-----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, U7/YBZ8kepZvL6X9Og5EjE8pK11dHkMvT/N4QXVw3QBg0BoxHSAZKdb0NpRNyT7o Jo2IQdRbpxSApHxpvf5D1A== 0000820027-99-000206.txt : 19990325 0000820027-99-000206.hdr.sgml : 19990325 ACCESSION NUMBER: 0000820027-99-000206 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990131 FILED AS OF DATE: 19990324 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: SEC FILE NUMBER: 811-02111 FILM NUMBER: 99571083 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 1999 SEMIANNUAL REPORT (icon of) ruler The goal of IDS Growth Fund, Inc. is long-term growth of capital. Distributed by American Express Financial Advisors Inc. AMERICAN EXPRESS Financial Advisors 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. CONTENTS From the Chairman 3 From the Portfolio Manager 3 Fund Facts 5 The 10 Largest Holdings 6 Financial Statements (Fund) 7 Notes to Financial Statements (Fund) 10 Financial Statements (Portfolio) 16 Notes to Financial Statements (Portfolio) 19 Investments in Securities 24 From the Chairman (picture of) Arne H. Carlson Arne H. Carlson Chairman of the board It is an honor for me to join the IDSMutual Fund Group as chairman of the board and chief executive officer for each of the funds. I have served for the past eight years as governor of Minnesota and also for the past 20 years as a constitutional officer responsible for the pension investments made on behalf of governmental employees. My responsibility in the coming years is to serve your interests. By law, half the members of a mutual fund board must be independent of their investment manager and distributor. I am one of those persons. I am not an employee of American Express Financial Corporation, nor do I own stock in American Express Company. Both are fine companies, but the law clearly states that to fully represent your interests I must be independent. Having said that, I have a great deal of respect for the capabilities of American Express Financial Corporation and for the services it provides investors. Your financial advisor assists you in financial planning, conducts regular investment reviews, and responds to your questions and needs. This is a very personal service that makes AEFCa partner in your financial future. I know that AEFC has an investment focus on the long-term performance of our economy. AEFC wants you to participate in that growth. Our board is here to serve you and to represent your interests in a professional manner. Arne H. Carlson From the Portfolio Manager (picture of) Mitzi Malevich Mitzi Malevich Portfolio manager Despite a severe setback at the outset of the period, IDS Growth Fund enjoyed a very productive six months. For the first half of the fiscal year -- August 1998 through January 1999 -- the total return from the Fund's Class A shares was 16.50%. (A portion of the return came in the form of a capital gain, which was paid to shareholders in December 1998 and reduced the Fund's net asset value by a like amount at that time.) As the period began, the fallout from crumbling economies in Asia, Russia and Latin America was taking a toll on U.S. stocks. The prevailing view was that American companies' profits would suffer because of reduced business overseas, and that technology-related companies were especially vulnerable. The result was heavy stock-selling that, by the end of August, drove the Fund's value down by nearly 20%. But, in another display of the remarkable resilience it has shown in recent years, the market eventually righted itself and began a tentative advance. Soon, buoyed by three reductions in short-term interest rates by the Federal Reserve Board during the fall, the recovery turned into a roaring rally. The Fund responded in strong fashion, recording five straight months of healthy gains. TECH LEADS THE WAY Leading the comeback were technology stocks, easily the largest exposure for the Fund. Prominent performers included Microsoft, Cisco Systems, Worldcom, IBM and Intel. Early in the period, I increased the technology exposure by adding to several holdings that had experienced price declines. That additional buying, along with subsequent substantial price run-ups on a number of stocks, pushed the technology exposure to approximately 50% of total Fund assets by period-end. Looking ahead, concerns about the strength of corporate earnings dominated the investment environment as