-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sQXJmeBr+UATct5kZOuxTbCj7rfBGYUlr+ZaokuSAYCbzo1Jhbij7RTI+vKplaM0 F2f34jyE/MQS9nlr6nXbDQ== 0000820027-95-000005.txt : 19950105 0000820027-95-000005.hdr.sgml : 19950105 ACCESSION NUMBER: 0000820027-95-000005 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941230 FILED AS OF DATE: 19950104 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDS STOCK FUND INC CENTRAL INDEX KEY: 0000052423 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 410839317 STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-00498 FILM NUMBER: 95500243 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126712727 FORMER COMPANY: FORMER CONFORMED NAME: INVESTORS STOCK FUND INC DATE OF NAME CHANGE: 19831221 N-30D 1 IDS STOCK FUND, INC. PAGE 1 FINANCIAL PLANNING IDS Stock Fund 1994 annual report (prospectus enclosed) (Icon of) building with columns The goals of IDS Stock Fund, Inc. are current income and growth of capital. The fund invests primarily in common stocks and securities convertible into common stock. (This annual report includes a prospectus that describes in detail the fund's objective, investment policies, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money.) IDS An American Express company AMERICAN EXPRESS Distributed by IDS Financial Services Inc. PAGE 2 (Icon of) Building with columns Big names, big business These are the names you know. They are the movers and shakers of today's business world. Whether representing established U.S. firms or companies that have made their mark overseas, the securities found in Stock Fund make up a veritable who's who in the financial market. These stocks offer a dual benefit of ongoing growth potential along with a steady stream of dividend income. And as we move toward a more global economy, these blue chip, multi-national companies are well-positioned to prosper in the 21st century. PAGE 3 Contents (Icon of) One open book inside of another. The purpose of this annual report is to tell investors how the fund performed. The prospectus, which is bound into the middle of this annual report, describes the fund in detail. 1994 annual report From the president 4 From the portfolio management team leader 4 Ten largest holdings 6 Making the most of your fund 7 Long-term performance 8 Independent auditors' report 9 Financial statements 10 Notes to financial statements 13 Investments in securities 19 IDS mutual funds 24 Federal income tax information 27 Table of contents The fund in brief Goal 3p Types of fund investments 3p Manager and distributor 3p Portfolio manager 3p Sales charge and fund expenses Sales charge 4p Operating expenses 4p Performance Financial highlights 5p Total returns 6p Key terms 7p Investment policies and risks Facts about investments and their risks 8p Fund structure 12p Valuing assets 12p How to buy, exchange or sell shares How to buy shares 13p How to exchange shares 15p How to sell shares 15p Reductions of the sales charge 19p Waivers of the sales charge 20p Special shareholder services Services 21p Quick telephone reference 21p PAGE 4 Distributions and taxes Dividend and capital gain distributions 22p Reinvestments 23p Taxes 24p How the fund is organized Shares 27p Voting rights 27p Shareholder meetings 27p Directors and officers 27p Investment manager and transfer agent 29p Distributor 30p About IDS General information 31p PAGE 5 To our shareholders (Photo of) William R. Pearce, President of the fund (Photo of) Joe Barsky, Portfolio management team leader From the president All of the funds in the IDS MUTUAL FUND GROUP held shareholder meetings on Nov. 9, 1994. The meetings, which were well-attended, approved all of the proposals advanced by management. Among the proposals were: o The election of directors and the selection of KPMG Peat Marwick LLP as independent auditors for each of the funds in the group. o A new investment management agreement that will become effective for each fund when it begins offering multiple classes of shares, now planned to occur in early March, 1995. o A change in investment policy that will permit the fund to adopt a master/feeder structure if and when the board of each fund determines that it is in the best interest of shareholders. o And, finally, a change in the rules with respect to the number of "fundamental investment polices" that allows the board to modify them should they deem appropriate. No other business was presented at the meeting, which was concluded by a report to shareholders from the IDS Investment Department. Thanks to all of you for your effort in reviewing the proxy material and voting your proxies. William R. Pearce From the portfolio management team leader In an unsettled period for stocks, IDS Stock Fund provided a positive total return for shareholders that essentially matched that of the stock market as a whole (as measured by the Standard & Poor's 500 Stock Index, an unmanaged group of widely held stocks commonly used to gauge the market's performance). Although the fund's net asset value declined for the fiscal year, that was more than offset by dividend and capital gain distributions in December 1993. The past 12 months largely came down to a tug of war between the negative influence of rising interest rates and the positive forces of low inflation and expanding corporate profits. The period began on a positive note in November 1993, as stocks mounted a rally that lasted well into January. The tenor of the market changed, though, in early February 1994, when the Federal Reserve began raising short-term interest rates to cool down the economy and prevent the possibility of rapidly rising inflation. PAGE 6 That Fed policy change marked the end of an extended trend of lower interest rates that played a major role in propelling a stock market advance that had gone virtually uninterrupted for more than three years. The interest-rate rise, which continued almot unabated through the rest of the fiscal year, took its biggest toll on stocks early last spring. Positive factors The good news, however, was that inflation reports remained encouraging and many corporations were enjoying solid if not excellent profits. Periodically, these factors would buoy investors' confidence and the market would spurt ahead. Late summer and early fall was a particularly strong time, during which the fund recouped essentially all of the losses incurred in the spring. As would be expected in a volatile investment environment, no sector of the stock market provided consistently positive performance. Early in the fiscal year, healthcare services and aerospace stocks helped us the most, while during the final several months certain telecommunications, technology, pharmaceutical, metal and paper stocks provided the best gains. Because the market was so selective, it was much more important to find the right stocks than the right sectors. Our foreign holdings fluctuated in value quite a bit, but gave us good overall performance, with Mexico and South America leading the way. We kept about 20% of the portfolio invested in foreign stocks during the 12 months, a figure that we're likely to maintain in the months ahead, given the generally positive outlook for foreign investments. Which way rates? While we continue to look for a positive return from stocks in the current fiscal year, we think the direction of interest rates will keep the market off balance during the near term. As has been the case for many months, effective stock selection again will be vital to success in such an environment. The main emphasis of the portfolio currently is on stocks of capital goods providers, which includes the areas of technology, construction equipment and productivity-enhancement. In most cases, we're also focusing on companies that derive a substantial portion of their business from foreign markets, especially developing nations, where demand for U.S. goods is high. Joe Barsky PAGE 7 12-month performance (All figures per share) Net asset value (NAV) Oct. 31, 1994 $19.48 Oct. 31, 1993 21.24 Decrease $(1.76) Distributions Nov. 1, 1993-Oct. 31, 1994 From income $ 0.91 From capital gains $ 1.64 Total distributions $ 2.55 Total Return* +3.9% *If you purchased shares in the fund during this period, your return also would have been affected by the sales charge, as described in the prospectus. PAGE 8 IDS Stock Fund, Inc. Your fund's ten largest holdings
