<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. (File No. 33-63951)
Post-Effective Amendment No. 3
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 5 (File No. 811-7405)
STRATEGIST WORLD FUND, INC.
(formerly Express Direct World Fund, Inc.)
IDS Tower 10, Minneapolis, Minnesota 55440-0010
Eileen J. Newhouse - IDS Tower 10,
Minneapolis, Minnesota 55440-0010
(612) 671-2772
Approximate Date of Proposed Public Offering:
immediately upon filing pursuant to paragraph (b)
X on Dec. 26, 1996 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i)
75 days after filing pursuant to paragraph (a)(ii)
on Oct. 31, 1996 paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
The Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Rule 24f of
the Investment Company Act of 1940.
Strategist Emerging Markets Fund, Strategist World Growth Fund and
Strategist World Income Fund, series of the Registrant, are a part
of a master/feeder operating structure. This Post-Effective
Amendment includes a signature page for World Trust, the master
fund.
<PAGE>
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<TABLE><CAPTION>
Cross reference sheet for Strategist Emerging Markets Fund, Strategist World Growth Fund and
Strategist World Income Fund showing the location in its 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.
PART A PART B
Section Section in
Item No. in Prospectus Item No. Statement of Additional Information
<S> <C> <S> <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 12 NA
(c) The Funds in brief; Fund expenses 13(a) Additional Investment Policies; all
appendices except Dollar-Cost Averaging
(b) Additional Investment Policies
3(a) NA (c) Additional Investment Policies
(b) NA (d) Security Transactions
(c) Performance
(d) NA 14(a) Board Members and Officers
(b) Board Members and Officers
4(a) The Funds in brief; Investment policies (c) Board Members and Officers
and risks; How the Funds and Portfolios
are organized 15(a) NA
(b) Investment policies and risks (b) NA
(c) Investment policies and risks (c) Board Members and Officers
5(a) Board members and officers 16(a)(i) How the Funds and Portfolios are organized*;
About the Advisor
(b)(i) Investment Manager ; About (a)(ii) Agreements: Investment Management Services
the Advisor
(b)(ii) Investment manager; Administrator and Agreement, Plan and
transfer agent Agreement of Distribution/Distribution Agreement
(b)(iii) Investment manager (a)(iii) NA
(c) Portfolio managers (b) NA
(d) Administrator and transfer agent (c) NA
(e) Administrator and transfer agent (d) Agreements: Administrative Services Agreement
(f) Investment manager; Administrator and (e) NA
transfer agent; Distributor (f) Agreements: Plan and Agreement of
(g) About the Advisor Distribution/Distribution Agreement
(g) NA
5A(a) NA (h) Custodian; Independent Auditors
(b) NA (i) Agreements: Transfer Agency Agreement; Custodian
6(a) Shares; Voting rights 17(a) NA
(b) NA (b) Brokerage Commissions Paid to Brokers Affiliated
(c) NA with Advisor
(d) NA (c) Security Transactions
(e) Cover page; Special shareholder services (d) Security Transactions
(f) Dividends and capital gains distributions; (e) Security Transactions
Reinvestments
(g) Taxes 18(a) Shares; Voting rights*
(h) Special considerations regarding master/ (b) NA
feeder structure
7(a) Distributor 19(a) Investing in the Fund
(b) Valuing Fund shares (b) Valuing Fund shares*; Investing in the Funds;
(c) NA Redeeming Shares
(d) How to purchase shares (c) Redeeming Shares
(e) NA
(f) Distributor 20 Taxes
8(a) How to redeem shares; Special considerations 21(a) Agreements: Plan and Agreement of
regarding master/feeder structure Distribution/Distribution Agreement, Placement
(b) NA Agency Agreement
(c) How to purchase, exchange or redeem shares:
Other important information (b) Agreements: Plan and Agreement of
(d) How to purchase, exchange or redeem shares: Distribution/Distribution Agreement, Placement
How to redeem shares Agency Agreement
9 None 22(a) NA
(b) Performance Information (for all funds except
money market funds)
23 Financial Statements
*Designates page number in prospectus.
</TABLE>
<PAGE>
PAGE 3
Strategist World Fund, Inc.
Prospectus
Dec. 30, 1996
This prospectus describes three, no-load mutual funds. Strategist
World Fund, Inc is a series mutual fund with series of capital
stock representing interests in Strategist Emerging Markets Fund (a
diversified mutual fund), Strategist World Growth Fund (a
diversified mutual fund) and Strategist World Income Fund (a non-
diversified mutual fund). Each Fund has its own goals and
investment policies.
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 World Trust. Each Portfolio is a
separate investment company managed by American Express Financial
Corporation that has the same goal as the 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 Fund are in a Statement of Additional
Information (SAI), filed with the Securities and Exchange
Commission (SEC) and available for reference, along with other
related materials, on the SEC Internet web site
(http://www.sec.gov). The SAI, dated Dec. 30, 1996, is
incorporated here 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
1-800-AXP-SERV
TTY: 1-800-710-5260
<PAGE>
PAGE 4
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
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
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
Appendices
Appendix A: Description of corporate bond ratings
Appendix B: Descriptions of derivative instruments
<PAGE>
PAGE 5
The Funds in brief
Strategist World Fund, Inc. (the Company) is a series mutual fund
with series of capital stock representing interests in Strategist
Emerging Markets Fund (Emerging Markets Fund), Strategist World
Growth Fund (World Growth Fund) and Strategist World Income Fund
(World Income Fund) (the Funds). Emerging Markets Fund and World
Growth Fund are diversified mutual funds and World Income Fund is a
non-diversified mutual fund. Each Fund has its own goals and
investment policies. Each of the Funds seeks to achieve its own
goals by investing all of its assets in a corresponding series (the
Portfolio) of World 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
Emerging Markets Fund seeks to provide shareholders with long-term
growth of capital. It does so by investing all of its assets in
the Portfolio, which has the same investment objective as the Fund.
Emerging Markets Portfolio is a diversified mutual fund that
invests primarily in the equity securities of issuers in countries
with developing or emerging markets. Emerging Markets Portfolio
also invests in debt securities, derivative instruments and money
market instruments.
World Growth Fund seeks to provide shareholders with long-term
growth of capital. It does so by investing all of its assets in
the Portfolio, which has the same investment objective as the Fund.
World Growth Portfolio is a diversified mutual fund that invests
primarily in equity securities of companies throughout the world.
World Growth Portfolio also invests in debt securities, derivative
instruments and money market instruments.
World Income Fund seeks to provide shareholders with high total
return through income and growth of capital. It does so by
investing all of its assets in the Portfolio, which has the same
investment objective as the Fund. World Income Portfolio is a non-
diversified mutual fund that invests primarily in debt securities
of U.S. and foreign issuers. Non-diversified mutual funds may have
more market risk than funds that have broader diversification.
World Income Portfolio also may invest in common and preferred
stocks, derivative instruments and money market instruments.
Because investments involve risk, a Fund cannot guarantee achieving
its goals. Risks arising from investments in foreign securities
include fluctuations in currency exchange rates, adverse political
and economic developments and lack of comparable regulatory
requirements applicable to U.S. companies. Investors should not
invest in Emerging Markets Fund if they are unable to bear the risk
of high volatility or a potentially significant decline in the
value of their investment. You should invest in a Fund only if you
are willing to assume such risks.
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PAGE 6
Structure of the Funds
Each Fund uses what is commonly known as a master/feeder structure.
This means that it is a feeder fund investing all of its assets in
a Portfolio that is its 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 $56 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.
Portfolio managers
Emerging Markets Portfolio
Ian King joined the Advisor in 1995 and serves as portfolio
manager. He has managed the assets of the Portfolio since 1996.
Prior to joining the Advisor he was portfolio manager of INVESCO
from 1989 to 1992 and Director of Lehman Brothers Global Asset
Management Ltd. from 1992 to 1995.
<PAGE>
PAGE 7
World Growth Portfolio
Richard Lazarchic joined the Advisor in 1979 and serves as
portfolio manager. He has managed the assets of World Growth
Portfolio and its predecessor fund since July 1995. He also serves
as portfolio manager of IDS Life Series International Equity
Portfolio. He was portfolio manager of IDS Utilities Income Fund
from 1989 to 1993 and IDS Diversified Equity Income Fund from 1990
to 1994 and IDS Managed Retirement Fund from 1993 to 1995.
World Income Portfolio
Ray Goodner joined the Advisor in 1977 and serves as vice president
and senior portfolio manager. He has managed the assets of World
Income Portfolio and its predecessor fund since 1989. He also has
managed the assets of the predecessor of Quality Income Portfolio,
a separate portfolio in the Preferred Master Trust Group, since
1985 and IDS Life Global Yield Fund since 1996.
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 the 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+
Maximum sales charge on purchases*
(as a percentage of offering price)
Emerging Markets World Growth World Income
Fund Fund Fund
0% 0% 0%
Annual Fund and allocated Portfolio operating expenses
(% of average daily net assets):
Emerging Markets World Growth World Income
Fund Fund Fund
Management fee** 1.10% 0.76% 0.74%
12b-1 fee 0.25% 0.25% 0.25%
Other expenses*** 0.85% 0.74% 0.36%
Total (after reimbursement) 2.20% 1.75% 1.35%
<PAGE>
PAGE 8
+A wire redemption charge, currently $15.00 is deducted from the
shareholder's Investment Management Account for wire redemptions
made at the request of the shareholder.
*There are no sales loads; however, each Fund imposes a 0.50%
redemption fee for shares redeemed or exchanged within 180 days of
their purchase date. This fee reimburses the Fund for brokerage
fees and other costs incurred. This fee also helps assure that
long-term shareholders are not unfairly bearing the costs
associated with frequent traders.
**The management fee is paid by the Trust on behalf of the
Portfolio.
***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 Oct. 31, 1997.
Under this agreement, Emerging Markets Fund's total expenses will
not exceed 2.20%, World Growth Fund's total expenses will not
exceed 1.75% and World Income Fund's total expenses will not exceed
1.35%. Without this agreement, the estimated Other expenses and
Total fund operating expenses would have been: for Emerging
Markets Fund 1.81% and 3.16%, for World Growth Fund 16.29% and
17.33% and for World Income Fund 18.22% and 19.23%.
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:
Emerging Markets World Growth World Income
Fund Fund Fund
1 year $ 22 $ 18 $ 14
3 years $ 69 $ 55 $ 43
5 years $118 $ 95 $ 74
10 years $254 $207 $163
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.<PAGE>
PAGE 9
Performance
Financial highlights
The table below shows certain important information for evaluation
each Fund's results.
<TABLE><CAPTION>
Fiscal period ended Oct. 31, 1996*
World World
Growth Fund Income Fund
<S> <C> <C>
Per share income and capital changes**
Net asset value, beginning of period $7.32 $6.05
Income from investment operations:
Net investment income (loss) .04 .15
Net gains (losses) (.28) .25
(both realized and unrealized)
Total from investment operations (.24) .40
Less distributions:
Dividends from net investment income -- (.15)
Excess distributions of net investment income -- (.06)
Total distributions -- (.21)
Net asset value, end of period 7.08 6.24
Ratios/supplemental data
Net assets, end of period (in thousands) $489 $524
Ratio of expenses to average daily net assets++ 1.75%+ 1.35%+
Ratio of net income to average daily net assets 1.61%+ 5.87%+
Total return (3.3%) 6.6%
Portfolio turnover rate (excluding short-term 58% 24%
securities) for the underlying Portfolio
Average brokerage commission rate for the $0.0086 --
underlying Portfolio#
*Inception date was May 13, 1996.
**For a share outstanding throughout the period. Rounded to the nearest cent.
+Adjusted to an annual basis.
++The Advisor and Distributor voluntarily limited total operating expenses to 1.75% (1.35%
for World Income Fund) of average daily net assets. Without this agreement, the ratio of
expenses to average daily net assets would have been 17.33% for World Growth Fund and 19.23%
for World Income Fund.
#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>
The information in this table has been audited by KPMG Peat Marwick
LLP, independent auditors. The independent auditor's report and
additional information about the performance of the Funds are
contained in the Funds' annual report which, if not included with
this prospectus, may be obtained without charge.
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.
<PAGE>
PAGE 10
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 Oct. 31, 1996.
Purchase 1 year 5 years Since
made ago ago inception*
World Growth Fund +14.47% +8.84% +7.22%*
EAFE Index +10.84% +8.21% +5.78%**
Lipper International
Fund Index +12.65% +9.74% +7.10%**
World Income Fund +8.94% 10.12% +10.84%#
Salomon Brothers
Global Govt.
Bond Composite
Index +5.36% +9.91% +10.17%##
Lipper Global
Income Fund Index +11.74% +7.83% +8.92%##
*Inception date was May 29, 1990
**Measurement period started June 1, 1990
#Inception date was March 20, 1989
##Measurement period started April 1, 1989.
Cumulative total returns as of Oct. 31, 1996
Purchase 1 year 5 years Since
made ago ago inception*
World Growth Fund +14.47% +52.83% +56.53%*
EAFE Index +10.84% +48.47% +43.48%**
Lipper International
Fund Index +12.65% +59.13% +55.44%**
World Income Fund +8.94% +62.03% +119.07%#
Salomon Brothers
Global Govt.
Bond Composite
Index +5.36% +60.41% +108.88%##
Lipper Global
Income Fund Index +11.74% +45.78% +91.40%##
*Inception date was May 29, 1990
**Measurement period started June 1, 1990
#Inception date was March 20, 1989
##Measurement period started April 1, 1989.
<PAGE>
PAGE 11
On May 13, 1996, IDS Global Growth Fund and IDS Global Bond Fund
(the predecessor funds) converted to a master/feeder structure and
transferred all of their assets to World Growth Portfolio and World
Income Portfolio, respectively. The performance information in the
foregoing tables represents performance of the corresponding
predecessor Fund prior to March 20, 1995 and of Class A shares from
March 20, 1995 through Oct. 31, 1996 adjusted to reflect the
absence of sales charges on shares of the Fund sold through this
prospectus. The performance has not been adjusted for any
difference between the estimated aggregate fees and expenses of the
Fund and fees and expenses of the predecessor Fund.