the new fiscal year began in February. While it's true that earnings could present a periodic problem for the market in the months ahead, I think the favorable factors of low inflation and a still-healthy economy are likely to stay with us. As for the Fund, I continue to concentrate investments in stocks of companies that impress me as having excellent long-term profit potential. Mitzi Malevich IDS GROWTH FUND Fund Facts Class A -- 6-month performance (All figures per share) Net asset value (NAV) Jan. 31, 1999 $40.74 July 31, 1998 $36.58 Increase $ 4.16 Distributions -- Aug. 1, 1998 - Jan. 31, 1999 From income $ -- From capital gains $ 1.70 Total distributions $ 1.70 Total return* +16.50%** Class B -- 6-month performance (All figures per share) Net asset value (NAV) Jan. 31, 1999 $39.46 July 31, 1998 $35.61 Increase $ 3.85 Distributions -- Aug. 1, 1998 - Jan. 31, 1999 From income $ -- From capital gains $ 1.70 Total distributions $ 1.70 Total return* +16.06%** Class Y -- 6-month performance (All figures per share) Net asset value (NAV) Jan. 31, 1999 $40.95 July 31, 1998 $36.74 Increase $ 4.21 Distributions -- Aug. 1, 1998 - Jan. 31, 1999 From income $ -- From capital gains $ 1.70 Total distributions $ 1.70 Total return* +16.55%** *The prospectus discusses the effect of sales charge, if any, on the various classes. **The total return is a hypothetical investment in the Fund with all distributions reinvested. The 10 Largest Holdings Percent Value (of net assets) (as of Jan. 31, 1999) Microsoft 5.73% $367,499,999 Cisco Systems 5.40 345,843,750 MCI WorldCom 4.85 311,025,000 EMC 4.42 283,075,000 Intel 4.40 281,875,000 Tellabs 4.15 265,825,000 Intl Business Machines 3.72 238,225,000 Texas Instruments 3.55 227,412,500 Pfizer 3.21 205,800,000 Applied Materials 2.96 189,562,500 For further detail about these holdings, please refer to the section entitled "Investments in Securities" herein. (icon of) pie chart The 10 holdings listed here make up 42.39% of net assets
Financial Statements Statement of assets and liabilities IDS Growth Fund Jan. 31, 1999 (Unaudited) Assets Investment in Growth Portfolio (Note 1) $6,384,841,202 -------------- Liabilities Disbursements in excess of cash on demand deposit 136 Accrued distribution fee 25,438 Accrued service fee 27,935 Accrued transfer agency fee 15,677 Accrued administrative services fee 6,708 Other accrued expenses 168,720 ------- Total liabilities 244,614 ------- Net assets applicable to outstanding capital stock $6,384,596,588 ============== Represented by Capital stock-- $.01 par value (Note 1) $ 1,576,427 Additional paid-in capital 3,512,971,860 Net operating loss (3,997,770) Accumulated net realized gain (loss) (74,493,781) Unrealized appreciation (depreciation) on investments 2,948,539,852 ------------- Total -- representing net assets applicable to outstanding capital stock $6,384,596,588 ============== Net assets applicable to outstanding shares: Class A $4,328,556,811 Class B $1,286,149,459 Class Y $ 769,890,318 Net asset value per share of outstanding capital stock: Class A shares 106,246,539 $ 40.74 Class B shares 32,594,951 $ 39.46 Class Y shares 18,801,183 $ 40.95 See accompanying notes to financial statements.
Statement of operations IDS Growth Fund Six months ended Jan. 31, 1999 (Unaudited) Investment income Income: Dividends $ 12,668,021 Interest 8,483,202 --------- Total income 21,151,223 ---------- Expenses (Note 2): Expenses allocated from Growth Portfolio 12,933,674 Distribution fee-- Class B 3,778,777 Transfer agency fee 2,697,848 Incremental transfer agency fee-- Class B 50,014 Service fee Class A 3,020,533 Class B 876,491 Class Y 298,371 Administrative services fees and expenses 1,052,007 Compensation of board members 6,316 Postage 122,285 Registration fees 308,413 Reports to shareholders 72,999 Audit fees 4,375 Other 17,605 ------ Total expenses 25,239,708 Earnings credits on cash balances (Note 2) (90,715) ------- Total net expenses 25,148,993 ---------- Investment income (loss) -- net (3,997,770) ---------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on security transactions (74,476,799) Net change in unrealized appreciation (depreciation) on investments 993,245,605 ----------- Net gain (loss) on investments 918,768,806 ----------- Net increase (decrease) in net assets resulting from operations $914,771,036 ============ See accompanying notes to financial statements.
