-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I8fy4cQgil1kRcjF4pEfDib0Pi1wo38Lw7cZoWECnTC34pQP6y5peZ7Qy9CtEh9C Z1lDkPLXV2nQBq60xp+atw== 0000820027-95-000490.txt : 19951005 0000820027-95-000490.hdr.sgml : 19951005 ACCESSION NUMBER: 0000820027-95-000490 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950731 FILED AS OF DATE: 19951004 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDS GROWTH FUND INC CENTRAL INDEX KEY: 0000049702 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 410329910 STATE OF INCORPORATION: MN FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02111 FILM NUMBER: 95578462 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126712772 N-30D 1 IDS GROWTH FUND, INC. PAGE 1 IDS Growth Fund 1995 annual report (prospectus enclosed) (Icon of) A flower The goal of IDS Growth Fund, Inc. is long-term growth of capital. The fund invests primarily in common stocks and securities convertible into common stocks. (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.) Distributed by American Express Financial Advisors Inc. PAGE 2 (Icon of) A flower Going for Growth In the long run, a company's stock price usually reflects its business fortunes. Therefore, if a company thrives, its stock tends to follow suit. That's why many long-term investors, including Growth Fund, focus on growth stocks - those of companies that enjoy rising sales and profits. While there will be interruptions along the way, patient investors look forward to sharing in that same prosperity. 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. 1995 annual report From the president 4 From the portfolio manager 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 21 IDS mutual funds 24 Federal income tax information 27 1995 prospectus The fund in brief Goal 3p Types of fund investments and their risks 3p Proposed conversion to master/feeder structure 3p Manager and distributor 3p Portfolio manager 3p Alternative sales arrangements 3p Sales charge and fund expenses 4p Performance Financial highlights 6p Total returns 7p Key terms 9p Investment policies and risks Facts about investments and their risks 10p Valuing assets 13p How to buy, exchange or sell shares Alternative sales arrangements 14p How to buy shares 17p How to exchange shares 20p How to sell shares 21p Reductions and waivers of the sales charge 26p Special shareholder services Services 31p Quick telephone reference 31p Distributions and taxes Dividend and capital gain distributions 32p Reinvestments 33p Taxes 34p How the fund is organized Shares 37p Voting rights 37p Shareholder meetings 37p Special considerations regarding master/feeder structure 38p Directors and officers 41p Investment manager and transfer agent 43p Distributor 44p About American Express Financial Corporation General information 46p Appendix Descriptions of derivative instruments 47p PAGE 4 To our shareholders (Photo of) William R. Pearce, President of the fund (Photo of) Mitzi Malevich, Portfolio manager From the president As I indicated in the fund's previous reports, new agreements between the fund and American Express Financial Corporation (AEFC) were approved by shareholders in November 1994. The new agreements became effective when the fund began offering multiple classes of shares on March 20, 1995. The advantage of offering more than a single class of shares is that investors may choose how they wish to pay sales charges. A portion of these charges compensates your American Express financial advisor (formerly called your IDS planner), who is committed to providing you with outstanding services. Adding new classes of mutual fund shares does make the presentation of financial information in this report more complex. However, we will continue our effort to make the reports easier to read and understand. Meanwhile, your American Express financial advisor is available to answer your questions. William R. Pearce From the portfolio manager Effective stock selection and a powerful market rally combined to produce a generous gain for IDS Growth Fund shareholders during the past fiscal year. The fund took full advantage of the improving investment environment, posting a return for the August 1994 through July 1995 period that was above that of both the overall stock market and the average for growth mutual funds. (The stock market's return is measured by the Standard & Poor's 500 Stock Index, an unmanaged group of stocks commonly used to gauge the market's performance. As detailed in the accompanying table, a substantial part of the fund's return for the 12 months came in the form of a capital gain, which reduced the fund's net asset value by a like amount.) Patience pays off After struggling throughout most of 1994, the stock market got off to a strong start in 1995. The driving factors included an ongoing low inflation rate, good corporate profits and declining long-term interest rates - an almost sure-fire formula for rising stock prices. With those factors in place, the market enjoyed its strongest sustained advance in years from January through July. PAGE 5 To the particular benefit of this fund, growth stocks, which had languished for many months, responded particularly well to the positive environment. More specifically, stocks of technology companies, especially those of semiconductor producers, comprised the largest portion of the portfolio and were often at the forefront of the market rally. Complementing the gains by those issues were good performances by