(Pie chart) The ten holdings listed here make up 12.88% of the fund's net assets _____________________________________________________________________________________________________________ Percent Value (of fund's net assets)(as of Oct. 31, 1994) ____________________________________________________________________________________ Minnesota Mining & Manufacturing 1.46% $ 34,609,375 Minnesota Mining & Manufacturing (3M) is a diversified Manufacturer of industrial, commercial and consumer products, including tapes, adhesives, coatings and sealants. First Chicago 1.45 34,300,000 A bank holding company whose main business is commercial banking, but with retail banking and credit card operation as well. Exxon 1.39 33,009,375 Exxon is a major factor in the world crude oil, natural gas and chemical industry and also has substantial coal and mineral holdings. General Signal 1.29 30,600,000 A leading producer of capital goods for the process control, electrical and telecommunications industry. Sears, Roebuck & Co. 1.26 29,700,000 Sears, Roebuck & Co., through its Sears stores, is the third largest retailer in the world. Royal Dutch Petroleum 1.23 29,125,000 Royal Dutch Petroleum Co., which includes Royal Dutch (the Dutch version) and Shell Transport (the English version) is a major oil company. CSX 1.22 29,000,000 A transportation company that generates most of its income from coal and freight-hauling by rail. Reader's Digest Association 1.21 28,518,750 Reader's Digest is a publisher and direct mail marketer of magazines, books, recorded music and and other products worldwide. PAGE 9 U S WEST 1.19 28,218,750 U S WEST provides telecommunications services to more than 40% of the United States in 14 western states. Goodyear Tire & Rubber 1.18 28,000,000 One of the largest manufacturers of tires in the world.
Making the most of your fund Average annual total return (as of Oct. 31, 1994) 1 year 5 years 10 years - -1.27% +10.39% +13.63% Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Figures reflect the deduction of the maximum 5% sales charge. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. Build your assets systematically To keep your assets growing steadily, one of the best ways to use the fund is by dollar-cost averaging -- a time-tested strategy that can make market fluctuations work for you. To dollar-cost average, simply invest a fixed amount of money regularly. You'll automatically buy more shares when the fund's share price is low, fewer shares when it is high. This does not ensure a profit or avoid a loss if the market declines. But, if you can continue to invest regularly through changing market conditions, it can be an effective way to accumulate shares to meet your long-term goals. How dollar-cost averaging works Month Amount Per-share Number of shares purchased invested market price Jan $100 $20 5.00 Feb 100 18 5.56 Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 June 100 18 5.56 July 100 17 5.88 Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00 (footnotes to table) By investing an equal number of dollars each month... (arrow in table pointing to April) you automatically buy more shares when the per share market price is low PAGE 10 (arrow in table pointing to September) and fewer shares when the per share market price is high. You have paid an average price of only $17.91 per share over the 10 months, while the average market price actually was $18.10. Your fund's long-term performance Three ways to benefit from a mutual fund: o your shares increase in value when the fund's investments do well o you receive capital gains when the gains on investments sold by the fund exceed losses o you receive income when the fund's stock dividends, interest and short-term gains exceed its expenses. All three make up your total return. And you potentially can increase your investment if, like most investors, you reinvest your dividends and capital gain distributions to buy additional shares of the fund or another fund. How your $10,000 has grown in IDS Stock Fund $35,886 S&P 500 Stock Fund Stock Index Lipper Growth & Income Fund Index $20,000 $9,500 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 Assumes: Holding period from 10/31/84 to 10/31/94. Returns do not reflect taxes payable on distributions. Also see "Performance" in the fund's current prospectus. Reinvestment of all income and capital gain distributions for the fund, with a value of $23,929. The Standard & Poor's 500 Stock Index, an unmanaged list of larger stocks is frequently used as a general measure of market performance. Lipper Growth and Income Fund Index, published by Lipper Analytical Services, Inc., include 30 funds that are generally similar to the fund, although some funds in the index may have somewhat different investment policies or objectives. On the chart above you can see how the fund's total return compared to two widely cited performance indexes, the S&P 500 and the Lipper Growth & Income Fund Index. In comparing Stock Fund to the two indexes, you should take account of the fact that the fund's performance reflects the maximum sales charge of 5%, while such PAGE 11 charges are not reflected in the performance of the indexes. If you were actually to buy either individual stocks or growth mutual funds, any sales charges that you pay would reduce your total return as well. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Average annual total return figures reflect the deduction of the maximum 5% sales charge. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 12 Independent auditors' report ___________________________________________________________________ The board of directors and shareholders IDS Stock Fund, Inc.: We have audited the accompanying statement of assets and liabilities, including the schedule of investments in securities, of IDS Stock Fund, Inc. as of October 31, 1994, and the related statement of operations for the year then ended and the statements of changes in net assets for each of the years in the two-year period ended October 31, 1994, and the financial highlights for each of the years in the ten-year period ended October 31, 1994. 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 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 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. 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 IDS Stock Fund, Inc. at October 31, 1994, and the results of its operations for the year then ended and the changes in its net assets for each of the years in the two-year period ended October 31, 1994, PAGE 13 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 2, 1994 PAGE 14 Financial statements Statement of assets and liabilities IDS Stock Fund, Inc. Oct. 31, 1994