Statements of changes in net assets IDS Growth Fund Jan. 31, 1999 July 31, 1998 Six months ended Year ended (Unaudited) Operations and distributions Investment income (loss) -- net $ (3,997,770) $ (15,832,745) Net realized gain (loss) on security transactions (74,476,799) 329,053,735 Net change in unrealized appreciation (depreciation) on investments 993,245,605 7,415,824 ----------- --------- Net increase (decrease) in net assets resulting from operations 914,771,036 320,636,814 ----------- ----------- Distributions to shareholders from: Net realized gain Class A (172,397,588) (90,606,005) Class B (52,232,570) (22,988,716) Class Y (29,774,192) (7,852,912) ----------- ---------- Total distributions (254,404,350) (121,447,633) ------------ ------------ Capital share transactions (Note 3) Proceeds from sales Class A shares (Note 2) 719,072,162 1,333,555,813 Class B shares 152,210,386 338,050,707 Class Y shares 209,747,183 488,734,157 Reinvestment of distributions at net asset value Class A shares 162,785,607 86,660,124 Class B shares 51,934,659 22,898,191 Class Y shares 29,774,192 7,852,912 Payments for redemptions Class A shares (678,310,956) (1,090,747,624) Class B shares (Note 2) (69,922,182) (87,327,778) Class Y shares (136,583,983) (122,660,109) ------------ ------------ Increase (decrease) in net assets from capital share transactions 440,707,068 977,016,393 ----------- ----------- Total increase (decrease) in net assets 1,101,073,754 1,176,205,574 Net assets at beginning of period 5,283,522,834 4,107,317,260 ------------- ------------- Net assets at end of period $6,384,596,588 $5,283,522,834 ============== ============== See accompanying notes to financial statements.
Notes to Financial Statements IDS Growth Fund (Unaudited as to Jan. 31, 1999) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of IDS Growth Fund, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. IDS Growth Fund, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the board. The Fund offers Class A, Class B and Class Y shares. o Class A shares are sold with a front-end sales charge. o Class B shares may be subject to a contingent deferred sales charge and automatically convert to Class A shares during the ninth calendar year of ownership. o Class Y shares have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend and liquidation rights. The 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. Investment in Growth Portfolio The Fund invests all of its assets in Growth Portfolio (the Portfolio), a series of Growth Trust (the Trust), an open-end investment company that has the same objectives as the Fund. This was accomplished by transferring the Fund's assets to the Portfolio in return for a proportionate ownership interest in the Portfolio. The Portfolio invests primarily in stocks of U.S. and foreign companies that appear to offer growth opportunities. The Fund records daily its share of the Portfolio's income, expenses and realized and unrealized gains and losses. The financial statements of the Portfolio are included elsewhere in this report and should be read in conjunction with the Fund's financial statements. The Fund records its investment in the Portfolio at the value that is equal to the Fund's proportionate ownership interest in the Portfolio's net assets. The percentage of the Portfolio owned by the Fund at Jan. 31, 1999 was 99.61%. Valuation of securities held by the Portfolio is discussed in Note 1 of the Portfolio's "Notes to financial statements" (included elsewhere in this report). Use of estimates Preparing financial statements that conform to generally accepted accounting principles requires management to make estimates (e.g., on assets and liabilities) that could differ from actual results. Federal taxes The Fund's policy is to comply with all sections of the Internal Revenue Code that apply to regulated investment companies and to distribute all of its taxable income to the shareholders. No provision for income or excise taxes is thus required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of deferred 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. Dividends to shareholders An annual dividend from net investment income, declared and paid at the end of the calendar year, 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. 2. EXPENSES AND SALES CHARGES In addition to the expenses allocated from the Portfolio, the Fund accrues its own expenses as follows: The Fund entered into an agreement with American Express Financial Corporation (AEFC) to provide administrative services. Under an Administrative Services Agreement, the Fund pays AEFC a fee for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.05% to 0.03% annually. Additional administrative service expenses paid by the Fund are office expenses, consultants' fees and compensation of officers and employees. Under this agreement, the Fund also pays taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees, and any other expenses properly payable by the Fund and approved by the board. Under a separate Transfer Agency Agreement, American Express Client Service Corporation (AECSC) maintains shareholder accounts and records. The Fund pays AECSC an annual fee per shareholder account for this service as follows: o Class A $15 o Class B $16 o Class Y $15 The Fund entered into agreements with American Express Financial Advisors Inc. for distribution and shareholder services. 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 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 and 0.10% of the Fund's average daily net assets attributable to Class Y shares. Sales charges received by American Express Financial Advisors Inc. for distributing Fund shares were $4,764,150 for Class A and $475,046 for Class B for the six months ended Jan. 31, 1999. During the six months ended Jan. 31, 1999, the Fund's transfer agency fees were reduced by $90,715 as a result of earnings credits from overnight cash balances.
3. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows: Six months ended Jan. 31, 1999 Class A Class B Class Y Sold 21,015,706 4,579,790 6,073,595 Issued for reinvested distributions 4,405,567 1,450,126 801,761 Redeemed (19,806,790) (2,106,821) (3,900,273) Net increase (decrease) 5,614,483 3,923,095 2,975,083 Year ended July 31, 1998 Class A Class B Class Y Sold 38,522,405 9,983,484 14,058,750 Issued for reinvested distributions 2,812,368 759,904 253,811 Redeemed (31,346,336) (2,553,367) (3,507,138) Net increase (decrease) 9,988,437 8,190,021 10,805,423 4. BANK BORROWINGS The Fund entered into a revolving credit agreement with U.S. Bank, N.A., whereby the Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund must have asset coverage for borrowings not to exceed the aggregate of 333% of advances equal to or less than five business days plus 367% of advances over five business days. The agreement, which enables the Fund to participate with other IDS Funds, permits borrowings up to $200 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.05% per annum. The Fund had no borrowings outstanding during the six months ended Jan. 31, 1999.
5. FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating the Fund's results. Fiscal period ended July 31, Per share income and capital changesa Class A 1999b 1998 1997 1996 1995 Net asset value, beginning of period $36.58 $35.47 $23.16 $21.50 $17.39 Income from investment operations: Net investment income (loss) -- (.07) (.05) -- .03 Net gains (losses) (both realized and unrealized) 5.86 2.14 13.04 2.81 5.63 Total from investment operations 5.86 2.07 12.99 2.81 5.66 Less distributions: Dividends from net investment income -- -- -- (.01) (.04) Distributions from realized gains (1.70) (.96) (.68) (1.14) (1.51) Total distributions (1.70) (.96) (.68) (1.15) (1.55) Net asset value, end of period $40.74 $36.58 $35.47 $23.16 $21.50 Ratios/supplemental data Class A 1999b 1998 1997 1996 1995 Net assets, end of period (in millions) $4,329 $3,681 $3,215 $1,871 $1,380 Ratio of expenses to average daily net assetsc 0.85%d .87% .97% 1.04% .93% Ratio of net investment income (loss) to average daily net assets (.01%)d (.22%) (.18%) --% .18% Portfolio turnover rate (excluding short-term securities) 11% 28% 24% 22% 30% Total returne 16.50% 6.32% 57.00% 13.29% 35.15% a For a share outstanding throughout the period. Rounded to the nearest cent. b Six months ended Jan. 31, 1999 (Unaudited). c Effective fiscal year 1996, expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. d Adjusted to an annual basis. e Total return does not reflect payment of a sales charge.