health care and financial services stocks, to which the fund also had considerable exposure. A long-term view Stock turnover was slight during the past year, amounting to no more than occasional portfolio pruning when holdings either reached the price targets or failed to meet my expectations. This is reflective of the fund's ongoing approach of holding stocks for years, rather than months, assuming their potential for gain remains promising. Also consistent with my fundamental investment style, the fund carried little cash reserves during the period. Put another way, I keep nearly all of the portfolio invested in stocks, concentrating on those of rapidly growing companies, with minimal regard for type of business. As has been the case for some time, many of those companies fall into the technology group; therefore, the fund usually owns a substantial amount of technology stocks. My aggressive strategy also contributed to the funds' performance in recent months, as the return from stocks far exceeded that generated by cash. While I expect this low cash position to be a benefit during positive market trends, it will also likely mean more negative performance during downturns. In the long run, however, I believe results for shareholders will be enhanced. As the fund enters a new fisal year, I think the key to the market's direction will be long-term interest rates. If they take a stable-to-declining path, stocks will be in good position to advance, though it's unlikely they will be able to match the pace of the first half of the year. Another potential ally to the market is the possibility of a reduction in the capital gains tax. That, should it occur, may be some time away, however. In the meantime, I will continue my search for rapidly growing companies with bright business prospects, regardless of industry sector. Mitzi Malevich Class A 12-month performance (All figures per share) Net assest value (NAV) July 31, 1995 $21.50 July 31, 1994 $17.39 Increase $ 4.11 Distributions Aug. 1, 1994-July 31, 1995 From income $ 0.04 From capital gains $ 1.51 Total distributions $ 1.55 Total return** +35.2%*** Class B March 20, 1995-July 31, 1995 (All figures per share) Net asset value (NAV) July 31, 1995 $21.45 March 20, 1995* $17.85 Increase $ 3.60 Distributions March 20, 1995*-July 31, 1995 From income $ -- From capital gains $ -- Total distributions $ -- Total return** +20.2%*** Class Y March 20, 1995-July 31, 1995 (All figures per share) Net asset value (NAV) July 31, 1995 $21.51 March 20, 1995* $17.85 Increase $ 3.66 Distributions March 20, 1995*-July 31, 1995 From income $ -- From capital gains $ -- Total distributions $ -- Total return** +20.5%*** *Inception date. **The prospectus discusses the effects of sales charges, if any, on the various classes. ***The total return is a hypothetical investment in the fund with all distributions reinvested. PAGE 6
IDS Growth Fund, Inc. Your fund's ten largest holdings Pie Chart: The ten holdings listed here make up 24.85% of the fund's net assets ____________________________________________________________________________________________________ Percent of Value (fund's net assets) (as July 31, 1995) ____________________________________________________________________________________________________ Tellabs 3.12% $44,500,000 Designer, manufacturer and marketer of a broad range of products and equipment for use by telephone companies, the Bell System, specialized common carriers and other providers of telecommunication services. Oracle Systems 2.64 37,687,500 One of the largest independent vendors of database-management software. Oracle offers a wide variety of new products, enhancements and applications software, supported by excellent service. Boston Scientific 2.53 36,153,250 Developer, manufacturer and marketer of medical devices. The company's products are used in a broad range of medical specialties, including cardiology, vascular surgery, urology, gastroenterology and radiology. Andrew 2.50 35,625,000 Producer of antennas, antenna systems, coaxial cable, and products and services supporting the integration of voice, data and video. End users are telecommunications companies, radio equipment companies, television stations, utilities distributors, corporate telecommunication network, and federal, local and foreign governments. Maxim Integrated 2.50 35,475,000 Designer and manufacturer of a broad line of analog and mixed signal semiconductors for use in a variety of electric products. The company's customer base is diversified and includes sales to computer, consumer/automotive, telecommunications and aerospace industries as well as industrial markets. First Financial Management 2.45 35,000,000 A leading provider of information services, including processing credit card transactions and health-care claims. Merrill Lynch 2.33 33,300,000 One of the largest and diversified securities firms in the world. The company broker securities, options, commodities, and futures; underwriters selected investments products and provides investment banking services. Coca-Cola 2.31 32,937,500 The world's largest producer and distributor of soft drinks, concentrates and syrups. Nucor 2.25 32,250,000 One of the largest and most profitable domestic steel mini-mills. Nucor is a leading producer of the joist and girders used in construction. Royal Dutch Petroleum 2.22 31,750,000 A major oil company that includes Royal Dutch (the Dutch version) and Shell Transport (the English version).
