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Amercian
Express
Financial
Direct
Strategist Growth Fund, Inc.
1997 Annual Report
Strategist Growth Fund
Strategist Growth Trends Fund
Strategist Special Growth Fund
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Table of contents
From the portfolio managers 1
The Funds' long-term performance 7
Independent auditors' report (Strategist Growth Fund, Inc.) 10
Financial statements (Strategist Growth Fund, Inc.) 11
Notes to financial statements (Strategist Growth Fund, Inc.) 16
Federal income tax information (Strategist Growth Fund, Inc.) 21
Independent auditors' report (Growth Portfolio) 22
Financial statements (Growth Portfolio) 23
Notes to financial statements (Growth Portfolio) 26
Investments in securities (Growth Portfolio) 30
Independent auditors' report (Growth Trends Portfolio) 38
Financial statements (Growth Trends Portfolio) 39
Notes to financial statements (Growth Trends Portfolio) 42
Investments in securities (Growth Trends Portfolio) 46
Independent auditors' report (Aggressive Growth Portfolio) 58
Financial statements (Aggressive Growth Portfolio) 59
Notes to financial statements (Aggressive Growth Portfolio) 62
Investments in securities (Aggressive Growth Portfolio) 66
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From the portfolio managers
(picture of) Mitzi Malevich
Strategist Growth Fund recorded a strong gain during the past 12 months, as the
stock market staged its strongest rally in many years. The result was a total
return of 57.06% for investors over the August 1996 through July 1997 period.
The return was comfortably ahead of that generated by the stock market as a
whole, as measured by the Standard & Poor's 500 stock index, a group of
unmanaged stocks commonly used as a proxy for the market. (Part of the Fund's
return came in the form of a capital gain, which was paid to shareholders last
December and reduced the Fund's net asset value by the same amount at that
time.)
As if on cue, the stock market began its advance just as the fiscal year got
underway. Buoyed by ongoing reports of low inflation, solid corporate profits
and an expanding economy, the market powered its way through the fall and winter
before stalling in mid-March. By that time, heightened fear of rising inflation
had driven up long-term interest rates, which in turn drove the market down by
close to 10% during the ensuing weeks. But by May, stocks had shaken off the
setback and were off and running to new highs through the end of the period.
Large growth stocks set pace
For the most part, the market's advance was led by stocks of large, rapidly
growing companies, a trend that works to this Fund's advantage. To the Fund's
further benefit, stocks of technology-related companies, including computer
hardware and software producers, and consumer-related companies, including
health-care providers and food/beverage producers, recorded some of the biggest
gains during the 12 months. As they have for several years, those two business
sectors comprised more than half of the portfolio's investments, with Microsoft,
Cisco Systems, Tellabs, Nike, Coca-Cola and HealthSouth among the best
individual performers. There was little turnover in the portfolio, as I
continued to be optimistic about the long-term prospects for the great majority
of holdings.
Also working to the Fund's benefit was its low level of cash reserves, as it
proved to be much more rewarding to keep virtually all of the assets invested in
stocks. This low-cash, or "fully invested," strategy is consistent with my
investment style and, while it does make the Fund more vulnerable during market
downturns, I believe it allows for a higher return over the long run.
As I wrote in my letter to you six months ago, I continue to find the investment
environment largely favorable. Inflation remains low, corporations are still
reporting solid profits and long-term interest rates continue to be at a
comfortable level. Those fundamentals haven't changed. What has changed is that
the stock market is at a much higher level than it was when the fiscal year
began in August 1996, which makes it more vulnerable to a negative change in any
of the fundamentals. But more important, even if the market does experience a
downturn in the months ahead, I don't think that will alter the underlying bias
of the market, which, I believe, will continue to work in favor of patient,
persistent investors over the next few years.
Mitzi Malevich
Portfolio Manager
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From the portfolio managers
(picture of) Gordon Fines
A soaring stock market and good securities selection made for a highly rewarding
fiscal year for Strategist Growth Trends Fund. During the period -- August 1996
through July 1997 -- investors in the Fund realized a total return (net asset
value change and distributions) of 43.74%.
Although nothing more than a pleasant accident, the market's surge began almost
in concert with the start of the Fund's fiscal year. A virtually ideal
environment for stocks prevailed for most of the period, highlighted by low
inflation, healthy corporate earnings, solid economic growth and generally low
long-term interest rates. Not surprisingly, the stock market flourished,
experiencing only one notable setback. That came last spring, when fear of a
potential increase in inflation drove up long-term interest rates and sent
stocks tumbling. Within weeks, though, the market had gotten back on its feet
and began marching to new highs through the end of the fiscal year. The Fund's
performance basically tracked that of the broad market over the entire period.