Fiscal period ended July 31, Per share income and capital changesa Class B Class Y 1999b 1998 1997 1996 1995c 1999b 1998 1997 1996 1995c Net asset value, beginning of period $35.61 $34.82 $22.92 $21.45 $17.85 $36.74 $35.60 $23.21 $21.51 $17.85 Income from investment operations: Net investment income (loss) (.12) (.29) (.22) (.02) (.03) .01 (.04) (.01) .01 .03 Net gains (losses) (both realized and unrealized) 5.67 2.04 12.80 2.63 3.63 5.90 2.14 13.08 2.85 3.63 Total from investment operations 5.55 1.75 12.58 2.61 3.60 5.91 2.10 13.07 2.86 3.66 Less distributions: Dividends from net investment income -- -- -- -- -- -- -- -- (.02) -- Distributions from realized gains (1.70) (.96) (.68) (1.14) -- (1.70) (.96) (.68) (1.14) -- Total distributions (1.70) (.96) (.68) (1.14) -- (1.70) (.96) (.68) (1.16) -- Net asset value, end of period $39.46 $35.61 $34.82 $22.92 $21.45 $40.95 $36.74 $35.60 $23.21 $21.51 Ratios/supplemental data Class B Class Y 1999b 1998 1997 1996 1995c 1999b 1998 1997 1996 1995c Net assets, end of period (in millions) $1,286 $1,021 $713 $281 $38 $770 $582 $179 $29 $8 Ratio of expenses to average daily net assetsd 1.61%e 1.63% 1.74% 1.82% 1.76%e .78%e .80% .85% .88% .85%e Ratio of net investment income (loss) to average daily net assets (.78%)e (.97%) (.94%) (.80%) (.70%)e .05%e (.12%) (.07%) .13% .26%e Portfolio turnover rate (excluding short-term securities) 11% 28% 24% 22% 30% 11% 28% 24% 22% 30% Total returnf 16.06% 5.52% 55.81% 12.43% 19.99% 16.55% 6.40% 57.23% 13.48% 20.36% a For a share outstanding throughout the period. Rounded to the nearest cent. b Six months ended Jan. 31, 1999 (Unaudited). c Inception date was March 20, 1995. d Effective fiscal year 1996, expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. e Adjusted to an annual basis. f Total return does not reflect payment of a sales charge.
Financial Statements Statement of assets and liabilities Growth Portfolio Jan. 31, 1999 (Unaudited) Assets Investments in securities, at value (Note 1): Investment in securities of unaffiliated issuers (identified cost $3,497,524,535) $6,466,470,830 Investment in securities of affiliated issuers (identified cost $60,266,600) 53,775,000 ---------- Total investments in securities (identified cost $3,557,791,135) 6,520,245,830 Dividends and accrued interest receivable 1,822,000 Receivable for investment securities sold 12,576,743 ---------- Total assets 6,534,644,573 ------------- Liabilities Disbursements in excess of cash on demand deposit 20,529,962 Payable upon return of securities loaned (Note 4) 104,100,000 Accrued investment management services fee 236,096 Other accrued expenses 70,528 ------ Total liabilities 124,936,586 ----------- Net assets $6,409,707,987 ============== See accompanying notes to financial statements.
Statement of operations Growth Portfolio Six months ended Jan. 31, 1999 (Unaudited) Investment income Income: Dividend $ 12,718,638 Interest 8,501,074 --------- Total income 21,219,712 ---------- Expenses (Note 2): Investment management services fee 12,752,323 Compensation of board members 10,686 Custodian fees 179,314 Audit fees 13,125 Other 35,917 ------ Total expenses 12,991,365 Earnings credits on cash balances (Note 2) (6,119) ------ Total net expenses 12,985,246 ---------- Investment income (loss) -- net 8,234,466 --------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on security transactions (Note 3) (74,639,617) Net change in unrealized appreciation (depreciation) on investments 996,898,130 ----------- Net gain (loss) on investments 922,258,513 ----------- Net increase (decrease) in net assets resulting from operations $930,492,979 ============ See accompanying notes to financial statements.