PAGE 7 Making the most of your fund Average annual total return (as of July 31, 1995) Class A 1 year 5 years 10 years +28.39% +14.93% +15.71% Total returns for Class A, Class B and Class Y for the period from March 20, 1995 to July 31, 1995 were +14.43, +15.18 and +20.50, respectively. March 20, 1995 was the inception date for Class B and Class Y. Total return for Class A is shown for comparative purposes. The performance of Class B and Class Y will vary from the performance of Class A based on differences in sales charges and fees. 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 sales charge, as discussed in the prospectus. 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 invest in 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. (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. PAGE 8 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. Class A* How your $10,000 has grown in IDS Growth Fund Average annual total return (as of July 31, 1995) $43,051 Growth Fund 1 year 5 years 10 years +28.39% +14.93% +15.71% S&P 500 Stock Index Lipper Small Co. Growth Fund Index $9,500 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 * The graph above is for Class A only. Class B and Class Y are not shown. Total returns for Class A, Class B and Class Y for the period from March 20, 1995 to July 31, 1995 were +14.43, +15.18, +20.50, respectively. March 20, 1995 was the inception date for Class B and Class Y. Total return for Class A is shown for comparative purposes. The performance of Class B and Class Y will vary from the performance of Class A based on differences in sales charges and fees. Assumes: Holding period from 7/31/85 to 7/31/95. 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 $31,409. 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. Lipper Growth Fund Index, published by Lipper Analytical Services, Inc., includes 30 funds that are generally similar to this fund, although some funds in the index may have somewhat different investment policies or objectives. On the graph above you can see how the fund's total return compared to two widely cited unmanaged performance indexes, the S&P 500 Stock Index and the Lipper Growth Fund Index. In comparing Growth Fund to the two indexes, you should take into account the fact that the fund's performance reflects the maximum sales charge of 5%, while such 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. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 9 Independent auditors' report The board of directors and shareholders IDS Growth Fund, Inc.: We have audited the accompanying statement of assets and liabilities, including the schedule of investments in securities, of IDS Growth Fund, Inc. as of July 31, 1995, 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 July 31, 1995, and the financial highlights for each of the years in the ten-year period ended July 31, 1995. 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 Growth Fund, Inc. at July 31, 1995, 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 July 31, 1995, 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 September 1, 1995 PAGE 10
Financial statements Statement of assets and liabilities IDS Growth Fund, Inc. July 31, 1995 _____________________________________________________________________________________________________________ Assets _____________________________________________________________________________________________________________ Investments in securities, at value (Note 1) (identified cost $920,612,671) $1,439,255,595 Cash in bank on demand deposit 3,733,073 Receivable for investment securities sold 2,029,000 Dividends and accrued interest receivable 417,958 _____________________________________________________________________________________________________________ Total assets 1,445,435,626 _____________________________________________________________________________________________________________ Liabilities _____________________________________________________________________________________________________________ Payable for investment securities purchased 11,794,511 Payable upon return of securities loaned (Note 4) 6,301,000 Accrued investment management services fee 94,071 Accrued distribution fee 3,095 Accrued service fee 27,608 Accrued transfer agency fee 17,285 Accrued administration services fee 7,697 Other accrued expenses 100,923 _____________________________________________________________________________________________________________ Total liabilities 18,346,190 _____________________________________________________________________________________________________________ Net assets applicable to outstanding capital stock $1,427,089,436 _____________________________________________________________________________________________________________ Represented by _____________________________________________________________________________________________________________ Capital stock -- authorized 10,000,000,000 shares of $.01 par value; $ 663,740 Additional paid-in capital 869,257,364 Undistributed net investment income 756,145 Accumulated net realized gain (Note 1) 37,769,263 Unrealized appreciation 518,642,924 _____________________________________________________________________________________________________________ Total -- representing