensation Table
for Growth Portfolio
Pension or Estimated Total cash
Aggregate Retirement annual compensation from
compensation benefits benefit the Preferred Master
from the accrued as upon Trust Group and IDS
Board member Portfolio Portfolio expenses retirement MUTUAL FUND GROUP
<S> <C> <C> <C> <C>
Lynne V. Cheney $163.34 $ 0 $ 0 $69,250.06
Robert F. Froehlke 165.34 0 0 69,550.06
Anne P. Jones 163.34 0 0 70,750.06
Melvin R. Laird 175.34 0 0 72,850.06
E.W. Spencer 175.34 0 0 75,050.06
Wheelock Whitney 175.34 0 0 70,300.06
C. Angus Wurtele 143.34 0 0 66,750.06
<PAGE>
PAGE 65
Compensation Table
for Growth Trends Portfolio
Pension or Estimated Total cash
Aggregate Retirement annual compensation from
compensation benefits benefit the Preferred Master
from the accrued as upon Trust Group and IDS
Board member Portfolio Portfolio expenses retirement MUTUAL FUND GROUP
Lynne V. Cheney $592.50 $ 0 $ 0 $69,250.06
Robert F. Froehlke 594.50 0 0 69,550.06
Anne P. Jones 592.50 0 0 70,750.06
Melvin R. Laird 604.50 0 0 72,850.06
E.W. Spencer 604.50 0 0 75,050.06
Wheelock Whitney 604.50 0 0 70,300.06
C. Angus Wurtele 572.50 0 0 66,750.06
During the period from Aug. 19, 1996 to Jan. 31, 1997, the members
of the board for Aggressive Growth Portfolio, for attending up to
12 meetings, received the following compensation:
Compensation Table
for Aggressive Growth Portfolio
Pension or Estimated Total cash
Aggregate Retirement annual compensation from
compensation benefits benefit the Preferred Master
from the accrued as upon Trust Group and IDS
Board member Portfolio Portfolio expenses retirement MUTUAL FUND GROUP
H. Brewster Atwater, Jr. $275 $0 $0 $27,000
(part of year)
Lynne V. Cheney 375 0 0 36,900
Robert F. Froehlke 465 0 0 41,100
Heinz F. Hutter 408 0 0 38,000
Anne P. Jones 400 0 0 38,300
Melvin R. Laird 341 0 0 35,100
Alan K. Simpson 109 0 0 10,700
(part of year)
Edson W. Spencer 433 0 0 39,700
Wheelock Whitney 458 0 0 41,100
C. Angus Wurtele 458 0 0 41,000
</TABLE>
During the fiscal period from May 13, 1996 to July 31, 1996, no
board member or officer earned more than $60,000 from Growth
Portfolio and Growth Trends Portfolio, respectively. All board
members and officers as a group earned $1,640 from Growth Portfolio
and $10,250 from Growth Trends Portfolio. During the period from
Aug. 19, 1996 to Jan. 31, 1997, no board member or officer earned
more than $60,000 from Aggressive Growth Portfolio. All board
members and officers as a group earned $2,813 from Aggressive
Growth Portfolio.
PRINCIPAL HOLDERS OF SECURITIES
As of Jan. 31, 1997, George L. Farr held 21.89% of Special Growth
Fund shares. Additional information on principal holders of
securities may be obtained by writing to American Express Financial
Direct, P.O. Box 59196, Minneapolis, MN 55459-0196.
<PAGE>
PAGE 66
INDEPENDENT AUDITORS
Growth and Growth Trends Funds' and corresponding Portfolios'
financial statements contained in the Annual Report to shareholders
for the fiscal period ended July 31, 1996 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 Funds.
FINANCIAL STATEMENTS
The Independent Auditors' Report and Financial Statements,
including Notes to the Financial Statements and the Schedule of
Investments in Securities, contained in the 1996 Annual Report to
shareholders (which has been audited), pursuant to Section 30(d) of
the 1940 Act, as amended, are hereby incorporated in this SAI by
reference. The Financial Statements, including Notes to the
Financial Statements and the Schedule of Investments in Securities,
contained in the 1997 Semi-Annual Report to shareholders
(unaudited), pursuant to Section 30(d) of the 1940 Act, as amended,
are hereby incorporated in this SAI by reference. No other portion
of the Annual or Semi-Annual Report, however, is incorporated by
reference.
PROSPECTUS
The prospectus, dated April 1, 1997, is hereby incorporated in this
SAI by reference.
<PAGE>
PAGE 67
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>
PAGE 68
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.
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.<PAGE>
PAGE 69
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 Portfolio's objectives and policies. When assessing the
risk involved in each non-rated security, the Portfolio will
consider the financial condition of the issuer or the protection
afforded by the terms of the security.
<PAGE>
PAGE 70
APPENDIX B
FOREIGN CURRENCY TRANSACTIONS
Since investments in foreign countries usually involve currencies
of foreign countries, and since a Portfolio may hold cash and cash-
equivalent investments in foreign currencies, the value of a
Portfolio'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, a Portfolio may incur costs in
connection with conversions between various currencies.
Spot Rates and Forward Contracts. A Portfolio 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.
A Portfolio may enter into forward contracts to settle a security
transaction or handle dividend and interest collection. When a
Portfolio 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, a Portfolio 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.
A Portfolio also may enter into forward contracts when management
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
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. A Portfolio will not enter
into such forward contracts or maintain a net exposure to such
contracts when consummating the contracts would obligate a
Portfolio to deliver an amount of foreign currency in excess of the
value of securities or other assets denominated in that currency.
<PAGE>
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A Portfolio will designate cash or securities in an amount equal to
the value of a Portfolio'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 a
Portfolio's commitments on such contracts.
At maturity of a forward contract, a Portfolio 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 a Portfolio retains a security and engages in an offsetting
transaction, a Portfolio will incur a gain or a loss (as described
below) to the extent there has been movement in forward contract
prices. If a Portfolio 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 a
Portfolio enters into a forward contract for selling foreign
currency and the date it enters into an offsetting contract for
purchasing the foreign currency, a Portfolio 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, a Portfolio 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 portfolio
securities will be at the expiration of a contract. Accordingly,
it may be necessary for a Portfolio 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 a Portfolio 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
security if its market value exceeds the amount of foreign currency
a Portfolio is obligated to deliver.
A Portfolio's dealing in forward contracts will be limited to the
transactions described above. This method of protecting the value
of securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities.
It simply establishes a rate of exchange that can be achieved at
some point in time. Although such forward contracts tend to
minimize the risk of loss due to a decline in value of hedged
currency, they tend to limit any potential gain that might result
should the value of such currency increase.
Although a Portfolio 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 unitholders should be aware of currency <PAGE>
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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 Portfolio at one rate, while offering a
lesser rate of exchange should the Portfolio desire to resell that
currency to the dealer.
Options on Foreign Currencies. A Portfolio 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, a Portfolio may buy put options on the
foreign currency. If the value of the currency does decline, a
Portfolio 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 a
Portfolio 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, a Portfolio 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.
A Portfolio may write options on foreign currencies for the same
types of hedging purposes. For example, when a Portfolio
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
a Portfolio 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, a
Portfolio also may be required to forego all or a portion of the
benefits which might otherwise have been obtained from favorable
movements on exchange rates.
All options written on foreign currencies will be covered. An
option written on foreign currencies is covered if a Portfolio
holds currency sufficient to cover the option or has an absolute
and immediate right to acquire that currency without additional <PAGE>
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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 a Portfolio 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.
Foreign Currency Futures and Related Options. A Portfolio 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 <PAGE>
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margin requirements) and are standardized as to contract size and
delivery date. Most currency futures call for payment of delivery
in U.S. dollars. A Portfolio 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 a Portfolio's investments. A
currency hedge, for example, should protect a Yen-denominated bond
against a decline in the Yen, but will not protect a Portfolio
against price decline if the issuer's creditworthiness
deteriorates. Because the value of a Portfolio'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 a Portfolio's
investments denominated in that currency over time.
A Portfolio will hold securities or other options or futures
positions whose values are expected to offset its obligations. A
Portfolio will not enter into an option or futures position that
exposes a Portfolio to an obligation to another party unless it
owns either (i) an offsetting position in securities or (ii) cash,
receivables and short-term debt securities with a value sufficient
to cover its potential obligations.
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APPENDIX C
OPTIONS AND STOCK INDEX FUTURES CONTRACTS
A Portfolio may buy or write options traded on any U.S. or foreign
exchange or in the over-the-counter market. A Portfolio may enter
into stock index futures contracts traded on any U.S. or foreign
exchange. A Portfolio 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 Advisor believes a
liquid secondary market exists for the options and only from
dealers and institutions the Advisor 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, a
Portfolio 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 a Portfolio and its
unitholders by improving a Portfolio's liquidity and by helping to
stabilize the value of its net assets.
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 <PAGE>
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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 Portfolio 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 a Portfolio for investment
purposes. Options permit a Portfolio to experience the change in
the value of a security with a relatively small initial cash
investment.
The risk a Portfolio assumes when it buys an option is the loss of
the premium. To be beneficial to a Portfolio, 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. A Portfolio will write covered options
when it feels it is appropriate and will follow these guidelines:
'All options written by a Portfolio will be covered. For covered
call options if a decision is made to sell the security, a
Portfolio will attempt to terminate the option contract through a
closing purchase transaction.
'A Portfolio 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.).
'A Portfolio will write options only as permitted under federal or
state laws or regulations, such as those that limit the amount of
total assets subject to the options. While no limit has been set
by a Portfolio, it will conform to the requirements of those
states.
Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since a Portfolio
is taxed as a regulated investment company under the Internal
Revenue Code, any gains on options and other securities held less
than three months must be limited to less than 30% of its annual
gross income.
If a covered call option is exercised, the security is sold by a
Portfolio. The premium received upon writing the option is added <PAGE>
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to the proceeds received from the sale of the security. A
Portfolio 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 a Portfolio 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, a Portfolio will gain $500 x (154-150) or
$2,000. If a Portfolio 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, a
Portfolio will lose $500 x (152-150) or $1,000.
Unlike the purchase or sale of an equity security, no price would
be paid or received by a Portfolio upon entering into futures
contracts. However, a Portfolio would be required to deposit with <PAGE>
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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 a Portfolio 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 a
Portfolio 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 a Portfolio 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, a Portfolio
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, a Portfolio would be required to make a
variation margin payment to the broker equal to the decline in
value.
How a Portfolio Would Use Stock Index Futures Contracts. A
Portfolio intends to use stock index futures contracts and related
options for hedging and not for speculation. Hedging permits a
Portfolio to gain rapid exposure to or protect itself from changes
in the market. For example, a Portfolio 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, a
Portfolio 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.
A Portfolio may enter into contracts with respect to any stock
index or sub-index. To hedge a Portfolio successfully, however, a
Portfolio must enter into contracts with respect to indexes or sub-
indexes whose movements will have a significant correlation with
movements in the prices of securities.
Special Risks of Transactions in Stock Index Futures Contracts.
1. Liquidity. A Portfolio 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 a
Portfolio. A Portfolio may close its positions by taking opposite <PAGE>
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positions. Final determinations of variation margin are then made,
additional cash as required is paid by or to a Portfolio, and a
Portfolio 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 a Portfolio 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, a
Portfolio 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.
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, a
Portfolio could lose money on the contracts and also experience a
decline in the value of its securities. While this could occur,
the Advisor believes that over time the value of securities 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
securities sought to be hedged. It also is possible that if a <PAGE>
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Portfolio has hedged against a decline in the value of the stocks
held in its Portfolio and stock prices increase instead, a
Portfolio 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 a Portfolio 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. A Portfolio 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, a Portfolio 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 Portfolio 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. A Portfolio will not purchase options
unless the market for such options has developed sufficiently, so
that the risks in connection with options are not greater than the
risks in connection with stock index futures contracts transactions
themselves. Compared to using futures contracts, purchasing
options involves less risk to a Portfolio 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 a Portfolio than
using a futures contract, such as when there is no movement in the
level of the stock index.
<PAGE>
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TAX TREATMENT. As permitted under federal income tax laws, a
Portfolio 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 a Portfolio 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, a Portfolio 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 a Portfolio's ability to engage in futures contracts and
related options transactions. For example, at the close of each
quarter of a Portfolio's taxable year, at least 50% of the value of
its assets must consist of cash, government securities and other
securities, subject to certain diversification requirements. Less
than 30% of its gross income must be derived from sales of
securities held less than three months.
The IRS has ruled publicly that an exchange-traded call option is a
security for purposes of the 50%-of-assets test and that its issuer
is the issuer of the underlying security, not the writer of the
option, for purposes of the diversification requirements. In order
to avoid realizing a gain within the three-month period, a
Portfolio may be required to defer closing out a contract beyond
the time when it might otherwise be advantageous to do so. A
Portfolio also may be restricted in purchasing put options for the
purpose of hedging underlying securities because of applying the
short sale holding period rules with respect to such underlying
securities.
Accounting for futures contracts will be according to generally
accepted accounting principles. Initial margin deposits will be
recognized as assets due from a broker (a Portfolio'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>
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APPENDIX D
MORTGAGE-BACKED SECURITIES
A mortgage pass through certificate is one that represents an
interest in a pool, or group, of mortgage loans assembled by the
Government National Mortgage Association (GNMA), Federal Home Loan
Mortgage Corporation (FHLMC), Federal National Mortgage Association
(FNMA) or non-governmental entities. In pass-through certificates,
both principal and interest payments, including prepayments, are
passed through to the holder of the certificate. Prepayments on
underlying mortgages result in a loss of anticipated interest, and
the actual yield (or total return) to a Portfolio, 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 a Portfolio.
Stripped Mortgage-Backed Securities. A Portfolio 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. A Portfolio 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. A Portfolio would buy or sell covered MBS call
spread options in situations where mortgage-backed securities are
expected to underperform like-duration Treasury securities.
<PAGE>
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APPENDIX E
DOLLAR-COST AVERAGING
A technique that works well for many investors is one that
eliminates random buy and sell decisions. One such system is
dollar-cost averaging. Dollar-cost averaging involves building a
portfolio through the investment of fixed amounts of money on a
regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility
of the financial markets. By using this strategy, more shares will
be purchased when the price is low and less when the price is high.
As the accompanying chart illustrates, dollar-cost averaging tends
to keep the average price paid for the shares lower than the
average market price of shares purchased, although there is no
guarantee.
While this technique does not ensure a profit and does not protect
against a loss if the market declines, it is an effective way for
many shareholders who can continue investing on a regular basis
through changing market conditions, including times when the price
of their shares falls or the market declines, to accumulate shares
in a Fund to meet long-term goals.
Dollar-cost averaging
___________________________________________________________________
Regular Market Price Shares
Investment of a Share Acquired
$100 $6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
$500 $25.00 103.4
Average market price of a share over 5 periods:
$5.00 ($25.00 divided by 5).
The average price you paid for each share:
$4.84 ($500 divided by 103.4).
<PAGE>
PAGE 84
Financial statements
Statements of assets and liabilities
Strategist Special Growth Fund
Jan. 31, 1997
Assets
(Unaudited)
Investment in Aggressive Growth Portfolio (Note 1) $994,866
Expense receivable from AEFC 261
_____________
Total assets 995,127
_____________
Liabilities
Accrued distribution fee 7
Other accrued expenses 5,334
_____________
Total liabilities 5,341
_____________
Net assets applicable to outstanding capital stock $989,786
=============
Represented by
Capital stock -- authorized 3,000,000,000 shares per Fund of $ .01
par value; outstanding 173,854 shares $ 1,739
Additional paid-in capital 895,468
Undistributed net investment income 56
Accumulated net realized gain (Note 1) 71,399
Unrealized appreciation 21,124
_____________
Total -- representing net assets applicable to
outstanding capital $989,786
=============
Net asset value per share of outstanding
capital stock $ 5.69
See accompanying notes to financial statements.
<PAGE>
PAGE 85
Financial statements
Statements of operations
Strategist Special Growth Fund
For the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Investment income
(Unaudited)
Income:
Dividends $ 3,975
Interest 2,312
_____________
Total income 6,287
_____________
Expenses (Note 2):
Distribution fee 858
Transfer agency fee 315
Administrative services fees and expenses 206
Postage 4,219
Registration fees 13,065
Reports to shareholders 2,693
Audit fees 785
Administrative 244
Other 2,913
_____________
Total feeder expenses 25,298
Expenses allocated from the Portfolio 2,654
_____________
Total expenses 27,952
Less expenses reimbursed by AEFC (23,138)
_____________
Total net expenses 4,814
_____________
Investment income -- net 1,473
_____________
Realized and unrealized gain -- net
Net realized gain on security transactions 69,789
Net realized gain on financial futures contracts 2,610
_____________
Net realized gain on investments 72,399
Net change in unrealized appreciation or depreciation 21,124
_____________
Net gain on investments 93,523
_____________
Net increase in net assets resulting from operations $94,996
=============
See accompanying notes to financial statements.
<PAGE>
PAGE 86
Financial statements
Statement of changes in net assets
Strategist Special Growth Fund
For the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Operations (Unaudited)
Investment income -- net $ 1,473
Net gain on investments 72,399
Net change in unrealized appreciation or
depreciation of investment 21,124
_____________
Net decrease in net assets resulting from operations 94,996
_____________
Distributions to shareholders from:
Net investment income (1,417)
Net realized gain (1,000)
_____________
Total distributions (2,417)
Capital share transactions (Note 3)
Proceeds from sales 912,577
Reinvestment of distributions at net asset value 2,417
Payments for redemptions (18,787)
_____________
Increase in net assets from capital share transactions 896,207
_____________
Total increase in net assets $ 988,786
Net assets at beginning of period (Note 1) 1,000
_____________
Net assets at end of period (including undistributed
net investment income of $56) $ 989,786
=============
See accompanying notes to financial statements.
<PAGE>
PAGE 87
Notes to financial statements
Strategist Special Growth Fund
(Unaudited as to Jan. 31, 1997)
___________________________________________________________________
1. Summary of significant accounting policies
The Fund is a series of capital stock within Strategist Growth
Fund, Inc. and is registered under the Investment Company Act of
1940 (as amended) as a diversified, open-end management investment
company. On Aug. 16, 1996, American Express Financial Corporation
(AEFC) invested $1,000 in Special Growth Fund that represented 200
shares. Operations commenced on Aug. 19, 1996 for Special Growth
Fund.
Investments in Portfolios
The Fund seeks to achieve its investment objectives by investing
all of its net investable assets in the Aggressive Growth Portfolio
(the Portfolio), a series of Growth Trust, an open-end investment
company that has the same objectives as the Fund. The Portfolio
invests primarily in the equity securities of companies that
comprise the S&P 500. The Fund records daily its share of the
Portfolio's income, expenses and realized and unrealized gains and
losses. The financial statements of the Portfolio are included
elsewhere in this report and should be read in conjunction with the
Fund's financial statements.
The Fund records its investment in the Portfolio at value that is
equal to the Fund's proportionate ownership interest in the net
assets of the Portfolio. As of Jan. 31, 1997, the percentage of the
Portfolio owned by the Fund was 0.69%. Valuation of securities held
by the Portfolio is discussed in Note 1 of the Portfolio's "Notes
to financial statements," which are included elsewhere in this
report.
Organizational costs
The Fund incurred organizational expenses in connection with the
start-up and initial registration of the Fund. These costs will be
amortized over 60 months on a straight-line basis beginning with
the commencement of operations. If any or all of the shares held by
AEFC representing initial capital of the Fund are redeemed during
the amortization period, the redemption proceeds will be reduced by
the pro rata portion of the unamortized organizational cost
balance.
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.<PAGE>
PAGE 88
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 the shareholders, no
provision for income or excise taxes is required.