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 the Fund's future performance.
The Morgan Stanley Capital International EAFE Index (EAFE Index),
an unmanaged index compiled from a composite of securities markets
of Europe, Australia and the Far East, is widely recognized by
investors in foreign markets as the measurement index for
portfolios of non-North American securities.
Lipper International Fund Index, an unmanaged index published by
Lipper Analytical Services, Inc., includes 30 funds that are
generally similar to World Growth Portfolio, although some funds in
the index may have somewhat different investment policies or
objectives.
Salomon Brothers Global Government Bond Composite Index is an
unmanaged representative list of government bonds of 17 countries
throughout the world. The index is a general measure of government
bond performance. Performance is expressed in the U.S. dollar as
well as the currencies of governments making up the index. The
bonds included in the index may not be the same as those in the
Portfolio.
Lipper Global Income Fund Index, an unmanaged index published by
Lipper Analytical Services, Inc., includes 30 funds that are
generally similar to the Portfolio, although some funds in the
index may have somewhat different policies or objectives.
The indexes reflect reinvestment of all distributions and changes
in market prices, but exclude brokerage commissions or other fees.
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PAGE 12
Yield
Yield is the net investment income earned per share for a specified
time period, divided by the net asset value at the end of the
period. From time to time World Income Fund may advertise its 30-
day annualized yield. The Fund calculates this 30-day annualized
yield by dividing:
o net investment income per share deemed earned during a 30-day
period by
o the net asset value per share on the last day of the period,
o converting the result to a yearly equivalent figure.
The Fund's yield varies from day to day, mainly because share
values and offering prices (which are calculated daily) vary in
response to changes in interest rates. Net investment income
normally changes much less in the short run. Thus, when interest
rates rise and share values fall, yield tends to rise. When
interest rates fall, yield tends to follow. Past yields should not
be considered an indicator of future yields.
Investment policies and risks
The policies described below apply both to the Fund and the
Portfolio.
Emerging Markets Portfolio - Emerging Markets Portfolio is a
diversified mutual fund that invests primarily in equity securities
of issuers in countries with developing or emerging markets. Under
normal market conditions, at least 65% of the Portfolio's total
assets will be invested in emerging market equity securities of at
least 3 different countries. The Portfolio may also invest in debt
securities, derivative instruments and money market instruments.
World Growth Portfolio - World Growth Portfolio invests primarily
in common stocks and securities convertible into common stocks of
companies located both in developed and emerging countries.
Generally, these companies will have over $200 million in market
capitalization and, under normal market conditions, at least 65% of
the Portfolio's total assets will be invested in the common stocks
and convertible securities of companies in at least three different
countries. The Portfolio also invests in preferred stocks, debt
securities, derivative instruments and money market instruments.
World Income Portfolio - World Income Portfolio invests primarily
in debt securities of U.S. and foreign issuers so under normal
market conditions at least 80% of the Portfolio's net assets will
be investment-grade corporate or government debt securities
including money market instruments of issuers located in at least
three different countries. The Portfolio also invests in debt
securities below investment grade, convertible securities, common
stocks and derivative instruments.
<PAGE>
PAGE 13
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
Common stocks: Stock prices are subject to market fluctuations.
Stocks of foreign companies may be subject to abrupt or erratic
price movements. While established companies in which the
Portfolio invests generally have adequate financial reserves, some
of the Portfolio's investments involve substantial risk and may be
considered speculative.
Preferred stocks: If a company earns a profit, it generally must
pay its preferred stockholders a dividend at a pre-established
rate.
Convertible securities: These securities generally are preferred
stocks or bonds that can be exchanged for other securities, usually
common stock, at prestated prices. When the trading price of the
common stock makes the exchange likely, the 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 than to changes in interest rates. These bonds
have greater price fluctuations, are more likely to experience a
default and sometimes are referred to as junk bonds. Reduced
liquidity for these bonds may occasionally make it more difficult
to value them. In valuing bonds, the Fund relies both on
independent rating agencies and the investment manager's credit
analysis.
Emerging Markets Portfolio may invest up to 20% of its net assets
in bonds. Emerging Markets Portfolio may invest up to 10% of its
net assets in bonds rated below investment grade, including Brady
bonds. Below investment grade bonds include BBB/Baa to D as rated
by Standard & Poor's corporation (S&P) or the Moody's Investors
Services, Inc. (Moody's) or unrated bonds of equivalent quality as
determined by the portfolio manager.
World Growth Portfolio may invest up to 20% of its net assets in
bonds. World Growth Portfolio will not invest more than 5% of its
net assets in bonds below investment grade, including Brady bonds.
World Income Portfolio invests in securities rated B or better by
Moody's Investors Services, Inc. (Moody's) or Standard & Poor's
Corporation (S&P).
Securities that are subsequently downgraded in quality may continue
to be held by the Portfolio and will be sold only when the
investment manager believes it is advantageous to do so.
<PAGE>
PAGE 14
<TABLE><CAPTION>
World Income Portfolio
Bond ratings and holdings for the calendar year
ending Oct. 31, 1996
S&P Rating Protection of Percent of net assets
Percent of (or Moody's principal and in unrated securities
net assets equivalent) interest assessed by the Advisor
<C> <C> <C> <C>
40.90% AAA Highest quality 0.36%
10.96 AA High quality --
5.94 A Upper medium grade --
4.58 BBB Medium grade --
8.85 BB Moderately speculative --
2.01 B Speculative --
-- CCC Highly speculative --
-- CC Poor quality --
-- C Lowest quality --
-- D In default --
1.10 Unrated Unrated securities 0.74
The table above excludes money market instruments which are considered investment grade
securities. See Appendix to this prospectus describing corporate bond ratings for further
information.
</TABLE>
(For the period from November 1, 1995 to May 12, 1996, the
information in the table above relates to IDS Global Bond Fund, a
fund that transferred its assets to World Income Portfolio on May
13, 1996)
Debt securities sold at a deep discount: Some bonds are sold at
deep discounts because they do not pay interest until maturity.
They include zero coupon bonds and PIK (pay-in-kind) bonds. To
comply with tax laws, the Portfolio has to recognize a computed
amount of interest income and pay dividends to unitholders even
though no cash has been received. In some instances, the Portfolio
may have to sell securities to have sufficient cash to pay the
dividends.
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 currency
fluctuations and 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 the 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. Currencies of emerging
countries may be subject to greater volatility than currencies of
developed countries. Because of the limited trading volume in some<PAGE>
PAGE 15
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. These risks are increased in countries with emerging
markets because they often have relatively unstable governments and
less established economies. The limited liquidity and price
fluctuations in emerging markets could make investments in
developing countries more volatile. In addition, the Portfolio may
have limited legal recourse in the event a sovereign government is
unwilling or unable to pay its debt.
Emerging markets: The Portfolio considers emerging markets to be
those countries characterized as developing or emerging by either
the World Bank or the United Nations. Some examples of Emerging
market countries are Brazil, India, Malaysia and Thailand. As used
in this prospectus, emerging market equity securities includes
securities traded in countries with developing or emerging markets
as well as securities traded in any market, if the issuer derives
50% or more of its total revenue from goods or services produced in
emerging market countries or from sales made in emerging market
countries. Equity investments in developing markets are high risk
investments, subject to significant price fluctuation due to the
potential lack of liquidity experienced by these market places, the
possibility that emerging markets will be less efficient in pricing
equity securities and the potential inability of emerging markets
to deal with significant price declines in an orderly manner.
Emerging markets generally grow more rapidly than developed
markets. Emerging market companies tend to be smaller companies
producing goods or providing services in less developed global
economies. Emerging market companies can be of any size and can be
in any industry. Normally, emerging market companies retain a
large part of their earnings for research, development and
reinvestment in capital assets. Therefore, they tend not to
emphasize the payment of dividend.
Diversification: Since World Income Portfolio is a non-diversified
mutual fund, it may concentrate its investments in securities of
fewer issuers than would a diversified fund. Accordingly, World
Income Portfolio may have more risk than mutual funds that have
broader diversification.
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.
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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). NAV generally
declines as interest rates increase and rises as interest rates
decline.
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.
o Assets and liabilities denominated in foreign currencies are
translated daily into U.S. dollars at a rate of exchange set
as near to the close of the day as practicable.
How to purchase, exchange or redeem shares
How to purchase shares
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.
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.
<PAGE>
PAGE 18
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.")
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.
<PAGE>
PAGE 19
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.
The Fund imposes a 0.50% redemption fee for shares redeemed or
exchanged within 180 days of their purchase date. This fee
reimburses the Fund for brokerage fees and other costs incurred.
This fee also helps assure that long-term shareholders are not
unfairly bearing the costs associated with frequent traders.
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 where
trained representatives are available to answer questions about the
Funds and your account. 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
1-800-AXP-SERV
TTY Service
For the hearing impaired
1-800-710-5260
<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. Net investment income from dividends and interest is
distributed to you as dividends by the end of the calendar year for
Emerging Markets Fund and World Growth Fund and at the end of each
calendar quarter for World Income Fund. 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.
<PAGE>
PAGE 25
Distributions are subject to federal income tax and also may be
subject to state and local taxes. Distributions are taxable in the
year the Fund declares them regardless of whether you take them in
cash or reinvest them.
Income received by a Fund may be subject to foreign tax and
withholding. Tax conventions between certain countries and the
U.S. may reduce or eliminate such taxes. You may be entitled to
claim foreign tax credits or deductions subject to provisions and
limitations of the Internal Revenue Code. The Fund will notify you
if such credit or deduction is available.
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.
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PAGE 26
How to determine the correct TIN
Use the Social Security or
For this type of account: Employer Identification number
of:
Individual or joint account The individual or individuals
listed on the account
Custodian account of a minor The minor
(Uniform Gifts/Transfers to Minors
Act)
A living trust The grantor-trustee (the person
who puts the money into the
trust)
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
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
Each Fund is a series of Strategist World 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.
<PAGE>
PAGE 27
Shares
The Company is currently composed of four 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, you have voting rights over the Fund's management
and fundamental policies. You are entitled to one vote for each
share you own. Shares of the Fund have cumulative voting rights.
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.
Special considerations regarding master/feeder structure
The Fund pursues its goals by investing its assets in a master fund
called the Portfolio. This means that the Fund does not invest
directly in securities; rather the Portfolio invests in and manages
its portfolio of securities. The Portfolio is a separate
investment company, but it has the same goals and investment
policies as the Fund. The goals and investment policies of the
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 the Fund's assets in the Portfolio. The
board believes that the master/feeder structure can be in the best
interest of the Fund and its shareholders since it offers the
opportunity for economies of scale. The Fund may redeem all of its
assets from the Portfolio at any time. Should the board determine
that it is in the best interest of the Fund and its shareholders to
terminate its investment in the 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.
<PAGE>
PAGE 28
Other feeders: The 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 Portfolio's securities on the same terms and
conditions as the Fund and pay their proportionate share of the
Portfolio's expenses. However, their operating costs and sales
charges are different from those of the Fund. Therefore, the
investment returns for other feeders are different from the returns
of the Fund. Information about other feeders may be obtained by
calling American Express Financial Advisors at 1-800-AXP-SERV.
Each feeder that invests in the Portfolio is different and
activities of its investors may adversely affect all other feeders,
including the Fund. For example, if one feeder decides to
terminate its investment in the Portfolio, the 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.
Board members and officers
Shareholders of the Company elect a board that oversees the
operations of the Fund 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
The Trust, on behalf of each Portfolio pays the Advisor for
managing the assets of the Portfolio. Under its Investment
Management Services Agreement, the Advisor determines which
securities will be purchased, held or sold by the Portfolio
(subject to the direction and control of the board).
The Advisor is paid a fee for these services based on the average
daily net assets of the Portfolio, as follows:
Emerging Markets Portfolio World Growth Portfolio
Assets Annual rate at Assets Annual rate at
(billions) each asset level (billions) each asset level
First $0.25 1.10% First $0.25 0.800%
Next 0.25 1.08 Next 0.25 0.775
Next 0.25 1.06 Next 0.25 0.750
Next 0.25 1.04 Next 0.25 0.725
Next 1.00 1.02 Next 1.0 0.700
Over 2.00 1.00 Over 2.0 0.675<PAGE>
PAGE 29
World Income Portfolio
Assets Annual rate at
(billions) each asset level
First $0.25 0.770%
Next 0.25 0.745
Next 0.25 0.720
Next 0.25 0.695
Over 1.0 0.670
Under the agreement, each Portfolio also pays taxes, brokerage
commissions and nonadvisory expenses.
Administrator and transfer agent
Under an Administrative Services Agreement, each Fund pays the
Advisor for administration and accounting services at an annual
rate that decreases in gradual percentages as assets increase. For
Emerging Markets Fund, the fee ranges from 0.10% to 0.05%. For
World Growth Fund, the fee ranges from 0.06% to 0.05%. For World
Income Fund, the fee ranges from 0.06% to 0.04%.
In addition, under a separate Transfer Agency Agreement, the
Advisor maintains shareholder accounts and records for each Fund.
Emerging Markets Fund and World Growth Fund pay an annual fee of
$20 per shareholder account for this service. World Income Fund
pays an annal fee of $25 per shareholder account for this service.
Distributor
The Fund sells 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 Fund and its operations, new account
applications, exchange and redemption requests. The Fund reserves
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, advertising and related
functions, the Fund pays 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, the Fund
pays a distribution fee at an annual rate of 0.25% of the Fund's
average daily net assets for distribution-related services. This
fee will not cover all of the costs incurred by the Distributor.