Statements of changes in net assets Growth Portfolio Jan. 31, 1999 July 31, 1998 Six months ended Year ended (Unaudited) Operations Investment income (loss) -- net $ 8,234,466 $ 5,304,359 Net realized gain (loss) on investments (74,639,617) 330,872,649 Net change in unrealized appreciation (depreciation) on investments 996,898,130 6,947,483 ----------- --------- Net increase (decrease) in net assets resulting from operations 930,492,979 343,124,491 Net contributions (withdrawals) from partners 173,117,371 831,889,423 ----------- ----------- Total increase (decrease) in net assets 1,103,610,350 1,175,013,914 Net assets at beginning of period 5,306,097,637 4,131,083,723 ------------- ------------- Net assets at end of period $6,409,707,987 $5,306,097,637 ============== ============== See accompanying notes to financial statements.
Notes to Financial Statements Growth Portfolio (Unaudited as to Jan. 31, 1999) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Growth Portfolio (the Portfolio) is a series of Growth Trust (the Trust) and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. Growth Portfolio invests primarily in stocks of U.S. and foreign companies that appear to offer growth opportunities. The Declaration of Trust permits the Trustees to issue non-transferable interests in the Portfolio. The Portfolios' significant accounting policies are summarized below: Use of estimates Preparing financial statements that conform to generally accepted accounting principles requires management to make estimates (e.g., on assets and liabilities) that could differ from actual results. Valuation of securities All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Option transactions To produce incremental earnings, protect gains and facilitate buying and selling of securities for investments, the Portfolio may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. The Portfolio also may buy and sell put and call options and write covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Portfolio gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Portfolio may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Portfolio pays a premium whether or not the option is exercised. The Portfolio also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Portfolio will realize a gain or loss when the option transaction expires or closes. 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 To gain exposure to or protect itself from market changes, the Portfolio may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Portfolio also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Portfolio is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Portfolio each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Portfolio recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars at the closing rate of exchange. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Portfolio may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Portfolio and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Portfolio is subject to the credit risk that the other party will not complete it contract obligations. Federal taxes For federal income tax purposes the Portfolio qualifies as a partnership and each investor in the Portfolio is treated as the owner of its proportionate share of the net assets, income, expenses and realized and unrealized gains and losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore does not pay any income dividends or capital gain distributions. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including level-yield amortization of premium and discount, is accrued daily. 2. FEES AND EXPENSES The Trust, on behalf of the Portfolio, has entered into an Investment Management Services Agreement with AEFC for managing its portfolio. Under this agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the Portfolio's average daily net assets in reducing percentages from 0.6% to 0.5% annually. The fees may be increased or decreased by a performance adjustment based on a comparison of the performance of Class A shares of the IDS Growth Fund to the Lipper Growth Fund Index. The maximum adjustment is 0.12% of the Portfolio's average daily net assets on an annual basis. The adjustment decreased the fee by $1,453,710 for the six months ended Jan. 31, 1999. Under the agreement, the Trust also pays taxes, brokerage commissions and nonadvisory expenses, which include custodian fees, audit and certain legal fees, fidelity bond premiums, registration fees for units, office expenses, consultants' fees, compensation of trustees, corporate filing fees, expenses incurred in connection with lending securities of the Portfolio and any other expenses properly payable by the Trust or Portfolio and approved by the board. The Portfolio also pays custodian fees to American Express Trust Company, an affiliate of AEFC. During the six months ended Jan. 31, 1999, the Portfolio's custodian fees were reduced by $6,119 as a result of earnings credits from overnight cash balances. According to a Placement Agency Agreement, American Express Financial Advisors Inc. acts as placement agent of the Trust's units. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $703,399,643 and $535,373,391, respectively, for the six months ended Jan. 31, 1999. For the same period, the portfolio turnover rate was 11%. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with AEFC were $135,000 for the six months ended Jan. 31, 1999. 4. LENDING OF PORTFOLIO SECURITIES As of Jan. 31, 1999, securities valued at $98,339,800 were on loan to brokers. For collateral, the Portfolio received $104,100,000 in cash. Income from securities lending amounted to $88,951 for the six months ended Jan. 31, 1999. The risks to the Portfolio of securities lending are that the borrower may not provide additional collateral when required or return the securities when due.