Net investment income (loss) and net realized gains (losses)
allocated from the Portfolio may differ for financial statement and
tax purposes primarily because of the deferral of losses on certain
futures contracts, the recognition of certain foreign currency
gains (losses) as ordinary income (loss) for tax purposes, and
losses deferred due to wash sale transactions. The character of
distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization
for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized
gains (losses) were recorded by the Fund.
Dividends to shareholders
An annual dividend declared and paid at the end of the calendar
year from net investment income is reinvested in additional shares
of the Fund at net asset value or payable in cash. Capital gains,
when available, are distributed along with the income dividend.
Other
As of Jan. 31, 1997, AEFC owned 100,067 shares of the Fund.
___________________________________________________________________
2. Expenses and sales charges
In addition to the expenses allocated from the Portfolio, the Fund
accrues its own expenses as follows:
The Fund entered into agreements with AEFC for providing
administrative services and transfer agent services. Under its
Administrative Services Agreement, the Fund pays AEFC for
administration and accounting services at a percentage of the
Fund's average daily net assets in reducing percentages from 0.06%
to 0.03% annually. Additional administrative services paid by the
Fund are office expenses, consultants' fees and compensation of
officers and employees. Under this agreement, the Fund also pays
taxes, audit and certain legal fees, registration fees for shares,
compensation of board members, corporate filing fees,
organizational expenses, and any other expenses properly payable by
the Fund approved by the board.
Under a separate Transfer Agency Agreement, AEFC maintains
shareholder accounts and records. The Fund pays AEFC an annual fee
per shareholder account of $20.
<PAGE>
PAGE 89
Under a Plan and Agreement of Distribution, the Fund pays American
Express Service Corporation (the Distributor) a distribution fee at
an annual rate of 0.25% of the Fund's average daily net assets for
distribution related services.
AEFC and the Distributor have agreed to waive certain fees and to
absorb certain other of Fund expenses until July 31, 1997. Under
this agreement, the Fund's total expenses will not exceed 1.40% of
the Fund's average daily net assets.
A redemption fee of up to 1.0% is applied and retained by the Fund,
if shares are redeemed or exchanged within one year of purchase.
The Fund has no present intention to implement a redemption fee
within the first year of operation.
___________________________________________________________________
3. Capital share transactions
Transactions in shares of capital stock for the period indicated is
as follows:
Period ended Jan. 31, 1997*
Special Growth Fund*
Sold 176,520
Issued for reinvested 439
distributions
Redeemed (3,305)
Net increase 173,654
*Inception date was Aug. 19, 1996.
<PAGE>
PAGE 90
Financial statements
Statement of assets and liabilities
Aggressive Growth Portfolio
Jan. 31, 1997
Assets
Investments in securities, at value (Note 1) (Unaudited)
(identified cost $141,659,156) $144,580,923
Cash in bank on demand deposit 1,227,491
Dividends receivable 93,922
Receivable for investment securities sold 6,906,566
_____________
Total assets 152,808,902
_____________
Liabilities
Payable for investment securities purchased 4,236,765
Accrued investment management services fee 2,568
Other accrued expenses 19,444
_____________
Total liabilities 4,258,777
_____________
Net assets $148,550,125
=============
See accompanying notes to financial statements.
<PAGE>
PAGE 91
Financial statements
Statement of operations
Aggressive Growth Portfolio
For the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Investment income
Income: (Unaudited)
Dividends (net of foreign taxes withheld of $390) $ 405,901
Interest 123,990
_____________
Total income 529,891
_____________
Expenses (Note 2):
Investment management services fee 217,645
Compensation of board members 2,813
Custodian fees 18,546
Audit fees 6,135
Administrative 803
Other 1,319
_____________
Total expenses 247,261
Earnings credits on cash balances (Note 2) (343)
_____________
Total net expenses 246,918
_____________
Investment income -- net 282,973
_____________
Realized and unrealized gain -- net
Net realized gain on security transactions (Note 3) 4,798,167
Net realized gain on financial futures contracts 321,957
_____________
Net realized gain on investments 5,120,124
Net change in unrealized appreciation or depreciation 3,056,467
_____________
Net gain on investments 8,176,591
_____________
Net increase in net assets resulting from operations $ 8,459,564
=============
See accompanying notes to financial statements.
<PAGE>
PAGE 92
Financial statements
Statement of changes in net assets
Aggressive Growth Portfolio
For the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Operations
(Unaudited)
Investment income -- net $ 282,973
Net realized gain on investments
Net change in unrealized appreciation 5,120,124
or depreciation 3,056,467
____________
Net increase in net assets resulting from operations 8,459,564
Net contributions 140,086,561
____________
Total increase in net assets 148,546,125
Net assets at beginning of period (Note 1) 4,000
____________
Net assets at end of period $148,550,125
============
See accompanying notes to financial statements.
<PAGE>
PAGE 93
Notes to financial statements
Aggressive Growth Portfolio
(Unaudited as to Jan. 31, 1997)
___________________________________________________________________
1. Summary of significant accounting policies
The Aggressive Growth Portfolio (the Portfolio) is a series of
Growth Trust (the Trust) and is registered under the Investment
Company Act of 1940 (as amended) as a diversified, open-end
management investment company. Aggressive Growth Portfolio
invests primarily in equity securities of companies that comprise
the S&P 500. The Declaration of Trust permits the Trustees to issue
non-transferable interests in the Portfolio. On Aug. 16, 1996,
American Express Financial Corporation (AEFC) contributed $4,000 to
the Portfolio. Operations commenced on Aug. 19, 1996.
Significant accounting polices followed by the Portfolio are
summarized below:
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of increase and decrease in net assets from
operations during the period. Actual results could differ from
those estimates.
Valuation of securities
All securities are valued at the close of each business day.
Securities traded on national securities exchanges or included in
national market systems are valued at the last quoted sales price,
securities for which market quotations are not readily available
are valued at fair value according to methods selected in good
faith by the board. Determination of fair value involves, among
other things, reference to market indexes, matrixes and data from
independent brokers. Short-term securities maturing in more than 60
days from the valuation date are valued at the market price or
approximate market value based on current interest rates, those
maturing in 60 days or less are valued at amortized cost.
<PAGE>
PAGE 94
Option transactions
In order to produce incremental earnings, protect gains and
facilitate buying and selling of securities for investment
purposes, the Portfolio may buy and write options traded on any
U.S. or foreign exchange where the completion of the obligation is
dependent upon the credit standing of the other party. The
Portfolio 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 Portfolio gives up the opportunity of profit if the market
price of the security increases. The risk in writing a put option
is that the Portfolio 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 Portfolio pays a premium whether or not the
option is exercised. The Portfolio 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 Portfolio 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 Portfolio may buy and sell financial futures contracts
traded on any U.S. or foreign exchange. The Portfolio also may buy
or write put and call options on these futures contracts. Risks of
entering into futures contracts and related options include the
possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with
changes in the value of the underlying securities.
Upon entering into a futures contract, the Portfolio 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 Portfolio
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 Portfolio recognizes a realized gain or loss when
the contract is closed or expires.
<PAGE>
PAGE 95
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 Portfolio 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
Portfolio and the resulting unrealized appreciation or depreciation
are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the
credit risk that the other party will not complete the obligations
of the contract.
Federal taxes
For federal income tax purposes, the Portfolio qualifies as a
partnership and each investor in the Portfolio is treated as the
owner of its proportionate share of the net assets, income,
expenses and realized and unrealized gains and losses of the
Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
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.
<PAGE>
PAGE 96
__________________________________________________________________
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an
Investment Management Services Agreement with AEFC for managing its
portfolio. Under this agreement, AEFC determines which securities
will be purchased, held or sold. The management fee is a percentage
of the Portfolio's average daily net assets in reducing percentages
from 0.65% to 0.5% annually.
Under the agreement, the Trust also pays taxes, brokerage
commissions and nonadvisory expenses, which include custodian fees
to be paid to an affiliate of AEFC, audit and certain legal fees,
fidelity bond premiums, registration fees for units, office
expenses, consultants' fees, compensation of trustees, corporate
filing fees, expenses incurred in connection with lending
securities of the Portfolio, and any other expenses properly
payable by the Trust or Portfolio, approved by the board.
For the period ended Jan. 31, 1997, the Portfolio's custodian fees
were reduced by $343 as a result of earnings credits from overnight
cash balances.
Pursuant to a Placement Agency Agreement, American Express
Financial Advisors Inc. acts as placement agent of the units of the
Trust.
__________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $188,503,109 and $61,527,341,
respectively, for the period ended Jan. 31,1997. For the same
period, the portfolio turnover rate was 82%. Realized gains and
losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were
$1,425 for this period.
__________________________________________________________________
4. Stock index futures contracts
Investments in securities at Jan. 31, 1997 included securities
valued at $997,500 that were pledged as collateral to cover initial
margin deposits on 32 purchase contracts. The market value of the
open contracts at Jan. 31, 1997 was $12,718,400 with a net
unrealized gain of $134,700.
<PAGE>
PAGE 97
Investments in securities
Aggressive Growth Portfolio (Percentages represent value of
Jan. 31, 1997 (Unaudited) investments compared to net assets)
Common stocks (90.7%)
Issuer Shares Value (a)
Aerospace & defense (2.8%)
Raytheon 90,500 $4,151,688
Airlines (0.5%)
AMR 8,900 (b) 716,450
Automotive & related (3.1%)
Chrysler 67,200 2,343,600
General Motors 39,400 2,324,600
Total 4,668,200
Banks and savings & loans (8.7%)
Bank of Boston 89,400 6,369,750
NationsBank 60,800 6,566,400
Total 12,936,150
Beverages & tobacco (5.4%)
Anheuser-Busch 41,500 1,763,750
Coca-Cola 108,400 6,273,650
Total 8,037,400
Building materials & construction (2.2%)
Tyco Intl 57,400 3,278,975
Computers & office equipment (11.3%)
Computer Associates Intl 71,700 3,253,387
First Data 75,000 2,700,000
Ikon Office Solutions 14,400 635,400
Oracle 74,600 (b) 2,900,075
Silicon Graphics 198,800 (b) 5,442,150
See accompanying notes to investments in securities.
<PAGE>
PAGE 98
3Com 28,200 (b) 1,892,925
Total 16,823,937
Food (4.8%)
CPC Intl 39,500 3,036,563
Quaker Oats 106,800 4,098,450
Total 7,135,013
Health care (17.5%)
ALZA 107,200 (b) 3,095,400
American Home Products 89,100 5,646,712
Amgen 55,700 (b) 3,140,088
Baxter Intl 16,600 765,675
Boston Scientific 10,300 (b) 702,975
Guidant 50,700 2,826,525
Johnson & Johnson 102,900 5,929,613
Medtronic 8,800 602,800
Schering-Plough 43,600 3,297,250
Total 26,007,038
Health care services (2.5%)
Service Corp Intl 33,900 983,100
Tenet Healthcare 43,700 (b) 1,179,900
United Healthcare 30,200 1,472,250
Total 3,635,250
Industrial equipment & services (2.7%)
Deere & Co 38,300 1,637,325
Illinois Tool Works 28,800 2,350,800
Total 3,988,125
Media (1.4%)
Time Warner 53,700 2,067,450
Metals (1.8%)
Aluminum Co of America 38,500 2,656,500
Multi-industry conglomerates (7.5%)
Emerson Electric 56,200 5,549,750
General Signal 122,400 5,538,600
Total 11,088,350
<PAGE>
PAGE 99
Paper & packaging (0.5%)
Crown Cork & Seal 13,800 793,500
Restaurants & lodging (0.7%)
Hilton Hotels 36,500 (c) 1,040,250
Retail (7.4%)
American Stores 15,200 638,400
Autozone 56,000 (b) 1,211,000
CUC Intl 47,100 (b) 1,165,725
Federated Dept Stores 61,200 (b) 2,011,950
Kroger 10,900 (b) 520,475
Lowe's 39,600 1,311,750
Rite Aid 15,100 604,000
Wal Mart Stores 149,600 3,553,000
Total 11,016,300
Utilities -- electric (2.0%)
General Public Utilities 86,600 2,901,100
Utilities -- telephone (5.9%)
AirTouch Communications 110,200 (b) 2,851,425
MCI Communications 167,100 5,869,387
Total 8,720,812
Foreign (2.0%) (d)
Northern Telecom 41,200 3,033,350
Total common stocks
(Cost: $131,774,071) $ 134,695,838
Short-term securities (6.6%)
<PAGE>
PAGE 100
Issuer Annualized Amount Value (a)
yield on payable at
date of maturity
purchase
Government agency (0.8%)
Federal Home Loan Mtge Assn Disc Nt
02-13-97 5.24% $1,200,000 $ 1,197,908
Commercial paper (4.5%)
Bell Atlantic
02-06-97 5.31 2,500,000 2,498,160
Consolidated Natural Gas
02-20-97 5.31 700,000 698,042
Ford Motor Credit
03-10-97 5.35 1,000,000 994,532
Sara Lee
02-05-97 5.28 1,300,000 1,299,237
02-10-97 5.35 1,200,000 1,198,395
Total 6,688,366
Letter of credit (1.3%)
Federal Home Loan Bank
02-05-97 5.35 2,000,000 1,998,811
Total short-term securities
(Cost: $9,885,085) $ 9,885,085
Total investment in securities
(Cost: $141,659,156)(e) $144,580,923
<PAGE>
PAGE 101
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Partially pledged as initial deposit on the following stock
index futures purchase contracts. (See Note 4 to the financial
statements):
Type of security Contracts
S&P 500, June 1997 32
(d) Foreign security values are stated in U.S. dollars.
(e) At Jan. 31, 1997, the cost of securities for federal income
tax purposes was approximately $141,659,000 and the approximate
aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $6,523,000
Unrealized depreciation (3,601,000)
Net unrealized appreciation $2,922,000<PAGE>
PAGE 102
Financial statements
Statement of assets and liabilities
Strategist Special Growth Fund
Feb. 28, 1997
Assets
(Unaudited)
Investment in corresponding Portfolio $ 8,090,607
Expense receivable from AEFC 153
Organizational costs 98
_____________
Total assets 8,090,858
_____________
Liabilities
Accrued distribution fee 56
Accrued administrative services fees and expenses 13
Other accrued expenses 12,200
_____________
Total liabilities 12,269
_____________
Net assets applicable to outstanding capital stock $ 8,078,589
=============
Represented by
Capital stock -- authorized 3,000,000,000 shares of $.01
par value; outstanding 1,406,997 shares $ 14,070
Additional paid-in capital 8,134,025
Excess distributions over net investment income (623)
Accumulated net realized gain 74,492
Unrealized depreciation (143,375)
_____________
Total -- representing net assets applicable to
outstanding capital stock $ 8,078,589
=============
Net asset value per share of
outstanding capital stock $ 5.74
<PAGE>
PAGE 103
Financial statements
Statement of operations
Strategist Special Growth Fund
One month ended Feb. 28, 1997
Investment income
(Unaudited)
Income:
Dividends $ 970
Interest 1,666
_____________
Total income 2,636
_____________
Expenses:
Distribution fee 587
Transfer agency fee 113
Administrative services fee and expenses 141
Postage 280
Registration fees 5,628
Reports to shareholders 420
Audit fees 134
Administrative 89
Other 286
_____________
Total feeder expenses 7,678
Expenses allocated from corresponding Portfolio 1,696
_____________
Total expenses 9,374
Less expenses reimbursed by AEFC (6,059)
_____________
Total net expenses 3,315
_____________
Investment income -- net (679)
_____________
Realized and unrealized gain -- net
Net realized gain on security transactions 6,379
Net realized loss on financial futures contracts (3,286)
_____________
Net realized gain on investments 3,093
Net change in unrealized appreciation or depreciation (164,499)
_____________
Net loss on investments (161,406)
_____________
Net decrease in net assets resulting from operations $ (162,085)
=============
<PAGE>
PAGE 104
Financial statements
Statement of changes in net assets
Strategist Special Growth Fund
One month ended Feb. 28, 1997
Operations
(Unaudited)
Investment loss -- net $ (679)
Net gain on investments 3,093
Net change in unrealized appreciation
or depreciation of investments (164,499)
____________
Net decrease in net assets resulting from operations (162,085)
____________
Capital share transactions
Proceeds from sales 7,253,926
Payments for redemptions (3,038)
____________
Increase in net assets from capital
share transactions 7,250,888
____________
Total increase in net assets 7,088,803
Net assets at beginning of period 989,786
____________
Net assets at end of period (including excess
of distributions over net investment income $623) $ 8,078,589
============
<PAGE>
PAGE 105
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS:
Financial Statements filed as part of this post-effective
amendment:
Strategist Growth Fund, Inc. - Strategist Special Growth Fund
Statement of assets and liabilities, Jan. 31, 1997
Statement of operations, for the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Statement of changes in net assets, for the period from Aug.
19, 1996 (commencement of operations) to Jan. 31, 1997
Notes to financial statements
Aggressive Growth Portfolio:
Statement of assets and liabilities, Jan. 31, 1997
Statement of operations, for the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Statement of changes in net assets, for the period from Aug.
19, 1996 (commencement of operations) to Jan. 31, 1997
Notes to financial statements
Investments in securities, Jan. 31, 1997
Notes to investments in securities
Strategist Growth Fund, Inc. - Strategist Special Growth Fund
Statement of assets and liabilities, Feb. 28, 1997
Statement of operations, for the one month ended Feb. 28,
1997
Statement of changes in net assets, for the one month ended
Feb. 28, 1997
Registrant's annual report to shareholders for Strategist
Growth and Growth Trends Funds filed electronically pursuant
to Section 270.30d-1 on or about Oct. 2, 1996 is incorporated
herein by reference.
Registrant's semi-annual report to shareholders for
Strategist Growth and Growth Trends Funds filed
electronically pursuant to Section 270.30d-1 on or about
March 27, 1997 is incorporated herein by reference.
(b) EXHIBITS:
1.(a) Articles of Incorporation, dated Sept. 1, 1995, filed
electronically on or about Nov. 1, 1995 as Exhibit 1 to
Registrant's initial Registration Statement, are incorporated
herein by reference.
1.(b) Articles of Amendment of Express Direct Growth Fund, Inc.,
filed electronically on or about April 17, 1996 as Exhibit
1(b) to Registrant's Pre-Effective Amendment No. 1, are
incorporated herein by reference.
<PAGE>
PAGE 106
2. Form of By-laws, filed electronically on or about April 17,
1996 as Exhibit 2 to Registrant's Pre-Effective Amendment No.
1, are incorporated herein by reference.
3. Not Applicable.
4. Not Applicable.
5. Not Applicable.
6.(a) Copy of Distribution Agreement between Strategist Growth
Fund, Inc., on behalf of Strategist Growth Fund and
Strategist Growth Trends Fund, and American Express Service
Corporation, is filed electronically herewith as Exhibit
6(a).
6.(b) Copy of Distribution Agreement between Strategist Growth
Fund, Inc., on behalf of Strategist Special Growth Fund, and
American Express Service Corporation, is filed electronically
herewith as Exhibit 6(b).
7. Not Applicable.
8.(a) Copy of Custodian Agreement between Strategist Growth Fund,
Inc., on behalf of Strategist Growth Fund and Strategist
Growth Trends Fund, and American Express Trust Company, is
filed electronically herewith as Exhibit 8(a).
8.(b) Copy of Addendum to Custodian Agreement between Strategist
Growth Fund, Inc., on behalf of Strategist Growth Fund and
Strategist Growth Trends Fund, and American Express Trust
Company and American Express Financial Corporation, is filed
electronically herewith as Exhibit 8(b).
8.(c) Copy of Custodian Agreement between Strategist Growth Fund,
Inc., on behalf of Strategist Special Growth Fund, and
American Express Trust Company, is filed electronically
herewith as Exhibit 8(c).