<PAGE>
PAGE 30
Total fees and expenses (excluding taxes and brokerage commissions)
cannot exceed the most restrictive applicable state expense
limitation.
The expense ratio of the Fund and Portfolio may be higher than that
of a fund investing exclusively in domestic securities because the
expenses of the Fund and Portfolio, such as the investment
management fee and the custodial costs, are higher. The expense
ratio generally is not higher, however, than that of funds with
similar investment goals and policies.
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 31
Appendix A
Description of corporate bond ratings
Bond 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. Ratings by Standard &
Poor's Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C and D.
The following is a compilation of the two agencies' rating
descriptions. For further information, see the SAI.
Aaa/AAA - Judged to be of the best quality and carry the smallest
degree of investment risk. Interest and principal are secure.
Aa/AA - Judged to be high-grade although margins of protection for
interest and principal may not be quite as good as Aaa or AAA rated
securities.
A - Considered upper-medium grade. Protection for interest and
principal is deemed adequate but may be susceptible to future
impairment.
Baa/BBB - Considered medium-grade obligations. Protection for
interest and principal is adequate over the short-term; however,
these obligations may have certain speculative characteristics.
Ba/BB - Considered to have speculative elements. The protection of
interest and principal payments may be very moderate.
B - Lack characteristics of more desirable investments. There may
be small assurance over any long period of time of the payment of
interest and principal.
Caa/CCC - Are of poor standing. Such issues may be in default or
there may be risk with respect to principal or interest.
Ca/CC - Represent obligations that are highly speculative. Such
issues are often in default or have other marked shortcomings.
C - Are obligations with a higher degree of speculation. These
securities have major risk exposures to default.
D - Are in payment default. The D rating is used when interest
payments or principal payments are not made on the due date.
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 32
Definitions of zero-coupon and pay-in-kind securities
A zero-coupon security is a security that is sold at a deep
discount from its face value and makes no periodic interest
payments. The buyer of such a security receives a rate of return
by gradual appreciation of the security, which is redeemed at face
value on the maturity date.
A pay-in-kind security is a security in which the issuer has the
option to make interest payments in cash or in additional
securities. The securities issued as interest usually have the
same terms, including maturity date, as the pay-in-kind securities.
<PAGE>
PAGE 33
Appendix B
Descriptions of derivative instruments
What follows are brief descriptions of derivative instruments the
Portfolio may use. At various times the 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. The 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 the Portfolio's
investments against price fluctuations or to increase market
exposure.
Asset-backed and mortgage-backed securities. Asset-backed
securities include interests in pools of assets such as motor
vehicle installment sale contracts, installment loan contracts,
leases on various types of real and personal property, receivables
from revolving credit (credit card) agreements or other categories
of receivables. Mortgage-backed securities include collateralized
mortgage obligations and stripped mortgage-backed securities.
Interest and principal payments depend on payment of the underlying
loans or mortgages. The value of these securities may also be
affected by changes in interest rates, the market's perception of
the issuers and the creditworthiness of the parties involved. The
non-mortgage related asset-backed securities do not have the
benefit of a security interest in the related collateral. Stripped
mortgage-backed securities include interest only (IO) and principal
only (PO) securities. Cash flows and yields on IOs and POs are
extremely sensitive to the rate of principal payments on the
underlying mortgage loans or mortgage-backed securities.
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 34
STATEMENT OF ADDITIONAL INFORMATION
FOR
STRATEGIST WORLD FUND, INC.
Dec. 30, 1996
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 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 Dec. 30, 1996, and it is to be used with the
Funds' prospectus dated Dec. 30, 1996, and the Annual Report for
the fiscal period ended Oct. 31, 1996.
<PAGE>
PAGE 35
TABLE OF CONTENTS
Goals and Investment Policies......................See Prospectus
Additional Investment Policies.............................p. 3
Security Transactions......................................p. 15
Brokerage Commissions Paid to Brokers Affiliated
with the Advisor...........................................p. 18
Performance Information....................................p. 19
Valuing Fund Shares........................................p. 22
Investing in the Funds.....................................p. 23
Redeeming Shares...........................................p. 23
Pay-out Plans..............................................p. 25
Capital Loss Carryover.....................................p. 26
Taxes......................................................p. 26
Agreements.................................................p. 28
Organizational Information.................................p. 32
Board Members and Officers.................................p. 32
Custodian..................................................p. 38
Independent Auditors.......................................p. 39
Financial Statements.......................................p. 39
Prospectus.................................................p. 39
Appendix A: Description of Bond Ratings...................p. 40
Appendix B: Foreign Currency Transactions.................p. 43
Appendix C: Options and Futures Contracts.................p. 49
Appendix D: Mortgage-Backed Securities....................p. 56
Appendix E: Dollar-Cost Averaging.........................p. 57
<PAGE>
PAGE 36
ADDITIONAL INVESTMENT POLICIES
Strategist World Fund, Inc. (the Company) is a mutual fund with
series of capital stock representing interests in Strategist
Emerging Markets Fund (Emerging Markets Fund), Strategist World
Growth Fund (World Growth Fund) and Strategist World Income Fund
(World Income Fund). (Emerging Markets Fund, World Growth Fund and
World Income Fund are collectively the Funds, and individually a
Fund). Each Fund, except World Income Fund, is a diversified
mutual fund. World Income Fund is a non-diversified mutual fund.
Each Fund has 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 World 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, 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 Fund's other investment policies, a Fund
may invest its assets in an open-end management investment company
having substantially the same investment objectives, policies and
restrictions as the Fund for the purpose of having those assets
managed as part of a combined pool.
Investment Policies applicable to Emerging Markets 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.
<PAGE>
PAGE 37
'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 members and officers.
'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.
'Issue senior securities, except to the extent that borrowing from
banks and using options, foreign currency forward contracts or
future contracts (as discussed elsewhere in the prospectus and SAI)
may be deemed to constitute issuing a senior security.
'Concentrate in any industry. According to the present
interpretation by the Securities and Exchange Commission (SEC),
this means no more than 25% of total assets, based on current
market value at time of purchase, can be invested in any one
industry.
<PAGE>
PAGE 38
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 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 domestic
or foreign 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. Under one state's law, the Portfolio is
limited to investments in the open market where no commission or
profit to a sponsor or dealer results from the purchase other than
the customary broker's commission, or when the purchase is part of
a plan or merger consideration, reorganization or acquisition.
Some countries permit foreign investment only indirectly, through
closed-end investment companies. At times, shares of these closed-
end investment companies may be purchased only at market prices
representing premiums to their net asset values. If the Portfolio
buys shares of a closed-end investment company, shareholders will
bear both their proportionate share of the expenses of the
Portfolio and, indirectly, the expenses of the closed-end
investment company.
'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 Portfolio and of 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 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.
'Invest more than 5% of its net assets in warrants. Under one
state's law no more than 2% of the Portfolio's net assets may be
invested in warrants not listed on the New York or American Stock
Exchange.
<PAGE>
PAGE 39
'Invest more than 10% of its net assets in securities and
derivative instruments that are illiquid. For purposes of this
policy, illiquid securities include some privately placed
securities, public securities and Rule 144A securities that for one
reason or another may no longer have a readily available market,
repurchase agreements with maturities greater than seven days,
nonnegotiable fixed-time deposits, 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
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. The Portfolio may also purchase short-term
notes and obligations (rated in the top two classifications by
Moody's Investors Service, Inc. (Moody's) or Standard & Poor's
Corporations (S&P) or the equivalent) of U.S. and foreign banks and
<PAGE>
PAGE 40
corporations 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. As a
temporary investment, during periods of weak or declining market
values for the securities in which the Portfolio invests, any
portion of its assets may be converted to cash (in foreign
currencies or U.S. dollars) or to the kinds of short term debt
securities discussed in this paragraph.
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
either a foreign or U.S. issuer. Generally Depositary Receipts in
registered form are designed for use in the U.S. securities market
and Depositary Receipts in bearer form are designed for use in
securities markets outside the U.S. Depositary Receipts may not
necessarily be denominated in the same currency as the underlying
securities into which they may be converted. Depositary Receipts
also involve the risks of other investments in foreign securities.
Investment Policies applicable to World 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.
<PAGE>
PAGE 41
'Concentrate in any one industry. According to the present
interpretation by the Securities and Exchange Commission (SEC),
this means no more than 25% of the 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 <PAGE>
PAGE 42
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.
'Issue senior securities, except to the extent that borrowing from
banks and using options, foreign currency forward contracts or
futures contracts (as discussed elsewhere in the Portfolio's
prospectus and SAI) may be deemed to constitute issuing a senior
security.
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 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 domestic
or foreign companies, including any predecessors, that have a
record of less than three years continuous operations.
'Invest more than 10% of its assets in securities of investment
companies. Under one state's law, the Portfolio is limited to
investments in the open market where on commission or profit to a
sponsor or dealer results from the purchase other than the
customary broker's commission or when the purchase is part of a
plan or merger consideration, reorganization or acquisition.
'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. Under one
state's law no more than 2% of the Portfolio's net assets may be
invested in warrants not listed on the New York or American Stock
Exchange.
'Invest more than 10% of its net assets in securities and
derivative instruments that are illiquid. For purposes of this
policy illiquid securities include some privately placed
securities, public securities and Rule 144A securities that for one
reason or another may no longer have a readily available market,
repurchase agreements with maturities greater than seven days, non-
negotiable fixed-time deposits and over-the-counter options.
<PAGE>
PAGE 43
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
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. The Portfolio also may purchase short-term
notes and obligations (rated in the top two classifications by
Moody's or S&P or the equivalent) of U.S. and foreign banks and
corporations 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 bankruptcy laws, the Portfolio's
ability to liquidate the security involved could be impaired. As a
temporary investment, during periods of weak or declining market
values for the securities in which the Portfolio invests, any
portion of its assets may be converted to cash (in foreign
currencies or U.S. dollars) or to the kinds of short-term debt
securities discussed in this paragraph.
<PAGE>
PAGE 44
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
either a foreign or U.S. issuer. Generally Depositary Receipts in
registered form are designed for use in the U.S. securities market
and Depositary Receipts in bearer form are designed for use in
securities markets outside the U.S. Depositary Receipts may not
necessarily be denominated in the same currency as the underlying
securities into which they may be converted. Depositary Receipts
also involve the risks of other investments in foreign securities.
Investment Policies applicable to World Income 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),
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.
<PAGE>
PAGE 45
'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.
'Issue senior securities, except to the extent that borrowing from
banks and using options, foreign currency forward contracts or
futures contracts (as discussed elsewhere in the Portfolio's
prospectus and SAI) may be deemed to constitute issuing a senior
security.
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:
<PAGE>
PAGE 46
'Buy on margin or sell short, but it may make margin payments in
connection with transactions in 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 domestic
or foreign companies, including any predecessors, that have a
record of less than three years continuous operations.
'Invest more than 10% of its assets in securities of investment
companies. Under one state's law, the Portfolio is limited to
investments in the open market where on commission or profit to a
sponsor or dealer results from the purchase other than the
customary broker's commission or when the purchase is part of a
plan or merger consideration, reorganization or acquisition.
'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. Under one
state's law no more than 2% of the Portfolio's net assets may be
invested in warrants not listed on the New York or American Stock
Exchange.
'Invest more than 10% of its net assets in securities and
derivative instruments that are illiquid. For purposes of this
policy illiquid securities include some privately placed
securities, public securities and Rule 144A securities that for one
reason or another may no longer have a readily available market,
loans and loan participations, 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 <PAGE>
PAGE 47
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.
Loans, loan participations and interests in securitized loan pools
are interests in amounts owed by a corporate, governmental or other
borrower to a lender or consortium of lenders (typically banks,
insurance companies, investment banks, government agencies or
international agencies). Loans involve a risk of loss in case of
default or insolvency of the borrower and may offer less legal
protection to the Portfolio in the event of fraud or
misrepresentation. In addition, loan participations involve a risk
of insolvency of the lender or other financial intermediary.
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. The Portfolio also may purchase short-term
notes and obligations (rated in the top two classifications by
Moody's or S&P or the equivalent) of U.S. and foreign banks and
corporations 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. As a
temporary investment, during periods of weak or declining market
values for the securities in which the Portfolio invests, any
portion of its assets may be converted to cash (in foreign
currencies or U.S. dollars) or to the kinds of short-term debt
securities discussed in this paragraph.
<PAGE>
PAGE 48
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
either a foreign or U.S. issuer. Generally Depositary Receipts in
registered form are designed for use in the U.S. securities market
and Depositary Receipts in bearer form are designed for use in
securities markets outside the U.S. Depositary Receipts may not
necessarily be denominated in the same currency as the underlying
securities into which they may be converted. Depositary Receipts
also involve the risks of other investments in foreign securities.
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 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 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
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.
<PAGE>
PAGE 49
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.
<PAGE>
PAGE 50
All other transactions shall be placed on the basis of obtaining
the best available price and most favorable execution. In so
doing, if, in the professional opinion of the person responsible
for selecting the broker or dealer, several firms can execute the
transaction on the same basis, consideration will be given 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 or accounts advised by
the Advisor or any of its subsidiaries. When a Portfolio buys or
sells the same security as another portfolio 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 Oct. 31, 1996, World
Growth Portfolio and World Income Portfolio paid total brokerage
commissions of $9,806 and $1,884, respectively. World Growth and
World Income Portfolios began operations on May 13, 1996. Emerging
Markets Portfolio began operations on Nov. 13, 1996. Substantially
all firms through whom transactions were executed provide research
services.
Transactions amounting to $228,443,000, on which $953,997 in
commissions were imputed or paid, were specifically directed to
firms in exchange for research services for World Growth Portfolio.
No transactions were directed to brokers because of research
services they provided to World Income Portfolio.
