STRATEGIST WORLD FUND INC, 485BPOS, 1997-12-24

STRATEGIST WORLD FUND INC
485BPOS, 1997-12-24

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. (File No. 33-63951)

Post-Effective Amendment No. 5

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 7 (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. 30, 1997 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(i) on (date) pursuant to
paragraph (a)(i) 75 days after filing pursuant to paragraph (a)(ii) on
(date) 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. Registrant's Rule 24f-2 Notice for the fiscal year ended Oct. 31, 1997
will be filed on or about Dec. 16, 1997.

World Trust has also executed this Amendment to the Registration Statement.
<PAGE>
Cross reference sheet showing the location in the prospectus and Statement of
Additional Information of the information called for by items enumerated in
Parts A and B of Form N-1A.

Negative answers omitted are so indicated.

PART A

Item No. Section in Prospectus
1 Cover page of prospectus

2 (a) Fund expenses
(b) The Funds in brief
(c) The Funds in brief

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

4 (a) The Funds in brief; Investment policies and risks; How the Funds
and Portfolios are organized
(b) Investment policies and risks
(c) Investment policies and risks

5 (a) Board members and officers
(b)(i) Investment manager; About the Advisor
(b)(ii) Investment manager; Administrator and transfer agent
(b)(iii) Investment manager
(c) Portfolio managers
(d) Administrator and transfer agent
(e) Administrator and transfer agent
(f) Investment manager; Administrator and transfer agent; Distributor
(g) About the Advisor

5A(a) *
(b) *

6 (a) Shares; Voting rights
(b) NA
(c) NA
(d) NA
(e) Cover page; Special shareholder services
(f) Dividend and capital gain distributions; Reinvestments
(g) Taxes
(h) Special considerations regarding master/feeder structure

7 (a) Distributor
(b) Valuing Fund shares
(c) NA
(d) How to purchase shares
(e) NA
(f) Distributor
(g) NA

8 (a) How to redeem shares
(b) NA
(c) How to purchase, exchange or redeem shares: Other important
information
(d) How to purchase, exchange or redeem shares: How to redeem shares

9 None

PART B

Item No. Section in Statement of Additional Information
10 Cover page of SAI

11 Table of Contents

12 NA

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

14 (a) Board Members and Officers
(b) Board Members and Officers
(c) Board Members and Officers

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

16 (a)(i) How the Funds and Portfolios are organized; About the Advisor**
(a)(ii) Agreements: Investment Management Services Agreement, Plan and
Agreement of Distribution / Distribution Agreement
(a)(iii) Agreements: Investment Management Services Agreement
(b) Agreements: Investment Management Services Agreement
(c) NA
(d) Agreements: Administrative Services Agreement
(e) NA
(f) Agreements: Plan and Agreement of Distribution / Distribution
Agreement
(g) NA
(h) Custodian Agreement; Independent Auditors
(i) Agreements: Transfer Agency Agreement; Custodian Agreement
17 (a) Security Transactions
(b) Brokerage Commissions Paid to Brokers Affiliated with the Advisor
(c) Security Transactions
(d) Security Transactions
(e) Security Transactions

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

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

20 Taxes

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

22 (a) NA
(b) Performance Information
23 Financial Statements

* Designates information is located in annual report.
** Designates location in prospectus.
<PAGE>
Strategist World Fund, Inc.

Prospectus
Dec. 30, 1997

This prospectus describes three, no-load mutual funds. Strategist World Fund,
Inc. is a mutual fund with series of capital stock representing interests in
Strategist Emerging Markets Fund, Strategist World Growth Fund and Strategist
World Income Fund. Each Fund has its own goals and investment policies.

The goal of Strategist Emerging Markets Fund and of Strategist World Growth Fund
is long-term growth of capital.

The goal of Strategist World Income Fund is a high total return through income
and growth of capital.

Each Fund has chosen to participate in a master/feeder structure. Each Fund
seeks to achieve its goal by investing all of its assets in a corresponding
Portfolio of World Trust. Each Portfolio is managed by American Express
Financial Corporation and has the same goal as the corresponding Fund. This
arrangement is commonly known as a master/feeder structure.

This prospectus contains facts that can help you decide if one or more of the
Funds is the right investment for you. Read it before you invest and keep it for
future reference.

Additional facts about the Funds are in a Statement of Additional Information
(SAI), filed with the Securities and Exchange Commission (SEC) and available for
reference, along with other related materials, on the SEC Internet web site
(http://www.sec.gov). The SAI is incorporated 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
<PAGE>
American Express Financial Direct
P.O. Box 59196
Minneapolis, MN
55459-0196
800-AXP-SERV
TTY: 800-710-5260
Web site address: http://www.americanexpress.com/direct
<PAGE>
Table of contents

The Funds in brief
Goals and types of Fund investments and their risks
Structure of the Funds
Manager and distributor
Portfolio managers

Fund expenses

Performance
Financial highlights
Total returns
Yield

Investment policies and risks
Facts about investments and their risks
Valuing Fund shares

How to purchase, exchange or redeem shares
How to purchase shares
How to exchange shares
How to redeem shares
Methods of exchanging or redeeming shares
Systematic purchase plans
Other important information

Special shareholder services
Services
Quick telephone reference

Distributions and taxes
Dividend and capital gain distributions
Reinvestments
Taxes
How to determine the correct TIN

How the Funds and Portfolios are organized
Shares
Voting rights
Shareholder meetings
Special considerations regarding master/feeder structure
Board members and officers
Investment manager
Administrator and transfer agent
Distributor

About the Advisor

Appendix A: Description of corporate bond ratings
Appendix B: Descriptions of derivative instruments
<PAGE>
The Funds in brief

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) (collectively referred to as
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 Emerging Markets
Portfolio, 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 World Growth Portfolio, 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 World
Income Portfolio, 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. You should
invest in a Fund only if you are willing to assume these risks.

Structure of the Funds

Each Fund uses what is commonly known as a master/feeder structure. This means
that the Fund (the feeder fund) invests all of its assets in the Portfolio (the
master fund). The Portfolio invests in and manages the securities and has the
same goals and investment
<PAGE>
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 $168 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,
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.

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 Nov. 1996. Prior to joining the
Advisor he was director of Lehman Brothers Global Asset Management Ltd. from
1992 to 1995.

World Growth Portfolio

John O'Brien joined AEFC in 1988 and serves as vice president and portfolio
manager for American Express Asset Management International Inc. He became
portfolio manger of World Growth Portfolio in Sept. 1997. He also serves as
portfolio manager of IDS Life International Equity Portfolio.
<PAGE>
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 manages Quality Income Portfolio, IDS
Global Balanced Fund and IDS Life Global Yield Fund.

Fund expenses

The purpose of the following table and example is to summarize the aggregate
expenses of each Fund and its corresponding Portfolio and to assist investors in
understanding the various costs and expenses that investors in each Fund may
bear directly or indirectly. The Company's board believes that, over time, the
aggregate per share expenses of a Fund and its corresponding Portfolio should be
approximately equal to (and may be less than) the per share expenses a Fund
would have if the Company retained its own investment advisor and the assets of
each Fund were invested directly in the type of securities held by the
corresponding Portfolio. For additional information concerning Fund and
Portfolio expenses, see "How the Funds and Portfolios are organized."

Shareholder transaction expenses(a)
Maximum sales charge on purchases(b)
(as a percentage of offering price)
<TABLE>
<CAPTION>
<S> <C> <C> <C>

- ------------------------------------ ----------------------------------- -----------------------------------
Emerging Markets World Growth World Income
- ------------------------------------ ----------------------------------- -----------------------------------
- ------------------------------------ ----------------------------------- -----------------------------------
Fund Fund Fund
- ------------------------------------ ----------------------------------- -----------------------------------
- ------------------------------------ ----------------------------------- -----------------------------------
0% 0% 0%
- ------------------------------------ ----------------------------------- -----------------------------------
</TABLE>

Annual Fund and allocated Portfolio operating expenses (as a percentage of
average daily net assets):
<TABLE>
<CAPTION>
<S> <C> <C> <C>

- --------------------------------------- -------------------------- --------------------- -------------------
Emerging Markets World Growth World Income
- --------------------------------------- -------------------------- --------------------- -------------------
- --------------------------------------- -------------------------- --------------------- -------------------
Fund Fund Fund
- --------------------------------------- -------------------------- --------------------- -------------------
- --------------------------------------- -------------------------- --------------------- -------------------
Management fee(c) 1.07% 0.78% 0.78%
- --------------------------------------- -------------------------- --------------------- -------------------
- --------------------------------------- -------------------------- --------------------- -------------------
12b-1 fee 0.25% 0.25% 0.25%
- --------------------------------------- -------------------------- --------------------- -------------------
- --------------------------------------- -------------------------- --------------------- -------------------
Other expenses(d) 0.88% 0.72% 0.32%
- --------------------------------------- -------------------------- --------------------- -------------------
- --------------------------------------- -------------------------- --------------------- -------------------
Total (after reimbursement) 2.20% 1.75% 1.35%
- --------------------------------------- -------------------------- --------------------- -------------------
</TABLE>

(a)A wire redemption charge, currently $15, is deducted from the shareholder's
Investment Management Account for wire redemptions made at the request of the
shareholder.
<PAGE>

(b)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. (c)The management fee is paid by the Trust on
behalf of the Portfolios. (d)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 Dec. 31, 1998. Under this agreement, total
expenses will not exceed 2.20% for Emerging Markets Fund, 1.75% for World Growth
Fund and 1.35% for World Income Fund. Without this agreement, the ratio of
expenses to average daily net assets would have been: 9.61% for Emerging Markets
Fund, 5.13% for World Growth Fund and 5.36%, for World Income Fund.

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

- --------------------------- -------------------------- -------------------------- --------------------------
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
- --------------------------- -------------------------- -------------------------- --------------------------
</TABLE>

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>
Performance

Financial highlights
<TABLE>
<CAPTION>

5. Financial highlights

The table below shows certain important information for evaluating each Fund's
results.
Fiscal period ended Oct. 31,
Per share income and capital changes(a)
Emerging
Markets World World
Fund Growth Fund Income Fund
1997(c) 1997 1996(b) 1997 1996(b)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.00 $7.08 $7.32 $6.24 $6.05

Income from investment operations:
Net investment income .01 .02 .04 .36 .15
Net gains (losses)
(both realized and unrealized) .27 .40 (.28) (.03) .25
Total from investment operations .28 .42 (.24) .33 .40

Less distributions:
Distributions from net investment income (.01) (.01) -- (.23) (.15)
Excess distributions of net
investment income -- -- -- -- (.06)
Distributions from realized gains -- -- -- (.02) --
Total distributions (.01) (.01) -- (.25) (.21)
Net asset value, end of period 5.27 7.49 7.08 6.32 6.24

Ratios/supplemental data
Net assets, end of period (in thousands) $651 $604 $489 $627 $524
Ratio of expenses to
average daily net assets 2.20%(d,e) 1.65%d 1.75%(d,e) 1.35%(d) 1.35%(d,e)
Ratio of net income to
average daily net assets .12%(e) .26% 1.61%(e) 6.28% 5.87%(e)
Total return 5.9% 6.0% (3.3%) 6.6% 6.6%
Portfolio turnover rate (excluding
short-term securities) 87% 199% 58% 55% 24%
Average brokerage commission rate(f) $.0034 $.0113 $.0086 -- --

(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was May 13, 1996.
(c) Inception date was Nov. 13, 1996.
(d) The Advisor and Distributor voluntarily limited total operating expenses.
Without this agreement, the ratio of expenses to average daily net assets
would have been 9.61% for Emerging Markets Fund for the period ended 1997,
5.13% and 17.33% for World Growth Fund for periods ended 1997 and 1996,
respectively, and 5.36% and 19.23% for World Income Fund for periods ended
1997 and 1996, respectively.
(e) Adjusted to an annual basis.
(f) Effective fiscal year 1996, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which
commissions are charged. The comparability of this information may be
affected by the fact that commission rates per share vary significantly
among foreign countries.
</TABLE>
4. Financial highlights

The table below shows certain important financial information for evaluating the
Fund's results.

Period ended Oct. 31,
Per share income and capital changesa

1997(b)

Net asset value, $5.00
beginning of period

Income from investment operations:

Net investment income (loss) (.07)

Net gains (losses) (both realized .34
and unrealized)

Total from investment operations .27

Net asset value, $5.27
end of period

Ratios/supplemental data:
1997(b)

Net assets, end of period $527
(in thousands)

Ratio of expenses to 1.50%(c,d)
average daily net assets

Ratio of net income (loss) (1.39%)(c)
to average daily net assets

Portfolio turnover rate 164%
(excluding short-term securities)
for the underlying Portfolio

Total return 5.4%

Average brokerage commission $.0488
rate for the underlying Portfolio(e)

(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date. Period from Nov. 13, 1996 to Oct. 31, 1997.
(c) Adjusted to an annual basis.
(d) The Advisor and Distributor voluntarily limited total operating expenses to
1.50% of average daily net assets. Without this agreement, the ratio of
expenses to average daily net assets would have been 2.36%.
(e) The Fund is required to disclose an average brokerage commission rate per
share for security trades on which commissions are charged. The
comparability of this information may be affected by the fact that
commission rates per share vary significantly among foreign countries.

The information in this table has been audited by KPMG Peat Marwick LLP,
independent auditors. The independent auditors' 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.

<PAGE>
Total returns

Total return is the sum of all of your returns for a given period, assuming you
reinvest all distributions. It is calculated by taking the total value of shares
you own at the end of the period (including shares acquired by reinvestment),
less the price of shares you purchased at the beginning of the period.

Average annual total return is the annually compounded rate of return over a
given time period (usually two or more years). It is the total return for the
period converted to an equivalent annual figure.

Average annual total returns as of Oct. 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>

- ------------------------------------------------------- ----------------- ----------------- ----------------
Purchase 1 year 5 years Since
made ago ago inception(a)
- ------------------------------------------------------- ----------------- ----------------- ----------------
- ------------------------------------------------------- ----------------- ----------------- ----------------

<PAGE>
Cumulative total returns as of Oct. 31, 1997

(a) Inception date was Nov. 13, 1996.
(b) Measurement period started Dec. 1, 1996.
(c) Inception date was May 29, 1990 for IDS Global Growth Fund and March 20,
1989for IDS Global Bond Fund (the predecessorfunds).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, other than the one year return, represents performance
of the corresponding predecessor funds prior to March 20, 1995 and of Class A
shares of the corresponding predecessor funds from March 20, 1995 through May
13, 1996 adjusted to reflect the absence of sales charges on shares of the Funds
sold through this prospectus. The historical performance has not been adjusted
for any difference between the estimated aggregate fees and expenses of the
Funds and historical fees and expenses of the predecessor Funds.
(d) Measurement period started June 1, 1990.
(e) Measurement period started April 1, 1989.

<PAGE>
These examples show total returns from hypothetical investments in each Fund.
These returns are compared to those of popular indexes for the same periods.

For purposes of calculation, information about each Fund makes no adjustments
for taxes an investor may have paid on the reinvested income and capital gains,
and covers a period of widely fluctuating securities prices. Returns shown
should not be considered a representation of a Fund's future performance.

Morgan Stanley Capital International (MSCI) Emerging Markets Free Index, an
unmanaged market capitalization-weighted index comprising 26 emerging market
countries. It is widely recognized by investors as a measurement index for
portfolios of emerging market securities. The index reflects reinvestment of all
distributions and changes in market prices, but excludes brokerage commissions
or other fees.

Lipper Emerging Markets Fund Index, published by Lipper Analytical Services,
Inc. includes 31 funds that are generally similar to the Fund, although some
funds in the index may have somewhat different investment policies or
objectives. The index reflects reinvestment of all distributions and changes in
market prices, but excludes brokerage commissions or other fees.

Morgan Stanley Capital International All Country World Free Index (MSCI All
Country World Free Index) is an unmanaged index compiled from a composite of
securities markets of 47 countries, including Canada, the United States and 26
emerging market countries. It is widely recognized by investors in foreign
markets as the measurement index for portfolios of global securities. The index
reflects reinvestment of all distributions and changes in market prices, but
excludes brokerage commissions or other fees.

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. The index reflects
reinvestment of all distributions and changes in market prices, but excludes
brokerage commissions or other fees.

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.
<PAGE>
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 World
Income Portfolio. The index reflects reinvestment of all distributions and
changes in market prices, but excludes brokerage commissions or other fees.

Lipper Global Income Fund Index, an unmanaged index published by Lipper
Analytical Services, Inc., includes 30 funds that are generally similar to World
Income Portfolio, although some funds in the index may have somewhat different
policies or objectives.

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. This annualized yield
for the 30-day period ended Oct. 31, 1997 was 6.17% for World Income Fund. 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 corresponding
Portfolio.

Emerging Markets Portfolio - Emerging Markets Portfolio 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 three
different countries. The Portfolio also may invest in debt securities,
derivative instruments and money market instruments.
<PAGE>
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
including the United States. 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. 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 including the United States. The Portfolio
also invests in debt securities below investment grade, convertible securities,
common stocks and derivative instruments.

The various types of investments described above that the investment 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

Emerging markets: Emerging markets are considered 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
include 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 dividends.

Common stocks: Stock prices are subject to market fluctuations. Stocks of
foreign companies may be subject to abrupt or erratic price movements. While
many of the Portfolio's investments are in established companies having adequate
financial reserves, some investments involve substantial risk and may be
considered speculative.

<PAGE>
Preferred stocks: If a company earns a profit, it generally must pay its
preferred stockholders a dividend at a pre-established rate.

Convertible securities: These securities generally are preferred stocks or bonds
that can be exchanged for other securities, usually common stock, at prestated
prices. When the trading price of the common stock makes the exchange likely,
convertible securities trade more like common stock.

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. They have greater price
fluctuations, are more likely to experience a default and sometimes are referred
to as junk bonds. Reduced market liquidity for these bonds may occasionally make
it more difficult to value them. In valuing bonds, the Portfolio relies both on
independent rating agencies and on 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.

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>
<TABLE>
<CAPTION>

World Income Portfolio
Bond ratings and holdings for the fiscal year
ending Oct. 31, 1997
<S> <C> <C> <C> <C>

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

- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
59.99% AAA Highest quality 0.67%
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
5.50 AA High quality --
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
2.10 A Upper medium grade --
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
2.73 BBB Medium grade --
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
15.03 BB Moderately speculative .32
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
1.01 B Speculative .24
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
-- CCC Highly speculative --
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
-- CC Poor quality --
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
-- C Lowest quality --
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
-- D In default --
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
3.22 Unrated Unrated securities 1.99
- ---------------------- -------------------- ---------------------------------- --------------------------------------
</TABLE>

The table above excludes money market instruments that are considered investment
grade securities. See Appendix to the prospectus describing corporate bond
ratings for further information.

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. Because such securities do not pay current cash
income the market value of these securities may be subject to greater volatility
than other debt securities. 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 investment: 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
<PAGE>
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. Because of the limited trading volume in some
foreign markets, efforts to buy or sell a security may change the price of the
security, and it may be difficult to complete the transaction. 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.

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: The investment manager may use derivative instruments in
addition to securities to achieve investment performance. Derivative instruments
include futures, options and forward contracts. Such instruments may be used to
maintain cash reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce transaction
costs or to pursue higher investment returns. Derivative instruments are
characterized by requiring little or no initial payment and a daily change in
price based on or derived from a security, a currency, a group of securities or
currencies, or an index. A number of strategies or combination of instruments
can be used to achieve the desired investment performance characteristics. A
small change in the value of the underlying security, currency or index will
cause a sizable gain or loss in the price of the derivative instrument.
Derivative instruments allow the investment manager to change the investment
performance characteristics very quickly and at lower costs. Risks include
losses of premiums, rapid changes in prices, defaults by other parties and
inability to close such instruments. 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.
<PAGE>
Securities and other instruments that are illiquid: A security or other
instrument is illiquid if it cannot be sold quickly in the normal course of
business. Some investments cannot be resold to the U.S. public because of their
terms or government regulations. Securities and instruments, however, can be
sold in private sales, and many may be sold to other institutions and qualified
buyers or on foreign markets. The investment manager will follow guidelines
established by the board and consider relevant factors such as the nature of the
security and the number of likely buyers when determining whether a security is
illiquid. No more than 10% of 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.

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 and assets with available market values are valued on that
basis

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

You may purchase shares of the Funds through an Investment Management Account
(IMA) maintained with the Distributor. There is no fee to open an IMA account.
Payment for shares must be made directly to the Distributor.

Complete an IMA Account Application (available by calling 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
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.

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.
<PAGE>
By phone:

You may use money in your IMA account to make initial and subsequent
purchases. To place your order, call 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.

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 on any other fund, read that fund's prospectus
carefully. 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
<PAGE>
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.

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.

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.

Methods of exchanging or redeeming shares

By phone:

You may exchange or redeem your shares by calling 800-AXP-SERV. 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
<PAGE>
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

Telephone transactions. You may make purchase, redemption and exchange requests
by mail or by calling 800-AXP-SERV. The privilege to initiate transactions by
telephone is automatically available through your IMA account. Each Fund will
honor any telephone transaction believed to be authentic and will use reasonable
procedures to confirm that instructions communicated by telephone are genuine.
This includes asking identifying questions and tape recording calls. If these
procedures are not followed, a Fund may be liable for losses due to unauthorized
or fraudulent instructions. Telephone privileges may be modified or discontinued
at any time.

Systematic purchase plans

The Distributor offers a Systematic Purchase Plan (SPP) that allows you to make
periodic investments in the Funds automatically and conveniently. A SPP can be
used as a dollar cost averaging program and saves you the time and expense
associated with writing checks or wiring funds.

Investment minimums: You can make automatic investments in any amount, from $100
to $50,000.

Investment methods: Automatic investments are made from your IMA account and you
may select from several different investment methods to make automatic
investment(s):
<PAGE>
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 authorizations: If you elect to use this option to make your
automatic investments, money is transferred from your bank checking or
savings account into your IMA account and is then used to make
automatic investments.

If you elect to use bank authorizations for your automatic investments, you will
select a transfer date (when the money is transferred into your IMA account). If
you change your bank authorization date, it may also be necessary to change your
automatic investment date to coincide with the new transfer date.

Investment frequency: You can select the frequency of your automatic investments
(example: twice monthly, monthly or quarterly). 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 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

Terminating your SPP. If you wish to terminate your SPP, you may call
800-AXP-SERV, or send written instructions to American Express Financial Direct,
P.O. Box 59196, Minneapolis, MN 55459-0196.

IMPORTANT: If you are canceling your bank authorizations 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
<PAGE>
above or telephoning 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.

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.
<PAGE>
Quick telephone reference

American Express Financial Direct Team
Fund performance, objectives and account inquiries, redemptions and exchanges,
dividend payments or reinvestments and automatic payment arrangements
800-AXP-SERV

TTY Service
For the hearing impaired
800-710-5260

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 that 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. Capital gains are realized when a
security is sold for a higher price than was paid for it. Short-term capital
gains are distributed at the end of the calendar year and are included in net
investment income. Long-term capital gains are realized when a security is held
for more than one year. 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.
These long-term capital gains will be subject to differing tax rates depending
on the holding period of the underlying investments. Before they are
distributed, both net investment income and net long-term capital gains are
included in the value of each share. After they are distributed, the value of
each share drops by the per-share amount of the distribution. (If your
distributions are reinvested, the total value of your holdings will not change.)

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

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

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

Taxes

The Funds have received a Private Letter Ruling from the Internal Revenue
Service stating that, for purposes of the Internal Revenue Code, each Fund will
be regarded as directly holding its allocable share of the income and gain
realized by the Portfolio.

Distributions are subject to federal income tax and also may be subject to state
and local taxes. Distributions are taxable in the year the respective Fund
declares them regardless of whether you take them in cash or reinvest them.

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

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
<PAGE>
For details on TIN requirements, call 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

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 Funds have cumulative voting rights.

Shareholder meetings

The Company does not hold annual shareholder meetings. However, the board
members may call meetings at their discretion, or on demand by holders of 10% or
more of the Company's outstanding shares, to elect or remove board members.

Special considerations regarding master/feeder structure

Each Fund pursues its goals by investing its assets in a master fund called a
Portfolio. This means that a Fund does not invest directly in securities; rather
the respective Portfolio invests in and manages its portfolio of securities. The
goals and investment policies of each Portfolio are described under the captions
"Investment policies and risks" and "Facts about investments and their risks."
Additional information on investment policies may be found in the SAI.

Board considerations: The board considered the advantages and disadvantages of
investing each Fund's assets in the respective Portfolio. The board believes
that the master/feeder structure will be in the best interest of each Fund and
its shareholders since it offers the opportunity for economies of scale.
A Fund may redeem all of its assets from
<PAGE>
the corresponding Portfolio at any time. Should the board determine that it is
in the best interest of a Fund and its shareholders to terminate its investment
in the Portfolio, it would consider hiring an investment advisor to manage the
Fund's assets, or other appropriate options. A Fund would terminate its
investment if the Portfolio changed its goals, investment policies or
restrictions without the same change being approved by the Fund.

Other feeders: Each Portfolio sells securities to other affiliated mutual funds
and may sell securities to non-affiliated investment companies and institutional
accounts (known as feeders). These feeders buy the 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 a Fund. Information about other
feeders may be obtained by calling a service representative at 800-437-3133.

Each feeder that invests in a Portfolio is different and activities of its
investors may adversely affect all other feeders, including the Fund. For
example, if one feeder decides to terminate its investment in a Portfolio, that
Portfolio may elect to redeem in cash or in kind. If cash is used, the Portfolio
will incur brokerage, taxes and other costs in selling securities to raise the
cash. This may result in less investment diversification if entire investment
positions are sold, and it also may result in less liquidity among the remaining
assets. If in-kind distribution is made, a smaller pool of assets remains that
may affect brokerage rates and investment options. In both cases, expenses may
rise since there are fewer assets to cover the costs of managing those assets.

Shareholder meetings: Whenever a Portfolio proposes to change a fundamental
investment policy or to take any other action requiring approval of its security
holders, the corresponding Fund will hold a shareholder meeting. The Fund will
vote for or against the Portfolio's proposals in proportion to the vote it
receives for or against the same proposals from its shareholders.

Board members and officers

Shareholders of the Company elect a board that oversees the operations of the
Funds and chooses the Company's officers. The Company's officers are responsible
for day-to-day business decisions based on policies set by the board.
Information about the board members and officers of both the Company and the
Trust is found in the SAI under the caption "Board Members and Officers."
<PAGE>
Investment manager

Each Portfolio pays the Advisor for managing its assets. Each Fund pays its
proportionate share of the fee. Under the Investment Management Services
Agreement, the Advisor is paid a fee for these services based on the average
daily net assets of each Portfolio, as follows:

Emerging Markets Portfolio

Assets Annual rate at
(billions) each asset level
First $0.25 1.10%
Next 0.25 1.08
Next 0.25 1.06
Next 0.25 1.04
Next 1.0 1.02
Over 2.0 1.00

World Growth Portfolio

Assets Annual rate at
(billions) each asset level
First $0.25 0.800%
Next 0.25 0.775
Next 0.25 0.750
Next 0.25 0.725
Next 1.0 0.700
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

For the fiscal period ended Oct. 31, 1997, the Advisor received investment
management fees of 1.07% of average daily net assets for Emerging Markets
Portfolio, 0.78% for World Growth Portfolio and 0.78% for World Income
Portfolio. Under the agreement, each Portfolio also pays taxes, brokerage
commissions and nonadvisory expenses.
<PAGE>
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 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 0.035%. For World Income
Fund, the fee ranges from 0.06% to 0.04%.

Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. Emerging Markets
Fund and World Growth Fund pay AECSC an annual fee for each Fund of $20 per
shareholder account and World Income Fund pays AECSC an annual fee of $25 per
shareholder account.

Distributor

The Funds sell shares through the Distributor under a Distribution Agreement.
The Distributor is located at P.O. Box 59196, Minneapolis, MN 55459-0196 and is
a wholly-owned subsidiary of Travel Related Services, Inc., a wholly-owned
subsidiary of American Express Company, a financial services company with
headquarters at American Express Tower, World Financial Center, New York, NY
10285. Financial consultants representing the Distributor provide information to
investors about individual investment programs, the Funds and their operations,
new account applications, exchange and redemption requests. The Funds reserve
the right to sell shares through other financial intermediaries or
broker/dealers. In that event, the account terms would also be governed by rules
that the intermediary may establish.

To help defray costs, including costs for marketing, sales administration,
training, overhead, direct marketing programs, advertising and related
functions, the Funds pay the Distributor a distribution fee, also known as a
12b-1 fee. Under a Plan and Agreement of Distribution each Fund pays a
distribution fee at an annual rate of 0.25% of that Fund's average daily net
assets for distribution-related services.
This fee will not cover all of the costs incurred by the Distributor.
<PAGE>
Total expenses paid by each Fund for the fiscal period ended Oct. 31, 1997, were
2.20% for Emerging Markets Fund, 1.65% for World Growth Fund and 1.35% for World
Income Fund.

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>
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.
<PAGE>
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.

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>
Appendix B

Descriptions of derivative instruments

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

Options and futures contracts - An option is an agreement to buy or sell an
instrument at a set price during a certain period of time. A futures contract is
an agreement to buy or sell an instrument for a set price on a future date. A
Portfolio may buy and sell options and futures contracts to manage its exposure
to changing interest rates, security prices and currency exchange rates. Options
and futures may be used to hedge a Portfolio's investments against price
fluctuations or to increase market exposure.

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.

Inverse floaters - Inverse floaters are created by underwriters using the
interest payment on securities. A portion of the interest received is paid to
holders of instruments based on current interest rates for short-term
securities. The remainder, minus a servicing fee, is paid to holders of inverse
floaters. As interest rates go down, the holders of the inverse floaters receive
more income and an increase in the price for the inverse floaters. As interest
rates go up, the holders of the inverse floaters receive less income and a
decrease in the price for the inverse floaters.
<PAGE>
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>
Strategist World Technologies Fund

Prospectus
Dec. 30, 1997

This prospectus describes a diversified, no-load mutual fund, Strategist World
Technologies Fund, a series of Strategist World Fund, Inc., whose goal is
long-term growth of capital.

The Fund has chosen to participate in a master/feeder structure. Unlike most
mutual funds that invest directly in securities, the Fund seeks to achieve its
objective by investing all of its assets in a Portfolio of World Trust. The
Portfolio is managed by American Express Financial Corporation and 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 the Fund is the right
investment for you. Read it before you invest and keep it for future reference.

Additional facts about the Fund are in a Statement of Additional Information
(SAI), filed with the Securities and Exchange Commission (SEC) and available for
reference, along with other related materials, on the SEC Internet web site
(http://www.sec.gov). The SAI, is incorporated by reference. For a free copy,
contact American Express Financial Direct.

Please note that this Fund:
o is not a bank deposit
o is not federally insured
o is not endorsed by any bank or government agency
o is not guaranteed to achieve its goal

American Express Financial Direct
P.O. Box 59196
Minneapolis, MN
55459-0196
800-AXP-SERV
TTY: 800-710-5260
Web site address: http://www.americanexpress.com/direct
<PAGE>
Table of contents

The Fund in brief
Goal and types of Fund investments and their risks
Structure of the Funds
Manager and distributor
Portfolio manager

Fund expenses

Performance
Financial highlights
Total returns

Investment policies and risks
Facts about investments and their risks
Valuing Fund shares

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 Fund and Portfolio are organized
Shares
Voting rights
Shareholder meetings
Special considerations regarding master/feeder structure
Board members and officers
Investment manager
Administrator and transfer agent
Distributor

About the Advisor

Appendix
Descriptions of derivative instruments
<PAGE>
The Fund in brief

Strategist World Technologies Fund (the Fund) is a diversified mutual fund that
seeks to achieve its goal by investing all of its assets in World Technologies
Portfolio (the Portfolio) of World Trust (the Trust) rather than by directly
investing in and managing its own portfolio of securities. The Fund is a series
of Strategist World Fund, Inc. (the Company).

Goal and types of Fund investments and their risks

The Fund seeks to provide shareholders with long-term growth of capital. It does
so by investing all of its assets in the Portfolio, a diversified mutual fund
that invests primarily in common stocks and securities convertible in common
stocks of companies within the information technology sector, a sector the
Portfolio anticipates will be characterized by continuous innovations. The
companies are located anywhere in the world, but investments will be in at least
three different countries.

Because the Portfolio investments are concentrated in the information technology
industries, the value of its shares will be especially affected by factors
peculiar to those industries and may fluctuate more widely than the value of
shares of a portfolio that invests in a broader range of industries.

Because investments involve risk, the goal cannot be guaranteed. 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. You should invest in the
Fund only if you are willing to assume these risks.

Structure of the Fund

The Fund uses what is commonly known as a master/feeder structure. This means
that the Fund (the feeder fund) invests all of its assets in the Portfolio (the
master fund). The Portfolio 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
<PAGE>
The Portfolio invests in
securities, such as stocks
or bonds

Manager and distributor

The Portfolio is managed by American Express Financial Corporation (the
Advisor), a provider of financial services since 1894. The Advisor currently
manages more than $168 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,
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.

Shares of the Fund are sold through American Express Service Corporation (the
Distributor), an affiliated company of the Advisor.

Portfolio manager

Louis Giglio joined AEFC in January 1994 as a senior equity analyst and serves
as portfolio manager. He has managed the assets of the Portfolio since November
1996. He also manages IDS Life Series Fund. Prior to joining the Advisor he had
eight years of experience as a financial analyst with Bear, Stearns & Co. Inc.
covering the microcomputer software and computer services industries.

Fund expenses

The purpose of the following table and example is to summarize the aggregate
expenses of the Fund and its 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 the Fund and its Portfolio should be approximately equal to
(and may be less than) the per share expenses the Fund would have if the Company
retained its own investment advisor and the assets of the Fund were invested
directly in the type of securities held by the Portfolio. For additional
information concerning Fund and Portfolio expenses, see "How the Fund and
Portfolio are organized."

Shareholder transaction expenses(a)
Maximum sales charge on purchases
(as a percentage of offering price)

0%
<PAGE>

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

- ------------------------- --------------------------------------
Management fee(b) 0.72%
- ------------------------------------------- --------------------
- ------------------------------------------------------ ---------
12b-1 fee 0.25%
- ------------------------------------------------------ ---------
- ------------------------------------------------------ ---------
Other expenses(c) 0.53%
- ------------------------------------------------------ ---------
- ------------------------------------------------------ ---------
Total (after reimbursement) 1.50%
- ------------------------------------------------------ ---------

(a)There is no sales load; however, 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. (b)The management fee is paid by the Trust on
behalf of the Portfolio. (c)Other expenses include an administrative services
fee, a transfer agency fee and other non-advisory expenses.

Example: Suppose for each year for the next three 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:

- ------------------------------------ -----------------------------------
1 year $ 15
- ------------------------------------ -----------------------------------
- ------------------------------------ -----------------------------------
3 years $ 47
- ------------------------------------ -----------------------------------
- ------------------------------------ -----------------------------------
5 years $ 82
- ------------------------------------ -----------------------------------
- ------------------------------------ -----------------------------------
10 years $180
- ------------------------------------ -----------------------------------

The table and example do not represent actual expenses, past or future. Actual
expenses may be higher or lower than those shown. Because the Fund pays annual
distribution (12b-1) fees, long-term shareholders may indirectly pay an
equivalent of more than 7.25% sales charge, the maximum permitted by the
National Association of Securities Dealers.
<PAGE>
Performance

Financial highlights

Strategist World Technologies Fund

The table below shows certain important financial information for evaluating the
Fund's results.

Period ended Oct. 31,
Per share income and capital changesa

1997b

Net asset value, $5.00
beginning of period

Income from investment operations:

Net investment income (loss) (.07)

Net gains (losses) (both realized .34
and unrealized)

Total from investment operations .27

Net asset value, $5.27
end of period

Ratios/supplemental data:

1997b

Net assets, end of period $527
(in thousands)

Ratio of expenses to 1.50% c,d
average daily net assets

Ratio of net income (loss) (1.39%) c
to average daily net assets
<PAGE>
Portfolio turnover rate 164%
(excluding short-term securities)
for the underlying Portfolio

Total return 5.4%

Average brokerage commission $.0488
rate for the underlying Portfolioe

a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date. Period from Nov. 13, 1996 to Oct. 31, 1997.
c Adjusted to an annual basis.
d The Advisor and Distributor voluntarily limited total operating expenses to
1.50% of average daily net assets. Without this agreement, the ratio of
expenses to average daily net assets would have been 2.36%.
e The Fund is required to disclose an average brokerage commission rate per
share for security trades on which commissions are charged. The
comparability of this information may be affected by the fact that
commission rates per share vary significantly among foreign countries.

The information in this table has been audited by KPMG Peat Marwick LLP,
independent auditors' report and additional information about the performance of
the Fund are contained in the Fund's annual report which if not included with
this prospectus may be obtained without charge.

<PAGE>

Total returns

Average annual total returns as of Oct. 31, 1997.

Purchase Since
made inception
- ------------------------------ ------------------- ------------------ ---------
World Technologies +5.40%*

S&P 500 +22.82%**

Lipper Science & Technology +12.19%
Funds Index

*Inception date was Nov. 13, 1996.
**Measurement period started Dec. 1, 1996.

Cumulative total returns as of Oct. 31, 1997.

Purchase Since
made inception
- ----------------------------- ------------------- ------------------ ----------
World Technologies +5.40%*

S&P 500 +22.82%**

Lipper Science & Technology +12.19%
Funds Index

*Inception date was Nov. 13, 1996.
**Measurement period started Dec. 1, 1996.
<PAGE>
Standard & Poor's 500 Stock Index (S&P 500), an unmanaged list of common stocks,
is frequently used as a general measure of market performance. However, the S&P
500 companies are generally larger than those in which the Fund invests. The
index reflects reinvestment of all distributions and changes in market prices,
but excludes brokerage commissions or other fees.

Lipper Science & Technology Funds Index, published by Lipper Analytical
Services, Inc., includes 10 funds that are generally similar to the Fund,
although some funds in the index may have somewhat different investment policies
or objectives. The index reflects reinvestment of all distributions and changes
in market prices, but excludes brokerage commissions or other fees.

Investment policies and risks

The policies described below apply both to the Fund and the Portfolio.

The Portfolio is a diversified mutual fund that invests primarily in common
stocks and securities convertible into common stocks of companies within the
information technology sector. The companies are located anywhere in the world
but investments will be in at least three different countries including the
United States. Under normal market conditions, at least 65% of the Portfolio's
total assets will be invested in companies in the information technology sector.
The Portfolio may also invest in debt securities, derivative instruments and
money market instruments, but income considerations are not a factor for
evaluating investments for the Portfolio.

The various types of investments described above that the investment manager
uses to achieve investment performance are explained in more detail in the next
section and in the SAI.

Facts about investments and their risks

Information technology sector: Companies in this sector include companies that
the investment manager considers to be principally engaged in the development,
advancement, production, distribution, and/or use of products or services
related to information processing, data processing, and/or information
presentation. Industry sectors likely to be included are (but are not limited
to): computer hardware and peripheral products, business software, consumer and
educational software, data networking, telecommunications equipment,
telecommunications service providers, computer services, semiconductor
manufacturers and equipment makers, media and information services.

Because the Portfolio investments are concentrated in these industries, the
value of its assets will be affected by factors influencing these industries and
may fluctuate more widely than a portfolio that invests in a broader range of
industries. For example, changes in governmental policies and the need for
regulatory approvals may have a material effect
<PAGE>
on the products and services in these industries. Technologies that change
rapidly create the risk of swift obsolescence. The development of new products
and services can be very capital intensive, leaving the possibility that
companies may not be able to recover their investment or meet their obligations.
Securities of smaller, less seasoned companies may be subject to greater price
fluctuation, limited liquidity and above-average investment risk.

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 on a dividend at a pre-established rate.

Debt securities: The price of bonds generally falls as interest rates increase,
and rises as interest rates decrease. The price of bonds also fluctuates if the
credit rating is upgraded or downgraded. The price of bonds below investment
grade may react more to the ability of the issuing company to pay interest and
principal when due than to changes in interest rates. These bonds have greater
price fluctuations and are more likely to experience a default. The Portfolio
may invest up to 20% of its net assets in bonds. The Portfolio will not invest
more than 5% of its net assets in bonds below investment grade, including Brady
bonds. Securities that are subsequently downgraded in quality may continue to be
held by the Portfolio and will be sold only when the Portfolio's investment
manager believes it is advantageous to do so.

Foreign investments: Securities of foreign companies and governments may be
traded in the United States, but often they are traded only on foreign markets.
Frequently, there is less information about foreign companies and less
government supervision of foreign markets. Foreign investments are subject to
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. Because
<PAGE>
of the limited trading volume in some foreign markets, efforts to buy or sell a
security may change the price of the security, and it may be difficult to
complete the transaction. The limited liquidity and price fluctuations in
emerging markets could make investments in developing countries more volatile.

Derivative instruments: The investment manager may use derivative instruments in
addition to securities to achieve investment performance. Derivative instruments
include futures, options and forward contracts. Such instruments may be used to
maintain cash reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce transaction
costs or to pursue higher investment returns. Derivative instruments are
characterized by requiring little or no initial payment and a daily change in
price based on or derived from a security, a currency, a group of securities or
currencies, or an index. A number of strategies or combination of instruments
can be used to achieve the desired investment performance characteristics. A
small change in the value of the underlying security, currency or index will
cause a sizable gain or loss in the price of the derivative instrument.
Derivative instruments allow the investment manager to change the investment
performance characteristics very quickly and at lower costs. Risks include
losses of premiums, rapid changes in prices, defaults by other parties and
inability to close such instruments. The 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 Portfolio will designate cash or appropriate
liquid assets to cover portfolio obligations. No more than 5% of the 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 the Portfolio's assets
at risk to 5%. The Portfolio is not limited as to the percentage of its assets
that may be invested in permissible investments, including derivatives, except
as otherwise explicitly provided in this prospectus or the SAI. For descriptions
of these and other types of derivative instruments, see the Appendix to this
prospectus and the SAI.

Securities and other instruments that are illiquid: A security or other
instrument is illiquid if it cannot be sold quickly in the normal course of
business. Some investments cannot be resold to the U.S. public because of their
terms or government regulations. Securities and instruments, however, can be
sold in private sales, and many may be sold to other institutions and qualified
buyers or on foreign markets. The investment manager will follow guidelines
established by the board and consider relevant factors such as the nature of the
security and the number of likely buyers when determining whether a security is
illiquid. No more than 10% of the 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
<PAGE>
better investment opportunities arise. Generally, less than 25% of the
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: The 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 the Portfolio's
net assets.

Valuing Fund shares

The net asset value (NAV) is the value of a single Fund share. It is the total
value of the 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 and assets with available market values are valued on that
basis

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

o Assets without readily available market values are valued according
to methods selected in good faith by the board

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

You may purchase shares of the Fund through an Investment Management Account
(IMA) maintained with the Distributor. There is no fee to open an IMA account.
Payment for shares must be made directly to the Distributor.
<PAGE>
Complete an IMA Account Application (available by calling 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.

Minimum Fund investment requirements. Your initial investment in the 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.

Methods of purchasing shares. There are three convenient ways to purchase shares
of the Fund. 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 800-AXP-SERV.
<PAGE>
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 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. The Fund reserves the right, in its sole discretion
and without prior notice to shareholders, to withdraw or suspend all or any part
of the offering made by this prospectus, to reject purchase requests or to
change the minimum investment requirements. All requests to purchase shares of
the Fund are subject to acceptance by the Fund and the Distributor and are not
binding until confirmed or accepted in writing. The Distributor will charge a
$15 service fee against an investor's IMA account if his or her investment check
is returned because of insufficient or uncollected funds or a stop payment
order.

How to exchange shares

The exchange privilege allows you to exchange your investment in the Fund at no
charge for shares of other funds in the Strategist Fund Group available in your
state. For complete information on any other fund, read that Fund's prospectus
carefully. 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. The 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 Fund reserve the right to
reject any exchange, limit the amount or modify or discontinue the exchange
privilege, to prevent abuse or adverse effects on the Fund and its shareholders.
<PAGE>
How to redeem shares

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.

A redemption is a taxable transaction. If the proceeds from your redemption are
more or less than the cost of your shares, you will have a gain or loss, which
can affect your tax liability. Redeeming shares held in an IRA or qualified
retirement account may subject you to certain federal taxes, penalties and
reporting requirements. Consult your tax advisor.

Methods of exchanging or redeeming shares

By phone:

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 mus
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
<PAGE>
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:

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 share
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

Telephone transactions. You may make purchase, redemption and exchange requests
by mail or by calling 800-AXP-SERV. The privilege to initiate transactions by
telephone is automatically available through your IMA account. The 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 followed, the Fund will not 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 Fund 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.
<PAGE>
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.

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

Terminating your SPP. If you wish to terminate your SPP, you may call
800-AXP-SERV, or send written instructions to American Express Financial Direct,
P.O. Box 59196, Minneapolis, MN 55459-0196.

Terminating bank authorizations. If you wish to terminate your bank
authorizations, you may do so at any time by notifying American Express
Financial Direct in writing or by calling 800-AXP-SERV. Your bank authorization
will not automatically terminate when you cancel your SPP.
<PAGE>
IMPORTANT: If you are canceling your bank authorizations 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 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.

Other important information

Minimum balance and account requirements. The 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.

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 Fund or
its Distributor. This prospectus does not constitute an offering by the Fund 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.

TTY Service
For the hearing impaired
800-710-5260

Distributions and taxes

As a shareholder you are entitled to your share of the Fund's net income and any
net gains realized on its investments. The Fund distributes dividends and
capital gain distributions to qualify as a regulated investment company and to
avoid paying corporate income and excise taxes. Dividend and capital gain
distributions will have tax consequences that you should know about.

Dividend and capital gain distributions

The Portfolio allocates investment income from dividends and interest and net
realized capital gains or losses, if any, to the Fund. The Fund deducts direct
and allocated expenses from the investment income. The Fund's net investment
income is distributed to you by the end of the calendar year as dividends.
Capital gains are realized when a security is sold for a higher price than was
paid for it. Short-term capital gains are included in net investment income.
Long-term capital gains are realized when a security is held for more than one
year. The Fund will offset any net realized capital gains by any available
capital loss carryovers. Net realized long-term capital gains, if any, are
distributed at the end of the calendar year as capital gain distributions. These
long-term capital gains will be subject to differing tax rates depending on the
holding period of the underlying investments. Before they are distributed, both
net investment income and net long-term capital gains are included in the value
of each share. After they are distributed, the value of each share drops by the
per-share amount of the distribution. (If your distributions are reinvested, the
total value of your holdings will not change.)

Reinvestments

Dividends and capital gain distributions are automatically reinvested in
additional shares of the 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.)
<PAGE>
If you choose cash distributions, you will receive only those declared after
your request has been processed.

Taxes

The Fund has received a Private Letter Ruling from the Internal Revenue Service
stating that, for purposes of the Internal Revenue Code, the Fund will be
regarded as directly holding its allocable share of the income and gain realized
by the Portfolio.

Distributions are subject to federal income tax and also may be subject to state
and local taxes. Distributions are taxable in the year the Fund declares them
regardless of whether you take them in cash or reinvest them.

Income received by the 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.

Redemptions and exchanges subject you to a tax on any capital gain. If you sell
shares for more than their cost, the difference is a capital gain. Your gain may
be short term (for shares held for one year or less) or long term (for shares
held for more than one year). Long-term capital gains will be taxed at rates
that vary depending upon the holding period. Long-term capital gains are divided
into two holding periods: (1) shares held more than one year but not more than
18 months and (2) shares held more than 18 months
<PAGE>
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.

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.

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

Important: This information is a brief and selective summary of certain federal
tax rules that apply to the Fund. Tax matters are highly individual and complex,
and you should consult a qualified tax advisor about your personal situation.

How the Fund and Portfolio are organized

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 Funds have cumulative voting rights.

Shareholder meetings

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
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 will 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
<PAGE>
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.

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 a service representative at 800-437-3133.

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.

Shareholder meetings: Whenever the Portfolio proposes to change a fundamental
investment policy or to take any other action requiring approval of its security
holders, the Fund will hold a shareholder meeting. The Fund will vote for or
against the Portfolio's proposals in proportion to the vote it receives for or
against the same proposals from its shareholders.

Board members and officers

Investment manager

The Portfolio pays the Advisor for managing its assets. The Fund pays its
proportionate share of the fee. Under the Investment Management Services
Agreement, the Advisor is paid a fee for these services based on the average
daily net assets of the Portfolio, as follows:
<PAGE>
Assets Annual rate at
(billions) each asset level

First $0.25 0.720%
Next 0.25 0.695
Next 0.25 0.670
Next 0.25 0.645
Next 1.0 0.620
Over 2.0 0.595

For the fiscal period ended Oct. 31, 1997, the Advisor received investment
management fees of 0.72% of average daily net assets. Under the agreement, the
Portfolio also pays taxes, brokerage commissions and nonadvisory expenses.

Administrator and transfer agent

Under an Administrative Services Agreement, the Fund pays the Advisor for
administration and accounting services at an annual rate that decreases as
assets increase. The fee ranges from 0.060% to 0.035%.

Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee of $20 per shareholder account.

Distributor

The Fund sells shares through the Distributor under a Distribution Agreement.
The Distributor is located at PO 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. Under a Plan and
Agreement of Distribution 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>
The total expenses paid by the Fund for the fiscal period ended Oct. 31, 1997,
were 1.50% of average daily net assets.

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

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 and 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.

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>

STATEMENT OF ADDITIONAL INFORMATION

FOR

STRATEGIST WORLD FUND, INC.

Dec. 30, 1997

This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the Funds' prospectus and the financial statements contained
in the Annual Report which may be obtained by calling American Express Financial
Direct, 800-AXP-SERV (TTY: 800-710-5260) or by writing to P.O. Box 59196,
Minneapolis, MN 55459-0196.

This SAI is dated Dec. 30, 1997, and it is to be used with the Funds' prospectus
dated Dec. 30, 1997,and the Annual Report for the fiscal period ended Oct. 31,
1997.
<PAGE>
Strategist World Fund, Inc.
TABLE OF CONTENTS

Goals and Investment Policies....................................See Prospectus

Additional Investment Policies..............................................p.3

Security Transactions......................................................p.14

Brokerage Commissions Paid to Brokers Affiliated with the Advisor..........p.17

Performance Information....................................................p.18

Valuing Fund Shares........................................................p.21

Investing in the Funds.....................................................p.22

Redeeming Shares...........................................................p.23

Capital Loss Carryover.....................................................p.24

Taxes......................................................................p.24

Agreements.................................................................p.26

Organizational Information.................................................p.30

Board Members and Officers.................................................p.30

Compensation for the Fund and Portfolio Board Members......................p.32

Principal Holders of Securities............................................p.37

Independent Auditors.......................................................p.37

Financial Statements.......................................................p.38

Prospectus.................................................................p.38

Appendix A: Foreign Currency Transactions..................................p.39

Appendix B: Options and Futures Contracts..................................p.44

Appendix C: Mortgage-Backed Securities.....................................p.50

Appendix D: Dollar-Cost Averaging..........................................p.51
<PAGE>
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, respectively, as defined in the Investment Company Act of
1940 (the 1940 Act). Whenever a Fund is requested to vote on a change in the
investment policies of the corresponding Portfolio, the Company will hold a
meeting of Fund shareholders and will cast the Fund's vote as instructed by the
shareholders.

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

Investment Policies applicable to 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:

`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 and Fund have not borrowed in the
past and have no present intention to borrow.

`Make cash loans if the total commitment amount exceeds 5% of the Portfolio's
total assets.
<PAGE>
`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.

`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.

`Lend Portfolio securities in excess of 30% of its net assets. The current
policy of the Portfolio's board is to make these loans, either long- or
short-term, to broker dealers. In making loans, the Portfolio receives the
market price in cash, U.S. government securities, letters of credit or such
other collateral as may be permitted by regulatory agencies and approved by the
board. If the market price of the loaned securities goes up, the 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.

<PAGE>
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, except the Portfolio 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 a futures contract 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.
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.
The Portfolio has no current intention to invest more than 5% of its total
assets in securities of other investment companies.

`Invest in a company to control or manage it.

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

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

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

`Invest more than 10% of the Portfolio's net assets in securities and derivative
instruments that are illiquid. For purposes of this policy, illiquid securities
include some privately placed securities, public securities and Rule 144A
securities that for one reason or another may no longer have a readily available
market, repurchase agreements with maturities greater than seven days,
non-negotiable fixed-time deposits, over-the-counter options.
<PAGE>
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 this practice. 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 Investors Service, Inc. (Moody's) or Standard &
Poor's Corporation (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>
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:

`Make cash loans if the total commitment amount exceeds 5% of the Portfolio's
total assets.

`Concentrate in any one industry. According to the present interpretation by the
SEC, this means no more than 25% of the Portfolio's total assets, based on
current market value at time of purchase, can be invested in any one industry.

`Purchase more than 10% of the outstanding voting securities of an issuer.

`Invest more than 5% of its total assets in securities of any one company,
government or political subdivision thereof, except the limitation will not
apply to investments in securities issued by the U.S. government, its agencies
or instrumentalities, and except that up to 25% of the Portfolio's total assets
may be invested without regard to this 5% limitation.
<PAGE>
`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.

`Make a loan of any part of its assets to the Advisor, to the board members and
officers of the Advisor or to its own board members and officers.

`Purchase securities of an issuer if the board members and officers of the Fund,
the Portfolio and the Advisor hold more than a certain percentage of the
issuer's outstanding securities. If the holdings of all board members and
officers of the Fund, the Portfolio and the Advisor who own more than 0.5% of an
issuer's securities are added together, and if in total they own more than 5%,
the Portfolio will not purchase securities of that issuer.