8.(d) Copy of Addendum to Custodian Agreement between Strategist
Growth Fund, Inc., on behalf of Strategist Aggressive Growth
Fund, and American Express Trust Company and American Express
Financial Corporation, is filed electronically herewith as
Exhibit 8(d).
9.(a) Copy of Transfer Agency Agreement between Strategist Growth
Fund, Inc., on behalf of Strategist Growth Fund and
Strategist Growth Trends Fund, and American Express Financial
Corporation, is filed electronically herewith as Exhibit
9(a).
<PAGE>
PAGE 107
9.(b) Copy of Transfer Agency Agreement between Strategist Growth
Fund, Inc., on behalf of Strategist Special Growth Fund, and
American Express Financial Corporation, is filed
electronically herewith as Exhibit 9(b).
9.(c) Copy of Administrative Services Agreement between Strategist
Growth Fund, Inc., on behalf of Strategist Growth Fund and
Strategist Growth Trends Fund, and American Express Financial
Corporation, is filed electronically herewith as Exhibit
9(c).
9.(d) Copy of Administrative Services Agreement between Strategist
Growth Fund, Inc., on behalf of Strategist Special Growth
Fund, and American Express Financial Corporation, is filed
electronically herewith as Exhibit 9(d).
9.(e) Copy of Agreement and Declaration of Unitholders between IDS
Growth Fund, Inc., on behalf of IDS Growth Fund, and
Strategist Growth Fund, Inc., on behalf of Strategist Growth
Fund, is filed electronically herewith as Exhibit 9(e).
9.(f) Copy of Agreement and Declaration of Unitholders between IDS
New Dimensions Fund, Inc. and Strategist Growth Fund, Inc.,
on behalf of Strategist Growth Trends Fund, is filed
electronically herewith as Exhibit 9(f).
9.(g) Copy of Agreement and Declaration of Unitholders between IDS
Growth Fund, Inc., on behalf of IDS Research Opportunities
Fund, and Strategist Growth Fund, Inc., on behalf of
Strategist Special Growth Fund, is filed electronically
herewith as Exhibit 9(g).
10. Opinion and consent of counsel as to the legality of the
securities being registered is filed with Registrant's most
recent 24f-2 notice.
11. Independent Auditors' Consent is filed electronically
herewith.
12. Not Applicable.
13. Copy of Share Purchase Agreement between Strategist Growth
Fund, Inc. and American Express Financial Corporation filed
electronically on or about April 17, 1996 as Exhibit 13 to
Registrant's Pre-Effective Amendment No. 1 to Registration
Statement No. 33-63905, is incorporated herein by reference.
14. Not Applicable.
<PAGE>
PAGE 108
15.(a) Copy of Plan and Agreement of Distribution between
Strategist Growth Fund, Inc., on behalf of Strategist
Growth Fund and Strategist Growth Trends Fund, and
American Express Service Corporation is filed
electronically herewith as Exhibit 15(a).
15.(b) Copy of Plan and Agreement of Distribution between
Strategist Growth Fund, Inc., on behalf of Strategist
Special Growth Fund, and American Express Service
Corporation is filed electronically herewith as Exhibit
15(b).
16. Copy of schedule for computation of each performance
quotation provided in the Registration Statement in response
to Item 22(b), filed on or about April 17, 1996 as Exhibit 16
to Registrant's Pre-Effective Amendment No. 1 to Registration
Statement No. 33-63905, is incorporated herein by reference.
17. Financial Data Schedule is filed electronically herewith.
18. Not Applicable.
19(a) Directors' Power of Attorney to sign Amendments to this
Registration Statement, dated April 24, 1996, filed
electronically on or about May 24, 1996 as Exhibit 19(a) to
Registrant's Post-Effective Amendment No. 1 to Registration
Statement No. 33-63905, is incorporated herein by reference.
19(b) Officers' Power of Attorney to sign Amendments to this
Registration Statement, dated April 24, 1996, filed
electronically on or about May 24, 1996 as Exhibit 19(b) to
Registrant's Post-Effective Amendment No. 1 to Registration
Statement No. 33-63905, is incorporated herein by reference.
19(c) Trustees' Power of Attorney to sign Amendments to this
Registration Statement, dated January 8, 1997, is filed
electronically herewith as Exhibit 19(c).
19(d) Officers' Power of Attorney to sign Amendments to this
Registration Statement, dated April 11, 1996, filed
electronically on or about April 17, 1996 as Exhibit 19(b) to
Registrant's Pre-Effective Amendment No. 1, is incorporated
herein by reference.
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
<PAGE>
PAGE 109
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Holders as of
Title of Class March 21, 1997
Common Stock
Strategist Growth Fund 488
Strategist Growth Trends Fund 313
Strategist Special Growth Fund 77
Item 27. Indemnification
The Articles of Incorporation of the Registrant provide that the
Fund shall indemnify any person who was or is a party or is
threatened to be made a party, by reason of the fact that she or he
is or was a director, officer, employee or agent of the Fund, or is
or was serving at the request of the Fund as a director, officer,
employee or agent of another company, partnership, joint venture,
trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may
purchase liability insurance and advance legal expenses, all to the
fullest extent permitted by the laws of the State of Minnesota, as
now existing or hereafter amended. The By-laws of the Registrant
provide that present or former directors or officers of the Fund
made or threatened to be made a party to or involved (including as
a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by
the Minnesota Business Corporation Act, all as more fully set forth
in the By-laws filed as an exhibit to this registration statement.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Any indemnification hereunder shall not be exclusive of any other
rights of indemnification to which the directors, officers,
employees or agents might otherwise be entitled. No
indemnification shall be made in violation of the Investment
Company Act of 1940.
<PAGE>
PAGE 110
<PAGE>
PAGE 1
American Express Financial Corporation is the investment advisor of
the Portfolios of the Trust.
<PAGE>
Item 29(c). Not applicable.
Item 30. Location of Accounts and Records
American Express Financial Corporation
IDS Tower 10
Minneapolis, MN 55440
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and
without charge.
<PAGE>
PAGE 111
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Strategist Growth
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 State of Minnesota on the 27th day
of March, 1997.
STRATEGIST GROWTH FUND, INC.
By /s/ James A. Mitchell*
James A. Mitchell
President
By /s/ Melinda S. Urion*
Melinda S. Urion
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by
the following persons in the capacities indicated on the 27th day
of March, 1997.
Signature Title
By /s/ Rodney P. Burwell** Director
Rodney P. Burwell
By /s/ William J. Heron Jr.** Director
William J. Heron
By /s/ Jean B. Keffeler** Director
Jean B. Keffeler
By /s/ Thomas R. McBurney** Director
Thomas R. McBurney
By /s/ James A. Mitchell** Director
James A. Mitchell
* Signed pursuant to Officers' Power of Attorney dated April 24,
1996, filed electronically as Exhibit 19(b) to Registrant's Post-
Effective Amendment No. 1, by:
Eileen J. Newhouse
<PAGE>
PAGE 112
** Signed pursuant to Directors' Power of Attorney dated April 24,
1996, filed electronically as Exhibit 19(a) to Registrant's Post-
Effective Amendment No. 1, by:
Eileen J. Newhouse
<PAGE>
PAGE 113
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, GROWTH TRUST consents to the filing
of this Amendment to the Registration Statement signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Minneapolis and State of Minnesota on the 27th day of March,
1997.
GROWTH TRUST
By /s/ William R. Pearce**
William R. Pearce
President
By /s/ Melinda S. Urion**
Melinda S. Urion
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by
the following persons in the capacities indicated on the 27th day
of March, 1997.
Signatures Capacity
/s/ William R. Pearce* Trustee
William R. Pearce
/s/ H. Brewster Atwater, Jr.* Trustee
H. Brewster Atwater, Jr.
/s/ Lynne V. Cheney* Trustee
Lynne V. Cheney
/s/ William H. Dudley* Trustee
William H. Dudley
/s/ Robert F. Froehlke* Trustee
Robert F. Froehlke
/s/ David R. Hubers* Trustee
David R. Hubers
/s/ Heinz F. Hutter* Trustee
Heinz F. Hutter
/s/ Anne P. Jones* Trustee
Anne P. Jones
/s/ Melvin R. Laird* Trustee
Melvin R. Laird
<PAGE>
PAGE 114
Signatures Capacity
/s/ Alan K. Simpson* Trustee
Alan K. Simpson
/s/ Edson W. Spencer* Trustee
Edson W. Spencer
/s/ John R. Thomas* Trustee
John R. Thomas
/s/ Wheelock Whitney* Trustee
Wheelock Whitney
/s/ C. Angus Wurtele* Trustee
C. Angus Wurtele
* Signed pursuant to Trustees' Power of Attorney dated January 8,
1997, filed electronically herewith as Exhibit 19(c), by:
___________________________________
Leslie L. Ogg
** Signed pursuant to Officers' Power of Attorney dated April 11,
1996, filed electronically as Exhibit 19(b) to Registrant's Pre-
Effective Amendment No. 1, by:
___________________________________
Leslie L. Ogg
<PAGE>
PAGE 115
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 4 TO REGISTRATION
STATEMENT No. 33-63905
This Amendment to the Registration Statement comprises the
following papers and documents:
The facing sheet.
Cross reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial statements.
Part C.
Other information.
The signatures.
<PAGE>
PAGE 1
EXHIBIT INDEX
Exhibit 6(a): Copy of Distribution Agreement between Strategist
Growth Fund, Inc., on behalf of Strategist Growth
Fund and Strategist Growth Trends Fund, and
American Express Service Corporation.
Exhibit 6(b): Copy of Distribution Agreement between Strategist
Growth Fund, Inc., on behalf of Strategist
Special Growth Fund, and American Express Service
Corporation.
Exhibit 8(a): Copy of Custodian Agreement between Strategist
Growth Fund, Inc., on behalf of Strategist Growth
Fund and Strategist Growth Trends Fund, and
American Express Trust Company.
Exhibit 8(b): Copy of Addendum to Custodian Agreement between
Strategist Growth Fund, Inc., on behalf of
Strategist Growth Fund and Strategist Growth
Trends Fund, and American Express Trust Company
and American Express Financial Corporation.
Exhibit 8(c): Copy of Custodian Agreement between Strategist
Growth Fund, Inc., on behalf of Strategist
Special Growth Fund, and American Express Trust
Company.
Exhibit 8(d): Copy of Addendum to Custodian Agreement between
Strategist Growth Fund, Inc., on behalf of
Strategist Aggressive Growth Fund, and American
Express Trust Company and American Express
Financial Corporation.
Exhibit 9(a): Copy of Transfer Agency Agreement between
Strategist Growth Fund, Inc., on behalf of
Strategist Growth Fund and Strategist Growth
Trends Fund, and American Express Financial
Corporation.
Exhibit 9(b): Copy of Transfer Agency Agreement between
Strategist Growth Fund, Inc., on behalf of
Strategist Special Growth Fund, and American
Express Financial Corporation.
Exhibit 9(c): Copy of Administrative Services Agreement between
Strategist Growth Fund, Inc., on behalf of
Strategist Growth Fund and Strategist Growth
Trends Fund, and American Express Financial
Corporation.
Exhibit 9(d): Copy of Administrative Services Agreement between
Strategist Growth Fund, Inc., on behalf of
Strategist Special Growth Fund, and American
Express Financial Corporation.
<PAGE>
PAGE 2
Exhibit 9(e): Copy of Agreement and Declaration of Unitholders
between IDS Growth Fund, Inc., on behalf of IDS
Growth Fund, and Strategist Growth Fund, Inc., on
behalf of Strategist Growth Fund.
Exhibit 9(f): Copy of Agreement and Declaration of Unitholders
between IDS New Dimensions Fund, Inc. and
Strategist Growth Fund, Inc., on behalf of
Strategist Growth Trends Fund.
Exhibit 9(g): Copy of Agreement and Declaration of Unitholders
between IDS Growth Fund, Inc., on behalf of IDS
Research Opportunities Fund, and Strategist
Growth Fund, Inc., on behalf of Strategist
Special Growth Fund.
Exhibit 11: Independent Auditors' Consent.
Exhibit 15(a): Copy of Plan and Agreement of Distribution
between Strategist Growth Fund, Inc., on behalf
of Strategist Growth Fund and Strategist Growth
Trends Fund, and American Express Service
Corporation.
Exhibit 15(b): Copy of Plan and Agreement of Distribution
between Strategist Growth Fund, Inc., on behalf
of Strategist Special Growth Fund, and American
Express Service Corporation.
Exhibit 17: Financial Data Schedule.
Exhibit 19(c): Trustees' Power of Attorney to sign Amendments to
this Registration Statement, dated January 8,
1997.
<PAGE>
PAGE 1
DISTRIBUTION AGREEMENT
Agreement made as of the 13th day of May, 1996, by and between
Strategist Growth Fund, Inc. (the "Company"), a Minnesota
corporation, on behalf of each class of its underlying series
funds, and American Express Service Corporation (AESC), a Delaware
corporation.
Part One: DISTRIBUTION OF SECURITIES
(1) The Company covenants and agrees that, during the term of
this agreement and any renewal or extension, AESC shall have the
exclusive right to act as principal underwriter for the Company and
to offer for sale and to distribute either directly or through any
affiliated or unaffiliated entity any and all shares of each class
of capital stock issued or to be issued by the Company.
(2) AESC hereby covenants and agrees to act as the principal
underwriter of each class of capital shares issued and to be issued
by the Company during the period of this agreement and agrees
during such period to offer for sale such shares as long as such
shares remain available for sale, unless AESC is unable or
unwilling to make such offer for sale or sales or solicitations
therefor legally because of any federal, state, provincial or
governmental law, rule or agency or for any financial reason.
(3) With respect to the offering for sale and sale of shares of
each class to be issued by the Company, it is mutually understood
and agreed that such shares are to be sold on the following terms:
(a) All sales shall be made by means of an application, and
every application shall be subject to acceptance or rejection by
the Company at its principal place of business. Shares are to be
sold for cash, payable at the time the application and payment for
such shares are received at the principal place of business of the
Company.
(b) No shares shall be sold at less than the net asset value
(computed in the manner provided by the currently effective
prospectus or Statement of Additional Information and the
Investment Company Act of 1940, and rules thereunder). The number
of shares or fractional shares to be acquired by each applicant
shall be determined by dividing the amount of each accepted
application by the public offering price of one share of the
capital stock of the appropriate class as of the close of business
on the day when the application, together with payment, is received
by the Company at its principal place of business. The computation
as to the number of shares and fractional shares shall be carried
to three decimal points of one share with the computation being
carried to the nearest 1/1000th of a share. If the day of receipt
of the application and payment is not a full business day, then
the asset value of the share for use in such computation shall be
determined as of the close of business on the next succeeding full
business day. In the event of a period of emergency, the
computation of the asset value for the purpose of determining the
number of shares or fractional shares to be acquired by the
<PAGE>
PAGE 2
applicant may be deferred until the close of business on the first
full business day following the termination of the period of
emergency. A period of emergency shall have the definition given
thereto in the Investment Company Act of 1940, and rules
thereunder.
(4) The Company agrees to make prompt and reasonable effort to
do any and all things necessary, in the opinion of AESC to have and
to keep the Company and the shares properly registered or qualified
in all appropriate jurisdictions and, as to shares, in such amounts
as AESC may from time to time designate in order that the Company's
shares may be offered or sold in such jurisdictions.
(5) The Company agrees that it will furnish AESC with information
with respect to the affairs and accounts of the Company, and in
such form, as AESC may from time to time reasonably require and
further agrees that AESC, at all reasonable times, shall be
permitted to inspect the books and records of the Company.
(6) AESC or its agents may prepare or cause to be prepared from
time to time circulars, sales literature, broadcast material,
publicity data and other advertising material to be used in the
sales of shares issued by the Company, including material which may
be deemed to be a prospectus under rules promulgated by the
Securities and Exchange Commission (each separate promotional piece
is referred to as an "Item of Soliciting Material"). At its
option, AESC may submit any Item of Soliciting Material to the
Company for its prior approval. Unless a particular Item of
Soliciting Material is approved in writing by the Company prior to
its use, AESC agrees to indemnify the Company and its directors and
officers against any and all claims, demands, liabilities and
expenses which the Company or such persons may incur arising out of
or based upon the use of any Item of Soliciting Material. The term
"expenses" includes amounts paid in satisfaction of judgments or in
settlements. The foregoing right of indemnification shall be in
addition to any other rights to which the Company or any director
or officer may be entitled as a matter of law. Notwithstanding the
foregoing, such indemnification shall not be deemed to abrogate or
diminish in any way any right or claim AESC may have against the
Company or its officers or directors in connection with the
Company's registration statement, prospectus, Statement of
Additional Information or other information furnished by or caused
to be furnished by the Company.
(7) AESC agrees to submit to the Company each application for
shares immediately after the receipt of such application and
payment therefor by AESC at its principal place or business.
(8) AESC agrees to cause to be delivered to each person
submitting an application a prospectus to be furnished by the
Company in the form required by the applicable federal laws or by
the acts or statutes of any applicable state, province or country.
(9) The Company shall have the right to extend to shareholders of
each class the right to use the proceeds of any cash dividend paid
by the Company to that shareholder to purchase shares of the same
<PAGE>
PAGE 3
class at the net asset value at the close of business upon the day
of purchase, to the extent set forth in the currently effective
prospectus or Statement of Additional Information.
(10) Shares of each class issued by the Company may be offered
and sold at their net asset value to the shareholders of the same
class of other companies in the Strategist Fund Group who wish to
exchange their investments in shares of the other funds in the
Strategist Fund Group to investments in shares of the Company, to
the extent set forth in the currently effective prospectus or
Statement of Additional Information, such net asset value to be
computed as of the close of business on the day of sale of such
shares of the Company.
(11) AESC and the Company agree to use their best efforts to
conform with all applicable state and federal laws and regulations
relating to any rights or obligations under the term of this
agreement.
Part Two: ALLOCATION OF EXPENSES
Except as provided by any other agreements between the parties,
AESC covenants and agrees that during the period of this agreement
it will pay or cause or be paid all expenses incurred by AESC or
any of its affiliates, in the offering for sale or sale of each
class of the Company's shares.
Part Three: COMPENSATION
(1) It is covenanted and agreed that AESC shall be paid:
(i) for a class of shares imposing a front-end sales charge,
by the purchasers of Company shares in an amount equal to the
difference between the total amount received upon each sale of
shares issued by the Company and the net asset value of such shares
at the time of such sale; and
(ii) for a class of shares imposing a deferred sales charge,
by owners of Company shares at the time the sales charge is imposed
in an amount equal to any deferred sales charge, as described in
the Company's prospectus.
Such sums as are received by the Company shall be received as Agent
for AESC and shall be remitted to AESC daily as soon as practicable
after receipt.
(2) The net asset value of any share of each class of the Company
shall be determined in the manner provided by the classes'
currently effective prospectus and Statement of Additional
Information and the Investment Company Act of 1940, and rules
thereunder.
<PAGE>
PAGE 4
Part Four: MISCELLANEOUS
(1) AESC shall be deemed to be an independent contractor and,
except as expressly provided or authorized in this agreement, shall
have no authority to act for or represent the Company.
(2) AESC shall be free to render to others services similar to
those rendered under this agreement.
(3) Neither this agreement nor any transaction had pursuant
hereto shall be invalidated or in any way affected by the fact that
directors, officers, agents and/or shareholders of the Company are
or may be interested in AESC as directors, officers, shareholders
or otherwise; that directors, officers, shareholders or agents of
AESC are or may be interested in the Company as directors,
officers, shareholders or otherwise; or that AESC is or may be
interested in the Company as shareholder or otherwise; provided,
however, that neither AESC nor any officer or director of AESC or
any officers or directors of the Company shall sell to or buy from
the Company any property or security other than a security issued
by the Company, except in accordance with a rule, regulation or
order of the federal Securities and Exchange Commission.