<PAGE>
PAGE 51
As of the fiscal period ended Oct. 31, 1996, each Portfolio 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 presented below:
Value of Securities
Owned at End of
Name of Issuer Fiscal Period
World Growth Portfolio
Dean Witter $8,470,307
Goldman Sachs Group 6,475,354
Morgan Stanley Group 1,776,952
NationsBank 4,975,938
World Income Portfolio
Dean Witter $4,298,104
First Chicago 4,997,083
Emerging Markets Portfolio does not expect its portfolio turnover
rate to exceed 150% during its initial fiscal period. For the
fiscal years 1996 and 1995, the portfolio turnover rates were 134%
and 90% for World Growth Portfolio and 49% and 92% for World Income
Portfolio. Higher turnover rates may result in higher brokerage
expenses. The variation can be attributed to a change in
management style.
For periods prior to the commencement of operations of World Growth
Portfolio and World Income 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.
<PAGE>
PAGE 52
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.
Information about brokerage commissions paid by the Portfolio to
brokers affiliated with the Advisor for the fiscal period from May
13, 1996 to Oct. 31, 1996 is contained in the following table:
<TABLE><CAPTION>
For the Fiscal Period from May 13, 1996 to Oct. 31, 1996.
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>
World Growth American (1) $5,831 .18% NA
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 and current yield
quotations used by the Funds are based on standardized methods of
computing performance as required by the SEC.
Average annual total return
The Funds 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)
<PAGE>
PAGE 53
Aggregate total return
The Funds may calculate aggregate total return for certain periods
representing the cumulative change in the value of an investment in
the Funds 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)
Annualized yield
The Funds may calculate an annualized yield by dividing the net
investment income per share deemed earned during a period by the
net asset value per share on the last day of the period and
annualizing the results.
Yield is calculated according to the following formula:
Yield = 2[(a-b + 1)6 - 1]
cd
where: a = dividends and interest earned during the period
b = aggregate expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period
World Income Fund's annualized yield was 6.47% for the 30-day
period ended Oct. 31, 1996.
The Fund's yield, calculated as described above according to the
formula prescribed by the SEC, is a hypothetical return based on
market value yield to maturity for the corresponding Portfolio's
securities. It is not necessarily indicative of the amount which
was or may be paid to the Fund's shareholders. Actual amounts paid
to the Fund's shareholders are reflected in the distribution yield.
<PAGE>
PAGE 54
Distribution yield
Distribution yield is calculated according to the following
formula:
D divided by POP F equals DY
30 30
where: D = sum of dividends for 30-day period
POP = sum of public offering price for 30-day period
F = annualizing factor
DY = distribution yield
World Income Fund's distribution yield was 21.30% for the 30-day
period ended Oct. 31, 1996.
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, 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 Global Growth fund and IDS Global Bond Fund
(the IDS Funds), two open-end investment companies managed by the
Advisor, transferred all of their respective assets to World Growth
Portfolio and World Income Portfolio, respectively, in exchange for
units of the Portfolio. Also on May 13, 1996, World Growth Fund
and World Income Fund transferred all of their respective assets to
the Portfolio of the Trust in connection with the commencement of
its operations. On March 20, 1995, the IDS Fund 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 World Growth Fund and World Income Fund is
based on the performance and yield of the IDS Fund prior to March
20, 1995 and to Class A shares of the 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 Fund and historical fees and expenses of the IDS
Fund.
<PAGE>
PAGE 55
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.
On Nov. 1, 1996, the first business day following the end of the
fiscal period, the computations looked like this:
<TABLE><CAPTION>
Net assets before Shares outstanding Net asset value
Fund shareholder transactions at the end of previous day of one share
<S> <C> <C> <C> <C> <C>
World Growth Fund $490,359 divided by 69,111 equals $ 7.10
World Income Fund 526,791 83,841 6.28
</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 56
'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, the Advisor 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 the Advisor. 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 to redeem shares for more than seven
days. Such emergency situations would occur if:
<PAGE>
PAGE 57
'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
A 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 a Fund 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, IRA's 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 a 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 a Fund at the beginning of
such period. Although redemptions in excess of this limitation
would normally be paid in cash, a 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 58
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.
<PAGE>
PAGE 59
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.
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, World Growth Fund had a total
capital loss carryover of $14,481 at Oct. 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 Fund's dividend
that is attributable to dividends the Fund received from domestic
(U.S.) securities. For the fiscal period ended Oct. 31, 1996, none
of World Income Fund's net investment income dividends qualified
for the corporate deduction. The exclusion for dividends received
by individuals is no longer generally available.
The Fund may be subject to U.S. taxes resulting from holdings in a
passive foreign investment company (PFIC). A foreign corporation
is a PFIC when 75% or more of its gross income for the taxable year
is passive income or 50% or more of the average value of its assets
consists of assets that produce or could produce passive income.
World Income has no current intention to invest in PFICS.
Income earned by the Fund may have had foreign taxes imposed and
withheld on it in foreign countries. Tax conventions between
certain countries and the United States may reduce or eliminate
such taxes. If more than 50% of the Fund's total assets at the
close of its fiscal year consists of securities of foreign
corporations, the Fund will be eligible to file an election with
the Internal Revenue Service under which shareholders of the Fund <PAGE>
PAGE 60
would be required to include their pro rata portions of foreign
taxes withheld by foreign countries as gross income in their
federal income tax returns. These pro rata portions of foreign
taxes withheld may be taken as a credit or deduction in computing
federal income taxes. If the election is filed, the Fund will
report to its shareholders the per share amount of such foreign
taxes withheld and the amount of foreign tax credit or deduction
available for federal income tax purposes.
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 Fund 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 the 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 the 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.
Under the Internal Revenue Code of 1986 (the Code), gains or losses
attributable to fluctuations in exchange rates which occur between
the time the Fund accrues interest or other receivables, or accrues
expenses or other liabilities denominated in a foreign currency and
the time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, gains or losses on disposition of debt securities
denominated in a foreign currency attributable to fluctuations in
the value of the foreign currency between the date of acquisition
of the security and the date of disposition also are treated as
ordinary gains or losses. These gains or losses, referred to under
the Code as "section 988" gains or losses, may increase or decrease
the amount of the Fund's investment company taxable income to be
distributed to its shareholders as ordinary income. If the Fund
incurs a loss, a portion of the dividends distributed to
shareholders may be considered a return of capital.
Under federal tax law, by the end of a calendar year the Fund must
declare and pay dividends representing 98% of ordinary income for
that calendar year and 98% of net capital gains (both long-term and
short-term) for the 12-month period ending Oct. 31 of that calendar
year. The Fund is subject to an excise tax equal to 4% of the
excess, if any, of the amount required to be distributed over the
amount actually distributed. The Fund intends to comply with
federal tax law and avoid any excise tax.
<PAGE>
PAGE 61
For purposes of the excise tax distributions, "section 988"
ordinary gains and losses are distributable based on an Oct. 31
year end. This is an exception to the general rule that ordinary
income is paid based on a calendar year end.
Under the Revenue Reconciliation Act of 1989, if a mutual fund is
the holder of record of any share of stock on the record date for
any dividend payable with respect to such stock, the dividend is
included in gross income by the Fund as of the later of (1) the
date the share became ex-dividend or (2) the date the Fund acquired
the share. Because the dividends on some foreign equity
investments may be received some time after the stock goes ex-
dividend, and in certain rare cases may never be received by the
Fund, this rule may cause the Fund to take into income dividend
income which it has not received and pay such income to its
shareholders. To the extent that the dividend is never received,
the Fund will take a loss at the time that a determination is made
that the dividend will not be received.
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 from the assets
of each Portfolio, based upon the following schedule:
Emerging Markets Portfolio World Growth Portfolio
Assets Annual rate at Assets Annual rate at
(billions) each asset level (billions) each asset level
First $0.25 1.10% First $0.25 0.800%
Next 0.25 1.08 Next 0.25 0.775
Next 0.25 1.06 Next 0.25 0.750
Next 0.25 1.04 Next 0.25 0.725
Next 1.00 1.02 Next 1.0 0.700
Over 2.00 1.00 Over 2.0 0.675
World Income Portfolio
Assets Annual rate at
(billions) each asset level
First $0.25 0.770%
Next 0.25 0.745
Next 0.25 0.720
Next 0.25 0.695
Over 1.0 0.670
<PAGE>
PAGE 62
On Oct. 31, 1996, the daily rates applied to the Portfolios' net
assets on an annual basis were equal to 0.758% for World Growth
Portfolio and 0.740% for World Income Portfolio. The fee is
calculated for each calendar day on the basis of net assets as the
close of business two days prior to the day for which the
calculation is made.
The management fee is paid monthly. For the fiscal period from May
13, 1996, to Oct. 31, 1996, the total amount paid was $3,704,753
for World Growth Portfolio and $2,730,146 for World Income
Portfolio. Emerging Markets Portfolio began operations on Nov. 13,
1996. The amounts are allocated among the Funds investing in the
Portfolios.
Under the agreement, the 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; Portfolio 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 Portfolio, approved by the board. For the fiscal
period from May 13, 1996, to Oct. 31, 1996, the Portfolios and
Funds paid nonadvisory expenses of $530,101 for World Growth
Portfolio and World Growth Fund and $78,812 for World Income
Portfolio and World Income Fund. Emerging Markets Portfolio began
operations on Nov. 13, 1996.
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:
Emerging Markets Fund World Growth Fund
Fund Assets Annual rate at Fund assets Annual rate at
(billions) each asset level (billions) each asset level
First $0.25 0.10% First $0.25 0.060%
Next 0.25 0.09 Next 0.25 0.055
Next 0.25 0.08 Next 0.25 0.050
Next 0.25 0.07 Next 0.25 0.045
Next 1.00 0.06 Next 1.0 0.040
Over 2.00 0.05 Over 2.0 0.035
<PAGE>
PAGE 63
World Income Fund
Fund Assets Annual rate at
(billions) each asset level
First $0.25 0.060%
Next 0.25 0.055
Next 0.25 0.050
Next 0.25 0.045
Over 1.0 0.040
On Oct. 31, 1996, the daily rates applied to the Funds' net assets
on an annual basis were equal to 0.060% for World Growth Fund and
0.60% for World Income Fund. 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 Oct. 31, 1996,
the Funds paid fees of $97 for World Growth Fund and $101 for World
Income Fund. Emerging Markets Fund began operations on Nov. 13,
1996.
Under the agreement, the 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 the Fund approved by the board.
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 Fund's 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 for Emerging
Markets and World Growth and $25 per year for World Income 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 Oct. 31, 1996, the Funds paid fees of $20 for World
Growth Fund and $20 for World Income Fund. Emerging Markets Fund
began operations on Nov. 13, 1996.
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 Fund shares. Under the Plan, the
Distributor is paid a fee at an annual rate of 0.25% of a Fund's
average daily net assets.
<PAGE>
PAGE 64
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
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 Oct. 31, 1996, the Funds paid fees of $404 for World Growth
Fund, and $421 for World Income Fund. Emerging Markets Fund began
operations on Nov. 13, 1996.
Total fees and expenses
Total combined fees and nonadvisory expenses of both the Fund and
the Portfolio cannot exceed the most restrictive applicable state
limitation. Currently, the most restrictive applicable state
expense limitation, subject to exclusion of certain expenses, is
2.5% of the first $30 million of each Fund's average daily net
assets, 2% of the next $70 million and 1.5% of average daily net
assets over $100 million, on an annual basis. At the end of each
month, if the fees and expenses of a Fund exceed this limitation
for each Fund's fiscal year in progress, the Advisor will assume
all expenses in excess of the limitation. The Advisor then may
bill the Fund for such expenses in subsequent months up to the end
of that fiscal period, but not after that date. No interest
charges are assessed by the Advisor for expenses it assumes. For
the fiscal period from May 13, 1996 to Oct. 31, 1996, the Funds
paid total fees and nonadvisory expenses of $2,839 for World Growth
Fund and $2,283 for World Income Fund. World Growth Fund and World
Income Fund began operations on May 13, 1996. Emerging Markets
Fund began operations on Nov. 13, 1996. The Advisor and the <PAGE>
PAGE 65
Distributor have agreed to waive certain fees and to absorb certain
other Fund expenses until Oct. 31, 1997. Under this agreement,
Emerging Markets Fund's total expenses will not exceed 2.20%, World
Growth Fund's total expenses will not exceed 1.75% and World Income
Fund's total expenses will not exceed 1.35%.
ORGANIZATIONAL INFORMATION
Each Fund is a series of Strategist World 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 and
officers, who are board members and officers 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.
Directors and officers 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.
<PAGE>
PAGE 66
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.
*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 Stratgist 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.<PAGE>
PAGE 67
Members of the board who are not officers of the Advisor or an
affiliate receive an annual fee of $1,000 for World Growth Fund and
$1,000 for World Income Fund. Emerging Markets Fund pays no fees
or expenses to board members until the assets of the Fund reach 20
million. 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 Oct. 31, 1996 the
members of the board received no compensation. On Oct. 31, 1996,
the Funds' board members and officers as a group owned less than 1%
of the outstanding shares of each Fund.
The following is a list of the Trust's board members and officers,
who are board members and officers of all five Trusts in the
Preferred Master Trust Group and, except for Mr. Dudley, all 47
funds in the IDS MUTUAL FUND GROUP. Mr. Dudley is a board member
of all IDS fund except the nine life funds. All units have
cumulative voting rights with respect to the election of board
members.
Trustees and officers of the Preferred Master Trust Group
H. Brewster Atwater, Jr.
Born in 1931
4900 IDS Tower
Minneapolis, MN
Former chairman and chief executive officer, General Mills, Inc.
Director, Merck & Co., Inc 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, the Interpublic Group of Companies, Inc.
(advertising) 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.<PAGE>
PAGE 68
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).
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 congressman,
secretary of defense and presidential counsellor. Director, Martin
Marietta Corp., 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).