Investments in Securities Growth Portfolio Jan. 31, 1999 (Unaudited) (Percentages represent value of investments compared to net assets) Common stocks (95.1%) Issuer Shares Value(a) Automotive & related (0.4%) Gentex 1,000,000(b) $22,875,000 Banks and savings & loans (4.6%) BankAmerica 1,357,920 90,810,900 BankBoston 1,200,000 44,325,000 Washington Mutual 3,750,000 157,500,000 Total 292,635,900 Beverages & tobacco (2.4%) Coca-Cola 2,381,700 155,852,494 Chemicals (3.2%) Monsanto 800,000 38,050,000 Waste Management 3,375,000 168,539,063 Total 206,589,063 Communications equipment & services (6.7%) Andrew Corp 2,200,000(b) 39,875,000 Ericsson (LM) ADR Cl B 2,800,000(c) 78,050,000 MasTec 1,800,000(b,g) 53,775,000 Tellabs 3,100,000(b) 265,825,000 Total 437,525,000 Computers & office equipment (29.6%) America Online 400,000(b) 70,275,000 Cisco Systems 3,100,000(b) 345,843,750 Compaq Computer 2,700,000 128,587,500 EMC 2,600,000(b) 283,075,000 Hewlett-Packard 1,800,000 141,075,000 Intl Business Machines 1,300,000 238,225,000 Keane 1,800,000(b) 58,050,000 Microsoft 2,100,000(b) 367,499,999 Network Associates 2,000,000(b) 104,750,000 Solectron 462,500(b) 41,191,406 Yahoo! 350,000(b,d) 123,987,500 Total 1,902,560,155 Electronics (13.8%) Applied Materials 3,000,000(b) 189,562,500 Broadcom Cl A 100,000 13,312,500 Intel 2,000,000 281,875,000 Maxim Integrated Products 2,400,000(b) 123,450,000 STMicroelectronics 500,000 52,250,000 Texas Instruments 2,300,000 227,412,500 Total 887,862,500 Energy (1.3%) Anadarko Petroleum 3,000,000 81,187,500 Energy equipment & services (2.2%) Halliburton 1,500,000 44,531,250 Schlumberger 2,000,000(c) 95,250,000 Total 139,781,250 Financial services (6.6%) Citigroup 2,500,000 140,156,250 Merrill Lynch & Co 1,600,000 121,600,000 Providian Financial 1,595,325 160,828,702 Total 422,584,952 Furniture & appliances (0.8%) Ethan Allen Interiors 1,014,000 48,418,500 Health care (7.5%) Boston Scientific 2,000,000(b) 48,875,000 Gensia Sicor 161(b) 855 Johnson & Johnson 700,000 59,500,000 Medtronic 500,000 39,843,750 Pfizer 1,600,000 205,800,000 Warner-Lambert 1,800,000 129,937,500 Total 483,957,105 Health care services (1.0%) HEALTHSOUTH Rehabilitation 4,800,000(b) 65,100,000 Household products (0.8%) ServiceMaster 2,650,000 50,515,624 Industrial equipment & services (0.6%) Deere & Co 1,200,000 39,075,000 Insurance (0.7%) Provident Companies 1,000,000 42,875,000 Leisure time & entertainment (1.1%) Harley-Davidson 1,000,000 52,000,000 Mattel 900,000 20,418,750 Total 72,418,750 Multi-industry conglomerates (3.2%) Apollo Group Cl A 1,800,000(b) 49,275,000 Tyco Intl 2,000,000(c) 154,125,000 Total 203,400,000 Restaurants & lodging (1.3%) Marriott Intl Cl A 2,400,000 84,300,000 Retail (2.3%) Home Depot 2,400,000 144,900,000 Utilities -- telephone (4.9%) MCI WorldCom 3,900,000(b) 311,025,000 Total common stocks (Cost: $3,139,690,618) $6,095,438,793 See accompanying notes to investments in securities.