`Lend Portfolio securities in excess of 30% of its net assets. The current
policy of the Portfolio's board is to make these loans, either long- or
short-term, to broker-dealers. In making loans, the Portfolio receives the
market price in cash, U.S. government securities, letters of credit or such
other collateral as may be permitted by regulatory agencies and approved by the
board. If the market price of the loaned securities goes up, the Portfolio will
get additional collateral on a daily basis. The risks are that the borrower may
not provide additional collateral when required or return the securities when
due. During the existence of the loan, the Portfolio receives cash payments
equivalent to all interest or other distributions paid on the loaned securities.
A loan will not be made unless the Advisor believes the opportunity for
additional income outweighs the risks.

The policies below are non-fundamental policies that apply both to the Fund and
its corresponding Portfolio and may be changed without shareholder/unitholder
approval. Unless changed by the board, the Portfolio will not:

`Buy on margin or sell short, except the Portfolio may make margin payments in
connection with transactions in futures contracts.
<PAGE>
`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 a futures contract 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.

`Invest in a company to control or manage it.

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

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

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

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
<PAGE>
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 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:

`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.
<PAGE>
`Make cash loans if the total commitment amount exceeds 5% of the Portfolio's
total assets.

`Purchase more than 10% of the outstanding voting securities of an issuer.

`Make a loan of any part of its assets to the Advisor, to the board members and
officers of the Advisor or to its own board members and officers.

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

`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.

`Invest in a company to control or manage it.

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

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

`Invest more than 10% of the Portfolio's net assets in securities and derivative
instruments that are illiquid. For purposes of this policy illiquid securities
include some privately placed securities, public securities and Rule 144A
securities that for one reason or another may no longer have a readily available
market, 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.
<PAGE>
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.

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>
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 discussion on foreign currency transactions, see Appendix A. For a
discussion on options and futures contracts, see Appendix B. For a discussion on
mortgage-backed securities, see Appendix C. For a discussion on dollar-cost
averaging, see Appendix D.

SECURITY TRANSACTIONS

Subject to policies set by the board, the Advisor is authorized to determine,
consistent with each Fund's and Portfolio's investment goal and policies, which
securities will be purchased, held or sold. In determining where the buy and
sell orders are to be placed, the Advisor has been directed to use its best
efforts to obtain the best available price and most favorable execution except
where otherwise authorized by the board. In selecting broker-dealers to execute
transactions, the Advisor may consider the price of the security, including
commission or mark-up, the size and difficulty of the order, the reliability,
integrity, financial soundness and general operation and execution capabilities
of the broker, the broker's expertise in particular markets, and research
services provided by the broker.

The Advisor has a strict Code of Ethics that prohibits its affiliated personnel
from engaging in personal investment activities that compete with or attempt to
take advantage of planned portfolio transactions for any fund or trust for which
it acts as investment manager. The Advisor carefully monitors compliance with
its Code of Ethics.

On occasion, it may be desirable to compensate a broker for research services or
for brokerage services by paying a commission that might not otherwise be
charged or a commission in excess of the amount another broker might charge. The
board has adopted a 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>
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
represented that under all three procedures the amount of commission paid will
be reasonable and competitive in relation to the value of the brokerage services
performed or research provided.

All other transactions shall be placed on the basis of obtaining the best
available price and 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.
<PAGE>
Each investment decision made for a Portfolio is made independently from any
decision made for other portfolios, funds or other accounts advised by the
Advisor or any of its subsidiaries. When a Portfolio buys or sells the same
security as another portfolio, fund or account, the Advisor carries out the
purchase or sale in a way the Trust agrees in advance is fair. Although sharing
in large transactions may adversely affect the price or volume purchased or sold
by a Portfolio, a Portfolio hopes to gain an overall advantage in execution. The
Advisor has assured the Trust it will continue to seek ways to reduce brokerage
costs.

On a periodic basis, the Advisor makes a comprehensive review of the
broker-dealers it uses and the overall reasonableness of their commissions. The
review evaluates execution, operational efficiency and research services.

For the fiscal period ended Oct. 31, 1997, Emerging Markets Portfolio, World
Growth Portfolio and World Income Portfolio paid total brokerage commissions of
$1,458,233, $8,099,200 and $1,457,773, 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 $475,324,000, on which $1,219,468 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 Emerging Markets Portfolio or World Income Portfolio except for the
affiliates as noted below.

As of the fiscal period ended Oct. 31, 1997, the Portfolios listed 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:

Name of Issuer Value of Securities Owned
at End of Fiscal Period
Emerging Markets Portfolio
Bank of America $ 3,396,883
Morgan Stanley Group 6,483,118

World Growth Portfolio
Bank of America $ 1,788,725

World Income Portfolio
Salomon Brothers $ 10,432,448
<PAGE>
For the fiscal period ended Oct. 31, 1997, the portfolio turnover rates were 87%
for Emerging Markets Portfolio, 199% for World Growth Portfolio and 55% for
World Income Portfolio. For the fiscal period ended Oct. 31, 1996, the portfolio
turnover rates were 134% for World Growth Portfolio and 49% for World Income
Portfolio.

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.

BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH THE ADVISOR

Affiliates of American Express Company (American Express) (of which the Advisor
is a wholly-owned subsidiary) may engage in brokerage and other securities
transactions on behalf of a Portfolio according to procedures adopted by the
board and to the extent consistent with applicable provisions of the federal
securities laws. The Advisor will use an American Express affiliate only if (i)
the Advisor determines that a Portfolio will receive prices and executions at
least as favorable as those offered by qualified independent brokers performing
similar brokerage and other services for a Portfolio and (ii) the affiliate
charges a Portfolio commission rates consistent with those the affiliate charges
comparable unaffiliated customers in similar transactions and if such use is
consistent with terms of the Investment Management Services Agreement.

The Advisor may direct brokerage to compensate an affiliate. The Advisor will
receive research on South Africa from New Africa Advisors, a wholly-owned
subsidiary of Sloan Financial Group. The Advisor owns 100% of IDS Capital
Holdings Inc. which in turn owns 40% of Sloan Financial Group. New Africa
Advisors will send research to the Advisor and in turn the Advisor will direct
trades to a particular broker. The broker will have an agreement to pay New
Africa Advisors. All transactions will be on a best execution basis.
Compensation received will be reasonable for the services rendered.

No brokerage commissions were paid to brokers affiliated with the Advisor for
the fiscal period ended Oct. 31, 1997 for Emerging Markets Portfolio or World
Income Portfolio.
<PAGE>
Information about brokerage commissions paid by World Growth Portfolio to
brokers affiliated with the Advisor for the fiscal period ended Oct. 31, 1997,
is contained in the following table:
<TABLE>
<CAPTION>

Fiscal period ended 1997 1996
- --------------- ------------- ----------- ------------------- ----------------- ------------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>

Aggregate Dollar Percent of Percent of Aggregate Aggregate Dollar
Amount of Aggregate Dollar Amount of Amount of
Nature of Commissions Paid Brokerage Transactions Involving Commissions Paid
Portfolio Broker Affiliation to Broker Commission Payment of Commissions to Broker
- --------------- ------------- ----------- ------------------- ----------------- ------------------------ -------------------
World Growth American (1) $61,457 .76% 2.13% $5,831
Enterprise
Investment
Services
Inc.
- --------------- ------------- ----------- ------------------- ----------------- ------------------------ -------------------
</TABLE>

(1) Wholly-owned subsidiary of the Advisor.

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>
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 th
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of
the period

The Fund's annualized yield was 6.17% for World Income Fund for the 30-day
period ended Oct. 31, 1997.

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>
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

The Fund's distribution yield was 4.49% for World Income Fund for the 30-day
period ended Oct. 31, 1997.

In its sales material and other communications, a Fund may quote, compare or
refer to rankings, yields or returns as published by independent statistical
services or publishers and publications such as The Bank Rate Monitor National
Index, Barron's, Business Week, Donoghue's Money Market Fund Report, Financial
Services Week, Financial Times, Financial World, Forbes, Fortune, Global
Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News and World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.

On May 13, 1996, IDS 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 Portfolios. Also on May
13, 1996, World Growth Fund and World Income Fund transferred all of their
respective assets to the corresponding Portfolio of the Trust in connection with
the commencement of their operations.

On March 20, 1995, the IDS 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 corresponding 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>
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. 3, 1997, the first business day following the end of the fiscal period
the computations looked like this:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>

Net assets Shares
before outstanding at Net asset value
Fund shareholder divided by the end of equals of one share
transactions previous day
- ------------------ ----------------- ----------------- ----------------- ----------------- -----------------
Emerging Markets $ 676,479 123,445 $ 5.48
World Growth 618,555 80,646 7.67
World Income 626,817 98,867 6.34
</TABLE>

In determining net assets before shareholder transactions, the securities held
by each Fund's corresponding Portfolio are valued as follows as of the close of
business of the New York Stock Exchange (the Exchange):

`Securities traded on a securities exchange for which a last-quoted sales price
is readily available are valued at the last-quoted sales price on the exchange
where such security is primarily traded.

`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.

computation of a Fund's net asset value. If events materially affecting the
value of such securities occur during such period, these securities will be
valued at their fair value according to procedures decided upon in good faith by
the board.

`Short-term securities maturing more than 60 days from the valuation date are
valued at the readily available market price or approximate market value based
on current interest rates. Short-term securities maturing in 60 days or less
that originally had maturities of more than 60 days at acquisition date are
valued at amortized cost using the market value on the 61st day before maturity.
Short-term securities maturing in 60 days or less at acquisition date are valued
at amortized cost. Amortized cost is an approximation of market value determined
by systematically increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium, so that the
carrying value is equal to maturity value on the maturity date.

`Securities without a readily available market price and other assets are valued
at fair value as determined in good faith by the board. The board is responsible
for selecting methods it believes provide fair value. When possible, bonds are
valued by a pricing service independent from the Portfolio. If a valuation of a
bond is not available from a pricing service, the bond will be valued by a
dealer knowledgeable about the bond if such a dealer is available.

The Exchange, American Express Service Corporation (the Distributor) 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

Each 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 Distributor. Of course, SIPC account protection does not
protect shareholders from share price fluctuations.
<PAGE>
REDEEMING SHARES

You have a right to redeem your shares at any time. For an explanation of
redemption procedures, please see the prospectus.

During an emergency, the board can suspend the computation of net asset value,
stop accepting payments for purchase of shares or suspend the duty of the Funds
(or a Fund) to redeem shares for more than seven days. Such emergency situations
would occur if:

`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 each Fund stop selling shares, the board members may make a deduction
from the value of the assets held by the Fund to cover the cost of future
liquidations of the assets so as to distribute fairly these costs among all
shareholders.

Redemptions by a Fund

Each Fund reserves the right to redeem, involuntarily, the shares of any
shareholder whose account has a value of less than a minimum amount but only
where the value of such account has been reduced by voluntary redemption of
shares. Until further notice, it is the policy of each 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, IRAs and other retirement plans).
In any event, before a Fund redeems such shares and sends the proceeds to the
shareholder, it will notify the shareholder that the value of the shares in the
account is less than the minimum amount and allow the shareholder 30 days to
make an additional investment in an amount which will increase the value of the
accounts to at least $1,000.

Redemptions in Kind

The Company has elected to be governed by Rule 18f-1 under the 1940 Act, which
obligates each Fund to redeem shares in cash, with respect to any one
shareholder during any 90-day period, up to the lesser of $250,000 or 1% of the
net assets of that Fund at the beginning of such period. Although redemptions in
excess of this limitation would normally be paid in cash, each Fund reserves the
right to make payments in whole or in part in securities or other assets in case
of an emergency, or if the payment of such redemption in cash would be
detrimental to the existing shareholders of each Fund as determined by the
board. In such circumstances, the securities distributed would
<PAGE>
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.

CAPITAL LOSS CARRYOVER

For federal income tax purposes, World Growth Fund had total capital loss
carryover of $3,309 at Oct. 31, 1997, that if not offset by subsequent capital
gains will expire in 2005.

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 a Fund's dividend that is attributable to dividends the
Fund has received from domestic (U.S.) securities. For the fiscal period ended
Oct. 31, 1997, none of Emerging Markets Fund's net investment income dividends,
98.22% of World Growth Fund's net investment income dividends and 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.

Each 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. The Funds have no current intention to invest in PFICS.

Income earned by a 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 a 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>
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 corporate shareholders, should
be treated as long-term capital gains regardless of how long they owned their
shares. Capital gain distributions, if any, received by individuals should be
treated as long-term if held for more than one year, however recent tax laws
have divided long-term capital gains into two holding periods: 1) shares held
more than one year but not more than 18 months and 2) shares held more than 18
months. Short-term capital gains earned by the Fund are paid to shareholders as
part of their ordinary income dividend and are taxable 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>
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 based upon the following schedule. Each Fund pays its
proportionate share of the fee.
<TABLE>
<CAPTION>

Emerging Markets Portfolio World Growth Portfolio
<S> <C> <C> <C> <C>

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 1.0 1.02 Next 1.0 0.700
Over 2.0 1.00 Over 2.0 0.675
</TABLE>
<PAGE>

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

On Oct. 31, 1997, the daily rates applied to the Portfolios' net assets on an
annual basis were equal to 1.09% for Emerging Markets Portfolio, 0.755% for
World Growth Portfolio and 0.733% 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 Nov. 13, 1996
(commencement of operations) to Oct. 31, 1997, the total amount paid was
$1,970,475 for Emerging Markets Portfolio. For the fiscal period ended Oct. 31,
1997, the total amount paid was $8,978,698 for World Growth Portfolio and
$6,721,234 for World Income Portfolio. For the fiscal period from May 13, 1996
(commencement of operations) to Oct. 31, 1996, the total amount paid was
$3,704,753 for World Growth Portfolio and $2,730,146 for World Income Portfolio.
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; 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 fiscal period from Nov. 13, 1996
(commencement of operations) to Oct. 31, 1997, Emerging Markets Portfolio and
Emerging Markets Fund paid nonadvisory expenses of $195,628. For the fiscal
period ended Oct. 31, 1997, World Growth Portfolio and World Growth Fund paid
nonadvisory expenses of $937,490 and World Income Portfolio and World Income
Fund paid nonadvisory expenses of $298,501. For the fiscal period from May 13,
1996 (commencement of operations) to Oct. 31, 1996, World Growth Portfolio and
World Growth Fund paid nonadvisory expenses of $530,101 and World Income
Portfolio and World Income Fund paid nonadvisory expenses of $78,812.
<PAGE>
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:
<TABLE>
<CAPTION>

Emerging Markets Fund World Growth Fund
<S> <C> <C> <C> <C>

Assets Annual rate at 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 1.0 0.06 Next 1.0 0.040
Over 2.0 0.05 Over 2.0 0.035
</TABLE>

World Income 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, 1997, the daily rates applied to the Funds' net assets on an annual
basis were equal to 0.10% for Emerging Markets Fund, 0.051% for World Growth
Fund and 0.053% 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 ended
Oct. 31, 1997, the Funds paid fees of $629 for Emerging Markets Fund, $357 for
World Growth Fund and $343 for World Income Fund.

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.
<PAGE>
Transfer Agency Agreement

The Company, on behalf of each Fund, has a Transfer Agency Agreement with
American Express Client Service Corporation (AECSC). 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 AECSC may be changed from time to time upon
agreement of the parties without shareholder approval. For the fiscal period
ended Oct. 31, 1997, the Funds paid fees of $346 for Emerging Markets Fund, $315
for World Growth Fund and $180 for World Income Fund.

Plan and Agreement of Distribution/Distribution Agreement

To help the Distributor defray the costs of distribution and servicing, the
Company and the Distributor have entered into a Plan and Agreement of
Distribution (Plan). These costs cover almost all aspects of distributing shares
of the Funds. Under the Plan, the Distributor is paid a fee at an annual rate of
0.25% of each Fund's average daily net assets.

The Plan must be approved annually by the board, including a majority of the
disinterested board members, if it is to continue for more than a year. At least
quarterly, the board must review written reports concerning the amounts expended
under the Plan and the purposes for which the expenditures were made. The Plan
and any agreement related to it may be terminated at any time with respect to a
Fund by vote of a majority of board members who are not interested persons of
the Company and have no direct or indirect financial interest in the operation
of the Plan or in any agreement related to the Plan, by vote of a majority of
the outstanding voting securities of a Fund or by the Distributor. The Plan (or
any agreement related to it) will terminate in the event of its assignment, as
that term is defined in the 1940 Act, as amended. The Plan may not be amended to
increase the amount to be spent for distribution without shareholder approval,
and all material amendments to the Plan must be approved by a majority of the
board members, including a majority of the board members who are not interested
persons of the Company and who do not have a 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 ended Oct. 31, 1997, the Funds paid fees of
$1,572 for Emerging Markets Fund, $1,487 for World Growth Fund and $1,430 for
World Income Fund.
<PAGE>
Custodian Agreement

The Trust's securities and cash are held by American Express Trust Company, 1200
Northstar Center West, 625 Marquette Ave., Minneapolis, MN 55402-2307, through a
custodian agreement. Each Fund also retains the custodian pursuant to a
custodian agreement. The custodian is permitted to deposit some or all of its
securities in central depository systems as allowed by federal law. For its
services, the Trust pays the custodian a maintenance charge per Portfolio and a
charge per transaction in addition to reimbursing the custodian's out-of-pocket
expenses.

Total fees and expenses

For the fiscal period ended Oct. 31, 1997, the Funds paid total fees and
nonadvisory expenses, net of reimbursements and earnings credits, of $13,804 for
Emerging Markets Fund, $9,788 for World Growth Fund and $7,754 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
Distributor have agreed to waive certain fees and to absorb certain other Fund
expenses until Dec 31, 1998. 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

Directors of Strategist Fund Group

The following is a list of the Company's board members who are board members of
all 15 funds in the Strategist Fund Group. All shares of the Funds have
cumulative voting rights with respect to the election of board members.
<PAGE>
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.

Jean B. Keffeler
Born in 1945
3424 Zenith Avenue South
Minneapolis, MN

Business and management consultant. Director, National Computer Systems,
American Paging Systems, Inc.

Thomas R. McBurney
Born in 1938
McBurney Management Advisors
1710 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, the Funds' other officers are:
<PAGE>
Eileen J. Newhouse
Born in 1955
IDS Tower 10
Minneapolis, MN

Secretary of all funds in the Strategist Fund Group. Counsel of the Advisor.

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

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

Compensation for the Fund Board Members

Once the assets of a Fund reach $20 million, members of that Fund's board who
are not officers of the Advisor or an affiliate receive an annual fee of $1,000.
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 ended Oct. 31, 1997, the independent members of the
board received no compensation. On Oct. 31, 1997, the Funds' board members and
officers as a group owned less than 1% of the outstanding shares of a Fund.

Trustees of the Preferred Master Trust Group

The following is a list of the Trust's board members. They serve 15 Master Trust
portfolios and 47 IDS and IDS Life funds (except for William H. Dudley who does
not serve the nine IDS Life funds). All units have cumulative voting rights with
respect to the election of board members.

H. Brewster Atwater, Jr.
Born in 1941
4900 IDS Tower
Minneapolis, MN

Former Chairman and chief executive officer, General Mills, Inc. Director, Merck
& Co., Inc. and Darden Restaurants, Inc.

<PAGE>
Lynne V. Cheney'
Born in 1941
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.

Distinguished Fellow AEI. Former Chair of National Endowment of the Humanities.
Director, The Reader's Digest Association Inc., Lockheed-Martin, Union Pacific
Resources and FPL Group, Inc. (holding company for Florida Power and Light).

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

Senior advisor to the chief executive officer of the Advisor. Former executive
vice president of the Advisor.

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

President and chief executive officer of the Advisor since August 1993, 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.

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

Chairman of the board, Board Services Corporation (provides administrative
services to boards). Director, trustee and officer of registered investment
companies whose boards are served by the company. Former vice chairman of the
board, Cargill, Incorporated (commodity merchants and processors).

Alan K. Simpson'
Born in 1931
1201 Sunshine Ave.
Cody, WY

Former three-term United States Senator for Wyoming. Former Assistant Republican
Leader, U.S. Senate. Director, PacifiCorp (electric power).

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

President, Spencer Associates Inc. (consulting). Former chairman of the board
and chief executive officer, Honeywell Inc. Director, Boise Cascade Corporation
(forest products). Member of International Advisory Council of NEC (Japan).

John R. Thomas**
Born in 1937
2900 IDS Tower
Minneapolis, MN

President of all funds in the IDS MUTUAL FUND GROUP. Senior vice president of
the Advisor.

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

Chairman, Whitney Management Company (manages family assets).
<PAGE>
C. Angus Wurtele'
Born in 1934
Valspar Corporation
Suite 1700
Foshay Tower
Minneapolis, MN

Chairman of the board and retired chief executive officer, The Valspar
Corporation (paints). Director, Bemis Corporation (packaging), Donaldson Company
(air cleaners & mufflers) and General Mills, Inc.
(consumer foods).

+ Member of executive committee.
' Member of joint audit committee.
* Interested person of the Trust by reason of being an officer and employee
of the Trust.
** Interested person of the Trust by reason of being an officer, board member,
employee and/or shareholder of the Advisor or American Express.

The board also has appointed officers who are responsible for day-to-day
business decisions based on policies it has established.

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

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

President, treasurer and corporate secretary of Board Services Corporation. Vice
president, general counsel and secretary for the Trust.

Officers who are also officers and/or employees of the Advisor:

Peter J. Anderson
Born in 1942
IDS Tower 10
Minneapolis, MN

Director and senior vice president-investments of the Advisor. Vice
president-investments for the Trust.
<PAGE>
Matthew N. Karstetter
Born in 1961
IDS Tower 10
Minneapolis, MN

Treasurer of all Trusts in the Preferred Master Trust Group. Vice president of
Investment Accounting for the Advisor since 1996. Prior to joining the Advisor,
he served as vice president of State Street Bank's mutual fund service operation
from 1991 to 1996.

Compensation for the Portfolio Board Members

Once the assets of the Portfolio reach $20 million, 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 $400 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, $1 for Emerging Markets
Portfolio, $6 for World Growth Portfolio and $4 for World Income Portfolio; and
as Chair of the Contracts Committee, $86. Expenses for attending meetings are
reimbursed.

During the fiscal period ended Oct. 31, 1997, the independent members of the
board for Emerging Markets Portfolio, World Growth Portfolio and World Income
Portfolio, for attending up to 31 meetings, received the following compensation:
<TABLE>
<CAPTION>

Compensation Table
for Emerging Markets Portfolio
<S> <C> <C> <C> <C>

Total cash compensation
Aggregate Pensions or Estimated annual from the IDS MUTUAL FUND
compensation Retirement benefits benefit upon GROUP and Preferred
Board Member from the accrued as Fund or retirement Master Trust Group
Portfolio Portfolio expenses
- --------------------------------- ---------------- --------------------- ------------------ ---------------------------
H. Brewster Atwater, Jr. $ 784 $0 $0 $100,500
Lynne V. Cheney 689 0 0 94,800
Robert F. Froehlke (Retired 859 0 0 103,700
11/13/97)
Heinz F. Hutter 834 0 0 103,400
Anne P. Jones 941 0 0 110,600
Melvin R. Laird (Retired 789 0 0 94,700
10/9/97)
Alan K. Simpson (part of year) 664 0 0 78,800
Edson W. Spencer 1,321 0 0 129,400
Wheelock Whitney 934 0 0 110,900
C. Angus Wurtele 984 0 0 112,300
<PAGE>
Compensation Table
for World Growth Portfolio

Total cash compensation
Aggregate Pensions or Estimated from the IDS MUTUAL FUND
compensation Retirement benefits annual benefit GROUP and Preferred
Board Member from the accrued as Fund or upon retirement Master Trust Group
Portfolio Portfolio expenses
- -------------------------------- ------------------ --------------------- ---------------- --------------------------
H. Brewster Atwater, Jr. $1,456 $0 $0 $100,500
Lynne V. Cheney 1,345 0 0 94,800
Robert F. Froehlke (Retired 1,506 0 0 103,700
11/13/97)
Heinz F. Hutter 1,506 0 0 103,400
Anne P. Jones 1,607 0 0 110,600
Melvin R. Laird (Retired 1,336 0 0 94,700
10/9/97)
Alan K. Simpson (part of year) 1,111 0 0 78,800
Edson W. Spencer 1,942 0 0 129,400
Wheelock Whitney 1,631 0 0 110,900
C. Angus Wurtele 1,656 0 0 112,300

Compensation Table
for World Income Portfolio

Total cash compensation
Aggregate Pensions or Estimated annual from the IDS MUTUAL FUND
compensation Retirement benefit upon GROUP and Preferred
Board Member from the benefits accrued retirement Master Trust Group
Portfolio as Fund or
Portfolio expenses
- -------------------------------- ---------------- -------------------- ------------------- --------------------------
H. Brewster Atwater, Jr. $1,237 $0 $0 $100,500
Lynne V. Cheney 1,116 0 0 94,800
Robert F. Froehlke (Retired 1,287 0 0 103,700
11/13/97)
Heinz F. Hutter 1,287 0 0 103,400
Anne P. Jones 1,374 0 0 110,600
Melvin R. Laird (Retired 1,107 0 0 94,700
10/9/97)
Alan K. Simpson (part of year) 932 0 0 78,800
Edson W. Spencer 1,724 0 0 129,400
Wheelock Whitney 1,412 0 0 110,900
C. Angus Wurtele 1,437 0 0 112,300
</TABLE>

PRINCIPAL HOLDERS OF SECURITIES

As of Oct. 31, 1997, William J. Russell and Frances M. Russell held 6.59% of
Strategist World Growth Fund shares.

INDEPENDENT AUDITORS

The Funds' and corresponding Portfolios' financial statements contained in the
Annual Report to shareholders for the fiscal year ended Oct. 31, 1997 were
audited by independent auditors, KPMG Peat Marwick LLP, 4200 Norwest Center, 90
S. Seventh St., Minneapolis, MN 55402-3900. The independent auditors also
provide other accounting and tax-related services as requested by the Funds.
<PAGE>
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 1997 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, 1997, is hereby incorporated in this SAI by
reference.

<PAGE>

APPENDIX A

FOREIGN CURRENCY TRANSACTIONS

Since investments in foreign countries usually involve currencies of foreign
countries, and since a Portfolio may hold cash and cash-equivalent investments
in foreign currencies, the value of 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, a Portfolio may incur costs in
connection with conversions between various currencies.

Spot Rates and Forward Contracts. A Portfolio conducts its foreign currency
exchange transactions either at the spot (cash) rate prevailing in the foreign
currency exchange market or by entering into forward currency exchange contracts
(forward contracts) as a hedge against fluctuations in future foreign exchange
rates. A forward contract involves an obligation to buy or sell a specific
currency at a future date, which may be any fixed number of days from the
contract date, at a price set at the time of the contract. These contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirements. No commissions are charged at any stage
for trades.

A Portfolio may enter into forward contracts to settle a security transaction or
handle dividend and interest collection. When a Portfolio enters into a contract
for the purchase or sale of a security denominated in a foreign currency or has
been notified of a dividend or interest payment, it may desire to lock in the
price of the security or the amount of the payment in dollars. By entering into
a forward contract, a Portfolio will be able to protect itself against a
possible loss resulting from an adverse change in the relationship between
different currencies from the date the security is purchased or sold to the date
on which payment is made or received or when the dividend or interest is
actually received.