<PAGE>
PAGE 69
William R. Pearce+*
Born in 1927
901 S. Marquette Ave.
Minneapolis, MN
President of all Trusts in the Preferred Master Trust Group since
April 1996 and president of all funds in the IDS MUTUAL FUND GROUP
since June 1993. Former vice chairman of the board, Cargill,
Incorporated (commodity merchants and processors).
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).
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. <PAGE>
PAGE 70
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, general counsel and secretary of all Trusts in the
Preferred Master Trust Group and of all funds in the IDS MUTUAL
FUND GROUP.
Officers who are also officers and/or employees of the Advisor:
Peter J. Anderson
Born in 1942
IDS Tower 10
Minneapolis, MN
Vice president-investments of all Trusts in the Preferred Master
Trust Group. Director and senior vice president-investments of the
Advisor.
Melinda S. Urion
Born in 1953
IDS Tower 10
Minneapolis, MN
Treasurer of all Trusts in the Preferred Master Trust 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 a Portfolio or of the
Advisor receive an annual fee of $100 for Emerging Markets
Portfolio, $600 for World Growth Portfolio and $300 for World
Income Portfolio. 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.
<PAGE>
PAGE 71
During the fiscal period from May 13, 1996 to Oct. 31, 1996 the
members of the board, for attending up to 25 meetings, received the
following compensation, in total, from all Portfolios in the
Preferred Master Trust Group:
<TABLE><CAPTION>
Compensation Table
for World 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 $ 356 $0 $0 $74,500
Robert F. Froehlke 399 0 0 76,800
Heinz F. Hutter 377 0 0 77,300
Anne P. Jones 381 0 0 77,400
Melvin R. Laird 418 0 0 80,600
Edson W. Spencer 419 0 0 83,300
Wheelock Whitney 369 0 0 75,200
C. Angus Wurtele 387 0 0 75,300
Compensation Table
for World Income 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 $ 289 $0 $0 $74,500
Robert F. Froehlke 332 0 0 76,800
Heinz F. Hutter 310 0 0 77,300
Anne P. Jones 314 0 0 77,400
Melvin R. Laird 351 0 0 80,600
Edson W. Spencer 352 0 0 83,300
Wheelock Whitney 302 0 0 75,200
C. Angus Wurtele 320 0 0 75,300
</TABLE>
During the fiscal period from May 13, 1996 to Oct. 31, 1996, no
board member or officer earned more than $60,000 from the World
Growth Portfolio and World Income Portfolio, respectively. All
board members and officers as a group earned $1,783 from World
Growth Portfolio and $1,338 from World Income Portfolio.
CUSTODIAN
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 Portfolios pay the custodian a maintenance charge per
Portfolio and a charge per transaction in addition to reimbursing
the custodian's out-of-pocket expenses.
<PAGE>
PAGE 72
INDEPENDENT AUDITORS
The Funds' and corresponding Portfolios' financial statements to be
contained in its Annual Report to shareholders at the end of the
fiscal year will be audited by independent auditors, KPMG Peat
Marwick LLP, 4200 Norwest Center, 90 S. Seventh St., Minneapolis,
MN 55402-3900. The independent auditors also provide other
accounting and tax-related services as requested by the Fund[s].
FINANCIAL STATEMENTS
The Independent Auditor's Report and the Financial Statements,
including Notes to the Financial Statements and the Schedule of
Investments in Securities, contained in the 1996 Annual Report to
shareholders, 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 Report, however, is incorporated by
reference.
PROSPECTUS
The prospectus dated Dec. 30, 1996, is hereby incorporated in this
SAI by reference.
<PAGE>
PAGE 73
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 an 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.
<PAGE>
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B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be
small.
Caa are of poor standing. Such issues may be in default or there
may be present elements of danger with respect to principal or
interest.
Ca represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.
C are the lowest rated class of bonds, and issues so rated can be
regarded as having extremely poor prospects of ever attaining any
real investment standing.
Ratings by Standard & Poor's Corporation are AAA, AA, A, BBB, BB,
B, CCC, CC, C and D.
AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in small degree.
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.
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CCC has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial, or
economic conditions, it is not likely to have the capacity to pay
interest and repay principal. The CCC rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.
CC typically is applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating.
C typically is applied to debt subordinated to senior debt that is
assigned an actual or implied CCC- rating. The C rating may be
used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the due
date, even if the applicable grace period has not expired, unless
S&P believes that such payments will be made during such grace
period. The D rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
Non-rated securities will be considered for investment when they
possess a risk comparable to that of rated securities consistent
with the 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.
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APPENDIX B
FOREIGN CURRENCY TRANSACTIONS
Since investments in foreign countries usually involve currencies
of foreign countries, and since the Portfolio may hold cash and
cash-equivalent investments in foreign currencies, the value of the
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, the Portfolio may incur costs
in connection with conversions between various currencies.
Spot Rates and Forward Contracts. The 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.
The Portfolio may enter into forward contracts to settle a security
transaction or handle dividend and interest collection. When the
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, the 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.
The Portfolio also may enter into forward contracts when management
of the Portfolio believes the currency of a particular foreign
country may change in relationship to the U.S. dollar or another
currency. The precise matching of forward contract amounts and the
value of securities involved generally will not be possible since
the future value of such securities in foreign currencies more than
likely will change between the date the forward contract is entered
into and the date it matures. The projection of short-term
currency market movements is extremely difficult and successful
execution of a short-term hedging strategy is highly uncertain.
The Portfolio will not enter into such forward contracts or
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contracts would obligate the Portfolio to deliver an amount of
foreign currency in excess of an offsetting position composed of
the Portfolio's securities and cash. Under normal circumstances,
consideration of the prospect for currency parities will be
incorporated into the longer term investment strategies. The
investment manager believes it is important, however, to have the
flexibility to enter into such forward contracts when it determines
it is in the best interest of the Portfolio to do so.
The Portfolio will designate cash or securities in an amount equal
to the value of the 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 the Portfolio's commitments on such contracts.
At maturity of a forward contract, the 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 the Portfolio retains the security and engages in an offsetting
transaction, the Portfolio will incur a gain or a loss (as
described below) to the extent there has been movement in forward
contract prices. If the 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 the Portfolio enters into a forward contract for
selling foreign currency and the date it enters into an offsetting
contract for purchasing the foreign currency, the 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, the 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 securities
will be at the expiration of a contract. Accordingly, it may be
necessary for the 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 the 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
the Portfolio is obligated to deliver.
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The Portfolio's dealing in forward contracts will be limited to the
transactions described above. This method of protecting the value
of the 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 the 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
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. The Portfolio may buy put and call
options and write covered call and cash-secured put options on
foreign currencies for hedging purposes. For example, a decline in
the dollar value of a foreign currency in which securities are
denominated will reduce the dollar value of such securities, even
if their value in the foreign currency remains constant. In order
to protect against such diminutions in the value of securities, the
Portfolio may buy put options on the foreign currency. If the
value of the currency does decline, the 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 the
Portfolio which otherwise would have resulted.
Conversely, where a change in the dollar value of a currency in
which securities to be acquired are denominated is projected, which
would increase the cost of such securities, the Portfolio may buy
call options thereon. The purchase of such options could offset,
at least partially, the effects of the adverse movements in
exchange rates.
As in the case of other types of options, however, the benefit to
the 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, the
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.
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The Portfolio may write options on foreign currencies for the same
types of hedging purposes. For example, when the 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.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be
acquired, the Portfolio could write a put option on the relevant
currency which, if rates move in the manner projected, will expire
unexercised and allow the Portfolio to hedge such increased cost up
to the amount of the premium.
As in the case of other types of options, however, the writing of a
foreign currency option will constitute only a partial hedge up to
the amount of the premium, and only if rates move in the expected
direction. If this does not occur, the option may be exercised and
the 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, the
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 the Portfolio
holds currency sufficient to cover the option or has an absolute
and immediate right to acquire that currency without additional
cash consideration upon conversion of assets denominated in that
currency or exchange of other currency held in the 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.
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Foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the Options
Clearing Corporation (OCC), thereby reducing the risk of
counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more
readily available than in the over-the-counter market, potentially
permitting the 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. The Portfolio may
enter into currency futures contracts to buy or sell currencies.
It also may buy put and call options and write covered call and
cash-secured put options on currency futures. Currency futures
contracts are similar to currency forward contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency
futures call for payment of delivery in U.S. dollars. The
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 the Portfolio's investments. A
currency hedge, for example, should protect a Yen-denominated bond
against a decline in the Yen, but will not protect the Portfolio
against price decline if the issuer's creditworthiness
deteriorates. Because the value of the 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 the Portfolio's
investments denominated in that currency over time.
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The Portfolio will hold securities or other options or futures
positions whose values are expected to offset its obligations. The
Portfolio will not enter into an option or futures position that
exposes the 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 FUTURES CONTRACTS
The Portfolio may buy or write options traded on any U.S. or
foreign exchange or in the over-the-counter market. The Portfolio
may enter into stock index futures contracts traded on any U.S. or
foreign exchange. The 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 investment
manager believes a liquid secondary market exists for the options
and only from dealers and institutions the investment manager
believes present a minimal credit risk. Some options are
exercisable only on a specific date. In that case, or if a liquid
secondary market does not exist, the 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 the Portfolio and its
shareholders by improving the Portfolio's liquidity and by helping
to stabilize the value of its net assets.
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Buying options. Put and call options may be used as a trading
technique to facilitate buying and selling securities for
investment reasons. Options are used as a trading technique to
take advantage of any disparity between the price of the underlying
security in the securities market and its price on the options
market. It is anticipated the trading technique will be utilized
only to effect a transaction when the price of the security plus
the option price will be as good or better than the price at which
the security could be bought or sold directly. When the option is
purchased, the 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 the Portfolio for
investment purposes. Options permit the Portfolio to experience
the change in the value of a security with a relatively small
initial cash investment.
The risk the Portfolio assumes when it buys an option is the loss
of the premium. To be beneficial to the 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 assure a profit
since prices in the option market may not reflect such a change.
Writing covered options. The Portfolio will write covered options
when it feels it is appropriate and will follow these guidelines:
'Underlying securities will continue to be bought or sold solely on
the basis of investment considerations consistent with the
Portfolio's goal.
'All options written by the Portfolio will be covered. For covered
call options if a decision is made to sell the security, or for put
options if a decision is made to buy the security, the Portfolio
will attempt to terminate the option contract through a closing
purchase transaction.
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A call option written by the Portfolio will be covered (i) if the
Portfolio owns the security in connection with which the option was
written, or has an absolute and immediate right to acquire such
security upon conversion of exchange or other securities held in
its portfolio, or (ii) in such other manner that is in accordance
with the rules of the exchange on which the option is traded and
applicable laws and regulations. A put option written by the
Portfolio will be covered through (i) segregation in a segregated
account held by the Portfolio's custodian of cash, short-term U.S.
government securities or money market instruments in an amount
equal to the exercise price of the option, or (ii) in any other
manner that is in accordance with the requirements of the exchange
on which the option is traded and applicable laws and regulations.
Upon exercise of the option, the holder is required to pay the
purchase price of the underlying security in the case of a call
option, or to deliver the security in return for the purchase price
in the case of a put option. Conversely the writer is required to
deliver the security in the case of a call option or to purchase
the security in the case of a put option. Options that have been
purchased or written may be closed out prior to exercise or
expiration by entering into an offsetting transaction on the
exchange on which the initial position was established subject to
the availability of a liquid secondary market.
The Portfolio will realize a profit from a closing transaction if
the premium paid in connection with the closing of an option
written by the Portfolio is less than the premium received from
writing the option. Conversely, the Portfolio will suffer a loss
if the premium paid is more than the premium received. The
Portfolio also will profit if the premium received in connection
with the closing of an option purchased by the Portfolio is more
than the premium paid for the original purchase. Conversely, the
Portfolio will suffer a loss if the premium received is less than
the premium paid in establishing the option position.
The Portfolio may deal in options on securities that are traded in
U.S. and foreign securities exchanges and over-the-counter markets
and on domestic and foreign securities indexes.
The 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 the Portfolio, it will conform to the requirements of those
states. For example, California limits the writing of options to
50% of the assets of a fund.
Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since the
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.
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If a covered call option is exercised, the security is sold by the
Portfolio. The premium received upon writing the option is added
to the proceeds received from the sale of the security. The
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.
FUTURES CONTRACTS. A futures contract is an agreement between two
parties to buy and sell a security for a set price on a future
date. Futures contracts are commodity contracts listed on
commodity exchanges. Futures contracts trade in a manner similar
to the way a stock trades on a stock exchange and the commodity
exchanges, through their clearing corporations, guarantee
performance of the contracts. There are contracts based on U.S.
Treasury bonds, Standard & Poor's 500 Index (S&P 500 Index), and
other broad stock market indexes as well as narrower sub-indexes.
The S&P 500 Index assigns relative weightings to the common stocks
included in the Index, and the Index fluctuates with changes in the
market values of those stocks.
In the case of S&P 500 Index futures contracts, the specified
multiple is $500. Thus, if the value of the S&P 500 Index were
150, the value of one contract would be $75,000 (150 x $500).
Unlike other futures contracts, a stock index futures contract
specifies that no delivery of the actual stocks making up the index
will take place. Instead, settlement in cash must occur upon the
termination of the contract. For example, excluding any
transaction costs, if the 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, the Portfolio will gain $500 x (154-150) or $2,000.
If the 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, the Portfolio will
lose $500 x (152-150) or $1,000.
Generally, a futures contract is terminated by entering into an
offsetting transaction. An offsetting transaction is effected by
the Portfolio taking an opposite position. At the time a futures
contract is made, a good faith deposit called initial margin is set
up within a segregated account at the Portfolio's custodian bank.
Daily thereafter, the futures contract is valued and the payment of
variation margin is required so that each day the Portfolio would
pay out cash in an amount equal to any decline in the contract's
value or receive cash equal to any increase. At the time a futures
contract is closed out, a nominal commission is paid, which is
generally lower than the commission on a comparable transaction in
the cash markets.