net assets applicable to outstanding capital stock $1,427,089,436 _____________________________________________________________________________________________________________ Net assets applicable to outstanding shares: Class A $1,380,428,247 Class B $ 38,437,214 Class Y $ 8,223,975 Net asset value per share of outstanding capital stock: Class A shares 64,199,790 $ 21.50 Class B shares 1,791,988 $ 21.45 Class Y shares 382,273 $ 21.51 See accompanying notes to financial statements. PAGE 11 Financial statements Statement of operations IDS Growth Fund, Inc. July 31, 1995 _____________________________________________________________________________________________________________ Investment income _____________________________________________________________________________________________________________ Income: Dividends (net of foreign taxes withheld of $182,694) $ 9,005,034 Interest 3,251,337 _____________________________________________________________________________________________________________ Total income 12,256,371 _____________________________________________________________________________________________________________ Expenses (Note 2): Investment management services fee 7,125,802 Distribution fee Class A 327,388 Class B 46,918 Transfer agency fee 1,346,147 Incremental transfer agency fee - Class B 1,437 Service fee Class A 783,617 Class B 10,929 Administrative services fee 223,922 Compensation of directors 13,622 Compensation of officers 8,483 Custodian fees 106,075 Postage 101,682 Registration fees 106,411 Reports to shareholders 79,391 Audit fees 25,000 Administrative 5,597 Other 17,439 _____________________________________________________________________________________________________________ Total expenses 10,329,860 _____________________________________________________________________________________________________________ Investment income -- net 1,926,511 _____________________________________________________________________________________________________________ Realized and unrealized gain -- net _____________________________________________________________________________________________________________ Net realized gain on security transactions (Note 3) 47,367,171 Net change in unrealized appreciation or depreciation 305,991,050 _____________________________________________________________________________________________________________ Net gain on investments 353,358,221 _____________________________________________________________________________________________________________ Net increase in net assets resulting from operations $ 355,284,732 _____________________________________________________________________________________________________________ See accompanying notes to financial statements.
PAGE 12
Financial statements Statements of changes in net assets IDS Growth Fund, Inc. Year ended July 31, 1995 _____________________________________________________________________________________________________________ Operations and distributions 1995 1994 _____________________________________________________________________________________________________________ Investment income -- net $ 1,926,511 $ 1,053,685 Net realized gain on investments 47,367,171 132,940,828 Net change in unrealized appreciation or depreciation 305,991,050 (69,264,677) _____________________________________________________________________________________________________________ Net increase in net assets resulting from operations 355,284,732 64,729,836 _____________________________________________________________________________________________________________ Distributions to shareholders from: Net investment income Class A (2,221,716) (34,025) Net realized gain Class A (83,810,550) (94,040,848) _____________________________________________________________________________________________________________ Total distributions (86,032,266) (94,074,873) _____________________________________________________________________________________________________________ Capital share transactions (Note 5) _____________________________________________________________________________________________________________ Proceeds from sales Class A shares (Note 2) 250,703,122 100,957,458 Class B shares 35,052,302 -- Class Y shares 7,107,887 -- Reinvestment of distribution at net asset value Class A shares 84,354,729 92,378,509 Payments for redemptions Class A shares (170,480,957) (144,922,563) Class B shares (Note 2) (402,110) -- Class Y shares (121,596) -- _____________________________________________________________________________________________________________ Increase in net assets from capital share transactions 206,213,377 48,413,404 _____________________________________________________________________________________________________________ Total increase in net assets 475,465,843 19,068,367 Net assets at beginning of year 951,623,593 932,555,226 _____________________________________________________________________________________________________________ Net assets at end of year (including undistributed net investment income of $(756,145 and $1,049,783) $1,427,089,436 $951,623,593 _____________________________________________________________________________________________________________ See accompanying notes to financial statements.