(4) For the purposes of this agreement, a "business day" shall
have the same meaning as is given to the term in the By-laws of the
Company.
(5) Any notice under this agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the parties to this
agreement at each company's principal place of business in
Minneapolis, Minnesota, or to such other address as either party
may designate in writing mailed to the other.
(6) AESC agrees that no officer, director or employee of AESC
will deal for or on behalf of the Company with himself as principal
or agent, or with any corporation or partnership in which he may
have a financial interest, except that this shall not prohibit:
(a) Officers, directors and employees of AESC from having a
financial interest in the Company or in AESC.
(b) The purchase of securities for the Company, or the sale
of securities owned by the Company, through a security broker or
dealer, one or more of whose partners, officers, directors or
employees is an officer, director or employee of AESC provided such
transactions are handled in the capacity of broker only and
provided commissions charged do not exceed customary brokerage
charges for such services.
(c) Transactions with the Company by a broker-dealer
affiliate of AESC if allowed by rule or order of the Securities and
Exchange Commission and if made pursuant to procedures adopted by
the Company's Board of Directors (the "Board").
(7) AESC agrees that, except as otherwise provided in this
agreement, or as may be permitted consistent with the use of a
broker-dealer affiliate of AESC under applicable provisions of the
<PAGE>
PAGE 5
federal securities laws, neither it nor any of its officers,
directors or employees shall at any time during the period of this
agreement make, accept or receive, directly or indirectly, any
fees, profits or emoluments of any character in connection with the
purchase or sale of securities (except securities issued by the
Company) or other assets by or for the Company.
Part Five: TERMINATION
(1) This agreement shall continue from year to year unless and
until terminated by AESC or the Company, except that such
continuance shall be specifically approved at least annually by a
vote of a majority of the Board who are not parties to this
agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval, and
by a majority of the Board or by vote of a majority of the
outstanding voting securities of the Company. As used in this
paragraph, the term "interested person" shall have the meaning as
set forth in the Investment Company Act of 1940, as amended.
(2) This agreement may be terminated by AESC or the Company at
any time by giving the other party sixty (60) days written notice
of such intention to terminate.
(3) This agreement shall terminate in the event of its
assignment, the term "assignment" for this purpose having the same
meaning as set forth in the Investment Company Act of 1940, as
amended.
IN WITNESS WHEREOF, The parties hereto have executed the foregoing
agreement on the date and year first above written.
STRATEGIST GROWTH FUND, INC.
Strategist Growth Fund
Strategist Growth Trends Fund
By /s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS SERVICE CORPORATION
By /s/ Richard W. Kling
Richard W. Kling
Vice President
<PAGE>
PAGE 1
DISTRIBUTION AGREEMENT
Agreement made as of the 19th day of August, 1996, by and between
Strategist Growth Fund, Inc. (the "Company"), a Minnesota
corporation, on behalf of each class of its underlying series fund,
and American Express Service Corporation (AESC), a Delaware
corporation.
Part One: DISTRIBUTION OF SECURITIES
(1) The Company covenants and agrees that, during the term of
this agreement and any renewal or extension, AESC shall have the
exclusive right to act as principal underwriter for the Company and
to offer for sale and to distribute either directly or through any
affiliated or unaffiliated entity any and all shares of each class
of capital stock issued or to be issued by the Company.
(2) AESC hereby covenants and agrees to act as the principal
underwriter of each class of capital shares issued and to be issued
by the Company during the period of this agreement and agrees
during such period to offer for sale such shares as long as such
shares remain available for sale, unless AESC is unable or
unwilling to make such offer for sale or sales or solicitations
therefor legally because of any federal, state, provincial or
governmental law, rule or agency or for any financial reason.
(3) With respect to the offering for sale and sale of shares of
each class to be issued by the Company, it is mutually understood
and agreed that such shares are to be sold on the following terms:
(a) All sales shall be made by means of an application, and
every application shall be subject to acceptance or rejection by
the Company at its principal place of business. Shares are to be
sold for cash, payable at the time the application and payment for
such shares are received at the principal place of business of the
Company.
(b) No shares shall be sold at less than the net asset value
(computed in the manner provided by the currently effective
prospectus or Statement of Additional Information and the
Investment Company Act of 1940, and rules thereunder). The number
of shares or fractional shares to be acquired by each applicant
shall be determined by dividing the amount of each accepted
application by the public offering price of one share of the
capital stock of the appropriate class as of the close of business
on the day when the application, together with payment, is received
by the Company at its principal place of business. The computation
as to the number of shares and fractional shares shall be carried
to three decimal points of one share with the computation being
carried to the nearest 1/1000th of a share. If the day of receipt
of the application and payment is not a full business day, then
the asset value of the share for use in such computation shall be
determined as of the close of business on the next succeeding full
business day. In the event of a period of emergency, the
computation of the asset value for the purpose of determining the
number of shares or fractional shares to be acquired by the
applicant may be deferred until the close of business on the first <PAGE>
PAGE 2
full business day following the termination of the period of
emergency. A period of emergency shall have the definition given
thereto in the Investment Company Act of 1940, and rules
thereunder.
(4) The Company agrees to make prompt and reasonable effort to
do any and all things necessary, in the opinion of AESC to have and
to keep the Company and the shares properly registered or qualified
in all appropriate jurisdictions and, as to shares, in such amounts
as AESC may from time to time designate in order that the Company's
shares may be offered or sold in such jurisdictions.
(5) The Company agrees that it will furnish AESC with information
with respect to the affairs and accounts of the Company, and in
such form, as AESC may from time to time reasonably require and
further agrees that AESC, at all reasonable times, shall be
permitted to inspect the books and records of the Company.
(6) AESC or its agents may prepare or cause to be prepared from
time to time circulars, sales literature, broadcast material,
publicity data and other advertising material to be used in the
sales of shares issued by the Company, including material which may
be deemed to be a prospectus under rules promulgated by the
Securities and Exchange Commission (each separate promotional piece
is referred to as an "Item of Soliciting Material"). At its
option, AESC may submit any Item of Soliciting Material to the
Company for its prior approval. Unless a particular Item of
Soliciting Material is approved in writing by the Company prior to
its use, AESC agrees to indemnify the Company and its directors and
officers against any and all claims, demands, liabilities and
expenses which the Company or such persons may incur arising out of
or based upon the use of any Item of Soliciting Material. The term
"expenses" includes amounts paid in satisfaction of judgments or in
settlements. The foregoing right of indemnification shall be in
addition to any other rights to which the Company or any director
or officer may be entitled as a matter of law. Notwithstanding the
foregoing, such indemnification shall not be deemed to abrogate or
diminish in any way any right or claim AESC may have against the
Company or its officers or directors in connection with the
Company's registration statement, prospectus, Statement of
Additional Information or other information furnished by or caused
to be furnished by the Company.
(7) AESC agrees to submit to the Company each application for
shares immediately after the receipt of such application and
payment therefor by AESC at its principal place or business.
(8) AESC agrees to cause to be delivered to each person
submitting an application a prospectus to be furnished by the
Company in the form required by the applicable federal laws or by
the acts or statutes of any applicable state, province or country.
(9) The Company shall have the right to extend to shareholders of
each class the right to use the proceeds of any cash dividend paid
by the Company to that shareholder to purchase shares of the same
class at the net asset value at the close of business upon the day
of purchase, to the extent set forth in the currently effective
prospectus or Statement of Additional Information.<PAGE>
PAGE 3
(10) Shares of each class issued by the Company may be offered
and sold at their net asset value to the shareholders of the same
class of other companies in the Strategist Fund Group who wish to
exchange their investments in shares of the other funds in the
Strategist Fund Group to investments in shares of the Company, to
the extent set forth in the currently effective prospectus or
Statement of Additional Information, such net asset value to be
computed as of the close of business on the day of sale of such
shares of the Company.
(11) AESC and the Company agree to use their best efforts to
conform with all applicable state and federal laws and regulations
relating to any rights or obligations under the term of this
agreement.
Part Two: ALLOCATION OF EXPENSES
Except as provided by any other agreements between the parties,
AESC covenants and agrees that during the period of this agreement
it will pay or cause or be paid all expenses incurred by AESC or
any of its affiliates, in the offering for sale or sale of each
class of the Company's shares.
Part Three: COMPENSATION
(1) It is covenanted and agreed that AESC shall be paid:
(i) for a class of shares imposing a front-end sales charge,
by the purchasers of Company shares in an amount equal to the
difference between the total amount received upon each sale of
shares issued by the Company and the net asset value of such shares
at the time of such sale; and
(ii) for a class of shares imposing a deferred sales charge,
by owners of Company shares at the time the sales charge is imposed
in an amount equal to any deferred sales charge, as described in
the Company's prospectus.
Such sums as are received by the Company shall be received as Agent
for AESC and shall be remitted to AESC daily as soon as practicable
after receipt.
(2) The net asset value of any share of each class of the Company
shall be determined in the manner provided by the classes'
currently effective prospectus and Statement of Additional
Information and the Investment Company Act of 1940, and rules
thereunder.
Part Four: MISCELLANEOUS
(1) AESC shall be deemed to be an independent contractor and,
except as expressly provided or authorized in this agreement, shall
have no authority to act for or represent the Company.
(2) AESC shall be free to render to others services similar to
those rendered under this agreement.
<PAGE>
PAGE 4
(3) Neither this agreement nor any transaction had pursuant
hereto shall be invalidated or in any way affected by the fact that
directors, officers, agents and/or shareholders of the Company are
or may be interested in AESC as directors, officers, shareholders
or otherwise; that directors, officers, shareholders or agents of
AESC are or may be interested in the Company as directors,
officers, shareholders or otherwise; or that AESC is or may be
interested in the Company as shareholder or otherwise; provided,
however, that neither AESC nor any officer or director of AESC or
any officers or directors of the Company shall sell to or buy from
the Company any property or security other than a security issued
by the Company, except in accordance with a rule, regulation or
order of the federal Securities and Exchange Commission.
(4) For the purposes of this agreement, a "business day" shall
have the same meaning as is given to the term in the By-laws of the
Company.
(5) Any notice under this agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the parties to this
agreement at each company's principal place of business in
Minneapolis, Minnesota, or to such other address as either party
may designate in writing mailed to the other.
(6) AESC agrees that no officer, director or employee of AESC
will deal for or on behalf of the Company with himself as principal
or agent, or with any corporation or partnership in which he may
have a financial interest, except that this shall not prohibit:
(a) Officers, directors and employees of AESC from having a
financial interest in the Company or in AESC.
(b) The purchase of securities for the Company, or the sale
of securities owned by the Company, through a security broker or
dealer, one or more of whose partners, officers, directors or
employees is an officer, director or employee of AESC provided such
transactions are handled in the capacity of broker only and
provided commissions charged do not exceed customary brokerage
charges for such services.
(c) Transactions with the Company by a broker-dealer
affiliate of AESC if allowed by rule or order of the Securities and
Exchange Commission and if made pursuant to procedures adopted by
the Company's Board of Directors (the "Board").
(7) AESC agrees that, except as otherwise provided in this
agreement, or as may be permitted consistent with the use of a
broker-dealer affiliate of AESC under applicable provisions of the
federal securities laws, neither it nor any of its officers,
directors or employees shall at any time during the period of this
agreement make, accept or receive, directly or indirectly, any
fees, profits or emoluments of any character in connection with the
purchase or sale of securities (except securities issued by the
Company) or other assets by or for the Company.
<PAGE>
PAGE 5
Part Five: TERMINATION
(1) This agreement shall continue from year to year unless and
until terminated by AESC or the Company, except that such
continuance shall be specifically approved at least annually by a
vote of a majority of the Board who are not parties to this
agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval, and
by a majority of the Board or by vote of a majority of the
outstanding voting securities of the Company. As used in this
paragraph, the term "interested person" shall have the meaning as
set forth in the Investment Company Act of 1940, as amended.
(2) This agreement may be terminated by AESC or the Company at
any time by giving the other party sixty (60) days written notice
of such intention to terminate.
(3) This agreement shall terminate in the event of its
assignment, the term "assignment" for this purpose having the same
meaning as set forth in the Investment Company Act of 1940, as
amended.
IN WITNESS WHEREOF, The parties hereto have executed the foregoing
agreement on the date and year first above written.
STRATEGIST GROWTH FUND, INC.
Strategist Special Growth Fund
By /s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS SERVICE CORPORATION
By /s/ Richard W. Kling
Richard W. Kling
Vice President
<PAGE>
PAGE 1
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated May 13, 1996, between Strategist
Growth Fund, Inc. (the Company), a Minnesota corporation, on behalf
of its underlying series funds, and American Express Trust Company,
a corporation organized under the laws of the State of Minnesota
with its principal place of business at Minneapolis, Minnesota (the
"Custodian").
WHEREAS, the Company desires that its securities and cash be
hereafter held and administered by Custodian pursuant to the terms
of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Company and the Custodian agree as follows:
Section 1. Definitions
The word "securities" as used herein shall be construed to include,
without being limited to, shares, stocks, treasury stocks,
including any stocks of this Company, notes, bonds, debentures,
evidences of indebtedness, options to buy or sell stocks or stock
indexes, certificates of interest or participation in any profit-
sharing agreements, collateral trust certificates, preorganization
certificates or subscriptions, transferable shares, investment
contracts, voting trust certificates, certificates of deposit for a
security, fractional or undivided interests in oil, gas or other
mineral rights, or any certificates of interest or participation
in, temporary or interim certificates for, receipts for, guarantees
of, or warrants or rights to subscribe to or purchase any of the
foregoing, acceptances and other obligations and any evidence of
any right or interest in or to any cash, property or assets and any
interest or instrument commonly known as a security. In addition,
for the purpose of this Custodian Agreement, the word "securities"
also shall include other instruments in which the Company may
invest including currency forward contracts and commodities such as
interest rate or index futures contracts, margin deposits on such
contracts or options on such contracts.
The words "custodian order" shall mean a request or direction,
including a computer printout, directed to the Custodian and signed
in the name of the Company by any two individuals designated in the
current certified list referred to in Section 2.
The word "facsimile" shall mean an exact copy or likeness which is
electronically transmitted for instant reproduction.
Section 2. Names, Titles and Signatures of Authorized Persons
The Company will certify to the Custodian the names and signatures
of its present officers and other designated persons authorized on
behalf of the Company to direct the Custodian by custodian order as
herein before defined. The Company agrees that whenever any change
occurs in this list it will file with the Custodian a copy of a
<PAGE>
PAGE 2
resolution certified by the Secretary or an Assistant Secretary of
the Company as having been duly adopted by the board of directors
(the "board") or the Executive Committee of the board designating
those persons currently authorized on behalf of the Company to
direct the Custodian by custodian order, as herein before defined,
and upon such filing (to be accompanied by the filing of specimen
signatures of the designated persons) the persons so designated in
said resolution shall constitute the current certified list. The
Custodian is authorized to rely and act upon the names and
signatures of the individuals as they appear in the most recent
certified list from the Company which has been delivered to the
Custodian as herein above provided.
Section 3. Use of Subcustodians
The Custodian may make arrangements, where appropriate, with other
banks having not less than two million dollars aggregate capital,
surplus and undivided profits for the custody of securities. Any
such bank selected by the Custodian to act as subcustodian shall be
deemed to be the agent of the Custodian.
The Custodian also may enter into arrangements for the custody of
securities entrusted to its care through foreign branches of United
States banks; through foreign banks, banking institutions or trust
companies; through foreign subsidiaries of United States banks or
bank holding companies, or through foreign securities depositories
or clearing agencies (hereinafter also called, collectively, the
"Foreign Subcustodian" or indirectly through an agent, established
under the first paragraph of this section, if and to the extent
permitted by Section 17(f) of the Investment Company Act of 1940
and the rules promulgated by the Securities and Exchange Commission
thereunder, any order issued by the Securities and Exchange
Commission, or any "no-action" letter received from the staff of
the Securities and Exchange Commission. To the extent the existing
provisions of the Custodian Agreement are consistent with the
requirements of such Section, rules, order or no-action letter,
they shall apply to all such foreign custodianships. To the extent
such provisions are inconsistent with or additional requirements
are established by such Section, rules, order or no-action letter,
the requirements of such Section, rules, order or no-action letter
will prevail and the parties will adhere to such requirements;
provided, however, in the absence of notification from the Company
of any changes or additions to such requirements, the Custodian
shall have no duty or responsibility to inquire as to any such
changes or additions.
Section 4. Receipt and Disbursement of Money
(1) The Custodian shall open and maintain a separate account or
accounts in the name of the Company or cause its agent to open and
maintain such account or accounts subject only to checks, drafts or
directives by the Custodian pursuant to the terms of this
Agreement. The Custodian or its agent shall hold in such account
or accounts, subject to the provisions hereof, all cash received by
<PAGE>
PAGE 3
it from or for the account of the Company. The Custodian or its
agent shall make payments of cash to or for the account of the
Company from such cash only:
(a) for the purchase of securities for the portfolio of the
Company upon the receipt of such securities by the Custodian
or its agent unless otherwise instructed on behalf of the
Company;
(b) for the purchase or redemption of shares of capital stock of
the Company;
(c) for the payment of interest, dividends, taxes, management
fees, or operating expenses (including, without limitation
thereto, fees for legal, accounting and auditing services);
(d) for payment of distribution fees, commissions, or redemption
fees, if any;
(e) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Company
held by or to be delivered to the Custodian;
(f) for payments in connection with the return of securities
loaned by the Company upon receipt of such securities or the
reduction of collateral upon receipt of proper notice;
(g) for payments for other proper corporate purposes;
(h) or upon the termination of this Agreement.
Before making any such payment for the purposes permitted under the
terms of items (a), (b), (c), (d), (e), (f) or (g) of paragraph (1)
of this section, the Custodian shall receive and may rely upon a
custodian order directing such payment and stating that the payment
is for such a purpose permitted under these items (a), (b), (c),
(d), (e), (f) or (g) and that in respect to item (g), a copy of a
resolution of the board or of the Executive Committee of the board
signed by an officer of the Company and certified by its Secretary
or an Assistant Secretary, specifying the amount of such payment,
setting forth the purpose to be a proper corporate purpose, and
naming the person or persons to whom such payment is made.
Notwithstanding the above, for the purposes permitted under items
(a) or (f) of paragraph (1) of this section, the Custodian may rely
upon a facsimile order.
(2) The Custodian is hereby appointed the attorney-in-fact of the
Company to endorse and collect all checks, drafts or other orders
for the payment of money received by the Custodian for the account
of the Company and drawn on or to the order of the Company and to
deposit same to the account of the Company pursuant to this
Agreement.
<PAGE>
PAGE 4
Section 5. Receipt of Securities
Except as permitted by the second paragraph of this section, the
Custodian or its agent shall hold in a separate account or
accounts, and physically segregated at all times from those of any
other persons, firms or corporations, pursuant to the provisions
hereof, all securities received by it for the account of the
Company. The Custodian shall record and maintain a record of all
certificate numbers. Securities so received shall be held in the
name of the Company, in the name of an exclusive nominee duly
appointed by the Custodian or in bearer form, as appropriate.
Subject to such rules, regulations or guidelines as the Securities
and Exchange Commission may adopt, the Custodian may deposit all or
any part of the securities owned by the Company in a securities
depository which includes any system for the central handling of
securities established by a national securities exchange or a
national securities association registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, or
such other person as may be permitted by the Commission, pursuant
to which system all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical
delivery of such securities.
All securities are to be held or disposed of by the Custodian for,
and subject at all times to the instructions of, the Company
pursuant to the terms of this Agreement. The Custodian shall have
no power or authority to assign, hypothecate, pledge or otherwise
dispose of any such securities, except pursuant to the directive of
the Company and only for the account of the Company as set forth in
Section 6 of this Agreement.