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The purpose of a futures contract is to allow the Portfolio to gain
rapid exposure to or protect itself from changes in the market
without actually buying or selling securities. 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, the 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.
Risks of Transactions in Futures Contracts
The Portfolio may elect to close some or all of its contracts prior
to expiration. Although the 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, the 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 owned by the Portfolio. 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.
Another risk in employing futures contracts to protect against the
price volatility of securities is that the prices of securities
subject to futures contracts may not correlate perfectly with the
behavior of the cash prices of the Portfolio's securities. The
correlation may be distorted because the futures market is
dominated by short-term traders seeking to profit from the
difference between a contract or security price and their cost of
borrowed funds. Such distortions are generally minor and would
diminish as the contract approached maturity.
In addition, the Portfolio's investment manager could be incorrect
in its expectations as to the direction or extent of various
interest rate or market movements or the time span within which the
movements take place. For example, if the Portfolio sold futures
contracts in anticipation of a market decline, and the market
rallied instead, the Portfolio would lose part or all of the
benefit of the increased value of the stock it has hedged because
it will have offsetting losses in its futures positions.
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OPTIONS ON FUTURES CONTRACTS. Options on futures contracts give
the holder a right to buy or sell futures contracts in the future.
Unlike a futures contract, which requires the parties to the
contract to buy and sell a security on a set date, an option on a
futures contract merely entitles its holder to decide on or before
a future date (within nine months of the date of issue) whether to
enter into such a contract. If the holder decides not to enter
into the contract, all that is lost is the amount (premium) paid
for the option. Furthermore, because the value of the option is
fixed at the point of sale, there are no daily payments of cash to
reflect the change in the value of the underlying contract.
However, since an option gives the buyer the right to enter into a
contract at a set price for a fixed period of time, its value does
change daily and that change is reflected in the net asset value of
the Portfolio.
The risk the Portfolio assumes when it buys an option is the loss
of the premium paid for the option. The risk involved in writing
options on futures contracts the Portfolio owns, or on securities
held in its portfolio, is that there could be an increase in the
market value of such contracts or securities. If that occurred,
the option would be exercised and the asset sold at a lower price
than the cash market price. To some extent, the risk of not
realizing a gain could be reduced by entering into a closing
transaction. The Portfolio could enter into a closing transaction
by purchasing an option with the same terms as the one it had
previously sold. The cost to close the option and terminate the
Portfolio's obligation, however, might be more or less than the
premium received when it originally wrote the option.
Furthermore, the Portfolio might not be able to close the option
because of insufficient activity in the options market. Purchasing
options also limits the use of monies that might otherwise be
available for long-term investments.
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.
TAX TREATMENT. As permitted under federal income tax laws, the
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 the Portfolio being required to defer recognizing losses
incurred by entering into futures contracts and losses on
underlying securities identified as being hedged against.
<PAGE>
PAGE 88
Federal income tax treatment of gains or losses from transactions
in options on futures contracts and indexes will depend on whether
such option is a section 1256 contract. If the option is a non-
equity option, the 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 the Portfolio's ability to engage in futures
contracts and related options transactions. For example, at the
close of each quarter of the 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, the
Portfolio may be required to defer closing out a contract beyond
the time when it might otherwise be advantageous to do so. The
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 (the 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>
PAGE 89
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>
PAGE 90
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 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 through changing market
conditions 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 91
<PAGE>
PAGE 92
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS:
Financial Statements filed as part of this post-effective
amendment:
Strategist World Fund, Inc.:
Independent Auditor's Report dated December 6, 1996
Statement of assets and liabilities, October 31, 1996
Statement of operations, for the period from May 13, 1996 to
October 31, 1996
Statement of changes in net assets, for the period from
May 13, 1996 to October 31, 1996
Notes to financial statements
World Growth Portfolio:
Independent Auditor's Report dated December 6, 1996
Statement of assets and liabilities, October 31, 1996
Statement of operations, for the period from May 13, 1996 to
October 31, 1996
Statement of changes in net assets, for the period from
May 13, 1996 to October 31, 1996
Notes to financial statements
Investments in securities, October 31, 1996
Notes to investments in securities
World Income Portfolio:
Independent Auditor's Report dated December 6, 1996
Statement of assets and liabilities, October 31, 1996
Statement of operations, for the period from May 13, 1996 to
October 31, 1996
Statement of changes in net assets, for the period from
May 13, 1996 to October 31, 1996
Notes to financial statements
Investments in securities, October 31, 1996
Notes to investments in securities
Strategist World Fund, Inc.
Statement of assets and liabilities, for the one month ended
November 30, 1996
Statement of operations, for the one month ended
November 30, 1996
Statement of changes in net assets, for the one month ended
November 30, 1996
(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.
<PAGE>
PAGE 93
(b) Articles of Amendment of Express Direct World Fund, Inc.,
dated April 4th, 1996 filed electronically on or about
April 17, 1996 as Exhibit 1(b) to Registrant's Pre-Effective
Amendment No. 2 are incorporated herein by reference.
2. Form of By-laws filed electronically on Nov. 1, 1995 as
Exhibit 2 to Registrant's Initial Registration Statement are
incorporated herein by reference.
3. Not Applicable.
4. Not Applicable.
5. Not Applicable.
6(a) Copy of Distribution Agreement between Strategist World
Fund, Inc. on behalf of Strategist World Growth Fund and
Strategist World Income Fund and American Express Service
Corporation, dated May 13, 1996, is filed electronically
herewith as Exhibit 6(a).
6(b) Copy of Distribution Agreement between Strategist World
Fund, Inc. on behalf of Strategist Emerging Markets Fund and
Strategist World Technologies Fund and American Express
Service Corporation dated Nov. 13, is filed
electronically herewith as Exhibit 6(b).
7. Not Applicable.
8(a) Copy of Custodian Agreement between Strategist World Fund,
Inc. on behalf of Strategist World Growth Fund and
Strategist World Income Fund and American Express Trust
Company, dated May 13, 1996, is filed electronically
herewith as Exhibit 8(a).
8(b) Copy of Custodian Agreement between Strategist World
Fund, Inc., on behalf of Strategist Emerging Markets Fund
and Strategist World Technologies Fund, and American
Express Trust Company, dated Nov. 13, is filed
electronically herewith as Exhibit 8(b).
8(c) Copy of Addendum to the Custodian Agreement between
Strategist World Fund, Inc., on behalf of Strategist World
Growth Fund and Strategist World Income Fund, American
Express Trust Company and American Express Financial
Corporation, dated May 13, 1996, is filed electronically
herewith as Exhibit 8(c).
8(d) Copy of Addendum to the Custodian Agreement between
Strategist World Fund, Inc. on behalf of Strategist Emerging
Markets Fund and Strategist World Technologies Fund,
American Express Trust Company and American Express
Financial Corporation, dated Nov. 13, is filed
electronically herewith as Exhibit 8(d).
<PAGE>
PAGE 94
9(a) Copy of Transfer Agency Agreement between Strategist World
Fund, Inc., on behalf of Strategist World Growth Fund and
Strategist World Income Fund and American Express Financial
Corporation, dated May 13, 1996, is filed electronically as
Exhibit 9(a).
9(b) Copy of Transfer Agency Agreement between Strategist
World Fund, Inc., on behalf of Strategist Emerging
Markets Fund and Strategist World Technologies Fund, and
American Express Financial Corporation, dated Nov. 13, 1996,
is filed electronically herewith as Exhibit 9(b).
9(c) Copy of Administrative Services Agreement between Strategist
World Fund, Inc., on behalf of Strategist World Growth Fund
and Strategist World Income Fund, and American Express
Financial Corporation, dated May 13, 1996, is filed
electronically herewith as Exhibit 9(c).
9(d) Copy of Administrative Services Agreement between
Strategist World Fund, Inc., on behalf of Strategist
Emerging Markets Fund and Strategist World Technologies
Fund, and American Express Financial Corporation, dated
Nov. 13 is filed electronically herewith as Exhibit 9(d).
9(e) Copy of Agreement and Declaration of Unitholders between IDS
Global Series, Inc., on behalf of IDS Global Bond Fund and
Strategist World Fund, Inc., on behalf of Strategist World
Income Fund, dated May 13, 1996, is filed electronically
herewith as Exhibit 9(e).
9(f) Copy of Agreement and Declaration of Unitholders between IDS
Global Series, Inc., on behalf of IDS Global Growth Fund and
Strategist World Fund, Inc., on behalf of Strategist World
Growth Fund, dated May 13, 1996, is filed electronically as
Exhibit 9(f).
9(g) Copy of Agreement and Declaration of Unitholders between IDS
Global Series, Inc., on behalf of IDS Emerging Markets Fund,
and Strategist World Fund, Inc., on behalf of Strategist
Emerging Markets Fund dated Nov. 13, 1996, is filed
electronically herewith as Exhibit 9(g).
9(h) Copy of Agreement and Declaration of Unitholders between IDS
Global Series, Inc., on behalf of IDS Innovations, and
Strategist World Fund, Inc., on behalf of Strategist World
Technologies Fund dated Nov. 13, 1996, is filed
electronically herewith as Exhibit 9(h).
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.
<PAGE>
PAGE 95
12. Not Applicable.
13(a). Copy of Notification of Election pursuant to Rule 18f-1
under the Investment Company Act of 1940 dated April 29,
1996 by the Registrant is incorporated herein by reference.
13(b). Subscription agreement dated April 16, 1996.
13(c). Share Purchase Agreement dated April 16, 1996.
14. Not Applicable.
15(a) Copy of Plan and Agreement of Distribution between
Strategist World Fund, Inc., on behalf of Strategist World
Growth Fund and Strategist World Income Fund, and American
Express Service Corporation, dated May 13, 1996, is filed
electronically as Exhibit 15(a).
15(b) Copy of Plan and Agreement of Distribution between
Strategist World Fund, Inc., on behalf of Strategist
Emerging Markets Fund and Strategist World Technologies
Fund, and American Express Service Corporation, dated
Nov. 13, 1996, is filed electronically herewith as Exhibit
15(b).
16. Schedule of computation of each performance quotation to be
filed electronically as Exhibit 16 to Registrant's
Pre-Effective Amendment No. 2, is incorporated herein by
reference.
17. Financial data schedules are filed electronically herewith.
18. Not Applicable.
19(a) Directors' Power of Attorney to sign Amendments to this
Registration Statement, dated April 24, 1996 is filed
electronically as Exhibit 19(a) to Registrant's Post-
Effective Amendment No. 1 is incorporated herein by
reference.
19(b) Officers' Power of Attorney to sign Amendments to this
Registration Statement, dated April 24, 1996, is filed
electronically as Exhibit 19(b) to Registrant's Post-
Effective Amendment No. 1 is incorporated herein by
reference.
19(c) Trustee's Power of Attorney to sign Amendments to this
Registration Statement, dated April 11, 1996, filed as
Exhibit 19(a) to Registrant's Pre-Effective Amendment No.
2, is incorporated herein by reference.
<PAGE>
PAGE 96
19(d) Officers' Power of Attorney to sign Amendments to this
Registration Statement, dated April 11, 1996, filed as
Exhibit 19(b) to Registrant's Pre-Effective Amendment No.
2, is incorporated herein by reference.
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Holders as of
Title of Class December 16, 1996
Common Stock
$.01 par value
Strategist Emerging Markets Fund 2
Strategist World Growth Fund 5
Strategist World Income Fund 2
Item 27. Indemnification
Reference is hereby made to Article IV of Registrant's Articles of
Incorporation filed electronically on or about Nov. 3, 1995 as
Exhibit 1 to Registrant's initial registration statement and
Article X of Registrant's By-laws filed electronically on or about
Nov. 3, 1995 as Exhibit 2 to Registrant's initial registration
statement.
<PAGE>
PAGE 97
<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 98
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Strategist World
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 26th day
of December, 1996.
STRATEGIST WORLD 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 26th day
of December, 1996.
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 Officer's 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
** 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 99
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, WORLD 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 26th day of December,
1996.
WORLD 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 26th day
of December, 1996.
Signature Capacity
/s/ William R. Pearce* Trustee
William R. Pearce
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
<PAGE>
PAGE 100
Signatures Capacity
/s/ Melvin R. Laird* Trustee
Melvin R. Laird
Trustee
Edson W. Spencer
/s/ John R. Thomas* Trustee
John R. Thomas
Trustee
Wheelock Whitney
/s/ C. Angus Wurtele* Trustee
C. Angus Wurtele
* Signed pursuant to Trustees Power of Attorney dated April 11,
1996, filed as Exhibit 19(a) to Registrant's Pre-Effective
Amendment No. 2, by:
___________________________________
Leslie L. Ogg
** Signed pursuant to Officers' Power of Attorney dated April 11,
1996, filed as Exhibit 19(b) to Registrant's Pre-Effective
Amendment No. 2, by:
___________________________________
Leslie L. Ogg
<PAGE>
PAGE 101
CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 3
TO REGISTRATION STATEMENT NO. 33-63951
This post-effective amendment comprises the following papers and
documents:
The facing sheet.
Cross reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Part C.
Other information.
Exhibits.
The signatures.
<PAGE>
PAGE 1
EXHIBIT INDEX
6(a) Copy of Distribution Agreement between Strategist World Fund,
Inc. on behalf of Strategist World Growth Fund and Strategist World
Income Fund and American Express Service Corporation.
6(b) Copy of Distribution Agreement between Strategist World Fund,
Inc. on behalf of Strategist Emerging Markets Fund and Strategist
World Technologies Fund and American Express Service Corporation.
8(a) Copy of Custodian Agreement between Strategist World Fund,
Inc., on behalf of Strategist World Growth Fund and Strategist
World Income Fund and American Express Trust Company.
8(b) Copy of Custodian Agreement between Strategist World Fund,
Inc., on behalf of Strategist Emerging Markets and Strategist World
Technologies Fund, an American Express Trust Company.