_____________________________________________________________________________________________________________ Assets _____________________________________________________________________________________________________________ Investments in securities, at value (Note 1): Investments in securities of unaffiliated issuers (identified cost $2,220,483,972) $2,367,076,894 Investments in securities of affiliated issuers (identified cost $44,803,480) 46,406,250 _____________________________________________________________________________________________________________ Total investments in securities (identified cost $2,265,287,452) 2,413,483,144 Dividends and accrued interest receivable 5,824,546 Receivable for investment securities sold 32,123,553 Receivable for foreign currency contracts held, at value (Notes 1 and 6) 1,386,397 U.S. government securities held as collateral (Note 4) 27,158,074 _____________________________________________________________________________________________________________ Total assets 2,479,975,714 _____________________________________________________________________________________________________________ Liabilities _____________________________________________________________________________________________________________ Disbursements in excess of cash on demand deposit 7,651,080 Payable for investment securities purchased 62,233,320 Payable upon return of securities loaned (Note 4) 37,439,174 Payable for foreign currency contracts held, at value (Notes 1 and 6) 1,386,372 Accrued investment management and services fee 1,058,847 Accrued distribution fee 95,863 Accrued transfer agency fee 238,874 Other accrued expenses 350,273 Open option contracts written, at value (premium received $1,790,183)(Note 5) 1,771,518 _____________________________________________________________________________________________________________ Total liabilities 112,225,321 _____________________________________________________________________________________________________________ Net assets applicable to outstanding capital stock $2,367,750,393 _____________________________________________________________________________________________________________ Represented by _____________________________________________________________________________________________________________ Capital stock -- authorized 10,000,000,000 shares of $.01 par value; outstanding 121,549,661 shares $ 1,215,497 Additional paid-in capital 2,029,565,703 Undistributed net investment income 4,526,952 Accumulated net realized gain (Note 1) 184,227,859 Unrealized appreciation (Note 6) 148,214,382 _____________________________________________________________________________________________________________ Total -- representing net assets applicable to outstanding capital stock $2,367,750,393 _____________________________________________________________________________________________________________ Net asset value per share of outstanding capital stock $ 19.48 _____________________________________________________________________________________________________________ See accompanying notes to financial statements. PAGE 15
Financial statements Statement of operations IDS Stock Fund, Inc. Year ended Oct. 31, 1994
_____________________________________________________________________________________________________________ Investment income _____________________________________________________________________________________________________________ Income: Dividends (net of foreign taxes withheld of $976,751) $ 60,051,411 Dividends earned on affiliate issuers 770,050 Interest 21,217,499 _____________________________________________________________________________________________________________ Total income 82,038,960 _____________________________________________________________________________________________________________ Expenses (Note 2): Investment management and services fee 12,067,405 Distribution fee 999,043 Transfer agency fee 2,486,288 Compensation of directors 4,808 Compensation of officers 17,115 Custodian fees 408,300 Postage 236,691 Registration fees 215,202 Reports to shareholders 69,597 Audit fees 30,000 Administrative 26,809 Other 42,066 _____________________________________________________________________________________________________________ Total expenses 16,603,324 _____________________________________________________________________________________________________________ Investment income -- net 65,435,636 _____________________________________________________________________________________________________________ Realized and unrealized gain (loss) -- net _____________________________________________________________________________________________________________ Net realized gain on security and foreign currency transactions (including loss of $67,989 from foreign currency transactions) (Note 3) 182,359,148 Net realized gain on sale of affiliated security 525,300 Net realized gain on expired option contracts written (Note 5) 1,327,524 _____________________________________________________________________________________________________________ Net realized gain on investments and foreign currency 184,211,972 Net change in unrealized appreciation or depreciation (163,987,803) _____________________________________________________________________________________________________________ Net gain on investments and foreign currency 20,224,169 _____________________________________________________________________________________________________________ Net increase in net assets resulting from operations $85,659,805 _____________________________________________________________________________________________________________ See accompanying notes to financial statements. PAGE 16
Financial statements Statements of changes in net assets IDS Stock Fund, Inc. Year ended Oct. 31,
_____________________________________________________________________________________________________________ Operations and distributions 1994 1993 _____________________________________________________________________________________________________________ Investment income -- net $ 65,435,636 $ 50,064,349 Net realized gain on investments and foreign currency 184,211,972 189,191,483 Net change in unrealized appreciation or depreciation (163,987,803) 75,180,622 _____________________________________________________________________________________________________________ Net increase in net assets resulting from operations 85,659,805 314,436,454 _____________________________________________________________________________________________________________ Distributions to shareholders from: Net investment income (66,287,242) (47,684,415) Net realized gain (189,047,838) (145,269,306) Excess distribution of realized gain (Note 1) -- (28,968) _____________________________________________________________________________________________________________ Total distributions (255,335,080) (192,982,689) _____________________________________________________________________________________________________________ Capital share transactions _____________________________________________________________________________________________________________ Proceeds from sales of 26,559,784 and 13,265,220 shares (Note 2) 517,092,765 267,880,638 Net asset value of 11,576,290 and 9,177,264 shares issued in reinvestment of distributions 226,574,033 176,369,824 Payments for redemptions of 13,522,239 and 8,219,963 shares (265,338,433) (165,004,017) _____________________________________________________________________________________________________________ Increase in net assets from capital share transactions representing net addition of 24,613,835 and 14,222,521 shares 478,328,365 279,246,445 _____________________________________________________________________________________________________________ Total increase in net assets 308,653,090 400,700,210 Net assets at beginning of year 2,059,097,303 1,658,397,093 _____________________________________________________________________________________________________________ Net assets at end of year (including undistributed net investment income of $4,526,952 and $5,437,453) $2,367,750,393 $2,059,097,303 _____________________________________________________________________________________________________________ See accompanying notes to financial statements.