Section 6. Transfer Exchange, Delivery, etc. of Securities
The Custodian shall have sole power to release or deliver any
securities of the Company held by it pursuant to this Agreement.
The Custodian agrees to transfer, exchange or deliver securities
held by it or its agent hereunder only:
(a) for sales of such securities for the account of the Company,
upon receipt of payment therefor;
(b) when such securities are called, redeemed, retired or
otherwise become payable;
(c) for examination upon the sale of any such securities in
accordance with "street delivery" custom which would include
delivery against interim receipts or other proper delivery
receipts;
(d) in exchange for or upon conversion into other securities
alone or other securities and cash whether pursuant to any
plan of
(e) merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;
<PAGE>
PAGE 5
(f) for the purpose of exchanging interim receipts or temporary
certificates for permanent certificates;
(g) upon conversion of such securities pursuant to their terms
into other securities;
(h) upon exercise of subscription, purchase or other similar
rights represented by such securities; for loans of such
securities by the Company receipt of collateral; or
(i) for other proper corporate purposes.
As to any deliveries made by the Custodian pursuant to items (a),
(b), (c), (d), (e), (f), (g) and (h), securities or cash received
in exchange therefore shall be delivered to the Custodian, its
agent, or to a securities depository. Before making any such
transfer, exchange or delivery, the Custodian shall receive a
custodian order or a facsimile from the Company requesting such
transfer, exchange or delivery and stating that it is for a purpose
permitted under Section 6 (whenever a facsimile is utilized, the
Company will also deliver an original signed custodian order) and,
in respect to item (i), a copy of a resolution of the board or of
the Executive Committee of the board signed by an officer of the
Company and certified by its Secretary or an Assistant Secretary,
specifying the securities, setting forth the purpose for which such
payment, transfer, exchange or delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the
person or persons to whom such transfer, exchange or delivery of
such securities shall be made.
Section 7. Custodian's Acts Without Instructions
Unless and until the Custodian receives a contrary custodian order
from the Company, the Custodian shall or shall cause its agent to:
(a) present for payment all coupons and other income items held
by the Custodian or its agent for the account of the Company
which call for payment upon presentation and hold all cash
received by it upon such payment for the account of the
Company;
(b) present for payment all securities held by it or its agent
which mature or when called, redeemed, retired or otherwise
become payable;
(c) ascertain all stock dividends, rights and similar securities
to be issued with respect to any securities held by the
Custodian or its agent hereunder, and to collect and hold for
the account of the Company all such securities; and
(d) ascertain all interest and cash dividends to be paid to
security holders with respect to any securities held by the
Custodian or its agent, and to collect and hold such interest
and cash dividends for the account of the Company.
<PAGE>
PAGE 6
Section 8. Voting and Other Action
Neither the Custodian nor any nominee of the Custodian shall vote
any of the securities held hereunder by or for the account of the
Company. The Custodian shall promptly deliver to the Company all
notices, proxies and proxy soliciting materials with relation to
such securities, such proxies to be executed by the registered
holder of such securities (if registered otherwise than in the name
of the Company), but without indicating the manner in which such
proxies are to be voted.
Custodian shall transmit promptly to the Company all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith) received by the Custodian from issuers of the securities
being held for the Company. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Company all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer.
Section 9. Transfer Taxes
The Company shall pay or reimburse the Custodian for any transfer
taxes payable upon transfers of securities made hereunder,
including transfers resulting from the termination of this
Agreement. The Custodian shall execute such certificates in
connection with securities delivered to it under this Agreement as
may be required, under any applicable law or regulation, to exempt
from taxation any transfers and/or deliveries of any such
securities which may be entitled to such exemption.
Section 10. Custodian's Reports
The Custodian shall furnish the Company as of the close of business
each day a statement showing all transactions and entries for the
account of the Company. The books and records of the Custodian
pertaining to its actions as Custodian under this Agreement and
securities held hereunder by the Custodian shall be open to
inspection and audit by officers of the Company, internal auditors
employed by the Company's investment advisor, and independent
auditors employed by the Company. The Custodian shall furnish the
Company in such form as may reasonably be requested by the Company
a report, including a list of the securities held by it in custody
for the account of the Company, identification of any subcustodian,
and identification of such securities held by such subcustodian, as
of the close of business of the last business day of each month,
which shall be certified by a duly authorized officer of the
Custodian. It is further understood that additional reports may
from time to time be requested by the Company. Should any report
ever be filed with any governmental authority pertaining to lost or
stolen securities, the Custodian will concurrently provide the
Company with a copy of that report.
<PAGE>
PAGE 7
The Custodian also shall furnish such reports on its systems of
internal accounting control as the Company may reasonably request
from time to time.
Section 11. Concerning Custodian
For its services hereunder the Custodian shall be paid such
compensation at such times as may from time to time be agreed on in
writing by the parties hereto in a Custodian Fee Agreement.
The Custodian shall not be liable for any action taken in good
faith upon any custodian order or facsimile herein described or
certified copy of any resolution of the board or of the Executive
Committee of the board, and may rely on the genuineness of any such
document which it may in good faith believe to have been validly
executed.
The Company agrees to indemnify and hold harmless Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against
it or its nominee in connection with the performance of this
Agreement, except such as may arise from the Custodian's or its
nominee's own negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any account of the
Company for such items. In the event of any advance of cash for
any purpose made by Custodian resulting from orders or instructions
of the Company, or in the event that Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Company shall
be security therefor.
The Custodian shall maintain a standard of care equivalent to that
which would be required of a bailee for hire and shall not be
liable for any loss or damage to the Company resulting from
participation in a securities depository unless such loss or damage
arises by reason of any negligence, misfeasance, or willful
misconduct of officers or employees of the Custodian, or from its
failure to enforce effectively such rights as it may have against
any securities depository or from use of an agent, unless such loss
or damage arises by reason of any negligence, misfeasance, or
willful misconduct of officers or employees of the Custodian, or
from its failure to enforce effectively such rights as it may have
against any agent.
Section 12. Termination and Amendment of Agreement
The Company and the Custodian mutually may agree from time to time
in writing to amend, to add to, or to delete from any provision of
this Agreement.
<PAGE>
PAGE 8
The Custodian may terminate this Agreement by giving the Company
ninety days' written notice of such termination by registered mail
addressed to the Company at its principal place of business.
The Company may terminate this Agreement at any time by written
notice thereof delivered, together with a copy of the resolution of
the board authorizing such termination and certified by the
Secretary of the Company, by registered mail to the Custodian.
Upon such termination of this Agreement, assets of the Company held
by the Custodian shall be delivered by the Custodian to a successor
custodian, if one has been appointed by the Company, upon receipt
by the Custodian of a copy of the resolution of the board certified
by the Secretary, showing appointment of the successor custodian,
and provided that such successor custodian is a bank or trust
company, organized under the laws of the United States or of any
State of the United States, having not less than two million
dollars aggregate capital, surplus and undivided profits. Upon the
termination of this Agreement as a part of the transfer of assets,
either to a successor custodian or otherwise, the Custodian will
deliver securities held by it hereunder, when so authorized and
directed by resolution of the board, to a duly appointed agent of
the successor custodian or to the appropriate transfer agents for
transfer of registration and delivery as directed. Delivery of
assets on termination of this Agreement shall be effected in a
reasonable, expeditious and orderly manner; and in order to
accomplish an orderly transition from the Custodian to the
successor custodian, the Custodian shall continue to act as such
under this Agreement as to assets in its possession or control.
Termination as to each security shall become effective upon
delivery to the successor custodian, its agent, or to a transfer
agent for a specific security for the account of the successor
custodian, and such delivery shall constitute effective delivery by
the Custodian to the successor under this Agreement.
In addition to the means of termination herein before authorized,
this Agreement may be terminated at any time by the vote of a
majority of the outstanding shares of the Company and after written
notice of such action to the Custodian.
Section 13. General
Nothing expressed or mentioned in or to be implied from any
provision of this Agreement is intended to, or shall be construed
to give any person or corporation other than the parties hereto,
any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any covenant, condition or provision herein
contained, this Agreement and all of the covenants, conditions and
provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective
successors and assigns.
<PAGE>
PAGE 9
This Agreement shall be governed by the laws of the State of
Minnesota.
STRATEGIST GROWTH FUND, INC.
Strategist Growth Fund
Strategist Growth Trends Fund
By: /s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS TRUST COMPANY
By: /s/ Chandrakant A. Patel
Chandrakant A. Patel
Vice President
<PAGE>
PAGE 1
ADDENDUM TO THE CUSTODIAN AGREEMENT
THIS ADDENDUM TO THE CUSTODIAN AGREEMENT dated May 13, 1996 between
Strategist Growth Fund, Inc. (the Company) on behalf of its
underlying series funds (the Funds) and American Express Trust
Company (the Custodian) is made pursuant to Section 12 of the
Agreement to reflect the Corporation's arrangement of investing all
of the Fund's assets in corresponding portfolios of a master trust.
American Express Financial Corporation (AEFC) serves as
administrator for the Company and for the master trust in which the
Funds invest.
The Company, the Custodian and AEFC agree as follows:
The parties to this Agreement acknowledge that, so long as the
Funds invest all of their assets in corresponding portfolios of a
master trust, the only assets held by the Funds will be units of
the corresponding portfolios of the master trust. The parties
agree that the Custodian is entitled to rely upon AEFC for an
accounting of the number of units held, purchased or redeemed by
the Company and to delegate to AEFC responsibility for all
reporting to the Company. AEFC agrees to indemnify and hold
harmless the Custodian from all claims and liabilities incurred or
assessed against the Custodian in connection with the accounting
for and reporting to the Company by AEFC.
IN WITNESS WHEREOF, the Company, the Custodian and AEFC have caused
this addendum to the Custodian Agreement to be executed on May 13,
1996 which shall remain in effect until terminated by one of the
parties on written notice to the other parties to this Addendum.
STRATEGIST GROWTH FUND, INC.
Strategist Growth Fund
Strategist Growth Trends Fund
By /s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS TRUST COMPANY
By /s/ Chandrakant A. Patel
Chandrakant A. Patel
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By /s/ Richard W. Kling
Richard W. Kling
Senior Vice President
<PAGE>
PAGE 1
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated August 19, 1996, between Strategist
Growth Fund, Inc. (the Company), a Minnesota corporation, on behalf
of its underlying series fund, and American Express Trust Company,
a corporation organized under the laws of the State of Minnesota
with its principal place of business at Minneapolis, Minnesota (the
"Custodian").
WHEREAS, the Company desires that its securities and cash be
hereafter held and administered by Custodian pursuant to the terms
of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Company and the Custodian agree as follows:
Section 1. Definitions
The word "securities" as used herein shall be construed to include,
without being limited to, shares, stocks, treasury stocks,
including any stocks of this Company, notes, bonds, debentures,
evidences of indebtedness, options to buy or sell stocks or stock
indexes, certificates of interest or participation in any profit-
sharing agreements, collateral trust certificates, preorganization
certificates or subscriptions, transferable shares, investment
contracts, voting trust certificates, certificates of deposit for a
security, fractional or undivided interests in oil, gas or other
mineral rights, or any certificates of interest or participation
in, temporary or interim certificates for, receipts for, guarantees
of, or warrants or rights to subscribe to or purchase any of the
foregoing, acceptances and other obligations and any evidence of
any right or interest in or to any cash, property or assets and any
interest or instrument commonly known as a security. In addition,
for the purpose of this Custodian Agreement, the word "securities"
also shall include other instruments in which the Company may
invest including currency forward contracts and commodities such as
interest rate or index futures contracts, margin deposits on such
contracts or options on such contracts.
The words "custodian order" shall mean a request or direction,
including a computer printout, directed to the Custodian and signed
in the name of the Company by any two individuals designated in the
current certified list referred to in Section 2.
The word "facsimile" shall mean an exact copy or likeness which is
electronically transmitted for instant reproduction.
Section 2. Names, Titles and Signatures of Authorized Persons
The Company will certify to the Custodian the names and signatures
of its present officers and other designated persons authorized on
behalf of the Company to direct the Custodian by custodian order as
herein before defined. The Company agrees that whenever any change
occurs in this list it will file with the Custodian a copy of a
resolution certified by the Secretary or an Assistant Secretary of
the Company as having been duly adopted by the board of directors <PAGE>
PAGE 2
(the "board") or the Executive Committee of the board designating
those persons currently authorized on behalf of the Company to
direct the Custodian by custodian order, as herein before defined,
and upon such filing (to be accompanied by the filing of specimen
signatures of the designated persons) the persons so designated in
said resolution shall constitute the current certified list. The
Custodian is authorized to rely and act upon the names and
signatures of the individuals as they appear in the most recent
certified list from the Company which has been delivered to the
Custodian as herein above provided.
Section 3. Use of Subcustodians
The Custodian may make arrangements, where appropriate, with other
banks having not less than two million dollars aggregate capital,
surplus and undivided profits for the custody of securities. Any
such bank selected by the Custodian to act as subcustodian shall be
deemed to be the agent of the Custodian.
The Custodian also may enter into arrangements for the custody of
securities entrusted to its care through foreign branches of United
States banks; through foreign banks, banking institutions or trust
companies; through foreign subsidiaries of United States banks or
bank holding companies, or through foreign securities depositories
or clearing agencies (hereinafter also called, collectively, the
"Foreign Subcustodian" or indirectly through an agent, established
under the first paragraph of this section, if and to the extent
permitted by Section 17(f) of the Investment Company Act of 1940
and the rules promulgated by the Securities and Exchange Commission
thereunder, any order issued by the Securities and Exchange
Commission, or any "no-action" letter received from the staff of
the Securities and Exchange Commission. To the extent the existing
provisions of the Custodian Agreement are consistent with the
requirements of such Section, rules, order or no-action letter,
they shall apply to all such foreign custodianships. To the extent
such provisions are inconsistent with or additional requirements
are established by such Section, rules, order or no-action letter,
the requirements of such Section, rules, order or no-action letter
will prevail and the parties will adhere to such requirements;
provided, however, in the absence of notification from the Company
of any changes or additions to such requirements, the Custodian
shall have no duty or responsibility to inquire as to any such
changes or additions.
Section 4. Receipt and Disbursement of Money
(1) The Custodian shall open and maintain a separate
account or accounts in the name of the Company or cause its agent
to open and maintain such account or accounts subject only to
checks, drafts or directives by the Custodian pursuant to the terms
of this Agreement. The Custodian or its agent shall hold in such
account or accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Company. The
Custodian or its agent shall make payments of cash to or for the
account of the Company from such cash only:
(a) for the purchase of securities for the portfolio of the
Company upon the receipt of such securities by the <PAGE>
PAGE 3
Custodian or its agent unless otherwise instructed on
behalf of the Company;
(b) for the purchase or redemption of shares of capital
stock of the Company;
(c) for the payment of interest, dividends, taxes,
management fees, or operating expenses (including,
without limitation thereto, fees for legal, accounting
and auditing services);
(d) for payment of distribution fees, commissions, or
redemption fees, if any;
(e) for payments in connection with the conversion,
exchange or surrender of securities owned or subscribed
to by the Company held by or to be delivered to the
Custodian;
(f) for payments in connection with the return of
securities loaned by the Company upon receipt of such
securities or the reduction of collateral upon receipt
of proper notice;
(g) for payments for other proper corporate purposes;
(h) or upon the termination of this Agreement.
Before making any such payment for the purposes permitted under the
terms of items (a), (b), (c), (d), (e), (f) or (g) of paragraph (1)
of this section, the Custodian shall receive and may rely upon a
custodian order directing such payment and stating that the payment
is for such a purpose permitted under these items (a), (b), (c),
(d), (e), (f) or (g) and that in respect to item (g), a copy of a
resolution of the board or of the Executive Committee of the board
signed by an officer of the Company and certified by its Secretary
or an Assistant Secretary, specifying the amount of such payment,
setting forth the purpose to be a proper corporate purpose, and
naming the person or persons to whom such payment is made.
Notwithstanding the above, for the purposes permitted under items
(a) or (f) of paragraph (1) of this section, the Custodian may rely
upon a facsimile order.
(2) The Custodian is hereby appointed the attorney-in-fact
of the Company to endorse and collect all checks, drafts or other
orders for the payment of money received by the Custodian for the
account of the Company and drawn on or to the order of the Company
and to deposit same to the account of the Company pursuant to this
Agreement.
Section 5. Receipt of Securities
Except as permitted by the second paragraph of this section, the
Custodian or its agent shall hold in a separate account or
accounts, and physically segregated at all times from those of any
other persons, firms or corporations, pursuant to the provisions
hereof, all securities received by it for the account of the
Company. The Custodian shall record and maintain a record of all
certificate numbers. Securities so received shall be held in the<PAGE>
PAGE 4
name of the Company, in the name of an exclusive nominee duly
appointed by the Custodian or in bearer form, as appropriate.
Subject to such rules, regulations or guidelines as the Securities
and Exchange Commission may adopt, the Custodian may deposit all or
any part of the securities owned by the Company in a securities
depository which includes any system for the central handling of
securities established by a national securities exchange or a
national securities association registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, or
such other person as may be permitted by the Commission, pursuant
to which system all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical
delivery of such securities.
All securities are to be held or disposed of by the Custodian for,
and subject at all times to the instructions of, the Company
pursuant to the terms of this Agreement. The Custodian shall have
no power or authority to assign, hypothecate, pledge or otherwise
dispose of any such securities, except pursuant to the directive of
the Company and only for the account of the Company as set forth in
Section 6 of this Agreement.
Section 6. Transfer Exchange, Delivery, etc. of Securities
The Custodian shall have sole power to release or deliver any
securities of the Company held by it pursuant to this Agreement.
The Custodian agrees to transfer, exchange or deliver securities
held by it or its agent hereunder only:
(a) for sales of such securities for the account of the
Company, upon receipt of payment therefor;
(b) when such securities are called, redeemed, retired or
otherwise become payable;
(c) for examination upon the sale of any such securities in
accordance with "street delivery" custom which would
include delivery against interim receipts or other
proper delivery receipts;
(d) in exchange for or upon conversion into other
securities alone or other securities and cash whether
pursuant to any plan of
(e) merger, consolidation, reorganization, recapitalization
or readjustment, or otherwise;
(f) for the purpose of exchanging interim receipts or
temporary certificates for permanent certificates;
(g) upon conversion of such securities pursuant to their
terms into other securities;
(h) upon exercise of subscription, purchase or other
similar rights represented by such securities; for
loans of such securities by the Company receipt of
collateral; or
<PAGE>
PAGE 5
(i) for other proper corporate purposes.
As to any deliveries made by the Custodian pursuant to items (a),
(b), (c), (d), (e), (f), (g) and (h), securities or cash received
in exchange therefore shall be delivered to the Custodian, its
agent, or to a securities depository. Before making any such
transfer, exchange or delivery, the Custodian shall receive a
custodian order or a facsimile from the Company requesting such
transfer, exchange or delivery and stating that it is for a purpose
permitted under Section 6 (whenever a facsimile is utilized, the
Company will also deliver an original signed custodian order) and,
in respect to item (i), a copy of a resolution of the board or of
the Executive Committee of the board signed by an officer of the
Company and certified by its Secretary or an Assistant Secretary,
specifying the securities, setting forth the purpose for which such
payment, transfer, exchange or delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the
person or persons to whom such transfer, exchange or delivery of
such securities shall be made.
Section 7. Custodian's Acts Without Instructions
Unless and until the Custodian receives a contrary custodian order
from the Company, the Custodian shall or shall cause its agent to:
(a) present for payment all coupons and other income items
held by the Custodian or its agent for the account of
the Company which call for payment upon presentation
and hold all cash received by it upon such payment for
the account of the Company;
(b) present for payment all securities held by it or its
agent which mature or when called, redeemed, retired or
otherwise become payable;
(c) ascertain all stock dividends, rights and similar
securities to be issued with respect to any securities
held by the Custodian or its agent hereunder, and to
collect and hold for the account of the Company all
such securities; and
(d) ascertain all interest and cash dividends to be paid
to security holders with respect to any securities held
by the Custodian or its agent, and to collect and hold
such interest and cash dividends for the account of the
Company.