Emerging Markets Portfolio and World Growth Portfolio also may enter into
forward contracts when management of a Portfolio believes the currency of a
particular foreign country may suffer a substantial decline against other
currency. It may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the Portfolio's securities denominated in such foreign currency. World Income
Portfolio 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. World Income Portfolio will not enter into such forward contracts or
maintain a net exposure to such contracts when consummating the contracts would
obligate a Portfolio to deliver an amount of foreign currency in excess of an
offsetting position composed of the Portfolio's securities and cash. Emerging
Markets
<PAGE>
Portfolio and World Growth Portfolio will not enter into such forward contracts
or maintain a net exposure to such contracts when consummating the contract or
would obligate the Portfolio to deliver an amount of foreign currency in excess
of the value of the Portfolio's securities or other assets denominated in that
currency. Under normal circumstances, consideration of the prospect for currency
parities will be incorporated into the longer term investment strategies. The
Advisor 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.

A Portfolio will designate cash or securities in an amount equal to the value of
a Portfolio's total assets committed to consummating forward contracts. If the
value of the securities declines, additional cash or securities will be
designated on a daily basis so that the value of the cash or securities will
equal the amount of a Portfolio's commitments on such contracts.

At maturity of a forward contract, a Portfolio may either sell the security and
make delivery of the foreign currency or retain the security and terminate its
contractual obligation to deliver the foreign currency by purchasing an
offsetting contract with the same currency trader obligating it to buy, on the
same maturity date, the same amount of foreign currency.

If a Portfolio retains a security and engages in an offsetting transaction, a
Portfolio will incur a gain or a loss (as described below) to the extent there
has been movement in forward contract prices. If a Portfolio engages in an
offsetting transaction, it may subsequently enter into a new forward contract to
sell the foreign currency. Should forward prices decline between the date a
Portfolio enters into a forward contract for selling foreign currency and the
date it enters into an offsetting contract for purchasing the foreign currency,
a Portfolio will realize a gain to the extent that the price of the currency it
has agreed to sell exceeds the price of the currency it has agreed to buy.
Should forward prices increase, a Portfolio will suffer a loss to the extent the
price of the currency it has agreed to buy exceeds the price of the currency it
has agreed to sell.

It is impossible to forecast what the market value of securities will be at the
expiration of a contract. Accordingly, it may be necessary for a Portfolio to
buy additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency a Portfolio is obligated to deliver and a decision is made to sell the
security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received on
the sale of a security if its market value exceeds the amount of foreign
currency a Portfolio is obligated to deliver.

A Portfolio's dealing in forward contracts will be limited to the transactions
described above. This method of protecting the value of securities against a
decline in the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of exchange
that can be achieved at some point in time. Although such forward contracts tend
to minimize the risk of loss due to a decline in value of hedged
<PAGE>
currency, they tend to limit any potential gain that might result should the
value of such currency increase.

Although a Portfolio values its assets each business day in terms of U.S.
dollars, it does not intend to convert its foreign currencies into U.S. dollars
on a daily basis. It will do so from time to time, and unitholders should be
aware of currency 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 a Portfolio
at one rate, while offering a lesser rate of exchange should a Portfolio desire
to resell that currency to the dealer.

Options on Foreign Currencies. A 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 portfolio securities are denominated will reduce the dollar
value of such securities, even if their value in the foreign currency remains
constant. In order to protect against such diminutions in the value of
securities, a Portfolio may buy put options on the foreign currency. If the
value of the currency does decline, a Portfolio will have the right to sell such
currency for a fixed amount in dollars and will thereby offset, in whole or in
part, the adverse effect on a 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 a Portfolio
derived from purchases of foreign currency options will be reduced by the amount
of the premium and related transaction costs. In addition, where currency
exchange rates do not move in the direction or to the extent anticipated, a
Portfolio could sustain losses on transactions in foreign currency options which
would require it to forego a portion or all of the benefits of advantageous
changes in such rates.

A Portfolio may write options on foreign currencies for the same types of
hedging purposes. For example, when a Portfolio anticipates a decline in the
dollar value of foreign-denominated securities due to adverse fluctuations in
exchange rates, it could, instead of purchasing a put option, write a call
option on the relevant currency. If the expected decline occurs, the option will
most likely not be exercised and the diminution in value of securities will be
fully or partially offset by the amount of the premium received.

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.
<PAGE>

All options written on foreign currencies will be covered. An option written on
foreign currencies is covered if a Portfolio holds currency sufficient to cover
the option or has an absolute and immediate right to acquire that currency
without additional cash consideration upon conversion of assets denominated in
that currency or exchange of other currency held in a Portfolio. An option
writer could lose amounts substantially in excess of its initial investments,
due to the margin and collateral requirements associated with such positions.

Options on foreign currencies are traded through financial institutions acting
as market-makers, although foreign currency options also are traded on certain
national securities exchanges, such as the Philadelphia Stock Exchange and the
Chicago Board Options Exchange, subject to SEC regulation. In an
over-the-counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost.

Foreign currency option positions entered into on a national securities exchange
are cleared and guaranteed by the Options Clearing Corporation (OCC), thereby
reducing the risk of counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more readily available
than in the over-the-counter market, potentially permitting a Portfolio to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.

The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively through the
OCC, which has established banking relationships in certain foreign countries
for the purpose. As a result, the OCC may, if it determines that foreign
governmental restrictions or taxes would prevent the orderly settlement of
foreign currency option exercises, or would result in undue burdens on OCC or
its clearing member, impose special procedures on exercise and settlement, such
as technical changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.
<PAGE>

Foreign Currency Futures and Related Options. A Portfolio may enter into
currency futures contracts to buy or sell currencies. It also may buy put call
options and write covered call and cash-secured 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. A Portfolio may use currency futures
for the same purposes as currency forward contracts, subject to Commodity
Futures Trading Commission (CFTC) limitations. All futures contracts are
aggregated for purposes of the percentage limitations.

Currency futures and options on futures values can be expected to correlate with
exchange rates, but will not reflect other factors that may affect the values of
a Portfolio's investments. A currency hedge, for example, should protect a
Yen-denominated bond against a decline in the Yen, but will not protect a
Portfolio against price decline if the issuer's creditworthiness deteriorates.
Because the value of a Portfolio's investments denominated in foreign currency
will change in response to many factors other than exchange rates, it may not be
possible to match the amount of a forward contract to the value of a Portfolio's
investments denominated in that currency over time.

A Portfolio will hold securities or other options or futures positions whose
values are expected to offset its obligations. A Portfolio will not enter into
an option or futures position that exposes a Portfolio to an obligation to
another party unless it owns either (i) an offsetting position in securities or
(ii) cash, receivables and short-term debt securities with a value sufficient to
cover its potential obligations.
<PAGE>
APPENDIX B

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.

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
<PAGE>
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.

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.
<PAGE>
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.

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.

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).
<PAGE>
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.

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.
<PAGE>
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.

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.
<PAGE>
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.

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>
APPENDIX C

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>
APPENDIX D

DOLLAR-COST AVERAGING

A technique that works well for many investors is one that eliminates random buy
and sell decisions. One such system is dollar-cost averaging. Dollar-cost
averaging involves building a portfolio through the investment of fixed amounts
of money on a regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility of the
financial markets. By using this strategy, more shares will be purchased when
the price is low and less when the price is high. As the accompanying chart
illustrates, dollar-cost averaging tends to keep the average price paid for the
shares lower than the average market price of shares purchased, although there
is no guarantee.

While this technique does not ensure a profit and does not protect against a
loss if the market declines, it is an effective way for many shareholders who
can continue investing on a regular basis through changing market conditions,
including times when the price of their shares falls or the market declines, to
accumulate shares in a fund to meet long-term goals.
<TABLE>
<CAPTION>

Dollar-cost averaging
<S> <C> <C> <C>

- ------------------------------------ ----------------------------------- -----------------------------------
Regular Investment Market Price of a Share Shares 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
</TABLE>

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>
STATEMENT OF ADDITIONAL INFORMATION

FOR

STRATEGIST WORLD FUND, INC.

Dec. 30, 1997

This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the Fund's prospectus and the financial statements contained
in the Annual Report which may be obtained by calling American Express Financial
Direct, 800-AXP-SERV (TTY: 800-710-5260) or by writing to P.O. Box 59196,
Minneapolis, MN 55459-0196.

This SAI is dated Dec. 30, 1997, and it is to be used with the Fund's prospectus
dated Dec. 30, 1997, and the Annual Report for the fiscal period ended Oct. 31,
1997.

<PAGE>
Strategist World Fund, Inc. - World Technologies

TABLE OF CONTENTS

Goals and Investment Policies....................................See Prospectus

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

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

Brokerage Commissions Paid to Brokers Affiliated with the Advisor..........p.10

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

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

Investing in the Fund......................................................p.13

Redeeming Shares...........................................................p.13

Capital Loss Carryover.....................................................p.15

Taxes......................................................................p.15

Agreements.................................................................p.17

Organizational Information.................................................p.20

Board Members and Officers.................................................p.20

Compensation for the Fund and Portfolio Board Members......................p.21

Independent Auditors.......................................................p.26

Financial Statements.......................................................p.26

Prospectus.................................................................p.26
<PAGE>
Appendix A: Description of Bond Ratings....................................p.27

Appendix B: Foreign Currency Transactions..................................p.30

Appendix C: Options and Futures Contracts..................................p.35

Appendix D: Mortgage-Backed Securities.....................................p.41

Appendix E: Dollar-Cost Averaging..........................................p.42
<PAGE>
ADDITIONAL INVESTMENT POLICIES

Strategist World Technologies Fund (the Fund) is a series of Strategist World
Fund, Inc. (the Company). The Fund is a diversified mutual fund with its own
goal and investment policies. The Fund seeks to achieve its goal by investing
all of its assets in World Technologies Portfolio (the 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 the Fund or Portfolio cannot be
changed without the approval of a majority of the outstanding voting securities
of the Fund or Portfolio, respectively, as defined in the Investment Company Act
of 1940 (the 1940 Act). Whenever the 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, the Fund may invest
its assets in an open-end management investment company having 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 World Technologies Portfolio:

`Make cash loans if the total commitment amount exceeds 5% of the Portfolio's
total assets.

`Purchase more than 10% of the outstanding voting securities of an issuer.
<PAGE>
`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 limitation.

`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.

`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 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.

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
<PAGE>
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 the Fund's and Portfolio's investment goal and policies, which
securities will be purchased, held or sold. In determining where the buy and
sell orders are to be placed, the Advisor has been directed to use its best
efforts to obtain the best available price and most favorable execution except
where otherwise authorized by the board. In selecting broker-dealers to execute
transactions, the Advisor may consider the price of the security, including
commission or mark-up, the size and difficulty of the order, the reliability,
integrity, financial soundness and general operation and execution capabilities
of the broker, the broker's expertise in particular markets, and research
services provided by the broker.

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
<PAGE>
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.

Each investment decision made for the Portfolio is made independently from any
decision made for other portfolios, funds or other accounts advised by the
Advisor or any of its subsidiaries. When the Portfolio buys or sells the same
security as another portfolio, fund or account, the Advisor carries out the
purchase or sale in a way the Trust agrees in advance is fair. Although sharing
in large transactions may adversely affect the price or volume purchased or sold
by the Portfolio, the 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.
<PAGE>
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.

World Technologies Portfolio began operations on Nov. 13, 1997.

No transactions were directed to brokers because of research services they
provided to a Portfolio except for the affiliates as noted below.

As of the fiscal period ended Oct. 31, 1997, the Portfolio held no 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.

For the fiscal period ended Oct. 31, 1997, the portfolio turnover rate was 164%
for World Technologies Portfolio. Higher turnover rates may result in higher
brokerage 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 the 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 the Portfolio will receive prices and executions at
least as favorable as those offered by qualified independent brokers performing
similar brokerage and other services for the Portfolio and (ii) the affiliate
charges the 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.

No brokerage commissions were paid to brokers affiliated with the Advisor
for the fiscal period from Nov. 13, 1996 to Oct. 31, 1997.
<PAGE>
PERFORMANCE INFORMATION

The Fund may quote various performance figures to illustrate past performance.
Average annual total return and current yield quotations used by the Fund are
based on standardized methods of computing performance as required by the SEC.

Average annual total return

The Fund may calculate average annual total return for certain periods by
finding the average annual compounded rates of return over the period that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:

P(1+T)n = ERV

Aggregate total return

The Fund may calculate aggregate total return for certain periods representing
the cumulative change in the value of an investment in the Fund over a specified
period of time according to the following formula:

ERV - P
P

In its sales material and other communications, the Fund may quote, compare or
refer to rankings, yields or returns as published by independent statistical
services or publishers and publications such as The Bank Rate Monitor National
Index, Barron's, Business Week, Donoghue's Money Market Fund Report, Financial
Services Week, Financial Times, Financial World, Forbes, Fortune, Global
Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News and World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.
<PAGE>
VALUING FUND SHARES

On Nov. 3, 1997, the first business day following the end of the fiscal period, the computations looked
like this:
<S> <C> <C> <C> <C> <C>

Net assets Shares
before outstanding at Net asset value
Fund shareholder divided by the end of equals of one share
transactions previous day
- ------------------- ----------------- ----------------- ----------------- ---------------- -----------------
World Technologies $527,000 100,000 $5.27
</TABLE>

In determining net assets before shareholder transactions, the securities held
by the Fund's corresponding Portfolio are valued as follows as of the close of
business of the New York Stock Exchange (the Exchange):

`Securities traded on a securities exchange for which a last-quoted sales price
is readily available are valued at the last-quoted sales price on the exchange
where such security is primarily traded.

`Securities included in the NASDAQ National Market System are valued at the
last-quoted sales price in this market.

`Futures and options traded on major exchanges are valued at the last-quoted
sales price on their primary exchange.

`Foreign securities traded outside the United States are generally valued as of
the time their trading is complete, which is usually different from the close of
the Exchange. Foreign securities quoted in foreign currencies are translated
into U.S. dollars at the current rate of exchange. Occasionally, events
affecting the value of such securities may occur between such times and the
close of the Exchange that will not be reflected in the computation of the
Fund's net asset value. If events materially affecting the value of such
securities occur during such period, these securities will be valued at their
fair value according to procedures decided upon in good faith by the board.
<PAGE>
`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.

The Exchange, American Express Service Corporation (the Distributor) and the
Fund will be closed on the following holidays: New Year's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

INVESTING IN THE FUND

The 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.

REDEEMING SHARES

You have a right to redeem your shares at any time. For an explanation of
redemption procedures, please see the prospectus.
<PAGE>

`The Exchange closes for reasons other than the usual weekend and holiday
closings or trading on the Exchange is restricted, or

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

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

Should the 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 the Fund

The Fund reserves the right to redeem, involuntarily, the shares of any
shareholder whose account has a value of less than a minimum amount but only
where the value of such account has been reduced by voluntary redemption of
shares. Until further notice, it is the policy of the 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, IRAs and other retirement plans).
In any event, before the 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 the Fund to redeem shares in cash, with respect to any one shareholder
during any 90-day period, up to the lesser of $250,000 or 1% of the net assets
of that Fund at the beginning of such period. Although redemptions in excess of
this limitation would normally be paid in cash, the 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 the Fund as determined by the board. In such
circumstances, the securities distributed would be valued as set forth in the
Prospectus. Should the Fund distribute securities, a shareholder may incur
brokerage fees or other transaction costs in converting the securities to cash.
<PAGE>

CAPITAL LOSS CARRYOVER

For federal income tax purposes, World Technologies Fund had total capital loss
carryover of $34,357, at Oct. 31, 1997, that if not offset by subsequent capital
gains will expire in 2005.

TAXES

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.

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 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.
<PAGE>

Capital gain distributions, if any, received by corporate shareholders, should
be treated as long-term capital gains regardless of how long they owned their
shares. Capital gain distributions, if any, received by individuals should be
treated as long-term if held for more than one year, however recent tax laws
have divided long-term capital gains into two holding periods: 1) shares held
more than one year but not more than 18 months and 2) shared held more than 18
months. Short-term capital gains earned by the Fund are paid to shareholders as
part of their ordinary income dividend and are taxable as ordinary income, not
capital gain.

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, such dividend shall be 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 such 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.

Investment Management Services Agreement

The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with the Advisor. For managing the assets of the Portfolio, the
Advisor is paid a fee based upon the following schedule.
The Fund pays its proportionate share of the fee.

World Technologies Portfolio

Assets Annual rate at
(billions) each asset level
---------- ----------------
First $0.25 0.720%
Next 0.25 0.695
Next 0.25 0.670
Next 0.25 0.645
Next 1.0 0.620
Over 2.0 0.595

On Oct. 31, 1997, the daily rates applied to the Portfolio's net assets on an
annual basis were equal to 0.720% for the Portfolio. The fee is calculated for
each calendar day on the basis of net assets at the close of business two days
prior to the day for which the calculation is made.

The management fee is paid monthly. For the fiscal period from Nov. 13,
1996 (commencement of operations) to Oct. 31, 1997, the total amount paid
was $27,140 by the Portfolio. The amount is allocated among the Fund
investing in the Portfolio.

<PAGE>
Administrative Services Agreement

The Company, on behalf of the Fund, has an Administrative Services Agreement
with the Advisor. Under this agreement, the Fund pays the Advisor for providing
administration and accounting services. The fee is payable from the assets of
the Fund and is calculated as follows:

World Technologies 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
Next 1.0 0.040
Over 2.0 0.035

On Oct. 31, 1997, the daily rates applied to the Fund's net assets on an
annual basis were equal to 0.060%. 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 ended Oct. 31, 1997, the Fund paid fees of $282.

Transfer Agency Agreement

The Company, on behalf of the Fund, has a Transfer Agency Agreement with
American Express Client Service Corporation (AECSC). 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 and dividing by the
number of days in the year. The fees paid to AECSC may be changed from time to
time upon agreement of the parties without shareholder approval. For the fiscal
period ended Oct. 31, 1997, the Fund paid fees of $18.
<PAGE>
Plan and Agreement of Distribution/Distribution Agreement

To help the Distributor defray the costs of distribution and servicing, the
Company and the Distributor have entered into a Plan and Agreement of
Distribution (Plan). These costs cover almost all aspects of distributing shares
of the Fund. Under the Plan, the Distributor is paid a fee at an annual rate of
0.25% of the Fund's average daily net assets.

The Plan must be approved annually by the board, including a majority of the
disinterested board members, if it is to continue for more than a year. At least
quarterly, the board must review written reports concerning the amounts expended
under the Plan and the purposes for which the expenditures were made. The Plan
and any agreement related to it may be terminated at any time with respect to
the 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 the 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 year ended
Oct. 31, 1997, the Fund paid fees of $1,174.

Custodian Agreement

The Trust's securities and cash are held by American Express Trust Company, 1200
Northstar Center West, 625 Marquette Ave., Minneapolis, MN 55402-2307, through a
custodian agreement. The Fund also retains the custodian pursuant to a custodian
agreement. The custodian is permitted to deposit some or all of its securities
in central depository systems as allowed by federal law. For its services, the
Trust pays the custodian a maintenance charge and a charge per transaction in
addition to reimbursing the custodian's out-of-pocket expenses.

Total fees and expenses

For the fiscal period ended Oct. 31, 1997, the Fund paid total fees and
nonadvisory expenses, net of reimbursements and earnings credits, of $6,989. The
Fund began operations on November 13, 1996. The Advisor and the Distributor have
agreed to waive certain fees and to absorb certain other Fund expenses until
Dec. 31, 1998. Under this agreement, the Fund's total expenses will not exceed
1.50%.
<PAGE>
ORGANIZATIONAL INFORMATION

The 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

Directors of Strategist Fund Group

The following is a list of the Company's board members who are board members of
all 15 funds in the Strategist Fund Group. All shares of the Fund have
cumulative voting rights with respect to the election of board members.

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.

Jean B. Keffeler
Born in 1945
3424 Zenith Avenue South
Minneapolis, MN

Business and management consultant. Director, National Computer Systems,
American Paging Systems, Inc.

Thomas R. McBurney
Born in 1938
McBurney Management Advisors
1710 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.
<PAGE>
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, the Funds' other officers are:

Eileen J. Newhouse
Born in 1955
IDS Tower 10
Minneapolis, MN

Secretary of all funds in the Strategist Fund Group. Counsel of the Advisor.

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

Compensation for the Fund Board Members

Once the assets of the Fund reach $20 million, members of the Fund's board who
are not officers of the Advisor or an affiliate receive an annual fee of $1,000
for World Technologies Fund. 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 ended Oct. 31, 1997, the independent members of
the board received no compensation. On Oct. 31, 1997, the Funds' board
members and officers as a group owned less than 1% of the outstanding
shares of the Fund.
<PAGE>
Trustees of the Preferred Master Trust Group

H. Brewster Atwater, Jr.
Born in 1941
4900 IDS Tower
Minneapolis, MN

Former Chairman and chief executive officer, General Mills, Inc. Director,
Merck & Co., 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, Union Pacific Resources and FPL Group, Inc. (holding
company for Florida Power and Light).

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

Senior advisor to the chief executive officer of the Advisor. Former executive
vice president of the Advisor.

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

President and chief executive officer of the Advisor since August 1993, and
director of the Advisor. Previously, senior vice president, finance and chief
financial officer of the Advisor.
<PAGE>
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.

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

Alan K. Simpson'
Born in 1931
1201 Sunshine Ave.
Cody, WY

Former three-term United States Senator for Wyoming. Former Assistant
Republican Leader, U.S. Senate. Director, PacifiCorp (electric power).

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 executiveofficer, Honeywell Inc. Director, Boise Cascade Corporation
(forest products). Member of International Advisory Council of NEC (Japan).
<PAGE>
John R. Thomas**
Born in 1937
2900 IDS Tower
Minneapolis, MN

President of all funds in the IDS MUTUAL FUND GROUP. Senior vice president 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

+ Member of executive committee.
' Member of joint audit committee.
* Interested person of the Trust by reason of being an officer and employee
of the Trust.
** Interested person of the Trust by reason of being an officer, board member
employee and/or shareholder of the Advisor or American Express.

The board also has appointed officers who are responsible for day-to-day
business decisions based on policies it has established.
<PAGE>

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

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

President, treasurer and corporate secretary of Board Services Corporation. Vice
president, general counsel and secretary for the Trust.

Officers who are also officers and/or employees of the Advisor:

Peter J. Anderson
Born in 1942
IDS Tower 10
Minneapolis, MN

Director and senior vice president-investments of the Advisor. Vice
president-investments for the Trust.

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

Compensation for the Portfolio Board Members

Once the assets of the Portfolio reach $20 million, members of the board who are
not officers of a Portfolio or of the Advisor receive an annual fee of $100 for
World Technologies 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, $1; and as Chair of the
Contracts Committee, $86.
Expenses for attending meetings are reimbursed.
<PAGE>
During the fiscal year ended Oct. 31, 1997, the independent members of the board
for World Technologies Portfolio, for attending up to 4 meetings, received the
following compensation:
<TABLE>
<CAPTION>

Compensation Table
for World Technologies Portfolio
<S> <C> <C> <C> <C>

Total cash compensation
Aggregate Pensions or Estimated from the Preferred
compensation Retirement annual benefit Master Trust Group and
Board Member from the benefits accrued upon retirement IDS MUTUAL FUND GROUP
Portfolio as Portfolio
expenses
- ---------------------------------- ----------------- -------------------- ---------------- --------------------------
H. Brewster Atwater, Jr. $0 $0 $0 $0
Lynne V. Cheney 0 0 0 0
Robert F. Froehlke (Retired 0 0 0 0
11/13/97)
Heinz F. Hutter 0 0 0 0
Anne P. Jones 0 0 0 0
Melvin R Laird (Retired 10/9/97) 0 0 0 0
Alan K. Simpson (part of year) 0 0 0 0
Edson W. Spencer 0 0 0 0
Wheelock Whitney 0 0 0 0
C. Angus Wurtele 0 0 0 0
</TABLE>

INDEPENDENT AUDITORS

The Fund's and corresponding Portfolio's financial statements contained in the
Annual Report to shareholders for the fiscal period ended Oct. 31, 1997 were
audited by independent auditors, KPMG Peat Marwick LLP, 4200 Norwest Center, 90
S. Seventh St., Minneapolis, MN 55402-3900. The independent auditors also
provide other accounting and tax-related services as requested by the Fund.

FINANCIAL STATEMENTS

PROSPECTUS

The prospectus dated Dec. 30, 1997, is hereby incorporated in this SAI by
reference.

<PAGE>
APPENDIX A

DESCRIPTION OF BOND RATINGS

These ratings concern the quality of the issuing corporation. They are not an
opinion of the market value of the security. Such ratings are opinions on
whether the principal and interest will be repaid when due. A security's rating
may change which could affect its price.

Ratings by Moody's Investors Service, Inc. are Aaa, Aa, A, Baa, Ba, B, Caa, Ca
and C.

Bonds rated:

Aaa are judged to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.

Aa are judged to be of high quality by all standards. Together with the Aaa
group they comprise what are generally known as high grade bonds. They are rated
lower than the best bonds because margins of protection may not be as large as
in Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risk
appear somewhat larger than the Aaa securities.

A possess many favorable investment attributes and are to be considered as
upper-medium-grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment some time in the future.

Baa are considered as medium-grade obligations (i.e., they are neither highly
protected nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well.

Ba are judged to have speculative elements; their future cannot be considered as
well-assured. Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in this class.

B generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.
<PAGE>
Caa are of poor standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest.

Ca represent obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings.

C are the lowest rated class of bonds, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.

Ratings by Standard & Poor's Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C
and D.

AAA has the highest rating assigned by S&P. Capacity to pay interest and repay
principal is extremely strong.

AA has a very strong capacity to pay interest and repay principal and differs
from the highest rated issues only in small degree.

A has a strong capacity to pay interest and repay principal, although it is
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than debt in higher-rated categories.

BBB is regarded as having adequate capacity to pay interest and repay principal.
Whereas it normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this category than in
higher-rated categories.

BB has less near-term vulnerability to default than other speculative issues.
However, it faces major ongoing uncertainties or exposure to adverse business,
financial, or economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or implied BBB-
rating.

B has a greater vulnerability to default but currently has the capacity to meet
interest payments and principal repayments. Adverse business, financial, or
economic conditions will likely impair capacity or willingness to pay interest
and repay principal. The B rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BB or BB- rating.

CCC has a currently identifiable vulnerability to default, and is dependent upon
favorable business, financial, and economic conditions to meet timely payment of
interest and repayment of principal. In the event of adverse business,
financial, or economic conditions, it is not likely to have the capacity to pay
interest and repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or B-
rating.
<PAGE>
CC typically is applied to debt subordinated to senior debt that is assigned an
actual or implied CCC rating.

C typically is applied to debt subordinated to senior debt that is assigned an
actual or implied CCC- rating. The C rating may be used to cover a situation
where a bankruptcy petition has been filed, but debt service payments are
continued.