PAGE 17 Notes to financial statements IDS Stock Fund, Inc. __________________________________________________________________ 1. Summary of significant accounting policies The fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. Significant accounting policies followed by the fund 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; securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board of directors. Determination of fair value involves, among other things, reference to market indexes, matrixes and data from independent brokers. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Options transactions In order to produce incremental earnings, protect gains, and facilitate buying and selling of securities for investment purposes, the fund may buy or 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 fund 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 fund gives up the opportunity of profit if the market price of the security increases. The risk in writing a put option is that the fund 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 fund pays a premium whether or not the option is exercised. The fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. PAGE 18 Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The fund 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 fund may buy and sell stock index futures contracts traded on any U.S. or foreign exchange. The fund also may buy or write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the fund 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 fund 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 fund 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. PAGE 19 The fund 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 fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The fund is subject to the credit risk that the other party will not complete the obligations of the contract. 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 shareholders, no provision for income or excise taxes is required. Net investment income (loss) and net realized gains (losses) 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. The effect on dividend distributions of certain book-to-tax differences is presented as "excess distributions" in the statement of changes in net assets. 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 decreased by $58,895 and accumulated net realized gain has been increased by $67,989 resulting in a net reclassification adjustment to decrease paid- in-capital by $9,094. Dividends to shareholders Dividends from net investment income, declared and paid each calendar quarter, are reinvested in additional shares of the fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the last income dividend of the calendar year. PAGE 20 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. Expenses and sales charges Under terms of an agreement dated Nov. 14, 1991, the fund pays IDS Financial Corporation (IDS) a fee for managing its investments, recordkeeping and other specified services. The fee is a percentage of the fund's average daily net assets consisting of a group asset charge in reducing percentages from 0.46% to 0.32% annually on the combined net assets of all non-money market funds in the IDS MUTUAL FUND GROUP and an individual annual asset charge of 0.14% of average daily net assets. The fee is adjusted upward or downward by a performance incentive adjustment based on the fund's average daily net assets over a rolling 12-month period as measured against the change in the Lipper Growth and Income Fund Index. The maximum adjustment is 0.08% of the fund's average daily net assets after deducting 1% from the performance difference. If the performance difference is less than 1%, the adjustment will be zero. The adjustment increased the fee by $282,277 for the year ended Oct. 31, 1994. The fund also pays IDS a distribution fee at an annual rate of $6 per shareholder account and a transfer agency fee at an annual rate of $15 per shareholder account. The transfer agency fee is reduced by earnings on monies pending shareholder redemptions. IDS will assume and pay any expenses (except taxes and brokerage commissions) that exceed the most restrictive applicable state expense limitation. Sales charges by IDS Financial Services Inc. for distributing fund shares were $4,535,067 for the year ended Oct. 31, 1994. The fund also pays custodian fees to IDS Trust Company, an affiliate of IDS. The fund has a retirement plan for its independent directors. Upon retirement, directors receive monthly payments equal to one-half of the retainer fee for as many months as they served as directors up to 120 months. There are no death benefits. The plan is not funded but the fund recognizes the cost of payments during the time the directors serve on the board. The retirement PAGE 21 plan expense amounted to $17,249 for the year ended Oct. 31, 1994. ___________________________________________________________________ 3. Securities transactions Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $1,533,397,787 and $1,471,959,617, respectively, for the year ended Oct. 31, 1994. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with IDS were $671,308 for the year ended Oct. 31, 1994. ___________________________________________________________________ 4. Lending of portfolio securities At Oct. 31, 1994, securities valued at $37,217,750 were on loan to brokers. For collateral, the fund received $10,281,100 in cash and U.S. government securities valued at $27,158,074. Income from securities lending amounted to $380,271 for the year ended Oct. 31, 1994. The risks to the fund of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. ___________________________________________________________________ 5. Option contracts written The number of contracts and premium amounts associated with options written is as follows: Year ended Oct. 31, 1994 _________________________________________________ Puts Calls Contracts Premium Contracts Premium ___________________________________________________________________ Balance Oct. 31, 1993 -- $ -- -- $ -- Open 18,218 1,120,929 38,885 2,975,557 Expired (2,143) (179,217) (17,835) (1,148,307) Exercised -- -- (7,300) (978,779) ___________________________________________________________________ Balance Oct. 31, 199416,075 $ 941,712 13,750 $ 848,471 ___________________________________________________________________ PAGE 22 ___________________________________________________________________ 6. Foreign currency contracts At Oct. 31, 1994, the fund had entered into a foreign currency exchange contract that obligates the fund to deliver currency at a specified future date. The unrealized appreciation of $25 on this contract is included in the accompanying financial statements. The terms of the open contract is as follows:
U.S. dollar value U.S. dollar value Currency to be as of Currency to be as of Exchange date delivered Oct. 31, 1994 received Oct. 31, 1994 _____________________________________________________________________________________________________ Nov. 10, 1994 847,002 $1,386,372 1,386,397 $1,386,397 British Pound U.S. Dollar ______________________________________________________________________________ 7. Financial highlights "Financial highlights" showing per share data and selected information is presented on page 5 of the prospectus. /TABLE PAGE 23 Investments in securities IDS Stock Fund, Inc. (Percentages represent value of Oct. 31, 1994 investments compared to net assets)