Section 8. Voting and Other Action
Neither the Custodian nor any nominee of the Custodian shall vote
any of the securities held hereunder by or for the account of the
Company. The Custodian shall promptly deliver to the Company all
notices, proxies and proxy soliciting materials with relation to
such securities, such proxies to be executed by the registered
holder of such securities (if registered otherwise than in the name
of the Company), but without indicating the manner in which such
proxies are to be voted.
<PAGE>
PAGE 6
Custodian shall transmit promptly to the Company all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith) received by the Custodian from issuers of the securities
being held for the Company. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Company all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer.
Section 9. Transfer Taxes
The Company shall pay or reimburse the Custodian for any transfer
taxes payable upon transfers of securities made hereunder,
including transfers resulting from the termination of this
Agreement. The Custodian shall execute such certificates in
connection with securities delivered to it under this Agreement as
may be required, under any applicable law or regulation, to exempt
from taxation any transfers and/or deliveries of any such
securities which may be entitled to such exemption.
Section 10. Custodian's Reports
The Custodian shall furnish the Company as of the close of business
each day a statement showing all transactions and entries for the
account of the Company. The books and records of the Custodian
pertaining to its actions as Custodian under this Agreement and
securities held hereunder by the Custodian shall be open to
inspection and audit by officers of the Company, internal auditors
employed by the Company's investment advisor, and independent
auditors employed by the Company. The Custodian shall furnish the
Company in such form as may reasonably be requested by the Company
a report, including a list of the securities held by it in custody
for the account of the Company, identification of any subcustodian,
and identification of such securities held by such subcustodian, as
of the close of business of the last business day of each month,
which shall be certified by a duly authorized officer of the
Custodian. It is further understood that additional reports may
from time to time be requested by the Company. Should any report
ever be filed with any governmental authority pertaining to lost or
stolen securities, the Custodian will concurrently provide the
Company with a copy of that report.
The Custodian also shall furnish such reports on its systems of
internal accounting control as the Company may reasonably request
from time to time.
Section 11. Concerning Custodian
For its services hereunder the Custodian shall be paid such
compensation at such times as may from time to time be agreed on in
writing by the parties hereto in a Custodian Fee Agreement.
The Custodian shall not be liable for any action taken in good
faith upon any custodian order or facsimile herein described or
certified copy of any resolution of the board or of the Executive
Committee of the board, and may rely on the genuineness of any such
document which it may in good faith believe to have been validly
executed.<PAGE>
PAGE 7
The Company agrees to indemnify and hold harmless Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against
it or its nominee in connection with the performance of this
Agreement, except such as may arise from the Custodian's or its
nominee's own negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any account of the
Company for such items. In the event of any advance of cash for
any purpose made by Custodian resulting from orders or instructions
of the Company, or in the event that Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Company shall
be security therefor.
The Custodian shall maintain a standard of care equivalent to that
which would be required of a bailee for hire and shall not be
liable for any loss or damage to the Company resulting from
participation in a securities depository unless such loss or damage
arises by reason of any negligence, misfeasance, or willful
misconduct of officers or employees of the Custodian, or from its
failure to enforce effectively such rights as it may have against
any securities depository or from use of an agent, unless such loss
or damage arises by reason of any negligence, misfeasance, or
willful misconduct of officers or employees of the Custodian, or
from its failure to enforce effectively such rights as it may have
against any agent.
Section 12. Termination and Amendment of Agreement
The Company and the Custodian mutually may agree from time to time
in writing to amend, to add to, or to delete from any provision of
this Agreement.
The Custodian may terminate this Agreement by giving the Company
ninety days' written notice of such termination by registered mail
addressed to the Company at its principal place of business.
The Company may terminate this Agreement at any time by written
notice thereof delivered, together with a copy of the resolution of
the board authorizing such termination and certified by the
Secretary of the Company, by registered mail to the Custodian.
Upon such termination of this Agreement, assets of the Company held
by the Custodian shall be delivered by the Custodian to a successor
custodian, if one has been appointed by the Company, upon receipt
by the Custodian of a copy of the resolution of the board certified
by the Secretary, showing appointment of the successor custodian,
and provided that such successor custodian is a bank or trust
company, organized under the laws of the United States or of any
State of the United States, having not less than two million
dollars aggregate capital, surplus and undivided profits. Upon the
termination of this Agreement as a part of the transfer of assets,
either to a successor custodian or otherwise, the Custodian will
deliver securities held by it hereunder, when so authorized and
directed by resolution of the board, to a duly appointed agent of <PAGE>
PAGE 8
the successor custodian or to the appropriate transfer agents for
transfer of registration and delivery as directed. Delivery of
assets on termination of this Agreement shall be effected in a
reasonable, expeditious and orderly manner; and in order to
accomplish an orderly transition from the Custodian to the
successor custodian, the Custodian shall continue to act as such
under this Agreement as to assets in its possession or control.
Termination as to each security shall become effective upon
delivery to the successor custodian, its agent, or to a transfer
agent for a specific security for the account of the successor
custodian, and such delivery shall constitute effective delivery by
the Custodian to the successor under this Agreement.
In addition to the means of termination herein before authorized,
this Agreement may be terminated at any time by the vote of a
majority of the outstanding shares of the Company and after written
notice of such action to the Custodian.
Section 13. General
Nothing expressed or mentioned in or to be implied from any
provision of this Agreement is intended to, or shall be construed
to give any person or corporation other than the parties hereto,
any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any covenant, condition or provision herein
contained, this Agreement and all of the covenants, conditions and
provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective
successors and assigns.
This Agreement shall be governed by the laws of the State of
Minnesota.
STRATEGIST GROWTH FUND, INC.
Strategist Special Growth Fund
By: /s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS TRUST COMPANY
By: /s/ Chandrakant A. Patel
Chandrakant A. Patel
Vice President
<PAGE>
PAGE 1
ADDENDUM TO THE CUSTODIAN AGREEMENT
THIS ADDENDUM TO THE CUSTODIAN AGREEMENT dated August 19, 1996
between Strategist Growth Fund (the Company) on behalf of its
underlying series fund, Strategist Special Growth Fund, (the Fund)
and American Express Trust Company (the Custodian) is made pursuant
to Section 12 of the Agreement to reflect the Corporation's
arrangement of investing all of the Fund's assets in corresponding
portfolio of a master trust.
American Express Financial Corporation (AEFC) serves as
administrator for the Company and for the master trust in which the
Funds invest.
The Company, the Custodian and AEFC agree as follows:
The parties to this Agreement acknowledge that, so long as the
Funds invest all of their assets in corresponding portfolios of a
master trust, the only assets held by the Funds will be units of
the corresponding portfolios of the master trust. The parties
agree that the Custodian is entitled to rely upon AEFC for an
accounting of the number of units held, purchased or redeemed by
the Company and to delegate to AEFC responsibility for all
reporting to the Company. AEFC agrees to indemnify and hold
harmless the Custodian from all claims and liabilities incurred or
assessed against the Custodian in connection with the accounting
for and reporting to the Company by AEFC.
IN WITNESS WHEREOF, the Company, the Custodian and AEFC have caused
this addendum to the Custodian Agreement to be executed on August
__, 1996 which shall remain in effect until terminated by one of
the parties on written notice to the other parties to this
Addendum.
STRATEGIST GROWTH FUND, INC.
Strategist Aggressive Growth Fund
By/s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS TRUST COMPANY
By/s/ Chandrakant A. Patel
Chandrakant A. Patel
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By/s/ Richard W. Kling
Richard W. Kling
Senior Vice President
<PAGE>
PAGE 1
TRANSFER AGENCY AGREEMENT
AGREEMENT dated as of May 13, 1996, between Strategist Growth Fund,
Inc. (the "Company"), a Minnesota corporation, on behalf of its
underlying series funds, and American Express Financial Corporation
(the "Transfer Agent"), a Delaware corporation.
In consideration of the mutual promises set forth below, the
Company and the Transfer Agent agree as follows:
1. Appointment of the Transfer Agent. The Company hereby appoints
the Transfer Agent, as transfer agent for its shares and as
shareholder servicing agent for the Company, and the Transfer Agent
accepts such appointment and agrees to perform the duties set forth
below.
2. Compensation. The Company will compensate the Transfer Agent for
the performance of its obligations as set forth in Schedule A.
Schedule A does not include out-of-pocket disbursements of the
Transfer Agent for which the Transfer Agent shall be entitled to
bill the Company separately.
The Transfer Agent will bill the Company monthly. The fee provided
for hereunder shall be paid in cash by the Company to the Transfer
Agent within five (5) business days after the last day of each
month.
Out-of-pocket disbursements shall include, but shall not be limited
to, the items specified in Schedule B. Reimbursement by the Company
for expenses incurred by the Transfer Agent in any month shall be
made as soon as practicable after the receipt of an itemized bill
from the Transfer Agent.
Any compensation jointly agreed to hereunder may be adjusted from
time to time by attaching to this Agreement a revised Schedule A,
dated and signed by an officer of each party.
3. Documents. The Company will furnish from time to time such
certificates, documents or opinions as the Transfer Agent deems to
be appropriate or necessary for the proper performance of its
duties.
4. Representations of the Company and the Transfer Agent.
(a) The Company represents to the Transfer Agent that all
outstanding shares are validly issued, fully paid and
non-assessable by the Company. When shares are hereafter issued in
accordance with the terms of the Company's Articles of
Incorporation and its prospectus, such shares shall be validly
issued, fully paid and non- assessable by the Company.
(b) The Transfer Agent represents that it is registered under
Section 17A(c) of the Securities Exchange Act of 1934. The
Transfer Agent agrees to maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under
this agreement and to comply with all applicable laws.
<PAGE>
PAGE 2
5. Duties of the Transfer Agent. The Transfer Agent shall be
responsible, separately and through its subsidiaries or affiliates,
for the following functions:
(a) Sale of Company Shares.
(1) On receipt of an application and payment, wired instructions
and payment, or payment identified as being for the account of a
shareholder, the Transfer Agent will deposit the payment, prepare
and present the necessary report to the Custodian and record the
purchase of shares in a timely fashion in accordance with the terms
of the prospectus. All shares shall be held in book entry form and
no certificate shall be issued unless the Company is permitted to
do so by the prospectus and the purchaser so requests.
(2) On receipt of notice that payment was dishonored, the Transfer
Agent shall stop redemptions of all shares owned by the purchaser
related to that payment, place a stop payment on any checks that
have been issued to redeem shares of the purchaser and take such
other action as it deems appropriate.
(b) Redemption of Company Shares. On receipt of instructions to
redeem shares in accordance with the terms of the Company's
prospectus, the Transfer Agent will record the redemption of shares
of the Company, prepare and present the necessary report to the
Custodian and pay the proceeds of the redemption to the
shareholder, an authorized agent or legal representative upon the
receipt of the monies from the Custodian.
(c) Transfer or Other Change Pertaining to Company Shares. On
receipt of instructions or forms acceptable to the Transfer Agent
to transfer the shares to the name of a new owner, change the name
or address of the present owner or take other legal action, the
Transfer Agent will take such action as is requested.
(d) Exchange of Company Shares. On receipt of instructions to
exchange the shares of the Company for the shares of another fund
in the Strategist Fund Group or other American Express Financial
Corporation product in accordance with the terms of the prospectus,
the Transfer Agent will process the exchange in the same manner as
a redemption and sale of shares.
(e) Right to Seek Assurance. The Transfer Agent may refuse to
transfer, exchange or redeem shares of the Company or take any
action requested by a shareholder until it is satisfied that the
requested transaction or action is legally authorized or until it
is satisfied there is no basis for any claims adverse to the
transaction or action. It may rely on the provisions of the
Uniform Act for the Simplification of Fiduciary Security Transfers
or the Uniform Commercial Code. The Company shall indemnify the
Transfer Agent for any act done or omitted to be done in reliance
on such laws or for refusing to transfer, exchange or redeem shares
or taking any requested action if it acts on a good faith belief
that the transaction or action is illegal or unauthorized.
(f) Shareholder Records, Reports and Services.
<PAGE>
PAGE 3
(1) The Transfer Agent shall maintain all shareholder accounts,
which shall contain all required tax, legally imposed and
regulatory information; shall provide shareholders, and file with
federal and state agencies, all required tax and other reports
pertaining to shareholder accounts; shall prepare shareholder
mailing lists; shall cause to be printed and mailed all required
prospectuses, annual reports, semiannual reports, statements of
additional information (upon request), proxies and other mailings
to shareholders; and shall cause proxies to be tabulated.
(2) The Transfer Agent shall respond to all valid inquiries related
to its duties under this Agreement.
(3) The Transfer Agent shall create and maintain all records in
accordance with all applicable laws, rules and regulations,
including, but not limited to, the records required by Section
31(a) of the Investment Company Act of 1940.
(g) Dividends and Distributions. The Transfer Agent shall prepare
and present the necessary report to the Custodian and shall cause
to be prepared and transmitted the payment of income dividends and
capital gains distributions or cause to be recorded the investment
of such dividends and distributions in additional shares of the
Corporation or as directed by instructions or forms acceptable to
the Transfer Agent.
(h) Confirmations and Statements. The Transfer Agent shall confirm
each transaction either at the time of the transaction or through
periodic reports as may be legally permitted.
(i) Lost or Stolen Checks. The Transfer Agent will replace lost or
stolen checks issued to shareholders upon receipt of proper
notification and will maintain any stop payment orders against the
lost or stolen checks as it is economically desirable to do.
(j) Reports to Company. The Transfer Agent will provide reports
pertaining to the services provided under this Agreement as the
Company may request to ascertain the quality and level of services
being provided or as required by law.
(k) Other Duties. The Transfer Agent may perform other duties for
additional compensation if agreed to in writing by the parties to
this Agreement.
6. Ownership and Confidentiality of Records. The Transfer Agent
agrees that all records prepared or maintained by it relating to
the services to be performed by it under the terms of this
Agreement are the property of the Company and may be inspected by
the Company or any person retained by the Company at reasonable
times. The Company and Transfer Agent agree to protect the
confidentiality of those records.
7. Action by Board and Opinion of Company's Counsel. The Transfer
Agent may rely on resolutions of the Board of Directors (the
"Board") or the Executive Committee of the Board and on opinion of
counsel for the Company.
<PAGE>
PAGE 4
8. Duty of Care. It is understood and agreed that, in furnishing
the Company with the services as herein provided, neither the
Transfer Agent, nor any officer, director or agent thereof shall be
held liable for any loss arising out of or in connection with their
actions under this Agreement so long as they act in good faith and
with due diligence, and are not negligent or guilty of any willful
misconduct. It is further understood and agreed that the Transfer
Agent may rely upon information furnished to it reasonably believed
to be accurate and reliable. In the event the Transfer Agent is
unable to perform its obligations under the terms of this Agreement
because of an act of God, strike or equipment or transmission
failure reasonably beyond its control, the Transfer Agent shall not
be liable for any damages resulting from such failure.
9. Term and Termination. This Agreement shall become effective on
the date first set forth above (the "Effective Date") and shall
continue in effect from year to year thereafter as the parties may
mutually agree; provided that either party may terminate this
Agreement by giving the other party notice in writing specifying
the date of such termination, which shall be not less than 60 days
after the date of receipt of such notice. In the event such notice
is given by the Company, it shall be accompanied by a vote of the
Board, certified by the Secretary, electing to terminate this
Agreement and designating a successor transfer agent or transfer
agents. Upon such termination and at the expense of the Company,
the Transfer Agent will deliver to such successor a certified list
of shareholders of the Company (with name, address and taxpayer
identification or Social Security number), a historical record of
the account of each shareholder and the status thereof, and all
other relevant books, records, correspondence, and other data
established or maintained by the Transfer Agent under this
Agreement in the form reasonably acceptable to the Company, and
will cooperate in the transfer of such duties and responsibilities,
including provisions for assistance from the Transfer Agent's
personnel in the establishment of books, records and other data by
such successor or successors.
10. Amendment. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties.
11. Subcontracting. The Company agrees that the Transfer Agent may
subcontract for certain of the services described under this
Agreement with the understanding that there shall be no diminution
in the quality or level of the services and that the Transfer Agent
remains fully responsible for the services. Except for
out-of-pocket expenses identified in Schedule B, the Transfer Agent
shall bear the cost of subcontracting such services, unless
otherwise agreed by the parties.
12. Miscellaneous.
(a) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable
without the written consent of the other party.
(b) This Agreement shall be governed by the laws of the State of
Minnesota.
<PAGE>
PAGE 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers as of the day and year
written above.
STRATEGIST GROWTH FUND, INC.
Strategist Growth Fund
Strategist Growth Trends Fund
By: /s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS FINANCIAL CORPORATION
By: /s/ Richard W. Kling
Richard W. Kling
Senior Vice President
<PAGE>
PAGE 6
Schedule A
STRATEGIST GROWTH FUND, INC.
FEE
Effective the 13th day of May, 1996, the annual fee for
services under this agreement is as follows:
$20 per account
Until July 31, 1997, AEFC has agreed to waive fees and to absorb
fund expenses under this Agreement. If, at the end of any month,
the fees and expenses of the Fund under this Agreement and any
other agreement between the Fund and AEFC exceed 1.3% for Growth
Fund or 1.3% for Growth Trends Fund, the Fund shall not pay fees
and expenses under this Agreement to the extent necessary to keep
the Growth and Growth Trends Funds' expense ratio from exceeding
the limitation.
<PAGE>
PAGE 7
Schedule B
OUT-OF-POCKET EXPENSES
The Company shall reimburse the Transfer Agent monthly for the
following out-of-pocket expenses:
o typesetting, printing, paper, envelopes, postage and return
postage for proxy soliciting material, and proxy tabulation costs
o printing, paper, envelopes and postage for dividend notices,
dividend checks, records of account, purchase confirmations,
exchange confirmations and exchange prospectuses, redemption
confirmations, redemption checks, confirmations on changes of
address and any other communication required to be sent to
shareholders
o typesetting, printing, paper, envelopes and postage for
prospectuses, annual and semiannual reports, statements of
additional information, supplements for prospectuses and statements
of additional information and other required mailings to
shareholders
o stop orders
o outgoing wire charges
o other expenses incurred at the request or with the consent of the
Company
<PAGE>
PAGE 1
TRANSFER AGENCY AGREEMENT
AGREEMENT dated as of August 19, 1996, between Strategist Growth
Fund, Inc. (the "Company"), a Minnesota corporation, on behalf of
its underlying series fund, and American Express Financial
Corporation (the "Transfer Agent"), a Delaware corporation.
In consideration of the mutual promises set forth below, the
Company and the Transfer Agent agree as follows:
1. Appointment of the Transfer Agent. The Company hereby appoints
the Transfer Agent, as transfer agent for its shares and as
shareholder servicing agent for the Company, and the Transfer Agent
accepts such appointment and agrees to perform the duties set forth
below.
2. Compensation. The Company will compensate the Transfer Agent for
the performance of its obligations as set forth in Schedule A.
Schedule A does not include out-of-pocket disbursements of the
Transfer Agent for which the Transfer Agent shall be entitled to
bill the Company separately.
The Transfer Agent will bill the Company monthly. The fee provided
for hereunder shall be paid in cash by the Company to the Transfer
Agent within five (5) business days after the last day of each
month.
Out-of-pocket disbursements shall include, but shall not be limited
to, the items specified in Schedule B. Reimbursement by the Company
for expenses incurred by the Transfer Agent in any month shall be
made as soon as practicable after the receipt of an itemized bill
from the Transfer Agent.