Characteristic of the market in recent years, stocks of large companies,
commonly called "large-caps," fared considerably better than their smaller
counterparts during the 12 months. Moreover, those with above-average profit
increases -- growth companies -- were in particular favor with investors. For a
large-cap growth fund such as this one, that proved to be a fruitful
combination.
Strongest sectors
Consistent with my strategy of recent years, I kept most of the portfolio's
assets invested in stocks in the technology/telecommunications, health care and
financial/business services sectors, which continued to offer much of corporate
America's greatest earnings growth. As for individual standout stocks, General
Electric, Cisco Systems, Microsoft, Intel, Citicorp and Pfizer were among the
Fund's biggest winners over the period. The great majority of the stock
investments were domestic; only about 10% went into those of foreign firms,
though I think that category is beginning to show more promise. Apart from some
minor shifts, the structure of the portfolio was essentially unchanged during
the period.
You may recall that in my last report to shareholders I thought it unlikely that
the stock market would continue to enjoy such a positive environment throughout
1997. While I still feel that way, at this point (mid-August) no major stumbling
blocks have surfaced. I think the keys for the market continue to be the
strength of corporate earnings and the direction of long-term interest rates. As
we wait to see how these and other factors unfold in the months ahead, I plan to
keep the portfolio invested based on the themes -- technology/
telecommunications, health care and financial/business services -- that have
worked to its advantage in recent years.
Gordon Fines
Portfolio Manager
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From the portfolio managers
(picture of)Guru Baliga
Strategist Special Growth Fund took advantage of a powerful bull market to post
an uncommonly strong gain during the past fiscal year which ran from August 19,
1996 (the Fund's inception date) through July 1997. Over that period, the Fund
generated a total return of 38.37%.
The timing of the Fund's introduction proved to be fortunate, as the stock
market was just beginning its remarkable rally. At that time, August 1996, the
foundation for the advance had just fallen into place: inflation was tame;
long-term interest rates had leveled off; corporations were reporting robust
profits; and the economy appeared healthy.
Supported by those excellent fundamentals, perhaps no one should have been
surprised when, for the next 12 months, the market went on an
almost-uninterrupted march. The only meaningful downturn (just under 10%) came
late last winter, when worries about a potential rise in the inflation rate sent
long-term interest rates higher. But the inflation fears soon subsided, rates
came back down, and the market was again on its way to higher ground. To put the
strength of the rally in perspective, the market's 16.6% surge in the second
quarter (April through June) was its best quarterly performance since 1991.
Health care, technology, financial services strong
The Fund's performance basically tracked that of the broad market -- two
striking advances sandwiched around a moderate, mid-period slump. Moreover, the
business sectors that drove the stock market -- health care, technology and
financial services -- to a large degree also drove the Fund. Among the top
individual performers for the portfolio were, in no particular order: Northern
Telecom, Intel, Computer Associates, Boston Scientific, American Home Products,
Gillette, Schering Plough, Merck, Boeing, Alcoa, Allied Signal, NationsBank,
BankBoston and Providian.
The only real disappointment over the period was what turned out to be the
premature sale of certain high-priced technology stocks -- primarily Dell
Computer, IBM and Microsoft -- that rebounded sharply from the late-winter
slump. On the other hand, being highly selective paid off when it came to
retailing, a sector that struggled for most of the fiscal year. Also benefiting
Fund performance was the decision to keep a low level of cash reserves, as stock
investments ultimately generated a much greater return.
As we begin a new fiscal year, the investment environment continues to benefit
from low inflation, moderate economic growth, low long-term interest rates and
generally good corporate profits. That's encouraging. But, like all good things,
this perfect world also will come to an end at some point, and the stock market
will stall out and, perhaps, retreat. While I can't predict when that will
happen, I can tell you that it's a normal part of investing and that I expect it
will prove to be only a temporary interruption in what I believe is still a
long-term positive trend for the stock market.
Guru Baliga
Portfolio Manager
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The Funds' long-term performance
How your $10,000 has grown in Strategist Growth Fund
Average annual total return
(as of July 31, 1997)
1 year 5 years 10 years
+57.06% +23.19% +15.70%
$14,209
Strategist
Growth
S&P 500 Fund
Stock Index
Lipper Growth
Fund Index
$10,000
5/31/96 6/30/96 7/31/96 8/31/96 9/30/96 10/31/96 11/30/96 12/31/96 1/31/97
2/28/97 3/31/97 4/30/97 5/31/97 6/30/97 7/31/97
Assumes: Holding period from 5/31/96 to 7/31/97. Returns do not reflect taxes
payable on distributions. There is no reinvestment of income or capital gain
distributions for the Fund. Also see "Performance" in the Fund's current
prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the Standard & Poor's 500 Stock Index (S&P
500) and the Lipper Growth Fund Index. Your investment and return values
fluctuate so that your shares, when redeemed, may be worth more or less than the
original cost. This was a period of widely fluctuating security prices. Past
performance is no guarantee of future results.