8(c) Copy of Addendum to the Custodian Agreement between Strategist
World Fund, Inc., on behalf of Strategist World Growth Fund and
Strategist World Income Fund, American Express Trust Company and
American Express Financial Corporation.
8(d) Copy of Addendum to the Custodian Agreement between Strategist
World Fund, Inc. on behalf of Strategist Emerging Markets and
Strategist World Technologies, American Express Trust Company and
American Express Financial Corporation.
9(a) Copy of Transfer Agency Agreement between Strategist World
Fund, Inc. on behalf of Strategist World Growth Fund and Strategist
World Income Fund and American Express Financial Corporation.
9(b) Copy of Transfer Agency Agreement between Strategist World
Fund, Inc. on behalf of Strategist Emerging Markets Fund and
Strategist World Technologies Fund and American Express Financial
Corporation.
9(c) Copy of Administrative Service Agreement between Strategist
World Fund, Inc. on behalf of Strategist World Growth Fund and
Strategist World Income Fund and American Express Financial
Corporation.
9(d) Copy of Administrative Services Agreement between Strategist
World Fund, Inc., on behalf of Strategist Emerging Markets and
Strategist World Technologies and American Express Financial
Corporation.
9(e) Copy of Agreement and Declaration of Unitholders between IDS
Global Series, Inc., on behalf of IDS Global Bond Fund and
Strategist World Fund, Inc. on behalf of Strategist World Income
Fund.
<PAGE>
PAGE 2
9(f) Copy of Agreement and Declaration of Unitholders between IDS
Global Series, Inc., on behalf of IDS Global Growth Fund and
Strategist World Fund, Inc., on behalf of Strategist World Growth
Fund.
9(g) Copy of Agreement and Declaration of Unitholders between IDS
Global Series, Inc., on behalf of IDS Emerging Markets Fund and
Strategist World Fund, Inc., on behalf of Strategist Emerging
Markets Fund.
9(h) Copy of Agreement and Declaration of Unitholders between IDS
Global Series, Inc., on behalf of IDS Innovations Fund and
Strategist World Fund, Inc., on behalf of Strategist World
Technologies Fund.
11 Consent of independent auditors.
13(b) Subscription agreement dated April 16, 1996.
13(c) Share Purchase Agreement dated April 16, 1996.
15(a) Copy of Plan and Agreement of Distribution between Strategist
World Fund, Inc. on behalf of Strategist World Growth Fund and
Strategist World Income Fund and American Express Service
Corporation.
15(b) Copy of Plan and Agreement of Distribution between
Strategist World Fund, Inc., on behalf of Strategist Emerging
Markets Fund, Strategist World Technologies Fund and American
Express Service Corporation.
17. Financial Data Schedules
<PAGE>
PAGE 1
DISTRIBUTION AGREEMENT
Agreement made as of the 13th day of May, 1996, by and between
Strategist World 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 <PAGE>
PAGE 2
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
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.<PAGE>
PAGE 3
(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.
(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").
<PAGE>
PAGE 5
(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.
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.
<PAGE>
PAGE 6
IN WITNESS WHEREOF, The parties hereto have executed the foregoing
agreement on the date and year first above written.
STRATEGIST WORLD FUND, INC.
Strategist World Income Fund
Strategist World 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
DISTRIBUTION AGREEMENT
Agreement made as of the 13th day of November, 1996, by and between
Strategist World Fund, Inc. (the "Company"), a Minnesota
corporation, on behalf of its underlying series funds: Strategist
Emerging Markets Fund and Strategist World Technologies Fund (each
referred to as the "Fund" and collectively referred to as the
"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 Funds 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 Funds.
(2) AESC hereby covenants and agrees to act as the principal
underwriter of the Funds' 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 Fund, 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 Fund's current 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 <PAGE>
PAGE 2
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 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 Funds'
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 Funds, 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.
<PAGE>
PAGE 3
(8) AESC agrees to cause to be delivered to each person
submitting an application a current prospectus of the respective
Fund in the form required by the applicable federal laws or by the
acts or statutes of any applicable state, province or country.
(9) The Funds shall have the right to extend to shareholders of
each class the right to use the proceeds of any cash dividend paid
by the respective Fund 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 Fund's
currently effective Prospectus or Statement of Additional
Information.
(10) Shares of each class of common stock issued by the Funds may
be offered and sold at their net asset value to the shareholders of
the same class of other funds 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 Funds, to the
extent set forth in the Funds' 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 the
Funds' common stock
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 the Funds' shares in an amount equal to the
difference between the total amount received upon each sale of
shares issued by the Funds 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 the Funds' shares at the time the sales charge is
imposed in an amount equal to any deferred sales charge, as
described in the Funds' current 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.
<PAGE>
PAGE 4
(2) The net asset value of the Funds' common stock shall be
determined in the manner provided by the Funds' 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 or the Funds.
(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 United States 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 or herself
as principal or agent, or with any corporation or partnership in
which he or she 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 Funds, or the sale
of securities owned by the Funds, 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; or
<PAGE>
PAGE 5
(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 Funds.
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.
<PAGE>
PAGE 6
IN WITNESS WHEREOF, The parties hereto have executed the foregoing
agreement on the date and year first above written.
STRATEGIST WORLD FUND, INC.
Strategist Emerging Markets Fund
Strategist World Technologies 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 November 13, 1996, between
Strategist World 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.
<PAGE>
PAGE 2
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
(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.
<PAGE>
PAGE 3
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
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, <PAGE>
PAGE 4
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
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.
<PAGE>
PAGE 5
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
(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.<PAGE>
PAGE 6
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.
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.
<PAGE>
PAGE 7
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 8
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,<PAGE>
PAGE 9
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.
This Agreement shall be governed by the laws of the State of
Minnesota.
STRATEGIST WORLD FUND, INC.
Strategist World Income Fund
Strategist World 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
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated November 13, 1996, between
Strategist World Fund, Inc. (the "Company"), a Minnesota
corporation, on behalf of its underlying series funds: Strategist
Emerging Markets Fund and Strategist World Technologies Fund (each
referred to as a "Fund" and collectively as the "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 the Funds' 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 Funds 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.
<PAGE>
PAGE 2
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
defined herein. 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
(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 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 provided herein.
Section 3. Use of Subcustodians
The Custodian may make arrangements, where appropriate, and as
approved by the Company, 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 United States 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.
<PAGE>
PAGE 3
Section 4. Receipt and Disbursement of Money
(1) The Custodian shall open and maintain a separate account or
accounts in the name of each Fund 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 each Fund. The Custodian or its
agent shall make payments of cash to or for the account of each
Fund from such cash only:
(a) for the purchase of securities for each Fund upon the
receipt of such securities by the Custodian or its agent
unless otherwise instructed on behalf of the respective
Fund;
(b) for the purchase or redemption of shares of the Funds'
capital stock;
(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 each Fund
held by or to be delivered to the Custodian;
(f) for payments in connection with the return of securities
loaned by the respective Fund upon receipt of such
securities or the reduction of collateral upon receipt of
proper notice;
(g) for payments for other proper corporate purposes; or
(h) 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.
<PAGE>
PAGE 4
(2) The Custodian is hereby appointed the attorney-in-fact of the
respective Fund to endorse and collect all checks, drafts or other
orders for the payment of money received by the Custodian for the
account of the Fund and drawn on or to the order of the Fund and to
deposit same to the account of the respective Fund 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 each Fund.
The Custodian shall record and maintain a record of all certificate
numbers. Securities so received shall be held in the name of the
respective Fund, 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 Funds 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 respective Fund and 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 Funds 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
respective Fund, upon receipt of payment therefor;
(b) when such securities are called, redeemed, retired or
otherwise become payable;
<PAGE>
PAGE 5
(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 merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise;
(e) for the purpose of exchanging interim receipts or temporary
certificates for permanent certificates;
(f) upon conversion of such securities pursuant to their terms
into other securities;
(g) upon exercise of subscription, purchase or other similar
rights represented by such securities;
(h) for loans of such securities by the Funds upon 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 of
Directors 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
respective Fund which call for payment upon presentation
and hold all cash received by it upon such payment for the
account of the Fund;
<PAGE>
PAGE 6
(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 Funds 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 Funds.
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
Funds. 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 Funds. 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.
<PAGE>
PAGE 7
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 Funds. 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 adviser, 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 each Fund, 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, 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 reasonable 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. 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 respective Fund shall be security therefor.
<PAGE>
PAGE 8
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 (as to one of the funds or
all of the funds) 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 Funds (for
which the agreement was terminated) 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 <PAGE>
PAGE 9
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 each Fund (as to the
respective Fund) 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 WORLD FUND, INC.
Strategist Emerging Markets Fund
Strategist World Technologies 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 World 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 Funds' 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 WORLD FUND, INC.
Strategist World Income Fund
Strategist World 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
ADDENDUM TO THE CUSTODIAN AGREEMENT
THIS ADDENDUM TO THE CUSTODIAN AGREEMENT dated November 13, 1996
between Strategist World Fund, Inc. (the "Company") on behalf of
its underlying series funds: Strategist Emerging Markets Fund and
Strategist World Technologies Fund (each referred to as the "Fund"
and collectively referred to as the "Funds"); American Express
Trust Company (the "Custodian") and American Express Financial
Corporation ("AEFC") is made pursuant to Section 12 of the
agreement to reflect the Company's arrangement of investing all of
the Funds' assets in corresponding portfolios of a master trust.
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 November
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 WORLD FUND, INC.
Strategist Emerging Markets Fund
Strategist World Technologies Fund
__/s/ James A. Mitchell_________
James A. Mitchell
President
AMERICAN EXPRESS TRUST COMPANY
__/s/ Chandrakant A. Patel______
Chandrakant A. Patel
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
__/s/ Michael J. Hogan__________
Michael J. Hogan
Vice President
<PAGE>
PAGE 1
TRANSFER AGENCY AGREEMENT
AGREEMENT dated as of May 13, 1996, between Strategist World 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.
<PAGE>
PAGE 2
(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.
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.
<PAGE>
PAGE 3
(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.
(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.
<PAGE>
PAGE 4
(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.
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.
<PAGE>
PAGE 5
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.
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 WORLD FUND, INC.
Strategist World Income Fund
Strategist World 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 6
Schedule A
STRATEGIST WORLD FUND, INC.
FEE
Effective the 13th day of May, 1996, the annual fee for
services under this agreement is as follows:
$25 per account for World Income Fund
$20 per account for World Growth Fund
Until October 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 1.35% for World
Income Fund or 1.75% for World Growth Fund, the Fund shall not pay
fees and expenses under this Agreement to the extent necessary to
keep the World Income and World Growth 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 November 13, 1996, between Strategist World
Fund, Inc. (the "Company"), a Minnesota corporation, on behalf of
its underlying series funds: Strategist Emerging Markets Fund and
Strategist World Technologies Fund (each referred to as a "Fund"
and collectively referred to as the "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, on behalf of the
Funds, hereby appoints the Transfer Agent, as transfer agent for
the Funds' shares and as shareholder servicing agent for the Funds,
and the Transfer Agent accepts such appointment and agrees to
perform the duties set forth below.
2. Compensation. The Funds 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 Funds separately.
The Transfer Agent will bill the Funds monthly. The fee provided
for hereunder shall be paid in cash by the Funds 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
Funds 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 Funds 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 the Funds'
currently 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 By-laws, such shares shall be validly
issued, fully paid and non-assessable by the Company.<PAGE>
PAGE 2
(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.
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 the Funds' 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 respective Funds' Prospectus. All shares shall be held in
book entry form and no certificate shall be issued unless the Fund
is permitted to do so by its 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 Shares. On receipt of instructions to
redeem shares in accordance with the terms of the respective Fund's
Prospectus, the Transfer Agent will record the redemption of shares
of the Fund, 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 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 Shares. On receipt of instructions to
exchange the shares of the Funds for shares of another fund
in the Strategist Fund Group or other American Express Financial
Corporation product in accordance with the terms of each Fund's
Prospectus, the Transfer Agent will process the exchange in the
same manner as a redemption and sale of shares.
<PAGE>
PAGE 3
(e) Right to Seek Assurance. The Transfer Agent may refuse to
transfer, exchange or redeem shares of the Funds 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.
(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
Funds 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.
<PAGE>
PAGE 4
(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 Counsel. The Transfer
Agent may rely on resolutions of the Board of Directors (the
"Board") and on opinion of counsel for the Company.
8. Duty of Care. It is understood and agreed that, in furnishing
the Funds 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 (as to one or all of the Funds), it shall
be accompanied by a vote of the Board of Directors, 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 Fund (or Funds) that has been terminated (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<PAGE>
PAGE 5
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.
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 WORLD FUND, INC.
Strategist Emerging Markets Fund
Strategist World Technologies Fund
By: __/s/ James A. Mitchell___________
James A. Mitchell
President
AMERICAN EXPRESS FINANCIAL CORPORATION
By: __/s/ Michael J. Hogan____________
Michael J. Hogan
Vice President
<PAGE>
PAGE 6
Schedule A
STRATEGIST WORLD FUND, INC.
FEE
Effective the 13th day of November, 1996, the annual fee
for services under this agreement is as follows:
Strategist Emerging Markets Fund $20 per account
Strategist World Technologies Fund $20 per account
Until October 31, 1997, the Transfer Agent has agreed to waive and
to absorb fund expenses under this agreement. If, at the end of
any month, the fees and expenses of a Fund under this Agreement and
any other agreement between a Fund and the Transfer Agent exceed
2.20% for Emerging Markets Fund or 1.50% for World Technologies
Fund, that Fund shall not pay fees and expenses under this
agreement to the extent necessary to keep Emerging Markets and
World Technologies Funds' ratio from exceeding the limitation.<PAGE>
PAGE 7
Schedule B
OUT-OF-POCKET EXPENSES
The Funds 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; and
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
World 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 Assets Annual rate at
(billions) each asset level (billions) each asset level
Strategist World Income Fund Strategist World Growth Fund
First $0.25 0.060% First $0.25 0.060%
Next 0.25 0.055 Next 0.25 0.055
Next 0.25 0.050 Next 0.25 0.050
Next 0.25 0.045 Next 0.25 0.045
Over 1.0 0.040 Next 1.0 0.040
Over 2.0 0.035
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 October 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 1.35% for
World Income Fund or 1.75% for World Growth Fund, the Fund shall
not pay fees and expenses under this Agreement to the extent
necessary to keep the World Income and World Growth 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.