Any compensation jointly agreed to hereunder may be adjusted from
time to time by attaching to this Agreement a revised Schedule A,
dated and signed by an officer of each party.
3. Documents. The Company will furnish from time to time such
certificates, documents or opinions as the Transfer Agent deems to
be appropriate or necessary for the proper performance of its
duties.
4. Representations of the Company and the Transfer Agent.
(a) The Company represents to the Transfer Agent that all
outstanding shares are validly issued, fully paid and
non-assessable by the Company. When shares are hereafter issued in
accordance with the terms of the Company's Articles of
Incorporation and its prospectus, such shares shall be validly
issued, fully paid and non- assessable by the Company.
(b) The Transfer Agent represents that it is registered under
Section 17A(c) of the Securities Exchange Act of 1934. The
Transfer Agent agrees to maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under
this agreement and to comply with all applicable laws.
<PAGE>
PAGE 2
5. Duties of the Transfer Agent. The Transfer Agent shall be
responsible, separately and through its subsidiaries or affiliates,
for the following functions:
(a) Sale of Company Shares.
(1) On receipt of an application and payment, wired instructions
and payment, or payment identified as being for the account of a
shareholder, the Transfer Agent will deposit the payment, prepare
and present the necessary report to the Custodian and record the
purchase of shares in a timely fashion in accordance with the terms
of the prospectus. All shares shall be held in book entry form and
no certificate shall be issued unless the Company is permitted to
do so by the prospectus and the purchaser so requests.
(2) On receipt of notice that payment was dishonored, the Transfer
Agent shall stop redemptions of all shares owned by the purchaser
related to that payment, place a stop payment on any checks that
have been issued to redeem shares of the purchaser and take such
other action as it deems appropriate.
(b) Redemption of Company Shares. On receipt of instructions to
redeem shares in accordance with the terms of the Company's
prospectus, the Transfer Agent will record the redemption of shares
of the Company, prepare and present the necessary report to the
Custodian and pay the proceeds of the redemption to the
shareholder, an authorized agent or legal representative upon the
receipt of the monies from the Custodian.
(c) Transfer or Other Change Pertaining to Company Shares. On
receipt of instructions or forms acceptable to the Transfer Agent
to transfer the shares to the name of a new owner, change the name
or address of the present owner or take other legal action, the
Transfer Agent will take such action as is requested.
(d) Exchange of Company Shares. On receipt of instructions to
exchange the shares of the Company for the shares of another fund
in the Strategist Fund Group or other American Express Financial
Corporation product in accordance with the terms of the prospectus,
the Transfer Agent will process the exchange in the same manner as
a redemption and sale of shares.
(e) Right to Seek Assurance. The Transfer Agent may refuse to
transfer, exchange or redeem shares of the Company or take any
action requested by a shareholder until it is satisfied that the
requested transaction or action is legally authorized or until it
is satisfied there is no basis for any claims adverse to the
transaction or action. It may rely on the provisions of the
Uniform Act for the Simplification of Fiduciary Security Transfers
or the Uniform Commercial Code. The Company shall indemnify the
Transfer Agent for any act done or omitted to be done in reliance
on such laws or for refusing to transfer, exchange or redeem shares
or taking any requested action if it acts on a good faith belief
that the transaction or action is illegal or unauthorized.
(f) Shareholder Records, Reports and Services.
<PAGE>
PAGE 3
(1) The Transfer Agent shall maintain all shareholder accounts,
which shall contain all required tax, legally imposed and
regulatory information; shall provide shareholders, and file with
federal and state agencies, all required tax and other reports
pertaining to shareholder accounts; shall prepare shareholder
mailing lists; shall cause to be printed and mailed all required
prospectuses, annual reports, semiannual reports, statements of
additional information (upon request), proxies and other mailings
to shareholders; and shall cause proxies to be tabulated.
(2) The Transfer Agent shall respond to all valid inquiries related
to its duties under this Agreement.
(3) The Transfer Agent shall create and maintain all records in
accordance with all applicable laws, rules and regulations,
including, but not limited to, the records required by Section
31(a) of the Investment Company Act of 1940.
(g) Dividends and Distributions. The Transfer Agent shall prepare
and present the necessary report to the Custodian and shall cause
to be prepared and transmitted the payment of income dividends and
capital gains distributions or cause to be recorded the investment
of such dividends and distributions in additional shares of the
Corporation or as directed by instructions or forms acceptable to
the Transfer Agent.
(h) Confirmations and Statements. The Transfer Agent shall confirm
each transaction either at the time of the transaction or through
periodic reports as may be legally permitted.
(i) Lost or Stolen Checks. The Transfer Agent will replace lost or
stolen checks issued to shareholders upon receipt of proper
notification and will maintain any stop payment orders against the
lost or stolen checks as it is economically desirable to do.
(j) Reports to Company. The Transfer Agent will provide reports
pertaining to the services provided under this Agreement as the
Company may request to ascertain the quality and level of services
being provided or as required by law.
(k) Other Duties. The Transfer Agent may perform other duties for
additional compensation if agreed to in writing by the parties to
this Agreement.
6. Ownership and Confidentiality of Records. The Transfer Agent
agrees that all records prepared or maintained by it relating to
the services to be performed by it under the terms of this
Agreement are the property of the Company and may be inspected by
the Company or any person retained by the Company at reasonable
times. The Company and Transfer Agent agree to protect the
confidentiality of those records.
7. Action by Board and Opinion of Company's Counsel. The Transfer
Agent may rely on resolutions of the Board of Directors (the
"Board") or the Executive Committee of the Board and on opinion of
counsel for the Company.
<PAGE>
PAGE 4
8. Duty of Care. It is understood and agreed that, in furnishing
the Company with the services as herein provided, neither the
Transfer Agent, nor any officer, director or agent thereof shall be
held liable for any loss arising out of or in connection with their
actions under this Agreement so long as they act in good faith and
with due diligence, and are not negligent or guilty of any willful
misconduct. It is further understood and agreed that the Transfer
Agent may rely upon information furnished to it reasonably believed
to be accurate and reliable. In the event the Transfer Agent is
unable to perform its obligations under the terms of this Agreement
because of an act of God, strike or equipment or transmission
failure reasonably beyond its control, the Transfer Agent shall not
be liable for any damages resulting from such failure.
9. Term and Termination. This Agreement shall become effective on
the date first set forth above (the "Effective Date") and shall
continue in effect from year to year thereafter as the parties may
mutually agree; provided that either party may terminate this
Agreement by giving the other party notice in writing specifying
the date of such termination, which shall be not less than 60 days
after the date of receipt of such notice. In the event such notice
is given by the Company, it shall be accompanied by a vote of the
Board, certified by the Secretary, electing to terminate this
Agreement and designating a successor transfer agent or transfer
agents. Upon such termination and at the expense of the Company,
the Transfer Agent will deliver to such successor a certified list
of shareholders of the Company (with name, address and taxpayer
identification or Social Security number), a historical record of
the account of each shareholder and the status thereof, and all
other relevant books, records, correspondence, and other data
established or maintained by the Transfer Agent under this
Agreement in the form reasonably acceptable to the Company, and
will cooperate in the transfer of such duties and responsibilities,
including provisions for assistance from the Transfer Agent's
personnel in the establishment of books, records and other data by
such successor or successors.
10. Amendment. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties.
11. Subcontracting. The Company agrees that the Transfer Agent may
subcontract for certain of the services described under this
Agreement with the understanding that there shall be no diminution
in the quality or level of the services and that the Transfer Agent
remains fully responsible for the services. Except for
out-of-pocket expenses identified in Schedule B, the Transfer Agent
shall bear the cost of subcontracting such services, unless
otherwise agreed by the parties.
12. Miscellaneous.
(a) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable
without the written consent of the other party.
(b) This Agreement shall be governed by the laws of the State of
Minnesota.<PAGE>
PAGE 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers as of the day and year
written above.
STRATEGIST GROWTH FUND, INC.
Strategist Special Growth Fund.
By:/s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS FINANCIAL CORPORATION
By:/s/ Richard W. Kling
Richard W. Kling
Vice President
<PAGE>
PAGE 6
Schedule A
STRATEGIST GROWTH FUND, INC.
FEE
Effective the 19th day of August, 1996, the annual fee for services
under this agreement is as follows:
$20 per account
Until July 31, 1997, AEFC has agreed to waive fees and to absorb
fund expenses under this Agreement. If, at the end of any month,
the fees and expenses of the Fund under this Agreement and any
other agreement between the Fund and AEFC exceed 1.40%, the Fund
shall not pay fees and expenses under this Agreement to the extent
necessary to keep the Fund's expense ratio from exceeding the
limitation.
<PAGE>
PAGE 7
Schedule B
OUT-OF-POCKET EXPENSES
The Company shall reimburse the Transfer Agent monthly for the
following out-of-pocket expenses:
o typesetting, printing, paper, envelopes, postage and return
postage for proxy soliciting material, and proxy tabulation costs
o printing, paper, envelopes and postage for dividend notices,
dividend checks, records of account, purchase confirmations,
exchange confirmations and exchange prospectuses, redemption
confirmations, redemption checks, confirmations on changes of
address and any other communication required to be sent to
shareholders
o typesetting, printing, paper, envelopes and postage for
prospectuses, annual and semiannual reports, statements of
additional information, supplements for prospectuses and statements
of additional information and other required mailings to
shareholders
o stop orders
o outgoing wire charges
o other expenses incurred at the request or with the consent of the
Company
<PAGE>
PAGE 1
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made the 13th day of May, 1996, by and between Strategist
Growth Fund, Inc. (the "Company"), a Minnesota corporation, on
behalf of its underlying series funds, and American Express
Financial Corporation (the "Corporation"), a Delaware corporation.
Part One: SERVICES
(1) The Company hereby retains the Corporation, and the Corporation
hereby agrees, for the period of this Agreement and under the terms
and conditions hereinafter set forth, to furnish the Company
continuously with all administrative, accounting, clerical,
statistical, correspondence, corporate and all other services of
whatever nature required in connection with the administration of
the Company as provided under this Agreement; and to pay such
expenses as may be provided for in Part Three hereof; subject
always to the direction and control of the Board of Directors (the
"Board"), the Executive Committee and the authorized officers of
the Company. The Corporation agrees to maintain an adequate
organization of competent persons to provide the services and to
perform the functions herein mentioned. The Corporation agrees to
meet with any persons at such times as the Board deems appropriate
for the purpose of reviewing the Corporation's performance under
this Agreement.
(2) The Company agrees that it will furnish to the Corporation any
information that the latter may reasonably request with respect to
the services performed or to be performed by the Corporation under
this Agreement.
(3) It is understood and agreed that in furnishing the Company with
the services as herein provided, neither the Corporation, nor any
officer, director or agent thereof shall be held liable to the
Company or its creditors or shareholders for errors of judgment or
for anything except willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or reckless disregard
of its obligations and duties under the terms of this Agreement. It
is further understood and agreed that the Corporation may rely upon
information furnished to it reasonably believed to be accurate and
reliable.
Part Two: COMPENSATION FOR SERVICES
(1) The Company agrees to pay to the Corporation, and the
Corporation covenants and agrees to accept from the Company in full
payment for the services furnished, based on the net assets of the
Company as set forth in the following table:
<PAGE>
PAGE 2
Assets Annual rate at
(billions) each asset level
Strategist Growth Fund
Strategist Growth Trends Fund
First $1 0.050%
Next 1 0.045
Next 1 0.040
Next 3 0.035
Over 6 0.030
The administrative fee for each calendar day of each year shall be
equal to 1/365th (1/366th in each leap year) on the total amount
computed. The computation shall be made for each such day on the
basis of net assets as of the close of business on the full
business day two (2) business days prior to the day for which the
computation is being made. In the case of the suspension of the
computation of net asset value, the administrative fee for each day
during such suspension shall be computed as of the close of
business on the last full business day on which the net assets were
computed. As used herein, "net assets" as of the close of a full
business day shall include all transactions in shares of the
Company recorded on the books of the Company for that day.
(2) The administrative fee shall be paid on a monthly basis and, in
the event of the termination of this Agreement, the administrative
fee accrued shall be prorated on the basis of the number of days
that this Agreement is in effect during the month with respect to
which such payment is made.
(3) The administrative fee provided for hereunder shall be paid in
cash by the Company to the Corporation within five (5) business
days after the last day of each month.
(4) Until July 31, 1997, AEFC has agreed to waive fees and to
absorb fund expenses under this Agreement. If, at the end of any
month, the fees and expenses of the Fund under this Agreement and
any other agreement between the Fund and AEFC exceed 1.3% for
Growth Fund or 1.3% for Growth Trends Fund, the Fund shall not pay
fees and expenses under this Agreement to the extent necessary to
keep the Growth and Growth Trends Funds' expense ratio from
exceeding the limitation.
Part Three: ALLOCATION OF EXPENSES
(1) The Company agrees to pay:
(a) Administrative fees payable to the Corporation for its services
under the terms of this Agreement.
(b) Taxes.
(c) Fees and charges of its independent certified public
accountants for services the Company requests.
(d) Fees and expenses of attorneys for services the company
requests.
<PAGE>
PAGE 3
(e) Fees paid for the qualification and registration for public
sale of the securities of the Company under the laws of the United
States and of the several states in which such securities shall be
offered for sale.
(f) Office expenses which shall include a charge for occupancy,
insurance on the premises, furniture and equipment, telephone,
telegraph, electronic information services, books, periodicals,
published services, and office supplies used by the Company, equal
to the cost of such incurred by American Express Financial
Corporation.
(g) Fees of consultants employed by the Company.
(h) Directors, officers and employees expenses which shall include
fees, salaries, memberships, dues, travel, seminars, pension,
profit sharing, and all other benefits paid to or provided for
directors, officers and employees, directors and officers liability
insurance, errors and omissions liability insurance, worker's
compensation insurance and other expenses applicable to the
directors, officers and employees, except the Company will not pay
any fees or expenses of any person who is an officer or employee of
the Corporation or its affiliates.
(i) Filing fees and charges incurred by the Company in connection
with filing any amendment to its articles of incorporation, or
incurred in filing any other document with the State of Minnesota
or its political subdivisions.
(j) Organizational expenses of the Company.
(k) One-half of the Investment Company Institute membership dues
charged jointly to the Preferred Master Trust Group and the
Corporation.
(l) Expenses properly payable by the Company, approved by the
Board.
(2) The Corporation agrees to pay all expenses associated with the
services it provides under the terms of this Agreement. Further,
the Corporation agrees that if, at the end of any month, the
expenses of the Company under this Agreement and any other
agreement between the Company and the Corporation, but excluding
those expenses set forth in (1)(b) of this Part Three, exceed the
most restrictive applicable state expenses limitation, the Company
shall not pay those expenses set forth in (1)(a) and (c) through
(m) of this Part Three to the extent necessary to keep the
Company's expenses from exceeding the limitation, it being
understood that the Corporation will assume all unpaid expenses and
bill the Company for them in subsequent months but in no event can
the accumulation of unpaid expenses or billing be carried past the
end of the Company's fiscal year.
<PAGE>
PAGE 4
Part Four: MISCELLANEOUS
(1) The Corporation shall be deemed to be an independent contractor
and, except as expressly provided or authorized in this Agreement,
shall have no authority to act for or represent the Company.
(2) A "full business day" shall be as defined in the By- laws.
(3) The Company recognizes that the Corporation now renders and may
continue to render investment advice and other services to other
investment companies and persons which may or may not have
investment policies and investments similar to those of the Company
and that the Corporation manages its own investments and/or those
of its subsidiaries. The Corporation shall be free to render such
investment advice and other services and the Company hereby
consents thereto.
(4) Neither this Agreement nor any transaction had pursuant hereto
shall be invalidated or in anyway affected by the fact that
directors, officers, agents and/or shareholders of the Company are
or may be interested in the Corporation or any successor or
assignee thereof, as directors, officers, stockholders or
otherwise; that directors, officers, stockholders or agents of the
Corporation are or may be interested in the Company as directors,
officers, shareholders, or otherwise; or that the Corporation or
any successor or assignee, is or may be interested in the Company
as shareholder or otherwise, provided, however, that neither the
Corporation, nor any officer, director or employee thereof or of
the Corporation, shall sell to or buy from the Company any property
or security other than shares issued by the Company, except in
accordance with applicable regulations or orders of the United
States Securities and Exchange Commission.
(5) Any notice under this Agreement shall be given in writing,
addressed, and delivered, or mailed postpaid, to the party to this
Agreement entitled to receive such, at such party's principal place
of business in Minneapolis, Minnesota, or to such other address as
either party may designate in writing mailed to the other.
(6) The Corporation agrees that no officer, director or employee of
the Corporation will deal for or on behalf of the Company with
himself as principal or agent, or with any corporation or
partnership in which he may have a financial interest, except that
this shall not prohibit officers, directors or employees of the
Corporation from having a financial interest in the Company or in
the Corporation.
(7) The Company agrees that the Corporation may subcontract for
certain of the services described under this Agreement with the
understanding that there shall be no diminution in the quality or
level of the services and that the Corporation remains fully
responsible for the services.
<PAGE>
PAGE 5
(8) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable
without the written consent of the other party. This Agreement
shall be governed by the laws of the State of Minnesota.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall become effective on the date first set
forth above (the "Effective Date") and shall continue in effect
from year to year thereafter as the parties may mutually agree;
provided that either party may terminate this Agreement by giving
the other party notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of
receipt of such notice.
(2) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties.
IN WITNESS THEREOF, the parties hereto have executed the foregoing
Agreement as of the day and year first above written.
STRATEGIST GROWTH FUND, INC.
Strategist Growth Fund
Strategist Growth Trends Fund
By: /s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS FINANCIAL CORPORATION
By: /s/ Richard W. Kling
Richard W. Kling
Senior Vice President
<PAGE>
PAGE 1
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made the 19th day of August, 1996, by and between
Strategist Growth Fund, Inc. (the "Company"), a Minnesota
corporation, on behalf of its underlying series fund, and American
Express Financial Corporation (the "Corporation"), a Delaware
corporation.
Part One: SERVICES
(1) The Company hereby retains the Corporation, and the
Corporation hereby agrees, for the period of this Agreement and
under the terms and conditions hereinafter set forth, to furnish
the Company continuously with all administrative, accounting,
clerical, statistical, correspondence, corporate and all other
services of whatever nature required in connection with the
administration of the Company as provided under this Agreement; and
to pay such expenses as may be provided for in Part Three hereof;
subject always to the direction and control of the Board of
Directors (the "Board"), the Executive Committee and the authorized
officers of the Company. The Corporation agrees to maintain an
adequate organization of competent persons to provide the services
and to perform the functions herein mentioned. The Corporation
agrees to meet with any persons at such times as the Board deems
appropriate for the purpose of reviewing the Corporation's
performance under this Agreement.
(2) The Company agrees that it will furnish to the
Corporation any information that the latter may reasonably request
with respect to the services performed or to be performed by the
Corporation under this Agreement.
(3) It is understood and agreed that in furnishing the
Company with the services as herein provided, neither the
Corporation, nor any officer, director or agent thereof shall be
held liable to the Company or its creditors or shareholders for
errors of judgment or for anything except willful misfeasance, bad
faith, or gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the terms of
this Agreement. It is further understood and agreed that the
Corporation may rely upon information furnished to it reasonably
believed to be accurate and reliable.