On May 13, 1996, IDS Growth Fund (the predecessor fund) converted to a
master/feeder structure and transferred all of its assets to Growth Portfolio.
The performance information in the total return table, other than the 1 year
average annual total return, represents performance of the predecessor fund
prior to March 20, 1995 and of Class A shares of the predecessor fund from March
20, 1995 through May 13, 1996, adjusted to reflect the absence of sales charges
on shares of the Fund. The historical performance has not been adjusted for any
difference between the estimated aggregate fees and expenses of the Fund and
historical fees and expenses of the predecessor fund.
S&P 500, an unmanaged list of common stocks, is frequently used as a general
measure of market performance. However, the S&P 500 companies are generally
larger than those in which the Portfolio invests.
Lipper Growth Fund Index, an unmanaged index published by Lipper Analytical
Services, Inc., includes 30 funds that are generally similar to the Fund,
although some funds in the index may have somewhat different investment policies
or objectives. <PAGE>
How your $10,000 has grown in Strategist Growth Trends Fund
Average annual total return
(as of July 31, 1997)
1 year 5 years 10 years
+43.74% +20.19% +16.52%
$13,779
Strategist
Growth
S&P 500 Trends
Stock Index Fund
Lipper Growth
Fund Index
$10,000
5/31/96 6/30/96 7/31/96 8/31/96 9/30/96 10/31/96 11/30/96 12/31/96 1/31/97
2/28/97 3/31/97 4/30/97 5/31/97 6/30/97 7/31/97
Assumes: Holding period from 5/31/96 to 7/31/97. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund, with a value of $36. Also see "Performance" in the
Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the Standard & Poor's 500 Stock Index (S&P
500) and the Lipper Growth Fund Index. Your investment and return values
fluctuate so that your shares, when redeemed, may be worth more or less than the
original cost. This was a period of widely fluctuating security prices. Past
performance is no guarantee of future results.
On May 13, 1996, IDS New Dimensions Fund (the predecessor fund) converted to a
master/feeder structure and transferred all of its assets to Growth Trends
Portfolio. The performance information in the total return table, other than the
1 year average annual total return, represents performance of the predecessor
fund prior to March 20, 1995 and of Class A shares of the predecessor fund from
March 20, 1995 through May 13, 1996, adjusted to reflect the absence of sales
charges on shares of the Fund. The historical performance has not been adjusted
for any difference between the estimated aggregate fees and expenses of the Fund
and historical fees and expenses of the predecessor fund.
S&P 500, an unmanaged list of common stocks, is frequently used as a general
measure of market performance. However, the S&P 500 companies are generally
larger than those in which the Portfolio invests.
Lipper Growth Fund Index, an unmanaged index published by Lipper Analytical
Services, Inc., includes 30 funds that are generally similar to the Fund,
although some funds in the index may have somewhat different investment policies
or objectives.
<PAGE>
How your $10,000 has grown in Strategist Special Growth Fund
Average annual total return
(as of July 31, 1997)
Since inception*
+38.37%
*inception date was Aug. 19, 1996
$14,236
Strategist
Special
S&P 500 Growth
Stock Index Fund
$10,000
8/31/96 9/30/96 10/31/96 11/30/96 12/31/96 1/31/97 2/28/97 3/31/97 4/30/97
5/31/97 6/30/97 7/31/97
Assumes: Holding period from 8/31/96 to 7/31/97. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund, with a value of $37. Also see "Performance" in the
Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to a widely
cited performance index, the Standard & Poor's 500 Stock Index (S&P 500). Your
investment and return values fluctuate so that your shares, when redeemed, may
be worth more or less than the original cost. This was a period of widely
fluctuating security prices. Past performance is no guarantee of future results.
S&P 500, an unmanaged list of common stocks, is frequently used as a general
measure of market performance. However, the S&P 500 companies are generally
larger than those in which the Portfolio invests.
<PAGE>
The financial statements contained in Post-Effective Amendment #5 to
Registration Statement No. 33-63905 filed on or about September 26, 1997 are
incorporated herein by reference.
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American
Express
Financial
Direct
P.O. Box 5196
Minneapolis, MN 55459-0196
American Express Service Corporation, Distributor