<PAGE>
PAGE 3
(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.
(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 <PAGE>
PAGE 4
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.
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.
<PAGE>
PAGE 5
(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.
(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 WORLD FUND, INC.
Strategist World Income Fund
Strategist World 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
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made the 13th day of November, 1996, by and between
Strategist World Fund, Inc. (the "Company"), a Minnesota
corporation, on behalf of its underlying series funds: Strategist
Emerging Markets Fund and Strategist World Technologies Fund (each
referred to as the "Fund" and collectively referred to as the
"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 Funds
continuously with all administrative, accounting, clerical,
statistical, correspondence, corporate and all other services of
whatever nature required in connection with the administration of
the Funds 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"), 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 of the Company 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 Corporation
with the services as herein provided, neither the Corporation, nor
any officer, director or agent thereof shall be held liable to the
Corporation 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.
<PAGE>
PAGE 2
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 each
Fund as set forth in the following table:
Assets Annual Rate At
(Billions) Each Asset Level
Strategist Emerging Markets Fund
First $0.25 0.100%
Next 0.25 0.090
Next 0.25 0.080
Next 0.25 0.070
Next 1.00 0.060
Over 2.00 0.050
Assets Annual Rate At
(Billions) Each Asset Level
Strategist World Technologies Fund
First $0.25 0.060%
Next 0.25 0.055
Next 0.25 0.050
Next 0.25 0.045
Next 1.00 0.040
Over 2.00 0.035
The administrative fee for each calendar day of each year shall be
equal to 1/365th (1/366th in each leap year) of 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 of 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 the suspension shall be computed as of the close of business
on the last full business day on which the net assets were
computed. "Net assets" as of the close of a full business day
shall include all transactions in shares of a respective Fund
recorded on the books of that Fund 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.
<PAGE>
PAGE 3
(3) The administrative fee provided for hereunder shall be paid in
cash to the Corporation within five (5) business days after the
last day of each month.
(4) Until October 31, 1997, the Corporation 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 the
Corporation exceed 2.20% for Emerging Markets Fund or 1.50% for
World Technologies Fund, the Fund shall not pay fees and expenses
under this agreement to the extent necessary to keep Emerging
Markets and World Technologies 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 (i) it employs in matters not
involving the assertion of a claim by a third party against the
Company, its directors and officers, (ii) it employs in conjunction
with a claim asserted by the Board against the Corporation, except
that the Corporation shall reimburse the Company for such fees and
expenses if it is ultimately determined by a court of competent
jurisdiction, or the Corporation agrees, that it is liable in whole
or in part to the Company, and (iii) it employs to assert a claim
against a third party;
(e) Fees paid for the qualification and registration for public
sale of the securities of the Funds 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 for the
Funds, equal to the cost of such incurred by the Corporation;
(g) Fees of consultants employed by the Company;
<PAGE>
PAGE 4
(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 Strategist Fund Group and the Corporation;
and
(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 each Fund under this agreement and any other agreement
between each Fund 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 respective Fund shall not
pay those expenses set forth in (1)(a) and (c) through (m) of this
Part Three to the extent necessary to keep that Fund's expenses
from exceeding the limitation, it being understood that the
Corporation will assume all unpaid expenses and bill the Fund for
them in subsequent months but in no event can the accumulation of
unpaid expenses or billing be carried past the end of the
respective Fund's fiscal year.
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 of the
Company.
<PAGE>
PAGE 5
(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 Company, 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 or herself as principal or agent, or with any corporation
or partnership in which he or she 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.
(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.
<PAGE>
PAGE 6
Part Five: RENEWAL AND TERMINATION
(1) This agreement shall become effective on the date first set
forth above 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 WORLD FUND,INC.
Strategist Emerging Markets Fund
Strategist World Technologies Fund
By: _/s/ James A. Mitchell___________
James A. Mitchell
President
AMERICAN EXPRESS FINANCIAL CORPORATION
By: __/s/ Michael J. Hogan___________
Michael J. Hogan
Vice President
<PAGE>
PAGE 1
WORLD INCOME 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 World Income Portfolio, a
separate series of World Trust.
WITNESS that
WHEREAS, the Declaration of Trust for World Trust provides for no
restrictions on the transfer of units therein; and
WHEREAS, the holders of units in World Income Portfolio desire to
restrict the transfer of their units in World Income Portfolio;
NOW, THEREFORE, the undersigned hereby declare that they will not
transfer any units in World Income Portfolio held by them without
the prior written consent of the other unitholders holding at least
two thirds of the World Income 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 World Income Portfolio as
provided for in the Declaration of Trust. The undersigned also
acknowledges 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 GLOBAL SERIES, INC.
IDS Global Bond Fund
__/s/ Leslie L. Ogg___________
Leslie L. Ogg
Vice President and General Counsel
STRATEGIST WORLD FUND, INC.
Strategist World Income Fund
__/s/ James A. Mitchell_______
James A. Mitchell
President
<PAGE>
PAGE 1
WORLD 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 World Growth Portfolio, a
separate series of World Trust.
WITNESS that
WHEREAS, the Declaration of Trust for World Trust provides for no
restrictions on the transfer of units therein; and
WHEREAS, the holders of units in World Growth Portfolio desire to
restrict the transfer of their units in World Growth Portfolio;
NOW, THEREFORE, the undersigned hereby declare that they will not
transfer any units in World Growth Portfolio held by them without
the prior written consent of the other unitholders holding at least
two thirds of the World 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 World Growth Portfolio as
provided for in the Declaration of Trust. The undersigned also
acknowledges 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 GLOBAL SERIES, INC.
IDS Global Growth Fund
__/s/ Leslie L. Ogg___________
Leslie L. Ogg
Vice President and General Counsel
STRATEGIST WORLD FUND, INC.
Strategist World Growth Fund
___/s/ James A. Mitchell______
James A. Mitchell
President
<PAGE>
PAGE 1
EMERGING MARKETS PORTFOLIO
AGREEMENT AND DECLARATION OF UNITHOLDERS
This AGREEMENT AND DECLARATION OF UNITHOLDERS is made
at Minneapolis, Minnesota, as of this 13th day of November, 1996 by
the holders of beneficial interest of Emerging Markets Portfolio, a
separate series of World Trust.
WITNESS THAT, the Declaration of Trust (the
"Declaration of Trust") for World Trust dated November 13, 1996, on
file in the office of the Secretary of State of the Commonwealth of
Massachusetts, provides for no restrictions on the transfer of
units therein; and
WHEREAS, the holders of units in Emerging Markets
Portfolio desire to restrict the transfer of their units in
Emerging Markets Portfolio;
NOW, THEREFORE, the undersigned hereby declare that
they will not transfer any units in Emerging Markets Portfolio held
by them without the prior written consent of the other unitholders
holding at least two thirds of the Emerging Markets 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 Emerging
Markets 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 GLOBAL SERIES, INC.
IDS Emerging Markets Fund
/s/ Leslie L. Ogg
Leslie L. Ogg
Vice President and General Counsel
STRATEGIST WORLD FUND, INC.
Strategist Emerging Markets
Fund
/s/ James A. Mitchell
James A. Mitchell
President
<PAGE>
PAGE 1
WORLD TECHNOLOGIES PORTFOLIO
AGREEMENT AND DECLARATION OF UNITHOLDERS
This AGREEMENT AND DECLARATION OF UNITHOLDERS is made
at Minneapolis, Minnesota, as of this 13th day of November, 1996 by
the holders of beneficial interest of World Technologies Portfolio,
a separate series of World Trust.
WITNESS THAT, the Declaration of Trust (the
"Declaration of Trust") for World Trust, dated November 13, 1996,
on file in the office of the Secretary of State in the Commonwealth
of Massachusetts, provides for no restrictions on the transfer of
units therein; and
WHEREAS, the holders of units in World Technologies
Portfolio desire to restrict the transfer of their units in World
Technologies Portfolio;
NOW, THEREFORE, the undersigned hereby declare that
they will not transfer any units in World Technologies Portfolio
held by them without the prior written consent of the other
unitholders holding at least two thirds of the World Technologies
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
World Technologies 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 GLOBAL SERIES, INC.
IDS Innovations Fund
/s/ Leslie L. Ogg
Leslie L. Ogg
Vice President and General Counsel
STRATEGIST WORLD FUND, INC.
Strategist World Technologies
Fund
/s/ James A. Mitchell
James A. Mitchell
President
<PAGE>
PAGE 1
INDEPENDENT AUDITORS' CONSENT
___________________________________________________________
The Board and Shareholders
Strategist World Fund, Inc.:
Strategist World Growth Fund
Strategist World Income Fund
We consent to the use of our reports included or incorporated
herein by reference, and to the references to our Firm under the
heading "Financial highlights" in Part A and "INDEPENDENT AUDITORS"
in Part B of the Registration Statement.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
December , 1996
<PAGE>
PAGE 1
SUBSCRIPTION AGREEMENT
April 16, 1996
World Trust
IDS Tower 10
Minneapolis, Minnesota 55440
Dear Trustees:
The World Trust (the "Trust") proposes to issue and sell in private
placements, units of beneficial interest (the "Units") in certain
series of Units (each a "Portfolio" and together, the "Portfolios")
pursuant to a registration statement on Form N-1A filed with the
Securities and Exchange Commission (the "SEC"). The Trust
currently consists of two Portfolios as follows:
World Growth Portfolio
World Income Portfolio
In order to provide the Trust with a net worth of at least
$100,000, we hereby offer to purchase $100,000 worth of Units,
divided between the Portfolios.
We represent and warrant to the Trust that the Units are being
acquired by us for investment and not with a view to the resale or
further distribution thereof and that we have no present intention
to redeem the Units.
Please confirm that the foregoing correctly sets forth our
agreement with the Trust.
Sincerely,
STRATEGIST WORLD FUND, INC.
By____/s/ William H. Dudley_________________
William H. Dudley
President
Confirmed, as of the date first above mentioned.
WORLD TRUST
By____/s/ Leslie L. Ogg_________________________
Leslie L. Ogg
Vice President and General Counsel
<PAGE>
PAGE 1
SHARE PURCHASE AGREEMENT
This agreement is entered into between Strategist World Fund, Inc.,
a Minnesota corporation (the Corporation) and American Express
Financial Corporation, a Delaware corporation (AEFC), as of this
16th day of April, 1996.
In order to provide the Corporation with its initial capital, the
Corporation hereby sells to AEFC and AEFC hereby purchases from the
Corporation $100,000 worth of shares of the Corporation. The
Corporation hereby acknowledges receipt from AEFC in the amount of
$100,000 in full payment for the shares.
AEFC represents and warrants to the Corporation that the shares are
being acquired for investment and not with a view to distribution
and that AEFC has no current intention to dispose of the shares.
Strategist World Fund, Inc.
By: /s/ William H. Dudley
William H. Dudley
President
American Express Financial Corporation
By: /s/ James A. Mitchell
James A. Mitchell
Executive Vice President
<PAGE>
PAGE 1
Plan and Agreement of Distribution
This plan and agreement is made by and between Strategist World
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 October 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 1.35% for World
Income Fund or 1.75% for World Growth Fund, the Fund shall not pay
fees and expenses under this Agreement to the extent necessary to
keep the World Income and World Growth 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 WORLD FUND, INC.
Strategist World Income Fund
Strategist World 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
Plan and Agreement of Distribution
This Plan and Agreement is between Strategist World Fund, Inc. (the
"Company") on behalf of its underlying series funds: Strategist
Emerging Markets Fund and Strategist World Technologies Fund (each
referred to as the "Fund" and collectively referred to as the
"Funds"); and American Express Service Corporation ("AESC"), the
principal underwriter of the Funds, for distribution services to
the Funds.
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 Funds' common
stock, 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 each Fund.
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 a Fund, including
fees under this agreement and any other agreement between a Fund
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 a respective Fund's current fiscal
year, that Fund shall not pay fees and expenses under this
agreement to the extent necessary to keep the Fund's expenses from
exceeding the limitation, it being understood that AESC will assume
all unpaid expenses and bill that Fund for them in subsequent
months, but in no event can the accumulation of unpaid expenses or
billing be carried past the end of the Fund's fiscal year.
3. Until October 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 a Fund under this agreement and any
other agreement between the Fund and AESC exceed 2.20% for Emerging
Markets Fund or 1.50% for World Income Fund, that Fund shall not
pay fees and expenses under this agreement to the extent necessary
to keep the Emerging Markets and World Technologies Funds' expense
ratio from exceeding the limitation.
4. 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
5. 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.
6. The Plan and Agreement may not be amended to increase
materially the amount that may be paid by the Company without the
approval of at least a majority of the Funds' outstanding common
stock. Any other amendment must be approved in the manner in which
the Plan and Agreement was initially approved.
7. This agreement may be terminated (by each Fund or by
both Funds) 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 outstanding shares of the respective Fund, 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 November, 1996.
STRATEGIST WORLD FUND, INC.
Strategist Emerging Markets Fund
Strategist World Technologies Fund
/s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS SERVICE CORPORATION
/s/ Richard W. Kling
Richard W. Kling
Vice President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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[NUMBER] 1
<NAME> STRATEGIST WORLD INCOME FUND
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<NAME> WORLD GROWTH PORTFOLIO
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