Part Two: COMPENSATION FOR SERVICES
(1) The Company agrees to pay to the Corporation, and the
Corporation covenants and agrees to accept from the Company in full
payment for the services furnished, based on the net assets of the
Company as set forth in the following table:
Assets Annual rate at
(billions) each asset level
<PAGE>
PAGE 2
Strategist Special Growth Fund
First $0.25 0.060%
Next 0.25 0.055
Next 0.50 0.050
Next 1.0 0.045
Next 1.0 0.040
Next 3.0 0.035
Over 6.0 0.030
The administrative fee for each calendar day of each year shall be
equal to 1/365th (1/366th in each leap year) on the total amount
computed. The computation shall be made for each such day on the
basis of net assets as of the close of business on the full
business day two (2) business days prior to the day for which the
computation is being made. In the case of the suspension of the
computation of net asset value, the administrative fee for each day
during such suspension shall be computed as of the close of
business on the last full business day on which the net assets were
computed. As used herein, "net assets" as of the close of a full
business day shall include all transactions in shares of the
Company recorded on the books of the Company for that day.
(2) The administrative fee shall be paid on a monthly basis
and, in the event of the termination of this Agreement, the
administrative fee accrued shall be prorated on the basis of the
number of days that this Agreement is in effect during the month
with respect to which such payment is made.
(3) The administrative fee provided for hereunder shall be
paid in cash by the Company to the Corporation within five (5)
business days after the last day of each month.
(4) Until July 31, 1997, AEFC has agreed to waive fees and
to absorb fund expenses under this Agreement. If, at the end of
any month, the fees and expenses of the Fund under this Agreement
and any other agreement between the Fund and AEFC exceed 1.40%, the
Fund shall not pay fees and expenses under this Agreement to the
extent necessary to keep the Fund's expense ratio from exceeding
the limitation.
Part Three: ALLOCATION OF EXPENSES
(1) The Company agrees to pay:
(a) Administrative fees payable to the Corporation for its
services under the terms of this Agreement.
(b) Taxes.
(c) Fees and charges of its independent certified public
accountants for services the Company requests.
(d) Fees and expenses of attorneys for services the company
requests.
<PAGE>
PAGE 3
(e) Fees paid for the qualification and registration for
public sale of the securities of the Company under the laws of the
United States and of the several states in which such securities
shall be offered for sale.
(f) Office expenses which shall include a charge for
occupancy, insurance on the premises, furniture and equipment,
telephone, telegraph, electronic information services, books,
periodicals, published services, and office supplies used by the
Company, equal to the cost of such incurred by American Express
Financial Corporation.
(g) Fees of consultants employed by the Company.
(h) Directors, officers and employees expenses which shall
include fees, salaries, memberships, dues, travel, seminars,
pension, profit sharing, and all other benefits paid to or provided
for directors, officers and employees, directors and officers
liability insurance, errors and omissions liability insurance,
worker's compensation insurance and other expenses applicable to
the directors, officers and employees, except the Company will not
pay any fees or expenses of any person who is an officer or
employee of the Corporation or its affiliates.
(i) Filing fees and charges incurred by the Company in
connection with filing any amendment to its articles of
incorporation, or incurred in filing any other document with the
State of Minnesota or its political subdivisions.
(j) Organizational expenses of the Company.
(k) One-half of the Investment Company Institute membership
dues charged jointly to the Preferred Master Trust Group and the
Corporation.
(l) Expenses properly payable by the Company, approved by
the Board.
(2) The Corporation agrees to pay all expenses associated
with the services it provides under the terms of this Agreement.
Further, the Corporation agrees that if, at the end of any month,
the expenses of the Company under this Agreement and any other
agreement between the Company and the Corporation, but excluding
those expenses set forth in (1)(b) of this Part Three, exceed the
most restrictive applicable state expenses limitation, the Company
shall not pay those expenses set forth in (1)(a) and (c) through
(m) of this Part Three to the extent necessary to keep the
Company's expenses from exceeding the limitation, it being
understood that the Corporation will assume all unpaid expenses and
bill the Company for them in subsequent months but in no event can
the accumulation of unpaid expenses or billing be carried past the
end of the Company's fiscal year.
<PAGE>
PAGE 4
Part Four: MISCELLANEOUS
(1) The Corporation shall be deemed to be an independent
contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for or represent the
Company.
(2) A "full business day" shall be as defined in the By-
laws.
(3) The Company recognizes that the Corporation now renders
and may continue to render investment advice and other services to
other investment companies and persons which may or may not have
investment policies and investments similar to those of the Company
and that the Corporation manages its own investments and/or those
of its subsidiaries. The Corporation shall be free to render such
investment advice and other services and the Company hereby
consents thereto.
(4) Neither this Agreement nor any transaction had pursuant
hereto shall be invalidated or in anyway affected by the fact that
directors, officers, agents and/or shareholders of the Company are
or may be interested in the Corporation or any successor or
assignee thereof, as directors, officers, stockholders or
otherwise; that directors, officers, stockholders or agents of the
Corporation are or may be interested in the Company as directors,
officers, shareholders, or otherwise; or that the Corporation or
any successor or assignee, is or may be interested in the Company
as shareholder or otherwise, provided, however, that neither the
Corporation, nor any officer, director or employee thereof or of
the Corporation, shall sell to or buy from the Company any property
or security other than shares issued by the Company, except in
accordance with applicable regulations or orders of the United
States Securities and Exchange Commission.
(5) Any notice under this Agreement shall be given in
writing, addressed, and delivered, or mailed postpaid, to the party
to this Agreement entitled to receive such, at such party's
principal place of business in Minneapolis, Minnesota, or to such
other address as either party may designate in writing mailed to
the other.
(6) The Corporation agrees that no officer, director or
employee of the Corporation will deal for or on behalf of the
Company with himself as principal or agent, or with any corporation
or partnership in which he may have a financial interest, except
that this shall not prohibit officers, directors or employees of
the Corporation from having a financial interest in the Company or
in the Corporation.
(7) The Company agrees that the Corporation may subcontract
for certain of the services described under this Agreement with the
understanding that there shall be no diminution in the quality or
level of the services and that the Corporation remains fully
responsible for the services.
<PAGE>
PAGE 5
(8) This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable without the written consent of the other party. This
Agreement shall be governed by the laws of the State of Minnesota.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall become effective on the date first
set forth above (the "Effective Date") and shall continue in effect
from year to year thereafter as the parties may mutually agree;
provided that either party may terminate this Agreement by giving
the other party notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of
receipt of such notice.
(2) This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties.
IN WITNESS THEREOF, the parties hereto have executed the foregoing
Agreement as of the day and year first above written.
STRATEGIST GROWTH FUND, INC.
Strategist Special Growth Fund
By: /s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS FINANCIAL CORPORATION
By: /s/ Richard W. Kling
Richard W. Kling
Senior Vice President
<PAGE>
PAGE 1
GROWTH PORTFOLIO
AGREEMENT AND DECLARATION OF UNITHOLDERS
This AGREEMENT AND DECLARATION OF UNITHOLDERS is made
at Minneapolis, Minnesota, as of this 13th day of May, 1996 by the
holders of beneficial interest of Growth Portfolio, a separate
series of Growth Trust.
WITNESS that
WHEREAS, the Declaration of Trust for Growth Trust
provides for no restrictions on the transfer of units therein; and
WHEREAS, the holders of units in Growth Portfolio
desire to restrict the transfer of their units in Growth Portfolio;
NOW, THEREFORE, the undersigned hereby declare that
they will not transfer any units in Growth Portfolio held by them
without the prior written consent of the other unitholders holding
at least two thirds of the Growth Portfolio's units outstanding
(excluding the units of the holder seeking to effect the transfer)
and that any attempted transfer in violation of this agreement
shall be null and void. This agreement shall not affect the rights
of any unitholder to redeem units in Growth Portfolio as provided
for in the Declaration of Trust. The undersigned also acknowledge
that the remedy of damages for the violation of this agreement
would be inadequate and therefore further agree that this agreement
shall be enforceable solely by the remedy of specific performance.
IDS GROWTH FUND, INC.
/s/ Leslie L. Ogg
Leslie L. Ogg
Vice President and General Counsel
STRATEGIST GROWTH FUND, INC.
Strategist Growth Fund
/s/ James A. Mitchell
James A. Mitchell
President
<PAGE>
PAGE 1
GROWTH TRENDS PORTFOLIO
AGREEMENT AND DECLARATION OF UNITHOLDERS
This AGREEMENT AND DECLARATION OF UNITHOLDERS is made at
Minneapolis, Minnesota, as of this 13th day of May, 1996 by the
holders of beneficial interest of Growth Trends Portfolio, a
separate series of Growth Trust.
WITNESS that
WHEREAS, the Declaration of Trust for Growth Trust provides for no
restrictions on the transfer of units therein; and
WHEREAS, the holders of units in Growth Trends Portfolio desire to
restrict the transfer of their units in Growth Trends Portfolio;
NOW, THEREFORE, the undersigned hereby declare that they will not
transfer any units in Growth Trends Portfolio held by them without
the prior written consent of the other unitholders holding at least
two thirds of the Growth Trends Portfolio's units outstanding
(excluding the units of the holder seeking to effect the transfer)
and that any attempted transfer in violation of this agreement
shall be null and void. This agreement shall not affect the rights
of any unitholder to redeem units in Growth Trends Portfolio as
provided for in the Declaration of Trust. The undersigned also
acknowledge that the remedy of damages for the violation of this
agreement would be inadequate and therefore further agree that this
agreement shall be enforceable solely by the remedy of specific
performance.
IDS NEW DIMENSIONS FUND, INC.
/s/ Leslie L. Ogg
Leslie L. Ogg
Vice President and General Counsel
STRATEGIST GROWTH FUND, INC.
Strategist Growth Trends Fund
/s/ James A. Mitchell
James A. Mitchell
President
<PAGE>
PAGE 1
AGGRESSIVE GROWTH PORTFOLIO
AGREEMENT AND DECLARATION OF UNITHOLDERS
This AGREEMENT AND DECLARATION OF UNITHOLDERS is made at
Minneapolis, Minnesota, as of this 19th day of August, 1996 by the
holders of beneficial interest of Aggressive Growth Portfolio, a
separate series of Growth Trust.
WHEREAS, the Declaration of Trust for Growth Trust provides for no
restrictions on the transfer of units therein; and
WHEREAS, the holders of units in Aggressive Growth Portfolio
desire to restrict the transfer of their units in Aggressive Growth
Portfolio;
NOW, THEREFORE, the undersigned hereby declare that they will not
transfer any units in Aggressive Growth Portfolio held by them
without the prior written consent of the other unitholders holding
at least two thirds of the Aggressive Growth Portfolio's units
outstanding (excluding the units of the holder seeking to effect
the transfer) and that any attempted transfer in violation of this
agreement shall be null and void. This agreement shall not affect
the rights of any unitholder to redeem units in Aggressive Growth
Portfolio as provided for in the Declaration of Trust. The
undersigned also acknowledge that the remedy of damages for the
violation of this agreement would be inadequate and therefore
further agree that this agreement shall be enforceable solely by
the remedy of specific performance.
IDS GROWTH FUND, INC.
IDS Research Opportunities Fund
/s/ Leslie L. Ogg
Leslie L. Ogg
Vice President and General Counsel
STRATEGIST GROWTH FUND, INC.
Strategist Special Growth Fund
/s/ James A. Mitchell
James A. Mitchell
President
<PAGE>
PAGE 1
Independent auditors' consent
___________________________________________________________
The board of directors and shareholders
Strategist Growth Fund, Inc.:
Strategist Growth Fund
Strategist Growth Trends Funds
We consent to the use of our reports incorporated herein by
reference and to 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
March 27, 1997
<PAGE>
PAGE 1
Plan and Agreement of Distribution
This plan and agreement is made by and between Strategist Growth
Fund, Inc. (the "Company") on behalf of its underlying series
funds, and American Express Service Corporation ("AESC"), the
principal underwriter of the Company, for distribution services to
the Company.
The Plan and Agreement has been approved by members of the Board of
Directors (the "Board") of the Company who are not interested
persons of the Company and have no direct or indirect financial
interest in the operation of the plan or any related agreement, and
all of the members of the Board, in person, at a meeting called for
the purpose of voting on the plan and agreement.
The Plan and Agreement provides that:
1. The Company will reimburse AESC for all sales and promotional
expenses attributable to the sale of the Company's shares,
including sales commissions, business and employee expenses charged
to distribution of shares, and corporate overhead appropriately
allocated to the sale of shares.
2. The amount of the reimbursement shall be equal on an annual
basis to 0.25% of the average daily net assets of the Company. The
amount so determined shall be paid to AESC in cash within five (5)
business days after the last day of each month. AESC agrees that
if, at the end of any month, the expenses of the Company, including
fees under this agreement and any other agreement between the
Company and AESC or American Express Financial Corporation, but
excluding taxes, brokerage commissions and charges in connection
with the purchase and sale of assets, exceed the most restrictive
applicable state expense limitation for the Company's current
fiscal year, the Company shall not pay fees and expenses under this
agreement to the extent necessary to keep the Company's expenses
from exceeding the limitation, it being understood that AESC will
assume all unpaid expenses and bill the Company for them in
subsequent months, but in no event can the accumulation of unpaid
expenses or billing be carried past the end of the Company's
fiscal year.
Until July 31, 1997, AESC has agreed to waive fees and to absorb
fund expenses under this Agreement. If, at the end of any month,
the fees and expenses of the Fund under this Agreement and any
other agreement between the Fund and AESC exceed 1.3% for Growth
Fund or 1.3% for Growth Trends Fund, the Fund shall not pay fees
and expenses under this Agreement to the extent necessary to keep
the Growth and Growth Trends Funds' expense ratio from exceeding
the limitation.
3. AESC agrees to provide at least quarterly an analysis of
distribution expenses and to meet with representatives of the
Company as reasonably requested to provide additional information.
<PAGE>
PAGE 2
4. The Plan and Agreement shall continue in effect for a period
of more than one year provided it is reapproved at least annually
in the same manner in which it was initially approved.
5. The Plan and Agreement may not be amended to increase
materially the amount that may be paid by the Company without the
approval of a least a majority of the Company's outstanding shares.
6. This agreement may be terminated at any time without payment
of any penalty by a vote of a majority of the members of the Board
who are not interested persons of the Company and have no financial
interest in the operation of the plan and agreement, or by vote of
a majority of the Company's outstanding shares, or by AESC. The
Plan and Agreement will terminate automatically in the event of its
assignment as that term is defined in the Investment Company Act of
1940.
Approved this 13th day of May, 1996.
STRATEGIST GROWTH FUND, INC.
Strategist Growth Fund
Strategist Growth Trends Fund
By /s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS SERVICE CORPORATION
By /s/ Richard W. Kling
Richard W. Kling
Vice President
<PAGE>
PAGE 1
Plan and Agreement of Distribution
This plan and agreement is made by and between Strategist Growth
Fund, Inc. (the "Company") on behalf of its underlying series fund,
and American Express Service Corporation ("AESC"), the principal
underwriter of the Company, for distribution services to the
Company.
The Plan and Agreement has been approved by members of the Board of
Directors (the "Board") of the Company who are not interested
persons of the Company and have no direct or indirect financial
interest in the operation of the plan or any related agreement, and
all of the members of the Board, in person, at a meeting called for
the purpose of voting on the plan and agreement.
The Plan and Agreement provides that:
1. The Company will reimburse AESC for all sales and promotional
expenses attributable to the sale of the Company's shares,
including sales commissions, business and employee expenses charged
to distribution of shares, and corporate overhead appropriately
allocated to the sale of shares.
2. The amount of the reimbursement shall be equal on an annual
basis to 0.25% of the average daily net assets of the Company. The
amount so determined shall be paid to AESC in cash within five (5)
business days after the last day of each month. AESC agrees that
if, at the end of any month, the expenses of the Company, including
fees under this agreement and any other agreement between the
Company and AESC or American Express Financial Corporation, but
excluding taxes, brokerage commissions and charges in connection
with the purchase and sale of assets, exceed the most restrictive
applicable state expense limitation for the Company's current
fiscal year, the Company shall not pay fees and expenses under this
agreement to the extent necessary to keep the Company's expenses
from exceeding the limitation, it being understood that AESC will
assume all unpaid expenses and bill the Company for them in
subsequent months, but in no event can the accumulation of unpaid
expenses or billing be carried past the end of the Company's
fiscal year.
Until July 31, 1997, AESC has agreed to waive fees and to absorb
fund expenses under this Agreement. If, at the end of any month,
the fees and expenses of the Fund under this Agreement and any
other agreement between the Fund and AESC exceed 1.40%, the Fund
shall not pay fees and expenses under this Agreement to the extent
necessary to keep the Fund's expense ratio from exceeding the
limitation.
3. AESC agrees to provide at least quarterly an analysis of
distribution expenses and to meet with representatives of the
Company as reasonably requested to provide additional information.
4. The Plan and Agreement shall continue in effect for a period
of more than one year provided it is reapproved at least annually
in the same manner in which it was initially approved.
<PAGE>
PAGE 2
5. The Plan and Agreement may not be amended to increase
materially the amount that may be paid by the Company without the
approval of a least a majority of the Company's outstanding shares.
6. This agreement may be terminated at any time without payment
of any penalty by a vote of a majority of the members of the Board
who are not interested persons of the Company and have no financial
interest in the operation of the plan and agreement, or by vote of
a majority of the Company's outstanding shares, or by AESC. The
Plan and Agreement will terminate automatically in the event of its
assignment as that term is defined in the Investment Company Act of
1940.
Approved this 19th day of August, 1996.
STRATEGIST GROWTH FUND, INC.
Strategist Special Growth Fund
By /s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS SERVICE CORPORATION
By /s/ Richard W. Kling
Richard W. Kling
Vice President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> STRATEGIST SPECIAL GROWTH FUND
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JAN-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 261
<ASSETS-OTHER> 994866
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 995127
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5331
<TOTAL-LIABILITIES> 5331
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 897207
<SHARES-COMMON-STOCK> 173854
<SHARES-COMMON-PRIOR> 200
<ACCUMULATED-NII-CURRENT> 56
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 71399
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21124
<NET-ASSETS> 989786
<DIVIDEND-INCOME> 3975
<INTEREST-INCOME> 2312
<OTHER-INCOME> 0
<EXPENSES-NET> 4814
<NET-INVESTMENT-INCOME> 1473
<REALIZED-GAINS-CURRENT> 72399
<APPREC-INCREASE-CURRENT> 21124
<NET-CHANGE-FROM-OPS> 94996
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1417)
<DISTRIBUTIONS-OF-GAINS> (1000)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 176520
<NUMBER-OF-SHARES-REDEEMED> (3305)
<SHARES-REINVESTED> 439
<NET-CHANGE-IN-ASSETS> 988786
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2654
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27952
<AVERAGE-NET-ASSETS> 760557
<PER-SHARE-NAV-BEGIN> 5.00
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> .70
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> .01
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.69
<EXPENSE-RATIO> 1.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
PAGE 1
TRUSTEES POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as 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 Investment Company Act of 1940 with the
Securities and Exchange Commission:
1940 Act
Reg. Number
Growth Trust 811-07395
Growth and Income Trust 811-07393
Income Trust 811-07307
Tax-Free Income Trust 811-07397
World Trust 811-07399
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 Act 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.
Dated the 8th day of January, 1997.
/s/ H. Brewster Atwater, Jr. /s/ Melvin R. Laird
H. Brewster Atwater, Jr. Melvin R. Laird
/s/ Lynne V. Cheney /s/ William R. Pearce
Lynne V. Cheney William R. Pearce
/s/ William H. Dudley /s/ Alan K. Simpson
William H. Dudley Alan K. Simpson
/s/ Robert F. Froehlke /s/ Edson W. Spencer
Robert F. Froehlke Edson W. Spencer
/s/ David R. Hubers /s/ John R. Thomas
David R. Hubers John R. Thomas
/s/ Heinz F. Hutter /s/ Wheelock Whitney
Heinz F. Hutter Wheelock Whitney
/s/ Anne P. Jones /s/ C. Angus Wurtele
Anne P. Jones C. Angus Wurtele