D is in payment default. The D rating category is used when interest payments or
principal payments are not made on the due date, even if the applicable grace
period has not expired, unless S&P believes that such payments will be made
during such grace period. The D rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.

Non-rated securities will be considered for investment when they possess a risk
comparable to that of rated securities consistent with the Portfolio's
objectives and policies. When assessing the risk involved in each non-rated
security, the Portfolio will consider the financial condition of the issuer or
the protection afforded by the terms of the security.
<PAGE>
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
maintain a net exposure to such contracts when consummating the 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.
<PAGE>
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.

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
<PAGE>
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.

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.

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.
<PAGE>
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.

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.

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
<PAGE>
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.

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.
<PAGE>
APPENDIX C

OPTIONS AND FUTURES CONTRACTS

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.

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.

Risks of Transactions in Futures Contracts

MORTGAGE-BACKED SECURITIES

A mortgage pass through certificate is one that represents an interest in a
pool, or group, of mortgage loans assembled by the Government National Mortgage
Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal
National Mortgage Association (FNMA) or non-governmental entities. In
pass-through certificates, both principal and interest payments, including
prepayments, are passed through to the holder of the certificate. Prepayments on
underlying mortgages result in a loss of anticipated interest, and the actual
yield (or total return) to the 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 the Portfolio.

Stripped Mortgage-Backed Securities. The 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. The 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. The 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>
APPENDIX E

DOLLAR-COST AVERAGING

Dollar-cost averaging
<S> <C> <C> <C>

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).
</TABLE>
<PAGE>

Independent auditors' report

The board and shareholders
Strategist World Fund, Inc.:

We have audited the accompanying statements of assets and liabilities of
Strategist Emerging Markets Fund, Strategist World Growth Fund and Strategist
World Income Fund (series within Strategist World Fund, Inc.) as of October 31,
1997, and the related statements of operations for the year then ended and the
statements of changes in net assets and the financial highlights for the year
ended October 31, 1997, and for the period from May 13, 1996 (commencement of
operations), to October 31, 1996 of Strategist World Growth Fund and Strategist
World Income Fund; and the related statement of operations, statement of changes
in net assets and the financial highlights for the period from November 13, 1996
(commencement of operations), to October 31, 1997 of Strategist Emerging Markets
Fund. These financial statements and financial highlights are the responsibility
of fund management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Strategist Emerging Markets
Fund, Strategist World Growth Fund and Strategist World Income Fund at October
31, 1997, and the results of their operations, the changes in their net assets
and the financial highlights for the periods stated in the first paragraph
above, in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 5, 1997
<PAGE>
<TABLE>
<CAPTION>
Financial statements

Statements of assets and liabilities
Strategist World Fund, Inc.
Oct. 31, 1997
Strategist Strategist Strategist
Emerging Markets World Growth World Income
Fund Fund Fund

Assets
<S> <C> <C> <C>
Investment in corresponding
Portfolio (Note 1) $667,001 $629,345 $663,559
Organizational costs (Note 1) 41 1,838 1,838
Other receivables 208 -- 14
------- ------- -------
Total assets 667,250 631,183 665,411
------- ------- -------

Liabilities
Dividends payable to shareholders -- -- 2,622
Payable to advisor -- -- 2,067
Accrued distribution fee 5 4 4
Accrued transfer agency fee 2 1 1
Accrued administrative services fee 2 1 1
Other accrued expenses 16,495 26,947 35,856
------ ------ ------
Total liabilities 16,504 26,953 40,551
------ ------ ------
Net assets applicable to
outstanding capital stock $650,746 $604,230 $624,860
-------- -------- --------

Represented by
Capital stock-- $.01 par value (Note 1) $ 1,235 $ 806 $ 989
Additional paid-in capital 632,423 583,654 597,691
Undistributed net investment income 1,195 2,051 3,973
Accumulated net realized gain (loss) 102,852 (3,383) 12,807
Unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies (86,959) 21,102 9,400
------- ------ -----
Total -- representing net assets applicable
to outstanding capital stock $650,746 $604,230 $624,860
-------- -------- --------
Shares outstanding 123,445 80,646 98,867
------- ------ ------
Net asset value per share of
outstanding capital stock $ 5.27 $ 7.49 $ 6.32
------ ------ ------
See accompanying notes to financial statements.
<PAGE>

Statements of operations
Year ended Oct. 31, 1997
Strategist Strategist Strategist
Emerging Markets World Growth World Income
Fund* Fund Fund
Investment income
Income:
Dividends $ 6,579 $ 7,717 $ 25
Interest 8,581 3,978 42,354
Less foreign taxes withheld (582) (356) (659)
---- ---- ----
Total income 14,578 11,339 41,720
------ ------ ------

Expenses (Note 2):
Expenses allocated from
corresponding Portfolio 7,425 5,112 4,657
Distribution fee 1,572 1,487 1,430
Transfer agency fee 346 315 180
Administrative services fees and expenses 629 357 343
Postage 6,763 3,733 5,001
Registration fees 36,310 13,836 10,768
Reports to shareholders 3,641 1,491 2,002
Audit fees 3,034 3,200 3,200
Other 740 1,006 1,117
--- ----- -----
Total expenses 60,460 30,537 28,698
Less expenses reimbursed by AEFC (46,656) (20,749) (20,944)
------- ------- -------
Total net expenses 13,804 9,788 7,754
------ ----- -----
Investment income (loss)-- net 774 1,551 33,966
--- ----- ------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions 102,852 12,677 5,843
Financial futures -- (102) (643)
------- ------ ------
Foreign currency transactions 1,549 (3,547) (314)
Written options contracts -- 838 103
Net realized gain (loss) on investments 104,401 9,866 4,989
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities in
foreign currencies (86,959) 18,151 (9,228)
------- ------ ------
Net gain (loss) on investments and
foreign currencies 17,442 28,017 (4,239)
------ ------ ------
Net increase (decrease) in net assets
resulting from operations $18,216 $29,568 $29,727
------- ------- -------
*For the period from Nov. 13, 1996 (commencement of operations) to Oct. 31, 1997.
See accompanying notes to financial statements.
<PAGE>
<CAPTION>
Statement of changes in net assets
Strategist World Fund, Inc.
Strategist Emerging Markets Fund
For the period from
Nov. 13, 1996*
to Oct. 31, 1997
Operations and distributions
<S> <C>
Investment income (loss) -- net $ 774
Net realized gain (loss) on investments 104,401
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies (86,959)
-------
Net increase (decrease) in net assets resulting from operations 18,216
------

Distributions to shareholders from:
Net investment income (1,462)
------
Capital share transactions (Note 3)
Proceeds from sales 634,388
Reinvestment of distributions at net asset value 1,462
Payments for redemptions (2,858)
------
Increase (decrease) in net assets from capital share transactions 632,992
-------
Total increase (decrease) in net assets 649,746
Net assets at beginning of period (Note 1) 1,000
-----
Net assets at end of period 650,746
-------

Undistributed net investment income $ 1,195
-------
*Commencement of operations.
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
Strategist World Fund, Inc.
Strategist World Growth Fund
Year ended For the period
Oct. 31, 1997 from May 13, 1996*
to Oct. 31, 1996
Operations and distributions
Investment income (loss)-- net $ 1,551 $ 2,612
Net realized gain (loss) on investments 9,866 (19,140)
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies 18,151 2,951
------ -----
Net increase (decrease) in net assets
resulting from operations 29,568 (13,577)
------ -------
Distributions to shareholders from:
Net investment income (957) --
---- ----
Capital share transactions (Note 3)
Proceeds from sales 105,025 454,736
Reinvestment of distributions at net asset value 957 --
Payments for redemptions (19,522) (2,000)
------- ------
Increase (decrease) in net assets from capital
share transactions 86,460 452,736
------ -------
Total increase (decrease) in net assets 115,071 439,159
Net assets at beginning of period (Note 1) 489,159 50,000
------- ------
Net assets at end of period $604,230 $489,159
-------- --------
Undistributed net investment income $ 2,051 $ 979
------- -----

*Commencement of operations.
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
Strategist World Fund, Inc.
Strategist World Income Fund
Year ended For the period
Oct. 31, 1997 from May 13, 1996*
to Oct. 31, 1996
Operations and distributions
Investment income (loss)-- net $ 33,966 $ 9,919
Net realized gain (loss) on investments 4,989 4,553
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies (9,228) 18,628
------ ------
Net increase (decrease) in net assets
resulting from operations 29,727 33,100
------ ------
Distributions to shareholders from:
Net investment income (20,717) (9,919)
Excess distributions of net investment income -- (4,831)
Net realized gain (1,848) --
------
Total distributions (22,565) (14,750)
------- -------
Capital share transactions (Note 3)
Proceeds from sales 80,679 450,000
Reinvestment of distributions at net asset value 29,488 5,157
Payments for redemptions (15,976) --
-------
Increase (decrease) in net assets from capital
share transactions 94,191 455,157
------ -------
Total increase (decrease) in net assets 101,353 473,507
Net assets at beginning of period (Note 1) 523,507 50,000
------- ------
Net assets at end of period $624,860 $523,507
-------- --------
Undistributed (excess of distributions over)
net investment income $ 3,973 $ (2,084)
------- ---------
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Strategist World Fund, Inc.

1. Summary of significant accounting policies

Strategist Emerging Markets Fund (Emerging Markets Fund), Strategist World
Growth Fund (World Growth Fund), and Strategist World Income Fund (World Income
Fund), are series of capital stock within Strategist World Fund, Inc. Each Fund
is registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. Each Fund has 3 billion
authorized shares of capital stock. On April 15, 1996, American Express
Financial Corporation (AEFC) invested $50,000 in World Growth Fund and World
Income Fund which represented 6,831 shares and 8,264 shares for each Fund,
respectively. Operations did not formally commence until May 13, 1996. On Nov.
12, 1996, American Express Financial Corporation (AEFC) invested $1,000 in the
Emerging Markets Fund, which represented 200 shares.
Operations commenced on Nov. 13, 1996.

Investments in Portfolios

Each of the Funds seeks to achieve its investment objectives by investing all of
its net investable assets in a corresponding series of World Trust (the Trust).

Emerging Markets Fund invests all of its assets in the Emerging Markets
Portfolio, an open-end investment company that has the same objectives as the
Fund. Emerging Markets Portfolio seeks to provide shareholders with a long-term
growth of capital by investing primarily in equity securities of issuers in
countries with developing or emerging markets.

World Growth Fund invests all of its assets in the World Growth Portfolio, an
open-end investment company that has the same objectives as the Fund. World
Growth Portfolio seeks to provide a long-term growth of capital by investing
primarily in common stocks and securities convertible into common stocks of
companies throughout the world.

World Income Fund invests all of its assets in the World Income Portfolio, an
open-end investment company that has the same objectives as the Fund. World
Income Portfolio invests primarily in debt securities of U.S. and foreign
issuers.

Each Fund records daily its share of the corresponding Portfolio's income,
expenses and realized and unrealized gains and losses. The financial statements
of the Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. Each Fund records its
investment in the corresponding Portfolio at value that is equal to the Fund's
proportionate ownership interest in the net assets of the Portfolio. As of Oct.
31, 1997, the percentages of the corresponding Portfolio owned by Emerging
Markets Fund, World Growth Fund and World Income Fund were 0.19%, 0.06% and
0.07%, respectively. Valuation of securities held by the Portfolios is discussed
in Note 1 of the Portfolios' "Notes to financial statements," which are included
elsewhere in this report.

Organizational costs

Each Fund incurred organizational expenses in connection with the start-up and
initial registration of the Fund. These costs will be amortized over 60 months
on a straight-line basis beginning with the commencement of operations. If any
or all of the shares held by AEFC representing initial capital of the Fund are
redeemed during the amortization period, the redemption proceeds will be reduced
by the pro rata portion of the unamortized organizational cost balance.

Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.

Federal taxes

Since each Fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to the shareholders, no provision for income or excise taxes is
required.

Net investment income (loss) and net realized gains (losses) allocated from the
Portfolios may differ for financial statement and tax purposes primarily because
of the deferral of losses on certain futures contracts, the recognition of
certain foreign currency gains (losses) as ordinary income (loss) for tax
purposes, and losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Funds.

On the statement of assets and liabilities, due to permanent book-to-tax
differences, undistributed net investment income and accumulated net realized
gain (loss) have been increased (decreased), resulting in net reclassification
adjustments to additional paid-in capital as follows:

Emerging World World
Markets Fund Growth Fund Income Fund
Undistributed net
investment income $1,883 $ 478 $(7,192)
Accumulated net
realized gain (loss) (1,549) 1,912 7,714
------ ----- -----
Additional paid-in capital
reduction (increase) $ 334 $2,390 $ 522
------ ------ -------
Dividends to shareholders

Dividends from net investment income, declared and paid at the end of each
calendar year for Emerging Markets Fund and World Growth Fund and declared daily
and paid each calendar quarter for World Income Fund are reinvested in
additional shares of the Funds at net asset value or payable in cash. Capital
gains, when available, are distributed along with the last income dividend of
the calendar year.

Other

At Oct. 31, 1997, AEFC owned 100,287 shares for Emerging Markets Fund, 68,855
shares for World Growth Fund and 88,364 shares for World Income Fund.

2. Expenses and sales charges

In addition to the expenses allocated from the Portfolio, each Fund accrues its
own expenses as follows:

Each Fund entered into agreements with AEFC for providing administrative
services and transfer agent services. Under its Administrative Services
Agreement, each Fund pays AEFC a fee for administration and accounting services
at a percentage of the Fund's average daily net assets in reducing percentages
from 0.10% to 0.05% for Emerging Markets Fund, from 0.06% to 0.035% for World
Growth Fund and from 0.06% to 0.04% for World Income Fund annually. Additional
administrative service expenses paid by the Fund are office expenses,
consultants' fees and compensation of officers and employees. Under this
agreement, each Fund also pays taxes, audit and certain legal fees, registration
fees for shares, office expenses, consultants' fees, compensation of board
members, corporate filing fees, organizational expenses and any other expenses
properly payable by the Funds and approved by the board.

Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts
and records. Each Fund pays AEFC an annual fee per shareholder account of $20
($25 for World Income Fund).

Under a Plan and Agreement of Distribution, each Fund pays American Express
Service Corporation (the Distributor) a distribution fee at an annual rate of
0.25% of the Fund's average daily net assets for distribution related services.

A redemption fee of 0.50% is applied and retained by the Fund, if shares are
redeemed or exchanged within 180 days of purchase.

AEFC and the Distributor have agreed to waive certain fees and to absorb certain
other of Fund expenses until Dec. 31, 1998. Under this agreement, total expenses
will not exceed 2.20% of Emerging Markets Fund's average daily net assets, 1.75%
of World Growth Fund's average daily net assets and 1.35% of World Income Fund's
average daily net assets. In addition, for the year ended Oct. 31, 1997, AEFC
further voluntarily agreed to waive certain fees and expenses to 1.65% for World
Growth Fund.

3. Capital share transactions

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

Year ended Oct. 31, 1997
Emerging World World
Markets Fund* Growth Fund Income Fund
Sold 123,439 14,316 12,880
Issued for reinvested
distributions 287 132 4,682
Redeemed (481) (2,913) (2,536)
---- ------ ------
Net increase (decrease) 123,245 11,535 15,026
------- ------ ------
*Inception date was Nov. 13, 1996.
<PAGE>
Period ended Oct. 31, 1996*
World World
Growth Fund Income Fund
Sold 62,555 74,751
Issued for reinvested
distributions -- 826
Redeemed (275) --
------ ------
Net increase (decrease) 62,280 75,577
------ ------
*Inception date was May 13, 1996.

4. Capital loss carryover

For federal income tax purposes, World Growth Fund had a capital loss carryover
at Oct. 31, 1997 of $3,309 that, if not offset by subsequent capital gains, will
expire in 2005. It is unlikely the board will authorize a distribution of any
net realized gain for a Fund until its capital loss carryover has been offset or
expires.
<PAGE>
<TABLE>
<CAPTION>
5. Financial highlights

The Funds are required by the Internal Revenue Code of 1986 to tell their
shareholders about the tax treatment of the dividends they pay during their
fiscal year. Some of the dividends listed below were reported to you on a Form
1099-DIV, Dividends and Distributions, last January. Dividends paid to you since
the end of last year will be reported to you on a tax statement sent next
January. Shareholders should consult a tax advisor on how to report
distributions for state and local purposes.

Strategist Emerging Markets Fund
Fiscal year ended Oct. 31, 1997

Income distribution taxable as dividend income, none qualifying for deduction by
corporations.

Payable date Per share
Dec. 27, 1996 $0.01462

Total distributions $0.01462

Strategist World Growth Fund
Fiscal year ended Oct. 31, 1997

Income distribution taxable as dividend income, 98.22% qualifying for deduction
by corporations.

Payable date Per share
Dec. 30, 1996 $0.01331

Total distributions $0.01331

Strategist World Income Fund
Fiscal year ended Oct. 31, 1997

Income distribution taxable as dividend income, none qualifying for deduction by
corporations.

Payable date Per share
Dec. 27, 1996 0.16797
March 27, 1997 0.04920
June 27, 1997 0.05934
Sept. 26, 1997 0.05847

Total distributions $0.33498

Capital gains distribution taxable as long-term capital gains.

Payable date Per share
Dec. 27, 1996 $0.00137

Total distributions $0.33635

The distribution of $0.16934 per share, payable Dec. 27, 1996 consisted of
$0.14730 derived from net investment income, $0.02067 from net short-term captal
gains (total of $0.16797 taxable as dividend income) and $0.00137 from long-term
capital gains.
<PAGE>
Independent auditors' report

The board of trustees and unitholders World Trust:

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of Emerging Markets Portfolio (a
series of World Trust) as of October 31, 1997, the related statement of
operations and the statement of changes in net assets for the period from
November 13, 1996 (commencement of operations) to October 31, 1997. These
financial statements are the responsibility of portfolio management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Investment securities
held in custody are confirmed to us by the custodian. As to securities purchased
and sold but not received or delivered, and securities on loan, we request
confirmations from brokers, and where replies are not received, we carry out
other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Emerging Markets Portfolio at
October 31, 1997, and the results of its operations and the changes in its net
assets for the period stated in the first paragraph above, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 5, 1997
<PAGE>
Financial statements

Statement of assets and liabilities
Emerging Markets Portfolio
Oct. 31, 1997

Assets
Investments in securities, at value (Note 1)
(identified cost $434,347,667) $385,142,855
Cash in bank on demand deposit
(including foreign currency holdings of $3,841,936) 6,863,507
Dividends and accrued interest receivable 75,112
Receivable for investment securities sold 969,086
Unrealized appreciation on foreign currency contracts held
(Notes 1 and 5) 1,602
U.S. government securities held as collateral (Note 4) 6,402,980
---------
Total assets 399,455,142
-----------

Liabilities
Payable for investment securities purchased 7,558,367
Unrealized depreciation on foreign currency contracts held,
at value (Notes 1 and 5) 6,742
Payable upon return of securities loaned (Note 4) 33,258,780
Accrued investment management services fee 10,892
Other accrued expenses 162,089
-------
Total liabilities 40,996,870
----------
Net assets $358,458,272
------------
See accompanying notes to financial statements.
<PAGE>

Statement of operations

Emerging Markets Portfolio
For the period from Nov. 13, 1996
(commencement of operations) to Oct. 31, 1997

Investment income
Income:
Dividends $ 2,092,384
Interest 1,989,063
Less foreign taxes withheld (173,913)
--------
Total income 3,907,534
---------
Expenses (Note 2):
Investment management services fee 1,970,475
Compensation of board members 8,801
Custodian fees 184,583
Audit fees 13,500
Other 6,442
-----
Total expenses 2,183,801
Earnings credits on cash balances (Note 2) (21,530)
-------
Total net expenses 2,162,271
---------
Investment income (loss) -- net 1,745,263
---------

Realized and unrealized gain (loss) -- net

Net realized gain (loss) on:
Security transactions (Note 3) 8,719,711
Foreign currency transactions (589,436)
--------
Net realized gain (loss) on investments 8,130,275
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies (49,497,497)
-----------
Net gain (loss) on investments and foreign currencies (41,367,222)
-----------
Net increase (decrease) in net assets
resulting from operations $(39,621,959)
------------
See accompanying notes to financial statements.
<PAGE>
Statement of changes in net assets

Emerging Markets Portfolio
For the period from Nov. 13, 1996
(commencement of operations) to Oct. 31, 1997

Operations
Investment income (loss)-- net $ 1,745,263
Net realized gain (loss) on investments 8,130,275
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies (49,497,497)
-----------
Net increase (decrease) in net assets resulting from operations (39,621,959)
Net contributions (withdrawals) from partners 398,076,231
-----------
Total increase (decrease) in net assets 358,454,272
Net assets at beginning of period (Note 1) 4,000
- -----
Net assets at end of period $358,458,272
------------
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements

Emerging Markets Portfolio

1. Summary of significant accounting policies
Emerging Markets Portfolio (the Portfolio) is a series of World Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. Emerging Markets
Portfolio invests primarily in equity securities of issuers in countries with
developing or emerging markets. The Declaration of Trust permits the Trustees to
issue non-transferable interests in the Portfolio. On Nov. 12, 1996, two funds
affiliated with American Express Financial Corporation (AEFC) invested $4,000 in
the Portfolio. Operations did not formally commence until Nov. 13, 1996.

Significant accounting policies followed by the Portfolio are summarized below:

Use of estimates

Valuation of securities

All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price deemed best to reflect
fair value as quoted by dealers who make markets in these securities or by an
independent pricing service. Securities for which market quotations are not
readily available are valued at fair value according to methods selected in good
faith by the board. Short-term securities maturing in more than 60 days from the
valuation date are valued at the market price or approximate market value based
on current interest rates; those maturing in 60 days or less are valued at
amortized cost.

Option transactions

In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy and
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The Portfolio also may buy and sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Portfolio may incur a
loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolio pays a premium whether or not
the option is exercised. The Portfolio also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does not
exist.

Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.

Futures transactions

In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy and write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.

Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.

Foreign currency translations and foreign currency contracts

Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.

The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete the obligations of the contract.

Federal taxes

For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.

Other

Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend notification or upon
receipt of ex-dividend notification in the case of certain foreign securities.
For U.S. dollar denominated bonds, interest income includes level-yield
amortization of premium and discount. For foreign bonds, except for original
issue discount, the Portfolio does not amortize premium and discount.

2. Fees and expenses

The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 1.10% to 1.00% annually.

Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.

During the period from Nov. 13, 1996 to Oct. 31, 1997, the Portfolio's custodian
fees were reduced by $21,530 as a result of earnings credits from overnight cash
balances.

Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.

3. Securities transactions

Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $455,934,223 and $136,693,516, respectively, for the
period from Nov. 13, 1996 to Oct. 31, 1997. For the same period, the portfolio
turnover rate was 87%. Realized gains and losses are determined on an identified
cost basis.

4. Lending of portfolio securities

At Oct. 31, 1997, securities valued at $33,028,321 were on loan to brokers. For
collateral, the Portfolio received $26,855,800 in cash and U.S. government
securities valued at $6,402,980. Income from securities lending amounted to
$162,273 for the period from Nov. 13, 1996 to Oct. 31, 1997. The risks to the
Portfolio of securities lending are that the borrower may not provide additional
collateral when required or return the securities when due.