PAGE 13 Notes to financial statements IDS Growth 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. The fund offers Class A, Class B and Class Y shares. Class A shares are sold with a front-end sales charge. Class B shares, which the fund began offering on March 20, 1995, may be subject to a contingent deferred sales charge. Class B shares automatically convert to Class A after eight years. Class Y shares, which the fund also began offering on March 20, 1995, have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend, liquidation and other rights, and the same terms and conditions, except that the level of distribution fee, transfer agency fee, and service fee (class specific expenses) differs among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. 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, including illiquid securities, 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. Option 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 the 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 14 ___________________________________________________________________ 1. Summary of significant accounting policies (continued) 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 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 dividend, interest income and foreign withholding taxes. 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. PAGE 15 ___________________________________________________________________ 1. Summary of significant accounting policies (continued) 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. 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 $1,567 resulting in a net reclassification adjustment to decrease paid-in-capital by $1,567. Dividends to shareholders An annual dividend declared and paid at the end of the calendar year from net investment income is reinvested in additional shares of the fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. Other 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 a prior agreement that ended March 19, 1995, the fund aid AEFC a fee for managing its investments, recordkeeping and other specified services. The fee was 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 0.23% 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 Fund Index. The maximum adjustment is PAGE 16 ___________________________________________________________________ 2. Expenses and sales charges (continued) 0.12% 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 $384,915 for the year ended July 31, 1995. Also under the terms of a prior agreement, the fund paid AEFC 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 was reduced by earnings on monies pending shareholder redemptions. Effective March 20, 1995, when the fund began offering multiple classes of shares, the fund entered into agreements with AEFC for managing its portfolio, providing administrative services and serving as transfer agent as follows: Under its Investment Management Services Agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the fund's average daily net assets in reducing percentages from 0.60% to 0.50% annually. The performance incentive adjustment remains unchanged from the prior agreement. Under an Administrative Services Agreement, the fund pays AEFC for administration and accounting services at a percentage of the fund's average daily net assets in reducing percentages from 0.05% to 0.03% annually. Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts and records. The fund pays AEFC an annual fee per shareholder account for this services as follows: o Class A $15 o Class B $16 o Class Y $15 Also effective March 20, 1995, the fund entered into agreements with American Express Financial Advisors Inc. for distribution and shareholder servicing - related services as follows: Under a Plan and Agreement of Distribution, the fund pays a distribution fee at an annual rate of 0.75% of the fund's average daily net assets attributable to Class B shares for distribution-related services. Under a Shareholder Service Agreement, the fund pays a fee for service provided to shareholders by financial advisors and other servicing agents. The fee is calculated at a rate of 0.175% of the fund's average daily net assets attributable to Class A and Class B shares. AEFC will assume and pay any expenses (except taxes and brokerage commissions) that exceed the most restrictive applicable state expense limitation. PAGE 17 ___________________________________________________________________ 2. Expenses and sales charges (continued) Sales charges by American Express Financial Advisors for distributing fund shares were $3,626,484 for Class A and $1,173 for Class B for the year ended July 31, 1995. The fund also pays custodian fees to American Express Trust Company, an affiliate of AEFC. 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 plan expense amounted to $5,822 for the year ended July 31, 1995. ___________________________________________________________________ 3. Securities transactions Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $382,646,719 and $320,760,906, respectively, for the year ended July 31, 1995. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with AEFC were $114,136 for the year ended July 31, 1995. ___________________________________________________________________ 4. Lending of portfolio securities At July 31, 1995, securities valued at $5,909,375 were on loan to brokers. For collateral, the fund received $6,301,000 in cash. Income from securities lending amounted to $310,862 for the year ended July 31, 1995. 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. Capital share transactions Transactions in shares of capital stock for the periods indicated are as follows:
Period ended July 31, 1995 Year ended 07/31/94 Class A Class B* Class Y* Class A ________________________________________________________________________________________ Sold 13,666,035 1,812,389 388,348 5,591,678 Issued for reinvested 5,080,692 -- -- 5,261,628 distributions Redeemed (9,255,889) (20,401) (6,075) (7,981,768) _______________________________________________________________________________________ Net increase 9,490,838 1,791,988 382,273 2,871,538 _______________________________________________________________________________________ *Inception date was March 20, 1995.