Investments in securities of unaffiliated issuers _____________________________________________________________________________________________________________________________ Common stocks (68.1%) _____________________________________________________________________________________________________________________________ Issuer Shares Value(a) _____________________________________________________________________________________________________________________________ Aerospace & defense (1.1%) Northrop Grumman 31,900 $ 1,399,613 United Technologies 375,000 23,625,000 ______________ Total 25,024,613 _____________________________________________________________________________________________________________________________ Automotive & related (3.1%) Chrysler 400,000 19,500,000 Dana 1,000,000 25,625,000 Goodyear Tire & Rubber 800,000 28,000,000 ______________ Total 73,125,000 _____________________________________________________________________________________________________________________________ Banks and savings & loans (3.6%) BankAmerica 625,000 27,187,500 First Chicago 700,000 34,300,000 NationsBank 500,000 (j) 24,750,000 ______________ Total 86,237,500 _____________________________________________________________________________________________________________________________ Beverages & tobacco (0.9%) UST 800,000 21,200,000 _____________________________________________________________________________________________________________________________ Building materials (0.2%) Tolmex 400,000 (b) 5,819,040 _____________________________________________________________________________________________________________________________ Chemicals (2.0%) Dow Chemical 325,000 23,887,500 Nalco Chemical 325,000 10,481,250 Witco 450,000 12,600,000 ______________ Total 46,968,750 _____________________________________________________________________________________________________________________________ See accompanying notes to investments in securities. PAGE 24 Computers & office equipment (5.8%) Amer Power Conversion 500,000 (c) 9,250,000 Banyan 600,000 (c) 10,350,000 Cisco Systems 400,000 12,050,000 COMPAQ Computer 225,000 9,028,125 Computer Assn Intl 225,000 11,165,625 Parametric Technology 200,000 (c,j) 7,200,000 Pitney Bowes 775,000 26,156,250 Solectron 325,000 (c) 9,059,375 Sterling Software 250,000 (c) 7,812,500 VMARK Software 40,000 (c) 650,000 Wall Data 275,000 (c,d) 9,968,750 Xerox 250,000 25,625,000 ______________ Total 138,315,625 _____________________________________________________________________________________________________________________________ Electronics (0.9%) Arrow Electronics 275,000 (c) 10,381,250 Intel 175,000 10,871,875 ______________ Total 21,253,125 _____________________________________________________________________________________________________________________________ Energy (7.2%) Amoco 425,000 26,934,375 Exxon 525,000 33,009,375 Repsol ADR 850,000 (b) 27,625,000 Royal Dutch Petroleum 250,000 (b) 29,125,000 Texaco 400,000 26,150,000 YPF Sociedad Anonima ADR 1,100,000 (b) 26,537,500 ______________ Total 169,381,250 _____________________________________________________________________________________________________________________________ Energy equipment & services (1.1%) Schlumberger 450,000 (b) 26,437,500 _____________________________________________________________________________________________________________________________ Financial services (3.2%) Holly Residential Property 175,000 2,537,500 Kranzco Realty Trust 20,000 345,000 Mutual Risk Management 500,000 13,687,500 Paribas 300,000 (b) 19,966,800 Sizeler Property 143,700 1,580,700 State Street Boston 257,400 8,590,725 Travelers 800,000 27,800,000 ______________ Total 74,508,225 _____________________________________________________________________________________________________________________________ PAGE 25 Health care (3.7%) Cordis 300,000 (j) 17,287,500 Merck 600,000 (d) 21,450,000 Pfizer 325,000 24,090,625 Schering-Plough 350,000 24,937,500 ______________ Total 87,765,625 _____________________________________________________________________________________________________________________________ Health care services (1.2%) Columbia Healthcare 250,000 10,406,250 Physician Corp of Amer 500,000 (j) 12,062,500 Service Corp Intl 200,000 5,325,000 ______________ Total 27,793,750 _____________________________________________________________________________________________________________________________ Industrial equipment & services (3.7%) General Signal 850,000 (d) 30,600,000 Giddings & Lewis 1,500,000 23,250,000 Illinois Tool Works 550,000 24,681,250 Stewart & Stevenson 247,000 9,509,500 ______________ Total 88,040,750 _____________________________________________________________________________________________________________________________ Industrial transportation (3.3%) CSX 400,000 29,000,000 Norfolk Southern 425,000 26,775,000 Union Pacific 475,000 23,215,625 ______________ Total 78,990,625 _____________________________________________________________________________________________________________________________ Insurance (1.1%) CIGNA 375,000 24,703,125 _____________________________________________________________________________________________________________________________ Leisure time & entertainment (0.5%) Hasbro 350,000 11,550,000 _____________________________________________________________________________________________________________________________ Media (3.4%) McGraw-Hill 350,000 26,162,500 Reader's Digest Assn 650,000 28,518,750 Tele-Communications 200,000 (c) 4,525,000 Time Warner 400,000 14,200,000 Viacom Cl B 151,537 (c) 5,947,827 Viacom Cl A 20,000 (c) 802,500 ______________ Total 80,156,577 _____________________________________________________________________________________________________________________________ PAGE 26 Metals (1.7%) Cyprus Minerals 750,000 19,968,750 RTZ 1,500,000 (b) 21,090,000 ______________ Total 41,058,750 _____________________________________________________________________________________________________________________________ Multi-industry conglomerates (4.9%) General Electric 525,000 25,659,375 Grupo Carso ADR 275,000 (b,c) 6,050,000 Hanson ADR 1,250,000 (b) 23,281,250 Hutchison Whampoa 4,500,000 (b) 20,785,500 Madeco ADR 200,000 (b) 6,250,000 Minnesota Mining & Mfg 625,000 34,609,375 ______________ Total 116,635,500 _____________________________________________________________________________________________________________________________ Paper & packaging (3.5%) Crown Cork & Seal 323,100 (c) 12,560,512 Kimberly-Clark 500,000 25,750,000 Kimberly-Clark de Mexico 1,000,000 (b) 19,842,900 Union Camp 500,000 23,750,000 ______________ Total 81,903,412 _____________________________________________________________________________________________________________________________ Retail (3.6%) Gap 600,000 20,250,000 Home Depot 93,700 4,263,350 Penney (JC) 500,000 25,312,500 Pep Boys Manny Moe & Jack 187,500 6,703,125 Sears Roebuck 600,000 29,700,000 ______________ Total 86,228,975 _____________________________________________________________________________________________________________________________ Utilities - electric (1.4%) Central Puerto ADR 300,000 (b,d) 9,900,000 Veba 70,000 (b) 23,467,570 ______________ Total 33,367,570 _____________________________________________________________________________________________________________________________ Utilities - natural gas (1.9%) Enron 700,000 22,662,500 Tenneco 500,000 (j) 22,125,000 ______________ Total 44,787,500 _____________________________________________________________________________________________________________________________ PAGE 27 Utilities - telephone (5.1%) AirTouch Communications 925,000 (c) 27,634,375 BCE 675,000 (b) 23,625,000 LIN Broadcasting 50,000 (c) 6,900,000 MCI Communications 450,000 10,350,000 Pacific Telesis Group 750,000 23,718,750 U S WEST 750,000 28,218,750 ______________ Total 120,446,875 _____________________________________________________________________________________________________________________________ Total common stocks of unaffiliated issuers (Cost: $1,457,453,656) 46,010,837 $1,611,699,662 _____________________________________________________________________________________________________________________________ Preferred stocks & other (7.8%) _____________________________________________________________________________________________________________________________ Issuer Shares Value(a) _____________________________________________________________________________________________________________________________ Bethlehem Steel $3.50 Cm Cv 350,000 (e) 18,812,500 Ceridan $2.75 Cm Cv 275,000 17,221,875 COINTEL 5.04% Cv 275,000 (f) 17,118,750 Equitable 6% Cm Cv 375,000 (e) 17,625,000 First Chicago Nextell 5.50% Cm Cv 750,000 17,437,500 Ford Motor 4.20% Cm Cv 200,000 19,350,000 General Motors 3.25% Cm Cv 300,000 16,837,500 Kenetech $1.67 Cm Cv 820,000 (f) 13,735,000 Parker & Parsley Capital $3.125 Cm Cv 325,000 (e) 16,981,250 Sears Roebuck 3.75% Cm Cv 300,000 16,987,500 Tenneco $2.80 Cm Cv 325,000 13,528,125 Viacom Rights 250,000 328,125 _____________________________________________________________________________________________________________________________ Total preferred stocks & other (Cost: $179,472,118) 4,545,000 $ 185,963,125 _____________________________________________________________________________________________________________________________ PAGE 28 _____________________________________________________________________________________________________________________________ Bonds (6.1%) _____________________________________________________________________________________________________________________________ Principal Issuer and coupon rate amount Value(a) _____________________________________________________________________________________________________________________________ Banco Nacional de Mexico 7% Cv 1999 $15,000,000 (b,e) $ 16,650,000 Banco Nacional de Mexico Euro 7% Cv 1999 5,000,000 (b) 5,618,750 Cemex 4.25% Cv 1997 6,000,000 (e) 6,202,500 Conner Peripherals 6.75% Cv 2001 15,000,000 11,775,000 Henderson Land Group Euro 4% Cv 1996 15,000,000 (b,e) 14,700,000 Medical Care Intl 6.75% Cv 2006 20,000,000 18,000,000 NAC Re 5.25% Cv 2002 15,000,000 (e) 12,600,000 Rogers Communications Zero Coupon 4.74% Cv 2013 50,000,000 (g) 17,500,000 Stone Container 6.75% Cv 2007 12,500,000 9,937,500 SynOptics Communications 5.25% 2003 25,000,000 (e) 18,125,000 Time Warner Zero Coupon 6.59% Cv 2012 40,000,000 (g) 12,300,000 _____________________________________________________________________________________________________________________________ Total bonds (Cost: $157,490,046) 218,500,000 $ 143,408,750 _____________________________________________________________________________________________________________________________ Short-term securities (18.0%) _____________________________________________________________________________________________________________________________ Issuer Annualized Amount Value(a) yield on payable date of at purchase maturity _____________________________________________________________________________________________________________________________ U.S. government agency (0.3%) Federal Natl Mtge Assn Disc Note 11-22-94 4.79% $ 6,500,000 $ 6,481,914 _____________________________________________________________________________________________________________________________ Certificate of Deposit (0.2%) Natl Bank Detroit 12-08-94 5.16 5,000,000 4,971,267 _____________________________________________________________________________________________________________________________ PAGE 29 Commercial paper (16.7%) Ameritech 11-15-94 5.03 10,500,000 10,479,583 Amgen 12-02-94 4.86 4,100,000 4,081,050 Aon 11-07-94 5.02 3,200,000 3,197,333 11-29-94 4.90 3,000,000 2,988,637 AT&T 11-16-94 4.94 3,100,000 3,093,671 Avco Financial Services 11-23-94 4.88 16,900,000 16,849,807 BBV Finance (Delaware) 12-19-94 4.98 6,700,000 6,654,498 01-19-95 5.46 6,600,000 6,521,827 Becton Dickinson 11-29-94 4.94 3,300,000 3,287,372 Beneficial 11-17-94 5.13 6,500,000 6,485,267 11-22-94 4.87 5,700,000 5,683,874 Cafco 11-22-94 4.87 4,000,000 3,988,683 11-29-94 4.90 15,000,000 14,943,183 Chevron Oil Finance 12-01-94 4.93 3,200,000 3,186,907 Ciesco LP 11-02-94 4.67 6,000,000 5,999,178 11-07-94 4.94 4,000,000 3,996,720 11-10-94 4.84 4,900,000 4,894,120 Colgate Palmolive 11-08-94 5.07 4,800,000 (h) 4,795,287 Commercial Credit 11-09-94 4.84 9,200,000 9,189,711 Commerzbank U.S. Finance 12-19-94 5.07 4,500,000 4,469,439 Consolidated Natural Gas 11-14-94 4.98 2,700,000 2,695,174 CPC Intl 12-13-94 5.18 8,200,000 (h) 8,149,813 01-09-95 5.55 5,000,000 (h) 4,948,181 Eiger Capital 11-21-94 4.85 3,800,000 (h) 3,789,803 11-28-94 4.94 6,000,000 (h) 5,977,860 Fleet Funding 12-01-94 4.93 4,300,000 (h) 4,282,442 Ford Motor Credit 11-17-94 5.12 4,500,000 4,489,820 11-18-94 5.03 5,000,000 4,988,194 General Electric Capital Services 11-18-94 4.90 6,300,000 6,285,482 Goldman Sachs Group 11-09-94 4.84 11,300,000 11,285,626 Kellogg 11-23-94 4.84 3,500,000 3,489,691 Merrill Lynch 11-28-94 5.03 6,100,000 6,077,125 PAGE 30 Metlife Funding 11-03-94 4.68 8,700,000 8,697,127 11-14-94 4.84 6,300,000 6,287,691 Michigan Consolidated Gas 11-22-94 4.97 7,000,000 6,979,869 Mobile Australia Finance (Delaware) 11-22-94 4.85 2,900,000 (h) 2,891,829 12-01-94 4.92 4,100,000 (h) 4,083,258 Motorola 11-16-94 4.82 1,300,000 1,297,400 Natl Australia Funding (Delaware) 11-01-94 4.90 7,900,000 7,900,000 Natl Bank of Detroit Canada 11-18-94 4.90 4,000,000 3,990,782 Nestle Capital 11-01-94 4.90 10,000,000 10,000,000 Norfolk Southern 11-14-94 5.08 3,700,000 (h) 3,693,253 12-05-94 4.90 6,200,000 (h) 6,167,939 Paccar Financial 12-21-94 5.12 5,700,000 5,657,714 Paribas Finance 11-23-94 4.85 7,000,000 6,979,338 Penney (JC) Funding 11-30-94 4.97 800,000 796,855 PepsiCo 11-10-94 5.05 7,100,000 7,091,089 Pioneer Hi-Bred Intl 12-05-94 4.95 6,100,000 6,071,598 Pitney Bowes Credit 11-08-94 4.83 3,600,000 3,596,226 12-05-94 5.09 1,600,000 1,591,895 01-11-95 5.43 5,000,000 4,946,700 Pittsburgh Natl Bank 01-06-95 5.50 10,000,000 10,000,149 St. Paul Companies 11-22-94 4.85 2,800,000 (h) 2,792,111 Sandoz 11-01-94 4.97 3,600,000 3,600,000 11-29-94 4.88 1,700,000 1,693,018 12-02-94 4.88 4,050,000 4,030,788 Sara Lee 12-16-94 5.18 4,000,000 3,973,067 SmithKline Beecham 11-30-94 4.90 7,000,000 6,972,482 Southern California Gas 11-02-94 4.85 5,200,000 5,199,304 11-10-94 5.03 11,000,000 10,986,250 12-05-94 4.91 4,569,000 (h) 4,545,855 12-06-94 4.91 7,000,000 (h) 6,963,094 PAGE 31 Southwestern Bell Capital 11-15-94 5.03 8,000,000 (h) 7,984,444 12-01-94 4.88 2,000,000 (h) 1,991,917 12-02-94 5.21 7,400,000 (h) 7,367,056 Sysco 11-21-94 4.99 9,800,000 (h) 9,773,050 USAA Capital 12-05-94 5.10 7,800,000 