5. Foreign currency contracts

At Oct. 31, 1997, the Portfolio had entered into foreign currency exchange
contracts that obligate the Portfolio to deliver currency at a specified future
date. The unrealized appreciation and/or depreciation on these contracts is
included in the accompanying financial statements. See Summary of significant
accounting policies.The terms of the open contracts are as follows:

Exchange date Currency to be Currency to be Unrealized Unrealized
delivered received appreciation depreciation
Nov. 3, 1997 964,922 8,057,102 $ -- $1,730
U.S. Dollar Mexican Peso
Nov. 3, 1997 625,167 2,213,091 1,602 --
U.S. Dollar Israeli Shekel
Nov. 4, 1997 1,877,151 14,509,442 -- 486
U.S. Dollar Hong Kong Dollar
Nov. 4, 1997 712,686 130,421,447,402 -- 2,484
U.S. Dollar Turkish Lira
Nov. 4, 1997 1,059,006 958,376 -- 2,042
Brazil Real U.S. Dollar
------ ------
$1,602 $6,742
Investments in securities

Emerging Markets Portfolio
Oct. 31, 1997
(Percentages represent value of investments compared to net assets)

Common stocks (77.6%)
Issuer Shares Value (a)

Argentina (3.5%)
Retail (1.9%)
Perez Companc 1,060,000 $ 6,639,416

Utilities -- telephone (1.6%)
Telefonica de Argentina ADR 210,000 5,906,250

Brazil (12.1%)
Beverages & tobacco (1.7%)
CIA Cervejaria Brahma 10,000,000 6,257,650

Chemicals (0.9%)
Companhia de Saneamento Basico do
Estado de Sao Paulo 17,000,000(b) 3,145,153

Energy (1.3%)
Petroleo Brasileiro ADR 240,000(c) 4,767,554

Utilities -- electric (3.9%)
Centrais Eletricas Brasileiras ADR 381,000 8,035,021
Light Servicos de Eletricidade 17,995,000 5,973,044
Total 14,008,065

Utilities -- telephone (4.3%)
Telecomunicacoes Brasileiras-Telebras ADR 110,000 11,165,000
Telecom Minas Gerais 32,900,000(b) 4,119,080
Total 15,284,080

Chile (4.0%)
Retail (0.5%)
Distribucion y Servicio D & S ADR 107,000(b) 1,879,188

Multi-industry conglomerates (0.1%)
Quinenco ADR 14,600(b) 213,525

Utilities -- electric (1.0%)
Enersis ADR 110,000 3,630,000

Utilities -- telephone (2.4%)
Cia. de Telecomunicaciones de Chile ADR 315,000 8,741,250

China (1.3%)
Utilities -- electric
Beijing Datang Power Generation Cl H 8,950,000(b) 4,514,640

Egypt (1.8%)
Building materials & construction
Suez Cement GDR 320,000 6,619,200

Greece (1.2%)
Utilities -- telephone
OTE GDR 403,077(b) 4,192,001

Hong Kong (4.0%)
Building materials & construction (0.2%)
New World Infrastructure 370,000(b,c) 732,199

Industrial equipment & services (0.8%)
First Tractor 3,800,000(b) 2,948,975

Multi-industry conglomerates (2.2%)
China Resources Enterprises 748,000(b) 2,051,038
Shanghai Industrial Holdings 1,332,000(c) 5,926,508
Total 7,977,546

Retail (0.8%)
Guangnan Holdings 2,960,857(c) 2,719,017

Hungary (3.1%)
Chemicals (1.0%)
BorsodChem GDR 100,000(e) 3,525,000

Health care (2.1%)
EGIS 63,000 2,957,093
Gedeon Richter 48,000(b) 4,464,000
Total 7,421,093

Indonesia (1.2%)
Health care (0.1%)
PT Tempo Scan Pacific 250,000 178,571

Multi-industry conglomerates (0.4%)
Modern Photo Film 1,402,000 1,448,668

Retail (0.2%)
Matahari Putra Prima 3,111,000 604,156

Utilities -- telephone (0.5%)
PT Telekomunikasi 2,023,000 1,879,901

Israel (7.2%)
Banks and savings & loans (1.6%)
Bank Hapoalim 2,418,563 5,726,272

Chemicals (2.0%)
Israel Chemicals 5,800,000 7,276,790

Communications equipment & services (2.2%)
ECI Telecommunications 155,000 4,281,875
Tadiran Telecommunications 100,000 3,622,821
Total 7,904,696

Health care (1.4%)
Teva Pharmaceutical Inds ADR 105,000(c) 4,908,750

Malaysia (1.6%)
Banks and savings & loans (0.7%)
Malayan Banking 688,000 2,641,428

Building materials & construction (0.1%)
IJM 663,000 355,178

Leisure time & entertainment (0.8%)
Tanjong 1,530,000 2,686,606

Mexico (12.0%)
Beverages & tobacco (3.9%)
Coca Cola Femsa ADR 65,000(c) 2,807,187
Fomento Economico Mexicano Cl B 959,000 6,764,017
Panamerican Beverages Cl A 149,400 4,631,400
Total 14,202,604

Financial services (1.3%)
Grupo Finaciero Bancomer 10,000,000(b) 4,722,060

Multi-industry conglomerates (2.4%)
Grupo Carso SA de CV 1,350,000 8,577,194

Paper & packaging (2.1%)
Kimberly-Clark de Mexico ADR 345,000 7,395,764

Utilities -- telephone (2.3%)
Telefonos de Mexico ADR Cl L 190,000 8,217,500

Peru (3.5%)
Banks and savings & loans (1.5%)
Credicorp 300,000(c) 5,381,250

Metals (2.0%)
Compania de Minas Buenaventura ADR 400,000 7,175,000

Philippines (2.5%)
Building materials & construction (0.1%)
Hi Cement 5,220,000 472,530

Utilities -- electric (0.7%)
Manila Electric Cl B 878,000 2,682,432

Utilities -- telephone (1.7%)
Philippine Long Distance Telephone 252,000(c) 6,111,000

Poland (0.8%)
Metals
KGHM Polish Copper 275,000(b,c) 2,822,188

Russia (7.3%)
Energy (4.3%)
AO Tatneft ADR 60,000(b) 8,580,000
Lukoil Holding ADR 80,000(c) 6,804,800
Total 15,384,800

Utilities -- electric (3.0%)
Mosenergo ADR 80,000(e) 3,569,784
Mosenergo ADR 75,000(b) 3,346,673
Unified Energy Systems 11,500,000 3,766,250
Total 10,682,707

South Africa (0.6%)
Metals
Ingew Coal 500,000 1,972,390

South Korea (1.5%)
Communications equipment & services (0.5%)
LG Information & Communication 33,999 1,944,743

Electronics (1.0%)
Dae Duck Electronics 38,000 1,545,597
LG Semiconductor 123,050(b) 2,027,458
Samsung Electronics 1,535 60,286
Total 3,633,341

Taiwan (3.9%)
Chemicals (0.5%)
Nan Ya Plastics 1,198,800 1,921,178

Computers & office equipment (0.8%)
Computers-LANS 1,748,000 2,761,782

Electronics (1.8%)
Acer Peripherals 700,000 1,187,399
Compal Electronics 689,000(b) 1,569,450
Taiwan Secom 350,000(b) 1,142,164
Yageo 1,285,000(b) 2,698,707
Total 6,597,720

Textiles & apparel (0.8%)
Far Eastern Textile 3,100,000 2,904,684

Turkey (2.5%)
Automotive & related (0.2%)
Otosan Otomobil Sanayii 852,000(b) 742,322

Banks and savings & loans (2.3%)
Yapi ve Kredi Bankasi 275,000 8,318,750

United Kingdom (0.5%)
Health care
Pliva 110,000 1,710,500

Venezuela (1.5%)
Utilities -- telephone
Compania Anonima Nacional Telefonos
de Venezuela ADR 122,142 5,343,712

Total common stocks
(Cost: $327,007,060) $278,410,969

Other (0.1%)
Issuer Shares Value (a)
Indonesia (0.1%)
Matahari Putra Prima
Rights 3,111,000 $345,197

Taiwan (--%)
Compal Electronics
Rights 59,488 --

Total other
(Cost: $953,918) $345,197

Short-term securities (29.7%)
Issuer Annualized Amount Value (a)
yield on payable at
date of maturity
purchase

U.S. government agencies (3.8%)
Federal Home Loan Mtge Corp Disc Nt
11-10-97 5.43% $5,000,000 $ 4,993,237
11-17-97 5.43 2,900,000 2,893,027
Federal Natl Mtge Assn Disc Nt
11-06-97 5.43 5,900,000 5,895,559
Total 13,781,823

Commercial paper (24.9%)
Alabama Power
11-25-97 5.53 6,500,000 6,476,167
Ameritech Capital Funding
12-05-97 5.54 2,100,000(d) 2,089,072
Bell Atlantic
11-18-97 5.51 7,300,000 7,281,075
Bell Atlantic
11-25-97 5.54 4,000,000 3,985,307
BHP Finance
11-17-97 5.52 3,100,000 3,092,436
BOC Group
11-10-97 5.54 2,400,000 2,396,694
Commerzbank U.S. Finance
11-26-97 5.53 7,200,000 7,172,450
Fleet Funding
12-02-97 5.57 2,000,000(d) 1,990,442
Gannett
11-06-97 5.54 1,400,000 1,398,930
Gateway Fuel
12-09-97 5.55 5,300,000 5,269,119
Metlife Funding
12-16-97 5.55 5,800,000 5,760,053
Morgan Stanley Group
11-18-97 5.52 6,500,000 6,483,118
NBD Bank Canada
11-28-97 5.54 4,900,000 4,879,714
Paccar Financial
11-20-97 5.53 6,500,000 6,481,097
SBC Communications Capital
11-05-97 5.56 6,100,000(d) 6,096,252
Siemens
11-14-97 5.52 5,500,000 5,489,096
Societe Generale North America
11-20-97 5.53 4,400,000 4,387,228
Toyota Motor Credit
11-19-97 5.52 6,800,000 6,781,334
USAA Capital
11-04-97 5.56 800,000 799,631
11-10-97 5.50 900,000 898,768
Total 89,207,983

<PAGE>

Letter of credit (1.0%)
Bank of America-
AES Barbers Point
11-07-97 5.52% $3,400,000 $ 3,396,883

Total short-term securities
(Cost: $106,386,689) $106,386,689

Total investments in securities
(Cost: $434,347,667) (f) $385,142,855
Notes to investments in securities
(a)Securities are valued by procedures described in Note 1 to the financial
statements. Foreign security values are stated in U.S. dollars.

(b) Non-income producing.

(d) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other accredited investors.
This security has been determined to be liquid under guidelines established by
the board.

(e) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.

(f) At Oct. 31,1997, the cost of securities for federal income tax purposes was
$436,328,740 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:

Unrealized appreciation $ 9,865,307
Unrealized depreciation (61,051,192)
-----------
Net unrealized depreciation ($51,185,885)
------------
See accompanying notes to investments in securities.
<PAGE>
Independent auditors' report

The board of trustees and unitholders
World Trust:

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of World Growth Portfolio (a series
of World Trust) as of October 31, 1997, the related statement of operations for
the year then ended and the statements of changes in net assets for the year
ended Oct. 31, 1997 and for the period from May 13, 1996 (commencement of
operations) to October 31, 1996. These financial statements are the
responsibility of portfolio management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Investment securities
held in custody are confirmed to us by the custodian. As to securities purchased
and sold but not received or delivered, and securities on loan, we request
confirmations from brokers, and where replies are not received, we carry out
other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of World Growth Portfolio at
October 31, 1997, and the results of its operations and the changes in its net
assets for the periods stated in the first paragraph above, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 5, 1997

Financial statements

Statement of assets and liabilities
World Growth Portfolio
Oct. 31, 1997

Assets

Investments in securities, at value (Note 1)
<S> <C>
(identified cost $1,202,501,578) $1,244,686,920
Cash in bank on demand deposit 5,059,639
Dividends and accrued interest receivable 1,920,078
Receivable for investment securities sold 15,641,949
Unrealized appreciation on foreign currency contracts held,
at value (Notes 1 and 4) 2,007,828
U.S. government securities held as collateral (Note 5) 13,779,015
----------
Total assets 1,283,095,429
-------------

Liabilities

Payable for investment securities purchased 68,020,184
Unrealized depreciation on foreign currency contracts held,
at value (Notes 1 and 4) 31,782
Payable upon return of securities loaned (Note 5) 81,724,990
Accrued investment management services fee 23,648
Other accrued expenses 178,921
-------
Total liabilities 149,979,525
-----------
Net assets applicable to outstanding capital stock $1,133,115,904
==============

See accompanying notes to financial statements.

</TABLE>

Statement of operations

World Growth Portfolio
Year ended Oct. 31, 1997

Investment income
Income:
<S> <C>
Dividends (including $48,661 earned from affiliates) $15,002,336
Interest 7,883,713
Less foreign taxes withheld (687,216)
--------
Total income 22,198,833
----------
Expenses (Note 2):
Investment management services fee 8,978,698
Compensation of board members 19,158
Custodian fees 882,553
Audit fees 22,000
Other 32,919
------
Total expenses 9,935,328
Earnings credits on cash balances (Note 2) (21,657)
-------
Total net expenses 9,913,671
---------
Investment income (loss) -- net 12,285,162
----------

Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (including $1,302,906 realized
gain on sales of affiliated issuers) (Note 3) 32,437,751
Financial futures contracts (226,454)
Foreign currency transactions (5,320,461)
Options contracts written (Note 6) 1,717,452
---------
Net realized gain (loss) on investments 28,608,288
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 37,976,694
----------
Net gain (loss) on investments and foreign currencies 66,584,982
----------
Net increase (decrease) in net assets resulting from operations $78,870,144
===========

See accompanying notes to financial statements.

</TABLE>

Statements of changes in net assets

World Growth Portfolio
Year ended For the period
Oct. 31, 1997 from May 13, 1996*
to Oct. 31, 1996
Operations
<S> <C> <C>
Investment income (loss)-- net $ 12,285,162 $ 12,183,646
Net realized gain (loss) on investments 28,608,288 27,471,267
Net change in unrealized appreciation
(depreciation) on investments and
on translation of assets and liabilities
in foreign currencies 37,976,694 (63,955,989)
Net increase (decrease) in net assets
resulting from operations 78,870,144 (24,301,076)
Net contributions (withdrawals) from partners (19,158,130) 1,097,654,966
Total increase (decrease) in net assets 59,712,014 1,073,353,890
Net assets at beginning of period (Note 1) 1,073,403,890 50,000
Net assets at end of period $1,133,115,904 $1,073,403,890

*Commencement of operations.

See accompanying notes to financial statements.

</TABLE>

<PAGE>

Notes to financial statements

World Growth Portfolio

1. Summary of significant accounting policies
World Growth Portfolio (the Portfolio) is a series of World Trust (the Trust)
and is registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. World Growth Portfolio
seeks to provide a long-term growth of capital by investing primarily in common
stocks and securities convertible into common stocks of companies throughout the
world. The Declaration of Trust permits the Trustees to issue non-transferable
interests in the Portfolio. On April 15, 1996, American Express Financial
Corporation (AEFC) contributed $50,000 to the Portfolio. Operations did not
formally commence until May 13, 1996, at which time an existing fund transferred
its assets to the Portfolio in return for an ownership percentage of the
Portfolio.

Significant accounting polices followed by the Portfolio are summarized below:

Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.

Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the counter market and are valued at a price deemed best to reflect
fair value as quoted by dealers who make markets in these securities or by an
independent pricing service. Securities for which market quotations are not
readily available are valued at fair value according to methods selected in good
faith by the board. Short-term securities maturing in more than 60 days from the
valuation date are valued at the market price or approximate market value based
on current interest rates; those maturing in 60 days or less are valued at
amortized cost.

Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy and
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The Portfolio also may buy and sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Portfolio may incur a
loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolio pays a premium whether or not
the option is exercised. The Portfolio also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does not
exist.

Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy and write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.

Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.

Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.

Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend notification or upon
receipt of ex-dividend notification in the case of certain foreign securities.
For U.S. dollar denominated bonds, interest income includes level-yield
amortization of premium and discount. For foreign bonds, except for original
issue discount, the Portfolio does not amortize premium and discount.

2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.8% to 0.675% annually.

During the year ended Oct. 31, 1997, the Portfolio's custodian fees were reduced
by $21,657 as a result of earnings credits from overnight cash balances.

Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.

3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $2,358,922,562 and $2,198,233,965, respectively, for the
year ended Oct. 31, 1997. For the same year, the portfolio turnover rate was
199%. Realized gains and losses are determined on an identified cost basis.

Brokerage commissions paid to brokers affiliated with AEFC were $61,457 for the
year ended Oct. 31, 1997.

4. Foreign currency contracts
At Oct. 31, 1997, the Portfolio had entered into foreign currency exchange
contracts that obligate the Portfolio to deliver currencies at specified future
dates. The unrealized appreciation and/or depreciation on these contracts is
included in the accompanying financial statements. See Summary of significant
accounting policies.
The terms of the open contracts are as follows:

Exchange date Currency to be Currency to be Unrealized Unrealized
delivered received appreciation depreciation

<S> <C> <C> <C> <C> <C>
Nov. 3, 1997 3,238,738 2,281,123 $ -- $29,951
Swiss Franc U.S. Dollar
Nov. 4, 1997 9,846,261 58,483,836 268,550 --
U.S. Dollar French Franc
Nov. 4, 1997 784,416 557,906 -- 1,831
Swiss Franc U.S. Dollar
Nov. 28, 1997 10,249,758 59,358,397 16,309 --
U.S. Dollar French Franc
Nov. 28, 1997 1,100,555 6,404,954 7,185 --
U.S. Dollar French Franc
Feb. 5, 1998 9,084,000,000 78,310,345 1,715,784 --
Japanese Yen U.S. Dollar
--------- -------
$2,007,828 $31,782

</TABLE>
<PAGE>

5. Lending of portfolio securities
At Oct. 31, 1997, securities valued at $78,012,894 were on loan to brokers. For
collateral, the Portfolio received $67,945,975 in cash and U.S. government
securities valued at $13,779,015. Income from securities lending amounted to
$1,143,476 for the year ended Oct. 31, 1997. The risks to the Portfolio of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.

6. Option contracts written
The number of contracts and premium amounts associated with option contracts
written is as follows:

Year ended Oct. 31, 1997

Puts Calls

Contracts Premium Contracts Premium

Balance Oct. 31, 1996 1,350 $1,128,600 -- $--

Opened -- -- 1,000 834,472

Closed -- -- (1,000) (834,472)

Expired (1,350) (1,128,600) -- --
------ ----------

Balance Oct. 31, 1997 -- $-- -- $--

See Summary of significant accounting policies.

<PAGE>

Investments in securities

World Growth Portfolio
Oct. 31, 1997
(Percentages represent value of investments compared to net assets)

Common stocks (98.0%)
Issuer Shares Value(a)

Argentina (1.1%)
Financial services (0.1%)
IRSA 34,500(c) $1,164,375

Multi-industry conglomerates (0.6%)
Perez Companc ADR 550,000 6,867,960

Utilities -- telephone (0.4%)
Telefonica De Argentina 170,000 4,781,250

Australia (0.8%)
Multi-industry conglomerates
Brambles Inds 465,000 8,937,310

Bahamas (0.9%)
Restaurants & lodging
Sun Intl Hotels 275,000(c) 9,900,000

Brazil (1.4%)
Banks and savings & loans (0.5%)
Uniao de Bancos Brasileiros ADR 225,000(c,d) 6,131,250

Utilities -- telephone (0.9%)
Telecomunicacoes Brasileiras -
Telebras ADR 95,000 9,642,500

Canada (5.0%)
Communications equipment & services (0.8%)
Northern Telecom 100,000 8,968,750

Health care (0.6%)
Biovail Intl 250,000(c,d) 7,218,750

Industrial equipment & services (1.9%)
Bombardier Cl B 1,100,000(d) 21,085,514

Paper & packaging (0.6%)
Avenor 400,000 6,559,938

Utilities -- telephone (1.1%)
BCE 468,200(d) 13,080,337

Chile (1.0%)
Multi-industry conglomerates (0.7%)
Quinenco ADR 574,100(c) 8,396,212

Retail (0.3%)
Distribucion Y Servicio ADR 171,000 3,003,187

Finland (1.5%)
Communications equipment & services
Nokia Cl A 195,000(c) 17,022,509

France (13.5%)
Automotive & related (2.1%)
Michelin 333,666 17,075,712
Renault 235,862(c) 6,547,190
Total 23,622,902

Banks and savings & loans (1.2%)
Banque Nationale de Paris 306,000 13,495,330

Chemicals (4.5%)
Cie Generale Des Eaux 101,248 11,784,833
Rhone-Poulenc 911,284 39,638,174
Total 51,423,007

Computers & office equipment (2.1%)
Dassault Systemes 790,000(c) 23,637,149

Energy (3.6%)
Elf Aquitaine 185,000(c) 22,845,036
Total Petroleum Cl B 164,250(c) 18,180,560
Total 41,025,596

Germany (4.3%)
Automotive & related (0.3%)
BMW 4,850(c,d) 3,506,465

Electronics (1.2%)
Siemens 220,000 13,533,163

Industrial equipment & services (2.0%)
Mannesmann 33,000 13,928,571
SGL Carbon 58,909 8,265,293
Total 22,193,864

Textiles & apparel (0.8%)
Adidas 63,478 9,182,375

Hong Kong (1.6%)
Multi-industry conglomerates (0.5%)
Hutchison Whampoa 790,000 5,466,597

Real estate (1.1%)
Cheung Kong Holdings 725,000(c) 5,040,257
New World Development 1,056,699 3,717,546
Sun Hung Kai Properties 475,000(c) 3,501,908
Total 12,259,711

Italy (6.6%)
Banks and savings & loans (3.7%)
Credito Italiano 9,040,000(c,d) 24,074,316
Istituto Bancario San Paulo di Torino 2,415,412(c) 18,300,086
Total 42,374,402

Communications equipment & services (1.4%)
Telecom Italia 3,900,000 15,734,339

Energy (1.5%)
ENI ADR 3,000,000(d) 16,845,582

Japan (7.0%)
Automotive & related (0.8%)
Honda 255,000 8,591,573

Communications equipment & services (0.8%)
Fujikura 1,250,000(c) 8,579,094

Computers & office equipment (1.5%)
Fujitsu 1,515,000(c) 16,636,579

Electronics (2.5%)
Ibiden 470,000(c) 7,819,974
Kyocera 138,000(c) 7,909,987
Tokyo Electron 270,000(c) 13,476,977
Total 29,206,938

Media (1.4%)
Sony 195,000(c) 16,206,064

Mexico (2.3%)
Multi-industry conglomerates (0.7%)
Grupo Financiero Banorte 6,000,000(c) 8,248,656

Paper & packaging (0.9%)
Kimberly-Clark de Mexico ADR 2,400,000 10,558,279

Utilities -- telephone (0.7%)
Telefonos de Mexico 175,000 7,568,750

Netherlands (6.3%)
Computers & office equipment (0.8%)
Baan 134,052(c) 9,467,922

Financial services (1.2%)
Ing Groep ADR 340,500(d) 14,200,175

Furniture & appliances (1.6%)
Philips Electronics 226,400(c) 17,676,597

Industrial equipment & services (1.2%)
Stork 307,894(c) 13,284,927

Retail (1.5%)
Vendex Intl 316,000 17,205,671

Peru (0.2%)
Utilities -- telephone
Telefonica del Peru ADR 130,000 2,567,500

Singapore (0.8%)
Real estate
DBS Land 5,000,000(c) 8,505,235

Sweden (0.8%)
Communications equipment & services
Ericsson (LM) ADR 200,000 8,850,000

Switzerland (2.1%)
Health care
Novartis 10,500(c) 16,431,069
Roche Holdings 771 6,769,770
Total 23,200,839

United Kingdom (10.0%)
Computers & office equipment (0.7%)
JBA Holdings 475,000 7,626,757

Electronics (0.9%)
Johnson Matthey 1,000,000(c) 9,826,641

Energy (2.0%)
Lasmo PLC 2,700,000 12,258,567
Shell Transport & Trading 1,623,000 11,498,806
Total 23,757,373

Health care (1.6%)
Glaxo Wellcome 440,600(c) 9,427,633
Smithkline Beecham PLC 881,200(c) 8,341,534
Total 17,769,167

Insurance (1.4%)
Prudential 1,500,000(c) 15,985,062

Leisure time & entertainment (0.9%)
Ladbroke Group 2,373,485 10,606,967

Machinery (1.0%)
Siebe 600,000 11,480,066

Multi-industry conglomerates (0.2%)
General Electric PLC 413,915(c) 2,634,089

Paper & packaging (1.3%)
Pearson 1,130,000(c) 14,353,856

United States (32.0%)
Aerospace & defense (2.0%)
Boeing 200,000 9,575,000
Hexcel 500,000(d) 13,406,250
Total 22,981,250

Airlines (1.3%)
AMR 125,000(c) 14,554,688

Banks and savings & loans (1.6%)
BankBoston 230,000 18,644,375

Communications equipment & services (0.8%
Motorola 150,000 9,262,500

Computers & office equipment (4.3%)
Cisco Systems 150,000(c) 12,304,688
Compaq 225,000 14,343,750
Ingram Micro 275,000(c) 8,198,438
Xerox 180,000 14,276,250
Total 49,123,126

Electronics (0.6%)
Lattice Semiconductor 125,000(c) 6,257,813

Energy (0.6%)
United Meridian 190,000(c) 6,448,125

Energy equipment & services (3.4%)
Camco Intl 110,000 7,947,500
Dresser Inds 400,000 16,850,000
Schlumberger 150,000 13,125,000
Total 37,922,500

Health care (3.2%)
Boston Scientific 200,000(c) 9,100,000
Medtronic 200,000 8,700,000
Pfizer 265,000 18,748,750
Total 36,548,750

Health care services (1.2%)
HBO & Co 300,000 13,050,000

Household products (1.1%)
Gillette 143,000 12,735,937

Industrial equipment & services (1.3%)
Illinois Tool Works 298,185 14,666,975

Insurance (1.4%)
American Intl Group 56,000 5,715,500
Travelers 150,000 10,500,000
Total 16,215,500

Leisure time & entertainment (0.9%)
Disney (Walt) 117,000 9,623,250

Metals (2.3%)
Aluminum Co of America 155,000 11,315,000
Getchell Gold 37,600(c) 1,353,600
Stillwater Mining 400,000(g) 8,300,000
225,000 4,668,750
Total 25,637,350

Retail (3.9%)
Rite Aid 230,000 13,656,250
Safeway 238,000 13,833,750
Walgreen 215,000 6,046,875
Wal-Mart 296,000 10,397,000
Total 43,933,875
Utilities -- telephone (2.1%)
Airtouch Communications 350,000(c) 13,518,750
GTE 250,000 10,609,375
Total 24,128,125

Total common stocks of unaffiliated issuers
(Cost: $1,081,777,993) $1,123,389,240

Bonds (0.4%)
Issuer and Principal Value(a)
coupon rate amount

Russia
City of Moscow
(U.S. Dollar)
9.50% 2000 $5,000,000(b) $4,862,500

Total bonds
(Cost: $4,990,000) $4,862,500

Other (0.1%)
Issuer Shares Value(a)

France
Rhone Poulenc
Warrants 222,372 $701,806

Total other
(Cost: $--) $701,806

Short-term securities (10.2%)

Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase

U.S. government agency (0.3%)
Federal Home Loan Mtge Corp Disc Nts
<S> <C> <C> <C>
11-07-97 5.45% $ 100,000 $ 99,910
11-13-97 5.49 600,000 598,904
11-17-97 5.43 2,565,000 2,558,832
Total 3,257,646

Commercial paper (9.8%)
Ameritech Capital Funding
11-06-97 5.53 11,300,000(e) 11,291,368
BBV Finance
11-06-97 5.52 500,000 499,618
BHP Finance
11-17-97 5.52 5,200,000 5,187,312
Deutsche Bank Financial
11-21-97 5.51 7,600,000 7,576,820
Fleet Funding
12-10-97 5.56 1,000,000(e) 994,009
Gateway Fuel
11-19-97 5.52 6,224,000 6,206,884
Intl Lease Finance
11-13-97 5.52 7,500,000 7,486,250
Lincoln Natl
12-08-97 5.55 900,000(e) 894,702
Metlife Funding
11-06-97 5.57 10,000,000 9,992,306
NBD Bank Canada
11-24-97 5.55 4,200,000 4,185,161
Paccar Financial
11-03-97 5.50 9,000,000 8,997,260
St. Paul Companies
11-21-97 5.51 2,300,000(e) 2,292,998
Siemens
11-14-97 5.52 10,000,000 9,980,175
UBS Finance
11-05-97 5.52 10,000,000 9,993,889
USAA Capital
11-10-97 5.50 7,900,000 7,889,187
11-18-97 5.50 5,500,000 5,485,767
Xerox Credit
12-08-97 5.54 11,800,000 11,733,297
Total 110,687,003

Letter of credit (0.1%)
Bank of America -
AES Barbers Point
12-12-97 5.54 1,800,000 1,788,725

Total short-term securities
(Cost: $115,733,585) $ 115,733,374

Total investments in securities
(Cost: $1,202,501,578) (h) $1,244,686,920

</TABLE>

Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements. Foreign security values are stated in U.S. dollars. For debt
securities, principal amounts are denominated in the currency indicated.

(b) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.

(d) Security is partially or fully on loan. See Note 5 to the financial
statements.

(e) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.

(f) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that were affiliates during the year
ended Oct. 31, 1997 are as follows:

Issuer Beginning Purchase Sales Ending Dividend
cost cost cost cost income

<S> <C> <C> <C> <C> <C>
Buenaventura ADR* $2,990,000 $4,017,518 $7,007,518 $ -- $48,661

Oliver Gold* 1,415,994 -- 1,415,994 -- --
--------- ---------- --------- ------- -------

Total $4,405,994 $4,017,518 $8,423,512 $ -- $48,661

*Issuer was not an affiliate for the entire fiscal period.