PAGE 18 ___________________________________________________________________ 6. Financial highlights "Financial highlights" showing per share data and selected information is presented on page 5 of the prospectus. PAGE 19
Investments in securities IDS Growth Fund, Inc. July 31, 1995 (Percentages represents value of investments compared to net assets) ____________________________________________________________________________________________________________________________ Common stocks (93.9%) ____________________________________________________________________________________________________________________________ Issuer Shares Value(a) _____________________________________________________________________________________________________________________________ Airlines (1.7%) KLM Royal Dutch Air 300,000 (b,c) $ 11,175,000 Northwest Airlines 350,000 (b) 13,431,250 ____________ Total 24,606,250 _____________________________________________________________________________________________________________________________ Automotive & related (0.3%) Gentex 200,000 (b) 4,325,000 _____________________________________________________________________________________________________________________________ Banks and savings & loans (1.7%) First Chicago 400,000 24,300,000 _____________________________________________________________________________________________________________________________ Beverages & tobacco (2.3%) Coca-Cola 500,000 32,937,500 _____________________________________________________________________________________________________________________________ Building materials (2.0%) Clayton Homes 750,000 15,000,000 Tyco Intl 250,000 13,750,000 ____________ Total 28,750,000 _____________________________________________________________________________________________________________________________ Communications equipment (17.0%) ADC Telecom 400,000 (b) 15,500,000 AirTouch Communications 600,000 (b) 18,900,000 Andrew 600,000 (b) 35,625,000 Cisco Systems 400,000 (b) 22,250,000 Ericsson (LM) Tel Cl B ADR 1,600,000 (c) 29,800,000 Intl Family Entertainment Cl B 196,800 (b) 2,952,000 MFS Communications 500,000 (b) 18,750,000 Motorola 400,000 30,650,000 Scientific-Atlanta 600,000 12,900,000 StrataCom 200,000 (b) 10,850,000 Tellabs 1,000,000 (b) 44,500,000 ____________ Total 242,677,000 _____________________________________________________________________________________________________________________________ See accompanying notes to investments in securities. PAGE 20 Computers & office equipment (11.4%) Compaq Computer 600,000 (b) 30,450,000 Danka Business Systems ADR 800,000 (c) 23,900,000 Intuit 100,000 (b) 8,625,000 Microsoft 300,000 (b) 27,150,000 Oracle Systems 900,000 (b) 37,687,500 Softkey Intl 400,000 (b,d) 17,350,000 Solectron 500,000 (b) 18,187,500 ____________ Total 163,350,000 ______________________________________________________________________________________________________________________________ Electronics (8.2%) Applied Materials 200,000 (b) 20,700,000 Harman Intl 350,000 13,781,250 Intel 200,000 13,000,000 Maxim Integrated Products 600,000 (b) 35,475,000 MEMC Electronic 404,000 (b) 12,170,500 Vishay Intertechnology 528,287 (b) 21,659,747 ____________ Total 116,786,497 _____________________________________________________________________________________________________________________________ Energy (3.6%) Mobil 200,000 19,550,000 Royal Dutch Petroleum 250,000 (c) 31,750,000 ____________ Total 51,300,000 _____________________________________________________________________________________________________________________________ Energy equipment & services (2.4%) Fluor 250,000 14,125,000 Schlumberger 300,000 (c) 20,100,000 ____________ Total 34,225,000 _____________________________________________________________________________________________________________________________ Financial services (4.8%) First Financial Management 400,000 35,000,000 Merrill Lynch 600,000 33,300,000 ____________ Total 68,300,000 _____________________________________________________________________________________________________________________________ Health care (14.0%) Amgen 100,000 (b) 8,512,500 Boston Scientific 990,500 (b) 36,153,250 HEALTHSOUTH Rehab 1,600,000 (b) 30,800,000 Johnson & Johnson 300,000 21,525,000 Medtronics 250,000 20,500,000 Pfizer 600,000 30,300,000 Stryker 400,000 17,500,000 Teva Pharmaceutical Inds ADR 200,000 (c) 7,937,500 