7,760,489 U S WEST Communications 11-04-94 4.79 5,900,000 5,897,665 11-14-94 4.86 5,000,000 4,991,297 ______________ Total 396,487,957 _____________________________________________________________________________________________________________________________ Letters of credit (0.8%) Bank of Amer- AES Barbers Point 12-07-94 5.20 8,000,000 7,956,302 Bank of Amer- Hyundai Motor Finance 12-08-94 5.17 7,200,000 7,160,322 First Natl Bankof Chicago- Commed Fuel 11-02-94 4.97 2,948,000 2,947,595 ______________ Total 18,064,219 _____________________________________________________________________________________________________________________________ Total short-term securities (Cost: $426,068,152) 427,367,000 $ 426,005,357 _____________________________________________________________________________________________________________________________ Total investments in securities of unaffiliated issuers (Cost: $2,220,483,972) 696,422,837 $2,367,076,894 _____________________________________________________________________________________________________________________________ Investments in securities of affiliated issuers (i) _____________________________________________________________________________________________________________________________ Common stocks (1.9%) _____________________________________________________________________________________________________________________________ Issuer Shares Value(a) _____________________________________________________________________________________________________________________________ Ericsson (LM) ADR 11,000,000 (b) $ 22,687,500 Lukens 750,000 23,718,750 _____________________________________________________________________________________________________________________________ Total investments in securities of affiliated issuers (Cost: $44,803,480) 11,750,000 $ 46,406,250 _____________________________________________________________________________________________________________________________ Total investments in securities (Cost: $2,265,287,452)(k) $2,413,483,144 _____________________________________________________________________________________________________________________________ PAGE 32 _____________________________________________________________________________________________________________________________ Notes to investments in securities _____________________________________________________________________________________________________________________________ (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Foreign security values and principal amounts are stated in U.S. dollars. (c) Presently non-income producing. (d) Security is partially or fully on loan. See Note 4 to the financial statements. (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 of directors. (f) PRIDES - Preferred Redeemed Increased Dividend Equity Securities are structured as convertible preferred securities issued by a company. Investors receive an enhanced yield but based upon a specific formula, potential appreciation is limited. PRIDES pay dividends, have voting rights, are noncallable for three years and upon maturity, convert into shares of common stock. (g) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. (h) 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 the guidelines established by the board of directors. (i) Investments representing 5% or more of the outstanding voting securities of the issuer. (j) At Oct. 31, 1994, securities valued at $53,537,500 were held in escrow to cover open call options written as follows: Number Exercise Expiration Issuer of contracts price date Value(a) _______________________________________________________________________________________ Cordis 3,000 $65 Nov. 1994 $ 46,890 NationsBank 750 50 Nov. 1994 56,250 Parametric Technology 2,000 40 Dec. 1994 150,000 Physician Corp of Amer 5,000 25 Dec. 1994 218,500 Tenneco 3,000 45 Dec. 1994 393,750 _______________________________________________________________________________________ (k) At Oct. 31, 1994, the cost of securities for federal income tax purposes was $2,265,186,782 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $193,252,250 Unrealized depreciation (44,955,888) ___________________________________________________________________________________________ Net unrealized appreciation $148,296,362 ___________________________________________________________________________________________ /TABLE PAGE 33 IDS mutual funds Cash equivalent investments These money market funds have three main goals: conservation of capital, constant liquidity and the highest possible current income consistent with these objectives. Very limited risk. IDS Cash Management Fund Invests in such money market securities as high quality commercial paper, bankers' acceptances, certificates of deposits (CDs) and other bank securities. (icon of) piggy bank IDS Tax-Free Money Fund Invests primarily in short-term bonds and notes issued by state and local governments to seek high current income exempt from federal income taxes. (icon of) shield with piggy bank enclosed Income investments The funds in this group invest their assets primarily in corporate bonds or government securities to seek interest income. Secondary objective is capital growth. Risk varies by bond quality. IDS Global Bond Fund Invests primarily in debt securities of U.S. and foreign issuers to seek high total return through income and growth of capital. (icon of) globe IDS Extra Income Fund Invests mainly in long-term, high-yielding corporate fixed-income securities in the lower rated, higher risk bond categories to seek high current income. Secondary objective is capital growth. (icon of) cornucopia IDS Bond Fund Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk bond categories, or the equivalent, and in government bonds. (icon of) greek column PAGE 34 IDS Strategy, Income Fund Invests primarily in corporate and government bonds to seek high current income while conserving capital. Also may seek capital appreciation when consistent with its primary goals. (icon of) chess piece IDS Selective Fund Invests in high-quality corporate bonds and other highly rated debt instruments including government securities and short-term investments. Seeks current income and preservation of capital. (icon of) skyline IDS Federal Income Fund Invests primarily in securities issued or guaranteed as to the timely payment of principal and interest by the U.S. government, its agencies and instrumentalities. Seeks a high level of current income and safety of principal consistent with its type of investments. (icon of) federal building IDS Strategy, Short-Term Income Fund Invests primarily in short-term and intermediate-term bonds and notes to seek a high level of current income. (icon of) chess piece Tax-exempt income investments These funds provide tax-free income by investing in municipal bonds. The income is generally free from federal income tax. Risk varies by bond quality. IDS High Yield Tax-Exempt Fund Invests primarily in medium- and lower-quality municipal bonds and notes. Lower-quality securities generally involve greater risk of principal and income. (icon of) shield with basket of apples enclosed IDS State Tax-Exempt Funds (CA, MA, MI, MN, NY, OH) Invests primarily in high- and medium-grade municipal securities to provide income to residents of each respective state that is exempt from federal, state and local income taxes. (New York is the