(g) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at Oct. 31, 1997, is as follows:

Security Acquisition date Cost
Stillwater Mining 08-18-95 $8,600,000

(h) At Oct. 31, 1997, the cost of securities for federal income tax purposes was
$1,202,633,541 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:

Unrealized appreciation $100,830,963
Unrealized depreciation (58,777,584)
-----------
Net unrealized appreciation $ 42,053,379
</TABLE>

<PAGE>

Independent auditors' report
The board of trustees and unitholders
World Trust:

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of World Income Portfolio (a series
of World Trust) as of October 31, 1997, and the related statement of operations
for the year then ended and the statements of changes in net assets for the year
ended October 31, 1997 and for the period from May 13, 1996 (commencement of
operations) to October 31, 1996. These financial statements are the
responsibility of portfolio management. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of World Trust Portfolio at
October 31, 1997, and the results of its operations and the changes in its net
assets for the periods stated in the first paragraph above, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 5, 1997

Financial Statements

Statement of assets and liabilities
World Income Portfolio
Oct. 31, 1997

Assets
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $958,160,678) $ 972,380,978
Cash in bank on demand deposit 199,804
Dividends and accrued interest receivable 26,001,615
Receivable for investment securities sold 1,766,802
Unrealized appreciation on foreign currency contracts held,
at value (Notes 1 and 4) 100,012
-------
Total assets 1,000,449,211
-------------

Liabilities
Payable for investment securities purchased 10,115,609
Unrealized depreciation on foreign currency contracts held,
at value (Notes 1 and 4) 156,430
Payable upon return of securities loaned (Note 5) 4,854,480
Accrued investment management services fee 19,775
Other accrued expenses 49,117
------
Total liabilities 15,195,411
----------
Net assets $ 985,253,800
==============

See accompanying notes to financial statements.

</TABLE>

Statement of operations

World Income Portfolio
Year ended Oct. 31, 1997

Investment income
Income:
<S> <C>
Dividends $ 38,782
Interest 63,725,859
Less foreign taxes withheld (993,284)
--------
Total income 62,771,357
----------
Expenses (Note 2):
Investment management services fee 6,721,234
Compensation of board members 16,475
Custodian fees 243,546
Audit fees 22,500
Other 31,269
------
Total expenses 7,035,024
Earnings credits on cash balances (Note 2) (16,433)
-------

Total net expenses 7,018,591
---------
Investment income (loss) -- net 55,752,766
----------

Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) 7,375,025
Financial futures contracts (977,400)
Foreign currency transactions (1,132,696)
Options contracts written (Note 6) 149,000
-------
Net realized gain (loss) on investments 5,413,929
Net change in unrealized appreciation (depreciation)
on investments and on translation
of assets and liabilities in foreign currencies (12,533,266)
-----------
Net gain (loss) on investments and foreign currencies (7,119,337)
----------
Net increase (decrease) in net assets resulting from operations $48,633,429
-----------

See accompanying notes to financial statements.

</TABLE>

Statements of changes in net assets

World Income Portfolio

Year ended For the period
Oct. 31, 1997 from May 13, 1996*
to Oct. 31, 1996

Operations
<S> <C> <C>
Investment income (loss)-- net $ 55,752,766 $ 22,643,163
Net realized gain (loss) on investments 5,413,929 3,494,043
Net change in unrealized appreciation
(depreciation) on investments and
on translation of assets and liabilities
in foreign currencies (12,533,266) 26,719,774
----------- ----------
Net increase (decrease) in net assets
resulting from operations 48,633,429 52,856,980
Net contributions (withdrawals) from partners 101,894,400 781,818,991
----------- -----------
Total increase (decrease) in net assets 150,527,829 834,675,971
Net assets at beginning of period (Note 1) 834,725,971 50,000
----------- ------
Net assets at end of period $985,253,800 $834,725,971
============ ============

*Commencement of operations.
See accompanying notes to financial statements.

</TABLE>

<PAGE>

Notes to financial statements

World Income Portfolio

1. Summary of significant accounting policies
World Income Portfolio (the Portfolio) is a series of World Trust (the Trust)
and is registered under the Investment Company Act of 1940 (as amended) as a
non-diversified, open-end management investment company. World Income Portfolio
invests primarily in debt securities of U.S. and foreign issuers. The
Declaration of Trust permits the Trustees to issue non-transferable interests in
the Portfolio. On April 15, 1996, American Express Financial Corporation (AEFA)
contributed $50,000 to the Portfolio. Operations did not formally commence until
May 13, 1996, at which time, an existing fund transferred its assets to the
Portfolio in return for an ownership percentage of the Portfolio.

Significant accounting polices followed by the Portfolio are summarized below:

Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price deemed best to reflect
fair value as quoted by dealers who make markets in these securities or by an
independent pricing service. Securities for which market quotations are not
readily available are valued at fair value according to methods selected in good
faith by the board. Short-term securities maturing in more than 60 days from the
valuation date are valued at the market price or approximate market value based
on current interest rates; those maturing in 60 days or less are valued at
amortized cost.

Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.

Illiquid securities
At Oct. 31, 1997, investment is securities included issues that are liquid. The
Portfolio currently limits investments in illiquid securities to 10% of the net
assets, at market value, at the time of purchase. The aggregate value of such
securities at Oct. 31, 1997 was $5,000,000 representing 0.5% of the net assets.
Pursuant to guidelines adopted by the board, certain unregistered securities are
determined to be liquid and are not included within the 10% limitation specified
above.

Under the agreement, the Trust also pays taxes and nonadvisory expenses, which
include custodian fees, audit and certain legal fees, fidelity bond premiums,
registration fees for units, office expenses, consultants' fees, compensation of
trustees, corporate filing fees, expenses incurred in connection with lending
securities of the Portfolio, and any other expenses properly payable by the
Trust or Portfolio and approved by the board.

During the year ended Oct. 31, 1997, the Portfolio's custodian fees were reduced
by $16,433 as a result of earnings credits from overnight cash balances.

Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.

3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $630,171,707 and $453,535,709 respectively, for the year
ended Oct. 31, 1997. For the same period, the portfolio turnover rate was 55%.
Realized gains and losses are determined on an identified cost basis.

4. Foreign currency contracts
At Oct. 31, 1997, the Portfolio had entered into foreign currency exchange
contracts that obligate the Portfolio to deliver currencies at specified future
dates. The unrealized appreciation and/or depreciation (see Summary of
significant accounting policies) on these contracts is included in the
accompanying financial statements.
The terms of the open contracts are as follows:

<PAGE>

Exchange date Currency to be Currency to be Unrealized Unrealized
delivered received appreciation depreciation

Nov. 3, 1997 1,218,222 858,359 $ 1,949 $ --
Australian Dollar U.S. Dollar
Nov. 3, 1997 10,022,295 17,421,096 98,063 --
U.S. Dollar Deutsche Mark
Nov. 28, 1997 3,800,000 2,630,702 -- 41,952
Australian Dollar U.S. Dollar
Oct. 19, 1998 3,000,000 11,655,000,000 -- 114,478
U.S. Dollar Indonesia Rupiah
-------- --------
$100,012 $156,430

5. Lending of portfolio securities

At Oct. 31, 1997, securities valued at $4,596,720 were on loan to brokers. For
collateral, the Portfolio received $4,854,480 in cash. Income from securities
lending amounted to $168,537 for the year ended Oct. 31, 1997. The risks to the
Portfolio of securities lending are that the borrower may not provide additional
collateral when required or return the securities when due.

6. Option contracts written
The number of contracts and premium amounts associated with option contracts
written is as follows:
Year ended Oct. 31, 1997
Puts Calls
Contracts Premium Contracts Premium
Balance Oct. 31, 1996 -- $ -- -- $ --
Opened 300 532,250 200 292,338
Closed (300) (532,250) (100) (154,188)
Expired -- -- (100) (138,150)
---- -------- ---- --------
Balance Oct. 31, 1997 -- $ -- -- $ --
---- -------- ---- --------

See Summary of significant accounting policies.

<PAGE>
<TABLE>
<CAPTION>
Investments in securities
World Income Portfolio
Oct. 31, 1997
(Percentages represent value of investments compared to net assets)

Bonds (95.6%)(b)
Issuer Coupon Maturity Principal Value(a)
rate year amount
Argentina (3.4%)
Perez Companc
<S> <C> <C> <C> <C>
(U.S. Dollar) 9.00 % 2004 $ 1,975,000(d) $ 1,935,500
Province of Mendoza
(U.S. Dollar) 10.00 2007 4,000,000(d) 3,810,000
Republic of Argentina
(Argentine Peso) 8.75 2002 8,500,000(d) 6,460,000
(Japanese Yen) 5.50 2001 880,000,000 7,816,160
(U.S. Dollar) 6.69 2005 10,560,000(c) 9,081,600
(U.S. Dollar) 11.375 2017 4,300,000 4,171,000
Total 33,274,260

Austria (0.9%)
Autobahn Schnell
(Japanese Yen) 6.00 2000 397,000,000 3,711,398
Republic of Austria
(Japanese Yen) 5.25 1998 540,000,000 4,556,898
Total 8,268,296

Brazil (0.7%)
CIA Paranaense de Energia Copel 9.75 2005 5,000,000(d) 5,000,000
(U.S. Dollar)
Espirito Santo Centrais
(U.S. Dollar) 10.00 2007 1,850,000(d) 1,757,500
Total 6,757,500

Canada (4.8%)
Govt of Canada
(Canadian Dollar) 8.00 2023 50,810,000 45,388,295
Rogers Cable System
(Canadian Dollar) 9.65 2014 2,000,000 1,543,412
Total 46,931,707

China (2.8%)
Bank of China
(U.S. Dollar) 8.25 2014 5,000,000 5,039,400
Greater Beijing First
(U.S. Dollar) 9.25 2004 3,500,000(d) 3,353,945
(U.S. Dollar) 9.50 2007 5,000,000(d) 4,770,450
People's Republic of China
(U.S. Dollar) 7.375 2001 4,450,000 4,513,969
Zhuhai Highway
(U.S. Dollar) 11.50 2008 9,550,000(d) 10,242,375
Total 27,920,139

Denmark (4.9%)
Kingdom of Denmark
(Danish Krone) 7.00 2024 70,000,000 11,095,623
(Danish Krone) 8.00 2003-06 178,200,000 30,333,768
(Danish Krone) 9.00 2000 40,000,000 6,741,922
Total 48,171,313

Ecuador (0.5%)
Republic of Ecuador
(U.S. Dollar) 10.81 2004 5,000,000(c,d) 5,150,000

France (1.1%)
Govt of France
(European Currency Unit) 7.50 2005 8,710,000 11,081,872

Germany (6.1%)
Bundes Republic Deutschland
(Deutsche Mark) 6.00 2016 34,650,000 20,020,982
(Deutsche Mark) 6.50 2027 16,400,000 9,848,748
(Deutsche Mark) 7.50 2004 31,870,000 20,715,130
(Deutsche Mark) 8.00 2002 15,265,000 9,925,613
Total 60,510,473

Hong Kong (0.5%)
Dao Heng Bank
(U.S. Dollar) 7.75 2007 5,000,000(d) 4,670,850

Indonesia (1.3%)
Polysindo Intl Finance
(U.S. Dollar) 11.375 2006 2,300,000 2,380,500
Pt Indah Kiat
(U.S. Dollar) 8.875 2000 2,500,000 2,381,250
(U.S. Dollar) 10.00 2007 4,350,000(d) 3,882,375
Tjiwi Kimia
(U.S. Dollar) 10.00 2004 2,450,000(d) 2,211,125
(U.S. Dollar) 13.25 2001 2,000,000 2,105,000
Total 12,960,250

Italy (4.7%)
Govt of Italy
(Italian Lira) 7.25 2026 15,270,000,000 9,660,566
(Italian Lira) 8.50 2004 46,125,000,000 30,628,384
Republic of Italy
(U.S. Dollar) 6.875 2023 6,000,000 6,097,980
Total 46,386,930

Japan (0.4%)
Matsushita Electric
(Japanese Yen) Cv 1.30 1999 325,000,000 2,776,712
Nippon Express
(Japanese Yen) Cv 1.00 2004 120,000,000 962,356
Total 3,739,068

Mexico (4.2%)
Banco Nacional Comercio Exterior
(U.S. Dollar) 7.25 2004 8,000,000 7,120,000
Grupo Televisa
(U.S. Dollar) 11.375 2003 2,500,000 2,656,250
Imexsa Export Trust
(U.S. Dollar) 10.125 2003 3,000,000(d) 3,030,000
United Mexican States
(Japanese Yen) 5.00 1998 580,000,000 4,956,680
(U.S. Dollar) 11.375 2016 5,000,000 5,337,500
(U.S. Dollar) 11.50 2026 16,951,000(f) 18,137,570
Total 41,238,000

Netherlands (0.1%)
Deutsche Bank Finance
(U.S. Dollar) Zero Coupon 4.50 2017 3,410,000(d,e) 1,406,625

Philippines (0.5%)
Philippine Long Distance
(U.S. Dollar) 7.85 2007 1,500,000(d) 1,299,435
(U.S. Dollar) 8.35 2017 4,700,000(d) 3,829,748
Total 5,129,183

Russia (2.0%)
ALFA Bank
(U.S. Dollar) 10.375 2000 3,000,000 2,925,000
(U.S. Dollar) 11.22 1997 3,000,000(c) 2,970,000
Ministry Finance
(U.S. Dollar) 9.25 2001 5,000,000(d) 4,725,000
Rostelecom (AO)
(U.S. Dollar) 9.56 2000 5,000,000(i) 5,000,000
Tatneft Finance
(U.S. Dollar) 9.00 2002 4,000,000(d) 3,930,000
Total 19,550,000

South Africa (1.4%)
Escom
(South African Rand) 8.00 2001 81,000,000 13,640,367

Spain (3.5%)
Govt of Spain
(Spanish Peseta) 8.80 2006 2,902,000,000 23,657,888
(Spanish Peseta) 9.40 1999 1,500,000,000 10,885,590
Total 34,543,478

Supranational (1.9%)
Asian Development Bank
(Japanese Yen) 5.00 2003 213,000,000 2,097,573
InterAmerica Development Bank
(Japanese Yen) 6.00 2001 59,000,000 584,699
Intl Bank Reconstruction & Development
(Japanese Yen) 4.50 1997 1,940,000,000 16,229,865

Total 18,912,137

Sweden (4.2%)
Govt of Sweden
(Swedish Krona) 6.00 2005 44,500,000 5,855,544
(Swedish Krona) 8.00 2007 160,200,000 23,839,722
Kingdom of Sweden
(Japanese Yen) 3.875 1999 600,000,000 5,259,762
Peab Paulsson Enterprise AB
(Swedish Krona) 7.00 2000 56,560,000 6,812,086
Total 41,767,114

Taiwan (0.2%)
Taiwan Semiconductor
(U.S. Dollar) Cv Zero Coupon 0.00 2002 1,360,000(d,e) 1,448,400

United Kingdom (9.9%)
Abbey Natl
(U.S. Dollar) 8.20 2004 5,000,000 5,497,650
United Kingdom Treasury
(British Pound) 8.00 2003 26,700,000 47,557,603
(British Pound) 8.50 2005 9,200,000 17,225,759
(British Pound) 9.00 2000 15,700,000 27,470,945
Total 97,751,957

United States (33.5%)
Chesapeake
(U.S. Dollar) 9.875 2003 1,000,000 1,148,210
Cleveland Electric Illuminating
(U.S. Dollar) 9.50 2005 3,000,000 3,342,060
Dayton Hudson
(U.S. Dollar) 8.50 2022 3,265,000 3,526,037
Executive Risk Capital Trust
(U.S. Dollar) 8.675 2027 3,500,000 3,798,445
Federal Natl Mtge Assn
(U.S. Dollar) 7.50 2027 14,577,618 14,905,210
(U.S. Dollar) 8.00 2027 14,732,187 15,270,943
Federal Natl Mtge Assn Global
(Japanese Yen) 2.00 1999 500,000,000 4,276,545
(Australian Dollar) 6.50 2002 22,715,000 16,537,529
General Motors
(U.S. Dollar) 9.125 2001 2,000,000 2,195,720
Global Telesystems Group
(U.S. Dollar) Cv 8.75 2000 3,000,000(d) 3,000,000
Govt Natl Mtge Assn
(U.S. Dollar) 8.00 2026 9,677,054 10,063,556
Nationwide Trust
(U.S. Dollar) Credit
Sensitive Nts 9.875 2025 7,000,000(d) 8,156,400
New Jersey Economic Development
Authority Pension Funding
Revenue Bond
Series 1997A MBIA Insured 7.425 2029 5,100,000(j) 5,517,129
New York Life Insurance
(U.S. Dollar) Credit
Sensitive Nts 7.50 2023 7,000,000(d) 7,128,520
Northwest Airlines
(U.S. Dollar) 8.97 2015 1,964,615 2,136,244
Overseas Private Investment
(U.S. Dollar) 6.99 2009 7,500,000 7,743,750
Pacific Bell
(U.S. Dollar) 8.50 2031 5,000,000 5,431,800
PDV America
(U.S. Dollar) 7.875 2003 3,500,000 3,625,265
Phillips Petroleum
(U.S. Dollar) 7.92 2023 3,115,000 3,240,628
Questar Pipeline
(U.S. Dollar) 9.375 2021 1,000,000 1,114,080
Salomon
(U.S. Dollar) 6.25 1999 10,400,000 10,432,448
Southern California Gas
(U.S. Dollar) 7.375 2023 900,000 925,542
Swiss Bank
(U.S. Dollar) 7.50 2025 4,700,000 4,995,818
Texas Utilities
(U.S. Dollar) 1st Mtge 9.75 2021 3,500,000 4,045,055
TU Electric Capital
(U.S. Dollar) 8.175 2037 6,150,000 6,454,917
U.S. Treasury
(U.S. Dollar) 4.75 1998 8,535,000 8,480,547
(U.S. Dollar) 5.875 2000 10,000,000 10,038,000
(U.S. Dollar) 6.00 2000 8,000,000 8,068,320
(U.S. Dollar) 7.50 2001 72,250,000 76,688,318
(U.S. Dollar) 7.50 2016 49,800,000 56,912,934
(U.S. Dollar)TIPS 3.375 2007 10,148,600(h) 10,012,203
U S WEST Communications
(U.S. Dollar) 7.20 2026 6,000,000 5,935,080
Zurich Capital Trust I
(U.S. Dollar) 8.38 2037 4,550,000(d) 5,002,179
Total 330,149,432

Venezuela (2.1%)
Govt of Venezuela
(Swiss Franc) 6.75 2007 23,750,000(c) 20,484,375
Total bonds
(Cost: $927,342,176) $941,843,726

Other (0.5%)(b)
Issuer Shares Value(a)

Mexico Value
Rights 1,000 (g) $--
Pinto Totta
Pfd 50,000 (c,d) 4,718,750
Total other
(Cost: $5,000,000) $4,718,750

Short-term securities (2.6%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agency (0.6%)
Federal Home Loan Mtge
Corp Disc Nts
11-13-97 5.44% $ 200,000 $ 199,640
12-05-97 5.50 5,700,000 5,670,499
Total 5,870,139

Commercial paper (2.0.%)
BHP Finance
11-03-97 5.52 4,400,000 4,398,655
Dailmer-Benz
12-02-97 5.56 9,300,000 9,255,634
Gateway Fuel
11-19-97 5.54 1,600,000 1,595,584
UBS Finance (Delaware)
11-03-97 5.67 4,600,000 4,598,551
11-05-97 5.52 100,000 99,939
Total 19,948,363

Total short-term securities
(Cost: $25,818,502) $ 25,818,502

Total investments in securities
(Cost: $958,160,678)(k) $972,380,978
</TABLE>
<PAGE>
Notes to investments in securities

(a) Securities are valued by procedures described in Note 1 to the financial
statements.

(b) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.

(c) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Oct. 31, 1997.

(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.

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

(f) Security is partially or fully on loan. See Note 5 to the financial
statements.

(g) Presently negligible market value.

(h) U.S. Treasury inflation-protection securities (TIPS) are securities in which
the principal amount is adjusted for inflation and the semi-annual interest
payments equal a fixed percentage of the inflation-adjusted principal amount.

(i) Identifies issued considered to be illiquid as to their marketability (see
Note 1 to the financial statements.) Information concerning such security
holdings at Oct. 31, 1997, is as follows:

Security Acquisition date Cost

Rosetelecom (AO)
9.56% 2000 04-28-97 $5,000,000

(j) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue: MBIA--American Municipal Bond Association Corporation

(k) At Oct. 31, 1997, the cost of securities for federal income tax purposes was
$958,661,888 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:

Unrealized appreciation $ 33,905,844
Unrealized depreciation (20,186,754)
-----------
Net unrealized appreciation $ 13,719,090
============

<PAGE>
Independent auditors' report

The board and shareholder
Strategist World Fund, Inc.:

We have audited the accompanying statement of assets and liabilities of
Strategist World Technologies Fund (a series of Strategist World Fund, Inc.) as
of October 31, 1997, and the related statement of operations, statement of
changes in net assets and the financial highlights for the period from November
13, 1996 (commencement of operations) to October 31, 1997. These financial
statements and the financial highlights are the responsibility of fund
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the financial highlights
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Strategist World Technologies
Fund at October 31, 1997, and the results of its operations, changes in its net
assets and the financial highlights for the period stated in the first paragraph
above, in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 5, 1997
<PAGE>
Financial statements

Statement of assets and liabilities
Strategist World Technologies Fund
Oct. 31, 1997

Assets

Investment in World Technologies Portfolio (Note 1) 529,387
Expense receivable from AEFC 17
Organizational cost (Note 1) 41
------------

Total assets 529,445
------------

Liabilities

Distribution fees 4
Other accrued expenses 2,357
------------

Total liabilities 2,361
------------

Net assets applicable to outstanding capital stock $ 527,084
============

Represented by

Capital stock-- of $.01 par value (Note 1) $ 1,000
Additional paid-in capital 492,472
Accumulated net realized gain (loss) (34,357)
Unrealized appreciation (depreciation) on investments 67,969
------------

Total-- representing net assets applicable to
outstanding capital stock $ 527,084
============

Shares outstanding 100,000

Net asset value per share of outstanding capital stock $ 5.27

See accompanying notes to financial statements.

<PAGE>
Financial statements

Statement of operations
Strategist World Technologies Fund
For the period from Nov. 13, 1996
(commencement of operations) to Oct. 31, 1997

Investment income

Income:
Dividends $ 86
Interest 375
------------
Total income 461
------------
Expenses (Note 2):
Expenses allocated from World Technologies Portfolio 5,838
Distribution fee 1,174
Transfer agency fee 18
Administrative services fees and expenses 282
Postage 194
Registration fees 244
Reports to shareholders 106
Audit fees 3,200
------------
Total expenses 11,056
Less expenses voluntarily reimbursed by AEFC (Note 2) (4,067)
------------
Total net expenses 6,989
------------
Investment income (loss) -- net (6,528)
------------

Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (34,357)
Net change in unrealized appreciation (depreciation) on
investments 67,969
------------
Net gain (loss) on investments 33,612
------------
Net increase (decrease) in net assets resulting
from operations $ 27,084
============
See accompanying notes to financial statements.
<PAGE>
Financial statements

Statement of changes in net assets
Strategist World Technologies Fund
For the period from Nov. 13, 1996
(commencement of operations) to Oct. 31, 1997

Operations

Investment income (loss)-- net $ (6,528)
Net realized gain (loss) on security transactions (34,357)
Net change in unrealized appreciation (depreciation)
on investments 67,969
------------
Net increase (decrease) in net assets resulting
from operations 27,084
Net assets at beginning of period (Note 1) 500,000
------------
Net assets at end of period $ 527,084
============
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
Strategist World Technologies Fund

1. Summary of significant accounting policies

Strategist World Technologies Fund is a series of capital stock within
Strategist World Fund, Inc. and is registered under the Investment Company Act
of 1940 (as amended) as a diversified, open-end management investment company.
The Fund has 3 billion authorized shares of capital stock. On Nov. 12, 1996,
American Express Financial Corporation (AEFC) invested $500,000, which
represented 100,000 shares for Strategist World Technologies Fund. Operations
did not formally commence until Nov. 13, 1996.

Investments in World Technologies Portfolio

The Fund invests all of its assets in World Technologies Portfolio (the
Portfolio), a series of World Trust, an open-end investment company that has the
same objectives as the Fund. World Technologies Portfolio invests in technology
common stocks.

The Fund records daily its share of the corresponding Portfolio's income,
expenses and realized and unrealized gains and losses. The financial statements
of the Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. The Fund records its
investment in the Portfolio at value that is equal to the Fund's proportionate
ownership interest in the net assets of the Portfolio. As of Oct. 31, 1997, the
percentage of the Portfolio owned by World Technologies Fund was 12.48%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's "Notes to financial statements," which are included elsewhere in
this report.

Organizational costs

The Fund incurred organizational expenses in connection with the start-up and
initial registration of the Fund. These costs will be amortized over 60 months
on a straight-line basis beginning with the commencement of operations. If any
or all of the shares held by AEFC representing initial capital of the Fund are
redeemed during the amortization period, the redemption proceeds will be reduced
by the pro rata portion of the unamortized organizational cost balance.

Use of estimates

Federal taxes

Since the Fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to the shareholders, no provision for income or excise taxes is
required.

Net investment income (loss) and net realized gains (losses) allocated from the
Portfolio may differ for financial statement and tax purposes primarily because
of the deferral of losses on certain futures contracts, the recognition of
certain foreign currency gains (losses) as ordinary income (loss) for tax
purposes, and losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Fund.

On the statement of assets and liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by $6,528
resulting in a reclassification adjustment to decrease paid-in capital by
$6,528.

Dividends to shareholders

An annual dividend declared and paid at the end of the calendar year from net
investment income, when available, is reinvested in additional shares of the
Fund at the net asset value or payable in cash. Capital gains, when available,
are distributed along with the income dividend.

Other

At Oct. 31, 1997, AEFC owned 100,000 shares of World Technologies Fund.

2. Expenses and sales charges

In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:

The Fund entered into agreements with AEFC for providing administrative services
and transfer agent services. Under its Administrative Services Agreement, the
Fund pays AEFC a fee for administration and accounting services at a percentage
of the Fund's average daily net assets in reducing percentages from 0.06% to
0.035% annually. Under this agreement, the Fund also pays taxes, audit and
certain legal fees, registration fees for shares, office expenses, consultants'
fees, compensation of board members, corporate filing fees, organizational
expenses, and any other expenses properly payable by the Fund and approved by
the board.

Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts
and records. The Fund pays a fee per shareholder account of $20.

Under a Plan and Agreement of Distribution, the Fund pays American Express
Service Corporation (the Distributor) a distribution fee at an annual rate of
0.25% of the Fund's average daily net assets for distribution related services.

AEFC and the Distributor have agreed to waive certain fees and to absorb certain
other of Fund expenses until Dec. 31, 1998. Under this agreement, the Fund's
total expenses will not exceed 1.50% of the Fund's average daily net assets.

3. Capital loss carryover

For federal income tax purposes, the Fund had a capital loss carryover at
Oct. 31, 1997 of $34,357 that, if not offset by subsequent capital gains, will
expire in 2005. It is unlikely the board will authorize a distribution of any
net realized gain for a Fund until its capital loss carryover has been offset or
expires.

Strategist World Technologies Fund

4. Financial highlights

The table below shows certain important financial information for evaluating the
Fund's results.