United Healthcare 600,000 27,150,000 ____________ Total 200,378,250 _____________________________________________________________________________________________________________________________ Health care services (0.7%) HealthCare COMPARE 291,400 (b) 9,907,600 _____________________________________________________________________________________________________________________________ Industrial equipment & services (4.2%) Caterpiller 350,000 24,631,250 Deere 300,000 26,962,500 Sanifill 250,000 (b) 8,218,750 ____________ Total 59,812,500 _____________________________________________________________________________________________________________________________ Insurance (1.0%) Travelers 300,000 14,212,500 _____________________________________________________________________________________________________________________________ Leisure time & entertainment (3.4%) Disney (Walt) 500,000 29,312,500 Duracell Intl 400,000 18,400,000 ____________ Total 47,712,500 _____________________________________________________________________________________________________________________________ Media (2.3%) Comcast 600,000 12,150,000 Tele-Communications 500,000 (b) 12,500,000 Thomas Nelson 375,000 (d) 8,015,625 ____________ Total 32,665,625 PAGE 21 _____________________________________________________________________________________________________________________________ Metals (3.6%) Birmingham Steel 799,100 15,582,450 Commercial Metals 100,000 2,837,500 Nucor 600,000 32,250,000 ____________ Total 50,669,950 _____________________________________________________________________________________________________________________________ Multi-industry conglomerates (3.1%) Alco Standard 300,000 24,412,500 Manpower 200,000 5,625,000 Olsten 400,000 14,000,000 ____________ Total 44,037,500 _____________________________________________________________________________________________________________________________ Restaurants & lodging (0.5%) Marriott Intl 200,000 7,250,000 _____________________________________________________________________________________________________________________________ Retail (4.0%) Best Buy 200,000 (b) 5,200,000 Home Depot 600,000 26,325,000 Nordstrom 300,000 12,075,000 Office Depot 200,000 (b) 5,875,000 Wal-Mart Stores 300,000 7,987,500 ____________ Total 57,462,500 _____________________________________________________________________________________________________________________________ Textiles & apparel (0.7%) St. John Knits 200,000 9,575,000 _____________________________________________________________________________________________________________________________ Utilities - telephone (1.0%) Century Telephone 500,000 14,250,000 _____________________________________________________________________________________________________________________________ Total common stocks (Cost: $820,848,248) $1,339,491,172 _____________________________________________________________________________________________________________________________
PAGE 22
Short-term securities (7.0%) _____________________________________________________________________________________________________________________________ Issuer Annualized Amount Value(a) yield on payable date of at purchase maturity _____________________________________________________________________________________________________________________________ U.S. government agencies (0.3%) Federal Home Loan Bank Western Financial Services 08-11-95 5.78% $3,100,000 $ 3,095,048 Federal Home Loan Mtge Disc Note 08-28-95 5.70 1,300,000 1,294,472 Federal Natl Mtge Assn Disc Note 08-14-95 5.68 300,000 299,388 _____________ Total 4,688,908 _____________________________________________________________________________________________________________________________ Commercial paper (6.7%) Alabama Power 08-25-95 5.76 5,800,000 5,777,844 Aon 08-10-95 5.75 5,700,000 5,691,849 AT&T Capital 08-18-95 5.93 3,700,000 3,689,709 Cargill Global Funding 08-18-95 5.72 1,300,000 (e) 1,296,489 Corporate Asset Funding 08-30-95 5.76 7,900,000 7,863,535 CPC Intl 08-30-95 5.75 2,900,000 (e) 2,886,637 08-30-95 5.76 4,500,000 (e) 4,479,229 Dun & Bradstreet 08-01-95 5.97 1,500,000 1,500,000 08-08-95 5.96 4,100,000 4,095,272 Metlife Funding 08-28-95 5.76 600,000 597,421 09-01-95 5.75 5,000,000 4,975,372 Natl Bank Detroit Canada 08-24-95 5.76 7,500,000 7,472,544 PACCAR Financial 08-24-95 5.76 3,200,000 3,188,285 Penney (JC) 