only state that is exempt at the local level.) (icon of) shield with U.S. enclosed PAGE 35 IDS Tax-Exempt Bond Fund Invests mainly in bonds and notes of state or local government units, with at least 75% in the four highest rated, lowest risk bond categories. (icon of) shield with Greek column IDS Insured Tax-Exempt Fund Invests primarily in municipal securities that are insured as to the timely payment of principal and interest. The insurance feature minimizes credit risk of the fund but does not guarantee the market value of the fund's shares. (icon of) shield with eagle head Growth and income investments These funds focus on securities of medium to large, well- established companies that offer long-term growth of capital and reasonable income from dividends and interest. Moderate risk. IDS International Fund Invests primarily in common stocks of foreign companies that offer potential for superior growth. The fund may invest up to 20% of its assets in the U.S. market. (icon of) three flags IDS Strategy, Worldwide Growth Fund Invests primarily in common stocks of companies throughout the world that offer potential for superior growth. Holdings may range from small- to large-capitalization stocks, including those of companies involved in areas of rapid economic growth. (icon of) chess piece IDS Managed Retirement Fund Invests in a combination of common stocks, fixed-income investments and money market securities to seek a maximum total return through a combination of growth of capital and current income. (icon of) bird in a nest IDS Equity Plus Fund Invests primarily in a combination of moderate growth stocks, higher-yielding equities and bonds. Seeks growth of capital and income. (icon of) three apple trees PAGE 36 IDS Blue Chip Advantage Fund Invests in selected stocks from a major market index. Securities purchased are those recommended by IDS research analysts as the best from each industry represented on the index. Offers potential for long-term growth as well as dividend income. (icon of) ribbon IDS Stock Fund Invests in common stock of companies representing many sectors of the economy. Seeks current income and growth of capital. (icon of) building with columns IDS Strategy, Equity Fund Invests primarily in undervalued common stocks that offer potential for growth of capital and income. (icon of) chess piece IDS Utilities Income Fund Invests primarily in the stocks of public utility companies to seek high current income and growth of income and capital with reduced volatility. (icon of) electrical cord IDS Diversified Equity Income Fund Invests primarily in high-yielding common stocks to seek high current income and, secondarily, to benefit from the growth potential offered by stock investments. (icon of) four puzzle pieces IDS Mutual Invests in a balance between common stocks and senior securities (preferred stocks and bonds). Seeks a balance of growth of capital and current income. (icon of) scale of justice Growth investments Funds in this group seek capital growth, primarily from common stocks. They are high risk mutual funds with a potential for high reward. PAGE 37 IDS Discovery Fund Invests in small- and medium-size, growth-oriented companies emphasizing technological innovation and productivity enhancement. Buys and holds larger growth-oriented stocks. (icon of) ship IDS Strategy, Aggressive Equity Fund Invests primarily in common stocks of companies that are selected for their potential for above-average growth. Above-average means that their growth potential is better, in the opinion of the portfolio's investment manager, than the Standard & Poor's Corporation (S&P) 500 Stock Index. (icon of) chess piece IDS Growth Fund Invests primarily in companies that have above-average potential for long-term growth as a result of new management, marketing opportunities or technological superiority. (icon of) flower IDS Global Growth Fund Invests in stocks of companies throughout the world that are positioned to meet market needs in a changing world economy. These companies offer above-average potential for long-term growth. (icon of) world IDS New Dimensions Fund Invests primarily in companies with significant growth potential due to superiority in technology, marketing or management. The Fund frequently changes its industry mix. (icon of) dimension IDS Progressive Fund Invests primarily in undervalued common stocks. The fund holds stocks for the long term with the goal of capital growth. (icon of) shooting star Specialty growth investment This fund aggressively seeks capital growth as a hedge against inflation. PAGE 38 IDS Precious Metals Fund Invests primarily in the securities of foreign or domestic companies that explore for, mine and process or distribute gold and other precious metals. This is the most aggressive and most speculative IDS mutual fund. (icon of) cart of precious gems For more complete information about any of these funds, including charges and expenses, you can obtain a prospectus by contacting your financial planner or writing to IDS Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534. Read it carefully before you invest or send money. PAGE 39 Federal income tax information IDS Stock Fund, Inc. ___________________________________________________________________ The fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. 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 adviser on how to report distributions for state and local purposes. IDS Stock Fund, Inc. Fiscal year ended Oct. 31, 1994 Income distributions taxable as dividend income, 50.76% qualifying for deduction by corporations. Payable date Per share Dec. 29, 1993 $0.4432 March 30, 1994 0.1550 June 29, 1994 0.1600 Sept. 29, 1994 0.1525 Total $0.9107 Capital gain distribution taxable as long-term capital gain. Payable date Per share Dec. 29, 1993 $1.6372 Total distributions $2.5479 The distribution of $2.0804 per share, payable Dec. 29, 1993, consisted of $0.1325 derived from net investment income, $0.3107 from net short-term capital gains (a total of $0.4432 taxable as dividend income) and $1.6372 from net long-term capital gains. PAGE 40 Quick telephone reference IDS Telephone Transaction Service Redemptions and exchanges, dividend payments or reinvestments and automatic payment arrangements National/Minnesota: 800-437-3133 Mpls./St. Paul area: 671-3800 IDS Shareholder Service Fund performance, objectives and account inquiries 612-671-3733 TTY Service For the hearing impaired 800-846-4852 IDS Infoline Automated account information (TouchToneR phones only), including current fund prices and performance, account values and recent account transactions National/Minnesota: 800-272-4445 Mpls./St. Paul area: 671-1630 Your IDS financial planner: IDS STOCK FUND IDS Tower 10 Minneapolis, MN 55440-0010 PAGE 41 STATEMENT OF DIFFERENCES Difference Description 1) The layout is different 1) Some of the layout in the throughout the annual report. annual report to shareholders is in two columns. 2) Headings. 2) The headings in the annual report and prospectus are placed in blue strip at the top of the page. 3) There are pictures, icons 3) Each picture, icon and and graphs throughout the graph is described in annual report and prospectus. parentheses. 4) Footnotes for charts and 4) The footnotes for each graphs are described at chart or graph are typed the left margin. below the description of the chart or graph. -----END PRIVACY-ENHANCED MESSAGE-----