IDS GROWTH FUND Bonds (2.7%) Issuer Coupon Principal Value(a) rate amount Resolution Funding Corp Zero Coupon 07-15-20 5.95% $400,000,000(f) $118,000,000 10-15-20 6.03 185,000,000(f) 53,804,383 Total bonds (Cost: $165,090,786) $171,804,383
Short-term securities (3.9%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agencies (2.2%) Federal Home Loan Bank Disc Nt 02-24-99 4.74% $16,600,000 $16,545,473 Federal Home Loan Mtge Corp Disc Nts 02-02-99 5.05 3,600,000 3,598,491 02-09-99 5.07 3,400,000 3,395,249 02-11-99 4.79 10,500,000 10,483,305 02-12-99 4.81 1,900,000 1,896,714 02-17-99 5.06 15,200,000 15,161,848 03-02-99 4.79 14,800,000 14,739,336 03-11-99 4.74 29,000,000 28,847,912 03-16-99 4.75 23,300,000 23,162,384 03-22-99 4.75 26,700,000 26,521,467 Total 144,352,179 Commercial paper (1.2%) CXC 03-04-99 4.90 $4,100,000(e) 4,081,697 Delaware Funding 02-23-99 4.91 7,600,000(e) 7,575,274 Fleet Funding 02-02-99 4.93 9,200,000(e) 9,196,228 General Electric Capital 02-01-99 4.81 16,100,000 16,095,698 GTE Funding 02-09-99 5.29 3,700,000 3,694,604 02-25-99 4.86 4,000,000 3,985,989 Preferred Receivables 02-03-99 5.45 1,000,000(e) 999,397 Rohm & Haas 02-01-99 4.82 33,900,000(e) 33,890,922 Total 79,519,809 Letter of credit (0.5%) Bank of America- AES Hawaii 02-05-99 5.22 16,400,000 16,385,814 02-25-99 5.24 12,800,000 12,744,852 Total 29,130,666 Total short-term securities (Cost: $253,009,731) $253,002,654 Total investments in securities (Cost: $3,557,791,135)(h) $6,520,245,830 See accompanying notes to investments in securities.
IDS GROWTH FUND Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of Jan. 31, 1999, the value of foreign securities represented 5.11% of net assets. (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 guidelines established by the board. (f) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. (g) Investments representing 5% or more of the outstanding voting securities of the issuer. Transactions with companies that are or were affiliates during the six months ended Jan. 31, 1999 are as follows: Issuer Beginning Purchase Sales Ending Dividend Value(a) cost cost cost cost income MasTec $60,266,600 $-- $-- $60,266,600 $-- $53,775,000 (h) At Jan. 31, 1999, the cost of securities for federal income tax purpose was approximately $3,557,791,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $3,087,513,000 Unrealized depreciation (125,058,000) ------------ Net unrealized appreciation $2,962,455,000 Quick telephone reference AMERICAN EXPRESS FINANCIAL ADVISORS TELEPHONE TRANSACTION SERVICE Sales and exchanges, dividend payments or reinvestments and automatic payment arrangements National/Minnesota: 800-437-3133 Mpls./St. Paul area: 612-671-3800 AMERICAN EXPRESS FINANCIAL ADVISORS Fund performance, objectives and account inquiries: 800-862-7919 TTY SERVICE For the hearing impaired: 800-846-4852 AMERICAN EXPRESS FINANCIAL ADVISORS Automated account information (TouchTone(R) telephones only), including current Fund prices and performance, account values and recent account transactions: 800-862-7919 TICKER SYMBOL Class A: INIDX Class B: IGRBX Class Y: IGRYX BULK RATE U.S. POSTAGE PAID PERMIT NO. 85 SPENCER, IA S-6456 M (3/99) IDS Growth Fund IDS Tower 10 Minneapolis, MN 55440-0010 AMERICAN EXPRESS Financial Advisors -----END PRIVACY-ENHANCED MESSAGE-----