09-06-95 5.76 4,300,000 4,275,404 09-07-95 5.76 4,000,000 3,976,484 Reed Elsevier 08-09-95 5.73 5,000,000 (e) 4,993,667 St. Paul Companies 08-21-95 5.75 3,800,000 (e) 3,787,946 Siemens 08-17-95 5.73 7,400,000 7,381,253 Toyota Motor Credit 08-01-95 5.97 1,400,000 1,400,000 08-16-95 5.73 5,000,000 4,988,125 USL Capital 08-28-95 5.77 5,800,000 5,775,075 USAA Capital 08-22-95 5.70 5,000,000 4,983,375 _____________ Total 95,075,515 _____________________________________________________________________________________________________________________________ Total short-term securities (Cost: $99,764,423) $ 99,764,423 _____________________________________________________________________________________________________________________________ Total investments in securities (Cost: $920,612,671)(f) $1,439,255,595 _____________________________________________________________________________________________________________________________ Notes to investments in securities _____________________________________________________________________________________________________________________________ PAGE 23 (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Presently non-income producing. (c) Foreign security values are stated in U.S. dollars. Foreign securities represent 8.7% of the fund's net assets as of July 31, 1995. (d) Security is partially or fully on loan. See Note 4 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 the guidelines established by the board of directors. (f) At July 31, 1995, the cost of securities for federal income tax purposes was $920,612,671 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $524,864,324 Unrealized depreciation (6,221,400) _______________________________________________________________________________________________ Net unrealized appreciation $518,642,924 _______________________________________________________________________________________________
PAGE 24 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 25 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 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 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 PAGE 26 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 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 Select 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 IDS Blue Chip Advantage Fund Invests in selected stocks from a major market index. Securities purchased are those recommended by our 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 Equity Value Fund Invests primarily in undervalued common stocks that offer potential for growth of capital and income. (icon of) three growing flowers PAGE 27 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. 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 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 PAGE 28 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. 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 advisor or writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534. Read it carefully before you invest or send money. PAGE 29 Federal income tax information IDS Growth 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. The dividends listed below were reported to you on a Form 1099-DIV, Dividends and Distributions, last January. Shareholders should consult a tax advisor on how to report distributions for state and local purposes. IDS Growth Fund, Inc. Fiscal year ended July 31, 1995 Income distributions -- taxable as dividend income, 100% qualifying for deductions by corporations. Payable date Per share ____________________________________________________ Dec. 29, 1994 $0.0400 Capital gain distribution -- taxable as long-term capital gain. Payable date Per share ____________________________________________________ Dec. 29, 1994 $1.5100 ____________________________________________________ Total distributions $1.5500 ____________________________________________________ PAGE 30 Quick telephone reference American Express 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 American Express Shareholder Service Fund performance, objectives and account inquiries 612-671-3733 TTY Service For the hearing impaired 800-846-4852 American Express 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 AMERICAN EXPRESS FINANCIAL ADVISORS IDS Growth Fund IDS Tower 10 Minneapolis, MN 55440-0010 PAGE 31 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-----