Period ended Oct. 31,
Per share income and capital changesa

1997(b)

Net asset value, $5.00
beginning of period

Income from investment operations:

Net investment income (loss) (.07)

Net gains (losses) (both realized .34
and unrealized)

Total from investment operations .27

Net asset value, $5.27
end of period

Ratios/supplemental data:
1997(b)

Net assets, end of period $527
(in thousands)

Ratio of expenses to 1.50%(c,d)
average daily net assets

Ratio of net income (loss) (1.39%)(c)
to average daily net assets

Portfolio turnover rate 164%
(excluding short-term securities)
for the underlying Portfolio

Total return 5.4%

Average brokerage commission $.0488
rate for the underlying Portfolio(e)

<PAGE>
The board of trustees and unitholders World Trust:

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of World Technologies Portfolio (a
series of World Trust) as of October 31, 1997, and the related statements of
operations and changes in net assets for the period from November 13, 1996
(commencement of operations) to October 31, 1997. These financial statements are
the responsibility of portfolio management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Investment securities
held in custody are confirmed to us by the custodian. As to securities purchased
and sold but not received or delivered, we request confirmations from brokers,
and where replies are not received, we carry out other appropriate auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of World Technologies Portfolio at
October 31, 1997, and the results of its operations and the changes in its net
assets for the period stated in the first paragraph above, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 5, 1997
<PAGE>
Financial statements

Statement of assets and liabilities
World Technologies Portfolio
Oct. 31, 1997

Assets

Investments in securities, at value (Note 1)
(identified cost $3,707,464) $ 4,247,538
Cash in bank on demand deposit 76,879
Dividends and accrued interest receivable 18
Receivable for investment securities sold 216,393
-------
Total assets 4,540,828
---------
Liabilities

Payable for investment securities purchased 290,593
Accrued investment management services fee 85
Other accrued expenses 8,047
-----
Total liabilities 298,725
-------
Net assets $ 4,242,103
=============
See accompanying notes to financial statements.
<PAGE>
Financial statements

Statement of operations
World Technologies Portfolio
For the period from Nov. 13, 1996
(commencement of operations) to Oct. 31, 1997

Investment income
Income:
Dividends $ 690
Interest 2,997
-----
Total income 3,687
-----
Expenses (Note 2):
Investment management services fee 27,140
Custodian fees 9,265
Audit fees 11,250
Other 847
---
Total expenses 48,502
Earnings credits on cash balances (Note 2) (1,740)
------
Total net expenses 46,762
------
Investment income (loss) -- net (43,075)
-------
Realized and unrealized gain (loss) -- net

Net realized gain (loss) on security transactions (Note 3) (279,246)
Net change in unrealized appreciation (depreciation) on investments 540,074
-------
Net gain (loss) on investments 260,828
-------
Net increase (decrease) in net assets resulting from operations $ 217,753
=========
See accompanying notes to financial statements.
<PAGE>
Financial statements

Statement of changes in net assets
World Technologies Portfolio
For the period from Nov. 13, 1996
(commencement of operations) to Oct. 31, 1997

Operations

Investment income (loss)-- net $ (43,075)
Net realized gain (loss) on security transactions (279,246)
Net change in unrealized appreciation (depreciation) on investments 540,074
-------
Net increase (decrease) in net assets resulting from operations 217,753

Net contributions (withdrawals) from partners 24,350
------
Total increase in net assets 242,103
Net assets at beginning of period (Note 1) 4,000,000
---------

Net assets at end of period $4,242,103
==========
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
World Technologies Portfolio

1. Summary of significant accounting policies

World Technologies Portfolio (the Portfolio) is a series of World Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. World Technologies
Portfolio invests in common stocks of companies within the information
technology sector. The Declaration of Trust permits the Trustees to issue
non-transferable interests in the Portfolio. On Nov. 12, 1996, two funds
affiliated with American Express Financial Corporation (AEFC) invested
$4,000,000 in the Portfolio. Operations commenced on Nov. 13, 1996.

Significant accounting polices followed by the Portfolio are summarized below:

Use of estimates

Valuation of securities

Option transactions

Futures transactions

Foreign currency translations
and foreign currency contracts

Federal taxes

Other

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

2. Fees and expenses

Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio, and any other
expenses properly payable by the Trust or Portfolio and approved by the board.

During the period ended Oct. 31, 1997, the Portfolio's custodian fees were
reduced by $1,740 as a result of earnings credits from overnight cash balances.

Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.

3. Securities transactions

Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $10,286,184 and $6,299,474, respectively, for the period
ended Oct. 31, 1997. For the same period, the portfolio turnover rate was 164%.
Realized gains and losses are determined on an identified cost basis.
<PAGE>

Investments in securities

World Technologies Portfolio (Percentages represent value of
Oct. 31, 1997 investments compared to net assets)

Common stocks (100.1%)

Issuer Shares Value (a)

Communications equipment & services (7.3%)
ADC Telecommunications 1,500 (b) $ 49,688
CIENA 1,000 (b) 55,000
Davel Communications Group 1,000 (b) 25,625
EchoStar Communications Cl A 2,000 (b) 38,000
MasTec 1,000 (b) 32,437
Powerwave Technologies 3,500 (b) 108,063
Total 308,813

Computers & office equipment (58.0%)
Arbor Software 1,000 (b) 36,563
AXENT Technologies 2,500 (b) 58,437
BEA Systems 5,000 (b) 67,500
BMC Software 600 (b) 36,225
Compaq Computer 1,000 (b) 63,750
Computer Associates Intl 1,000 74,563
CSG Systems Intl 1,000 (b) 39,188
DAOU Systems 3,000 (b) 79,125
E*TRADE Group 1,500 (b) 46,312
Envoy 1,600 (b) 44,800
Excite 2,000 (b) 49,875
Gateway 2000 1,500 (b) 43,031
GeoTel Communications 3,000 (b) 51,375
HBO & Co 5,800 252,300
Infinity Financial Technology 5,500 (b) 84,562
Ingram Micro Cl A 1,800 (b) 53,663
McAfee Associates 1,400 (b) 69,650
Metro Information Services 2,000 (b) 49,750
Metzler Group 1,800 (b) 69,525
Microsoft 300 (b) 39,000
Network General 3,000 (b) 60,750
Oracle 3,000 (b) 107,344
Parametric Technology 1,400 (b) 61,775
PeopleSoft 1,900 (b) 119,462
Peritus Software Services 4,000 (b) 74,000
Pervasive Software 8,000 (b) 60,000
PMT Services 3,000 (b) 48,375
ProSoft Development 4,000 (b) 50,500
Security Dynamics Technologies 2,000 (b) 67,750
STB Systems 1,300 (b) 38,188
Sterling Commerce 4,200 (b) 139,387
Sterling Software 2,400 (b) 81,900
Symix 4,000 (b) 66,500
Technology Modeling Associates 3,000 (b) 42,000
UOL Publishing 2,300 (b) 49,450
Viasoft 1,000 (b) 41,000
Visio 1,100 (b) 40,906
Total 2,458,481

Electronics (9.3%)
Applied Materials 2,400 (b) 80,100
Intel 600 46,200
KLA-Tencor 1,000 (b) 43,938
Maxim Intergrated Products 1,750 (b) 115,937
Uniphase 1,000 (b) 67,125
Unitrode 1,600 (b) 42,900
Total 396,200

Energy equipment & services (1.4%)
Veritas DGC 1,500 (b) 61,406

Health care (4.7%)
Boston Scientific 1,000 (b) 45,500
St. Jude Medical 1,300 (b) 39,406
Synaptic Pharmaceutical 4,000 (b) 50,500
Watson Pharmaceuticals 2,000 (b) 63,500
Total 198,906

Health care services (0.9%)
Advanced Health 2,200 (b) 38,775

Media (4.4%)
May & Speh 4,400 (b) 55,550
Universal Outdoor Holdings 1,500 (b) 63,375
Univision Communications Cl A 1,100 (b) 68,200
Total 187,125

Multi-industry conglomerates (2.4%)
Abacus Direct 1,500 (b) 55,125
Strayer Education 1,000 47,750
Total 102,875

Utilities -- telephone (1.1%)
NEXTLINK Communications Cl A 2,000 (b) 45,250

Foreign (10.6%)(c)
ASM Lithography Holding 1,200 (b) 87,900
BioChem Pharma 1,400 (b) 35,088
Cognos 4,000 (b) 91,500
Companie Generale de Geophysique ADR 3,400 (b) 95,200
Discreet Logic 2,300 (b) 44,994
Petroleum Geo-Services ADR 800 (b) 55,400
Taiwan Semiconductor Mfg ADR 2,000 (b) 39,625
Total 449,707

Total investment in securities
(Cost: $3,707,464)(d) $ 4,247,538

Notes to investments in securities

(a) Securities are valued by procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) At Oct. 31, 1997, the cost of securities for federal income tax purposes was
$3,707,464 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:

Unrealized appreciation $ 708,371
Unrealized depreciation (168,297)
- --------------------------------------------------------------
Net unrealized appreciation $ 540,074
- --------------------------------------------------------------

<PAGE>
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 auditors' report dated Dec. 5, 1997
Statement of assets and liabilities, Oct. 31, 1997
Statement of operations, year ended Oct. 31, 1997
Statement of changes in net assets, for the year ended Oct. 31. 1997
and for the period from Nov. 13, 1996 (commencement of operations) to
April 30, 1997
Notes to financial statements

Emerging Markets Portfolio:

Independent auditors' report dated Dec. 5, 1997
Statement of assets and liabilities, Oct. 31, 1997
Statement of operations, for the period from Nov. 13, 1996
(commencement of operations) to Oct. 31, 1997
Statement of changes in net assets, for the period from Nov. 13, 1996
(commencement of operations) to Oct. 31, 1997
Notes to financial statements
Investments in securities, Oct. 31, 1997
Notes to investments in securities

World Growth Portfolio:

Independent auditors' report dated Dec. 5, 1997
Statement of assets and liabilities, Oct. 31, 1997
Statement of operations, year ended Oct. 31, 1997
Statement of changes in net assets, for the year ended Oct. 31, 1997
and for the period from May 13, 1996 to Oct. 31, 1996
Notes to financial statements
Investments in securities, Oct. 31, 1997
Notes to investments in securities

World Income Portfolio:

Independent auditors' report dated Dec. 5, 1997
Statement of assets and liabilities, Oct. 31, 1997
Statement of operations, year ended Oct. 31, 1997
Statement of changes in net assets, for the year ended Oct. 31, 1997
and for the period from May 13, 1996 to Oct. 31, 1996
Notes to financial statements
Investments in securities, Oct. 31, 1997
Notes to investments in securities
<PAGE>
World Technologies Portfolio:

Independent auditors' report dated Dec. 5, 1997
Statement of assets and liabilities, Oct. 31, 1997
Statement of operations, for the period from Nov. 13, 1996 to Oct. 31,
1997
Statement of changes in net assets, for the period from Nov. 13, 1996
to Oct. 31, 1997
Notes to financial statements
Investments in securities, Oct. 31, 1997
Notes to investments in securities

(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.

(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. Copy of By-laws dated April 24, 1996, filed electronically as Exhibit 2 to
Registrants' Post-Effective Amendment No. 4 to Registration Statement No.
33-63951, is 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 an
American Express Service Corporation, dated May 13, 1996, filed electronically
as Exhibit 6(a) to Registrant's Post-Effective Amendment No. 3 to Registration
Statement No. 33-63951, is incorporated herein by reference.

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, 1996, filed
electronically as Exhibit 6(b) to Registrant's Post-Effective Amendment No. 3 to
Registration Statement No. 33-63951, is incorporated herein by reference.
<PAGE>
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, filed electronically as Exhibit 8(a)
to Registrant's Post-Effective Amendment No. 3 to Registration Statement No.
33-63951, is incorporated herein by reference.

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, 1996, filed electronically as
Exhibit 8(b) to Registrant's Post-Effective Amendment No. 3 to Registration
Statement No. 33-63951, is incorporated herein by reference.

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, filed electronically as Exhibit 8(c) to Registrant's
Post-Effective Amendment No. 3 to Registration Statement No. 33-63951, is
incorporated herein by reference.

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, 1996, filed electronically as Exhibit 8(d) to
Registrant's Post-Effective Amendment No. 3 to Registration Statement No.
33-63951, is incorporated herein by reference.

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, filed electronically
as Exhibit 9(a) to Registrant's Post-Effective Amendment No. 3 to Registration
Statement No. 33-63951, is incorporated herein by reference.

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, filed
electronically as Exhibit 9(b) to Registrant's Post-Effective Amendment No. 3 to
Registration Statement No. 33-63951, is incorporated herein by reference.

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, filed
electronically as Exhibit 9(c) to Registrant's Post-Effective Amendment No. 3 to
Registration Statement No. 33-63951, is incorporated herein by reference.

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,
1996, filed electronically as Exhibit 9(d) to Registrant's Post-Effective
Amendment No. 3 to Registration Statement No. 33-63951, is incorporated herein
by reference.
<PAGE>
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, filed electronically
as Exhibit 9(e) to Registrant's Post-Effective Amendment No. 3 to Registration
Statement No. 33-63951, is incorporated herein by reference.

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, filed electronically
as Exhibit 9(f) to Registrant's Post-Effective Amendment No. 3 to Registration
Statement No. 33-63951, is incorporated herein by reference.

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, filed
electronically as Exhibit 9(g) to Registrant's Post-Effective Amendment No. 3 to
Registration Statement No. 33 63951, is incorporated herein by reference.

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, filed electronically
as Exhibit 9(h) to Registrant's Post-Effective Amendment No. 3 to Registration
Statement No. 33-63951, is incorporated herein by reference.

10. Opinion and consent of counsel as to the legality of the securities being
registered, is filed electronically herewith.

11. Independent auditors' consent, is filed electronically herewith.

12. Not Applicable.

13(a) Copy of Share Purchase Agreement between Strategist World, Inc. and
American Express Financial Corporation dated April 16, 1996, filed
electronically as Exhibit 13(a) to Registrant's Post-Effective Amendment No.4
to Registration Statement No. 33-63951, is incorporated herein by reference.

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, filed
electronically as Exhibit 15(a) to Registrant's Post-Effective Amendment No. 3
to Registration Statement No. 33-63951, is incorporated herein by reference.

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, filed electronically as Exhibit 15(b) to Registrant's Post-Effective
Amendment No. 3 to Registration Statement No. 33-63951, is incorporated herein
by reference.

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.
<PAGE>
17. Financial data schedule, is filed electronically herewith.

18. Not Applicable.

19(a) Directors' Power of Attorney to sign Amendments to this Registration
Statement, dated April 24, 1996, filed electronically 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, 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 January 8, 1997, filed electronically as Exhibit 19(c) to
Registrants' Post-Effective Amendment No. 4 is incorporated herein by reference.

19(d) Officers' Power of Attorney to sign Amendments to this Registration
Statement, dated April 11, 1996, filed electronically as Exhibit 19(b) to
Registrant's Pre-Effective Amendment No.2, is incorporated herein by reference.

19(e) Officers' Power of Attorney to sign Amendments to this Registration
Statement, dated November 21, 1997, is filed electronically herewith.

19(f) Directors' Power of Attorney to sign Amendments to this Registration
Statement, dated November 21, 1997, is filed electronically herewith.

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 Dec. 19, 1997

Common Stock
$.01 par value

Strategist Emerging Markets Fund 32
Strategist World Growth Fund 21
Strategist World Income Fund 10
Strategist World Technologies Fund 1

Item 27. Indemnification

The Articles of Incorporation of the Registrant provide that the Fund shall
indemnify any person who was or is a party or is threatened to be made a party,
by reason of the fact that she or he is or was a director, officer, employee or
agent of the Fund, or is or was serving at the request of the Fund as a
director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may purchase
liability insurance and advance legal expense, all to the fullest extent
permitted by the laws of the State of Minnesota, as now existing or hereafter
amended. The By-laws of the Registrant provide that present or former directors
or officers of the Fund made or threatened to be made a party to or involved
(including as a witness) in an actual or
<PAGE>
threatened action, suit or proceeding shall be indemnified by the Fund to the
full extent authorized by the Minnesota Business Corporation Act, all as more
fully set forth in the By-laws filed as an exhibit to this registration
statement.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

Any indemnification hereunder shall not be exclusive of any other rights of
indemnification to which the directors, officers, employees or agents might
otherwise be entitled. No indemnification shall be made in violation of the
Investment Company Act of 1940.
<PAGE>

<PAGE>
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) Registrant hereby undertakes to file a Post-Effective
Amendment, using financial statements which need not be
certified, within four to six months from the effective date
of the post-effective amendment to Registrant's 1933 Act
Registration Statement or within 60 days of the four to six
month period in compliance with the generic comment letter of
the Division of Investment Management dated Feb. 25, 1995,
section V - Financial Statements, or commencement of
operations by the Fund, whichever is later.

(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without
charge.

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, 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 24th day of December, 1997.

STRATEGIST WORLD FUND, INC.

By /s/ James A. Mitchell*
James A. Mitchell, President

By /s/ Matthew N. Karstetter
Matthew N. Karstetter, 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 24th day of December, 1997.

Signature Title

By /s/ Rodney P. Burwell** Director
Rodney P. Burwell

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, file
electronically as Exhibit 19(a) to Registrant's Post-Effective Amendment
No. 1, by:

Eileen J. Newhouse
<PAGE>
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 24th day
of December, 1997.

WORLD TRUST

By /s/ William R. Pearce**
William R. Pearce, President

By /s/ Matthew N. Karstetter
Matthew N. Karstetter, 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 24th day of December, 1997.

Signature Capacity

/s/ William R. Pearce* Trustee
William R. Pearce

/s/ H. Brewster Atwater, Jr. Trustee
H. Brewster Atwater, Jr.

/s/ Lynne V. Cheney* Trustee
Lynne V. Cheney

/s/ William H. Dudley* Trustee
William H. Dudley

/s/ David R. Hubers* Trustee
David R. Hubers

/s/ Heinz F. Hutter Trustee
Heinz F. Hutter

/s/ Anne P. Jones Trustee
Anne P. Jones

/s/ Alan K. Simpson* Trustee
Alan K. Simpson

/s/ Edson W. Trustee
Edson W. Spencer

/s/ John R. Thomas Trustee
John R. Thomas

Signatures Capacity

/s/ Wheelock Whitney Trustee
Wheelock Whitney

/s/ C. Angus Wurtele* Trustee
C. Angus Wurtele

* Signed pursuant to Trustees Power of Attorney dated January 8, 1997, filed as
Exhibit 19(a) to Registrant's Post-Effective Amendment No. 4, by:

- -----------------------------------
Leslie L. Ogg

** Signed pursuant to Officers' Power of Attorney dated April 11, 1996, file
as Exhibit 19(b) to Registrant's Pre-Effective Amendment No. 2, by:

- ----------------------------------
Leslie L. Ogg
<PAGE>
CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 5
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>
STATEGIST WORLD FUND, INC.
FILE NO.33-63951/811-7405

EXHIBIT INDEX

Exhibit 10: Opinion and consent of counsel

Exhibit 11: Independent auditors consent

Exhibit 17: Financial Data Schedules

Exhibit 19(e): Officers' Power of Attorney

Exhibit 19(f): Directors' Power of Attorney

<PAGE>
December 24, 1997

Strategist World Fund, Inc.
IDS Tower 10
Minneapolis, Minnesota 55440-0010

Gentlemen:

I have examined the Articles of Incorporation and the By-Laws of the Company and
all necessary certificates, permits, minute books, documents and records of the
Company, and the applicable statutes of the State of Minnesota, and it is my
opinion:

(a) That the Company is a corporation duly organized and existing under the
laws of the State of Minnesota with an authorized capital stock of
20,000,000,000 shares, all of $.01 par value, that such shares may be
issued as full or fractional shares;

(b) That all such authorized shares are, under the laws of the State of
Minnesota, redeemable as provided in the Articles of Incorporation of
the Company and upon redemption shall have the status of authorized
shares and unissued shares;

(d) That shares which were sold at not less than their par value and in
accordance with applicable federal and state securities laws were
legally issued, fully paid an nonassessable.

I hereby consent that the foregoing opinion may be used in connection with
this Post-Effective Amendment.

Very truly yours,

Eileen J. Newhouse
Secretary

EJN/KB/ps

<PAGE>
Independent auditors' consent
- -----------------------------------------------------------
The board and shareholders
Strategist World Fund, Inc.:
Strategist Emerging Markets Fund
Strategist World Growth Fund
Strategist World Income Fund
Strategist World Technologies Fund

The board of trustees and unitholders World Trust:
Emerging Markets Portfolio
World Growth Portfolio
World Income Portfolio
World Technologies Portfolio

We consent to the use of our reports incorporated herein by reference and to the
references to our Firm under the headings"Financial highlights" in Part A and
"INDEPENDENT AUDITORS" in Part B of the Registration Statement.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 23, 1997

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> STRATEGIST EMERGING MARKETS FUND

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
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<EXPENSES-NET> 13804
<NET-INVESTMENT-INCOME> 774
<REALIZED-GAINS-CURRENT> 104401
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<DISTRIBUTIONS-OF-INCOME> 1462
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<AVG-DEBT-OUTSTANDING> 0
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</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> STRATEGIST WORLD GROWTH FUND

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 5295
<ACCUM-APPREC-OR-DEPREC> 21102
<NET-ASSETS> 604230
<DIVIDEND-INCOME> 7361
<INTEREST-INCOME> 3978
<OTHER-INCOME> 0
<EXPENSES-NET> 9788
<NET-INVESTMENT-INCOME> 1551
<REALIZED-GAINS-CURRENT> 9866
<APPREC-INCREASE-CURRENT> 18151
<NET-CHANGE-FROM-OPS> 29568
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<DISTRIBUTIONS-OF-INCOME> 1462
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14316
<NUMBER-OF-SHARES-REDEEMED> 2913
<SHARES-REINVESTED> 132
<NET-CHANGE-IN-ASSETS> 115071
<ACCUMULATED-NII-PRIOR> 979
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 15161
<GROSS-ADVISORY-FEES> 5112
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 30537
<AVERAGE-NET-ASSETS> 594834
<PER-SHARE-NAV-BEGIN> 7.08
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> .40
<PER-SHARE-DIVIDEND> .01
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<PER-SHARE-NAV-END> 7.49
<EXPENSE-RATIO> 1.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> STRATEGIST WORLD INCOME FUND

<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 0
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<OTHER-ITEMS-LIABILITIES> 40551
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 598680
<SHARES-COMMON-STOCK> 98867
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<ACCUMULATED-NII-CURRENT> 3973
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12807
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9400
<NET-ASSETS> 624860
<DIVIDEND-INCOME> 24
<INTEREST-INCOME> 41696
<OTHER-INCOME> 0
<EXPENSES-NET> 7754
<NET-INVESTMENT-INCOME> 33966
<REALIZED-GAINS-CURRENT> 4989
<APPREC-INCREASE-CURRENT> (9228)
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<DISTRIBUTIONS-OF-INCOME> 20717
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<SHARES-REINVESTED> 4682
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<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1952
<OVERDISTRIB-NII-PRIOR> 2084
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<GROSS-EXPENSE> 28698
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<PER-SHARE-NAV-BEGIN> 6.24
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<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> STRATEGIST WORLD TECHNOLOGIES FUND

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<PERIOD-END> OCT-31-1997
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<OVERDISTRIBUTION-GAINS> 34357
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</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> EMERGING MARKETS PORTFOLIO

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</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> WORLD GROWTH PORTFOLIO

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<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> WORLD INCOME PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-END> OCT-31-1997
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<NET-ASSETS> 985253800
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<EXPENSES-NET> 7018591
<NET-INVESTMENT-INCOME> 55752766
<REALIZED-GAINS-CURRENT> 5413929
<APPREC-INCREASE-CURRENT> (12533266)
<NET-CHANGE-FROM-OPS> 48633429
<EQUALIZATION> 0
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<GROSS-EXPENSE> 7035024
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<AVG-DEBT-OUTSTANDING> 0
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</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> WORLD TECHNOLOGIES PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 3707464
<INVESTMENTS-AT-VALUE> 4247538
<RECEIVABLES> 216411
<ASSETS-OTHER> 76879
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4540828
<PAYABLE-FOR-SECURITIES> 290593
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8132
<TOTAL-LIABILITIES> 298725
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
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<ACCUMULATED-NET-GAINS> 0
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<NET-ASSETS> 4242103
<DIVIDEND-INCOME> 690
<INTEREST-INCOME> 2997
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<EXPENSES-NET> 46762
<NET-INVESTMENT-INCOME> (43075)
<REALIZED-GAINS-CURRENT> (279246)
<APPREC-INCREASE-CURRENT> 540074
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<GROSS-EXPENSE> 48502
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</TABLE>

<PAGE>
OFFICERS POWER OF ATTORNEY

City of Minneapolis
State of Minnesota

Each of the undersigned, as officers of the below listed open-end management
investment companies that previously have filed registration statements and
amendments thereto pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940 with the Securities and Exchange
Commission:

1933 Act 1940 Act
Reg. Number Reg. Number
Strategist Growth Fund, Inc. 33-63905 811-7401
Strategist Growth and Income Fund, Inc 33-63907 811-7403
Strategist Income Fund, Inc. 33-60323 811-7305
Strategist Tax-Free Fund, Inc. 33-63909 811-7407
Strategist World Fund, Inc. 33-63951 811-7405

hereby constitutes and appoints James A. Mitchell, Eileen J. Newhouse, Colin M.
Lancaster, or Sherilyn K. Beck as his attorney-in-fact and agent, to sign for
him in his name, place and stead any and all further amendments to said
registration statements filed pursuant to said Acts and any rules and
regulations thereunder, and to file such amendments with all exhibits thereto
and other documents in connection therewith with the Securities and Exchange
Commission, granting to either of them the full power and authority to do and
perform each and every act required and necessary to be done in connection
therewith.

Dated this 21st day of November, 1997.

/s/ James A. Mitchell
James A. Mitchell

/s/ Matthew N. Karstetter
Matthew N. Karstetter

<PAGE>
DIRECTORS POWER OF ATTORNEY

City of Minneapolis
State of Minnesota

Each of the undersigned, as directors of the below listed open-end management
investment companies that previously have filed registration statements and
amendments thereto pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940 with the Securities and Exchange
Commission:

1933 Act 1940 Act
Reg. Number Reg. Number
Strategist Growth Fund, Inc. 33-63905 811-7401
Strategist Growth and Income Fund, Inc. 33-63907 811-7403
Strategist Income Fund, Inc. 33-60323 811-7305
Strategist Tax-Free Fund, Inc. 33-63909 811-7407
Strategist World Fund, Inc. 33-63951 811-7405

hereby constitutes and appoints James A. Mitchell, Eileen J. Newhouse, Colin M.
Lancaster, or Sherilyn K. Beck as her or his attorney-in-fact and agent, to sign
for her or him in her or his name, place and stead any and all further
amendments to said registration statements filed pursuant to said Acts and any
rules and regulations thereunder, and to file such amendments with all exhibits
thereto and other documents in connection therewith with the Securities and
Exchange Commission, granting to either of them the full power and authority to
do and perform each and every act required and necessary to be done in
connection therewith.

Dated this 20th day of November, 1997.

/s/ Rodney P. Burwell /s/ Thomas R. McBurney
Rodney P. Burwell Thomas R. McBurney

/s/ Jean B Keffeler /s/ James A. Mitchell
Jean B. Keffeler James A. Mitchell

/s/ Brian Kleinberg
Brian Kleinberg