1997 semiannual report
IDS
Growth
Fund
(picture of icon: growing trees)
The goal of IDS Growth Fund, Inc. is long term growth of capital.
American
Express
Financial
Advisors
Distributed by American Express Financial Advisors Inc.
<PAGE>
(picture of icon : growing trees)
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 president 3
From the portfolio manager 3
The Portfolio's ten largest holdings 5
Financial statements (Fund) 6
Notes to financial statements (Fund) 9
Financial statements (Portfolio) 15
Notes to financial statements (Portfolio) 18
Investments in securities 23
Board members and officers 27
IDS mutual funds 28
<PAGE>
To our shareholders
From the president
If you're an experienced investor, you know that the past two years have been
unusually strong ones in many financial markets. Perhaps just as important, you
also know that history shows that bull markets don't last forever. Though
they're often unpredictable, declines -- whether they're brief or long-lasting,
moderate or substantial -- are always a possibility.
That fact reinforces the need for investors to periodically review their
long-term goals and examine whether their investment program remains on track to
achieving them. Your quarterly investment statements are one part of that
monitoring process. The other is a meeting with your American Express financial
advisor. That becomes even more important if there's a major change in your
financial situation or in the financial markets.
William R. Pearce
From the portfolio manager
Taking advantage of a surging stock market, IDS Growth Fund generated an
extraordinarily strong gain during the first half of its fiscal year. The Fund's
total return for the period -- August 1996 through January 1997 -- was 28.8% for
Class A shares. (That figure includes a substantial capital gain, which was paid
to shareholders last December and reduced the Fund's net asset value by a like
amount at that time.)
The power of persistence in investing was made explicitly clear during the past
six months. The period began with stocks, particularly growth stocks, licking
their wounds from a mid-summer slump. But just when some investment
professionals were declaring that the bull market had finally come to a close,
stocks started edging higher on the news that inflation remained tame and
corporate profits were still reasonably strong, even robust in some cases.
<PAGE>
The ultimate result was a remarkable run-up that, aside from a few brief dips,
lasted from late last summer through the end of the period. To put the rally's
strength in perspective, the Fund gained more than 9% in September alone. The
only down month for the Fund was December, when it lost approximately 2%.
Tech, consumer
stocks strong
For the most part, the market's advance was led by stocks of larger, rapidly
growing companies, a trend that plays directly into this Fund's bedrock
investment strategy. To the Fund's further benefit, stocks of technology (such
as computer hardware and software) and consumer (such as health care and
food/beverage) companies registered many of the biggest gains during the six
months. As they have for some time, those two sectors comprised more than half
of the Fund's investments, with Microsoft, Coca-Cola, Tellabs and Healthsouth
proving to be among the best individual performers.
Consistent with my management style, the Fund held few cash reserves during the
period. While this "fully invested" approach turned out to be rewarding, it does
make the Fund more vulnerable to market downturns. In the long run, however, I
believe that keeping the Fund almost entirely invested in stocks leads to a
higher overall return.
Long-term outlook
remains favorable
After an exhilarating period such as the one completed in January, it's possible
for investors, professionals included, to get a bit complacent about stocks'
positive performance in recent years. Therefore, it's a good time to remember
that stock market history also includes periodic corrections, or downturns, that
can sorely test an investor's patience. That said, at this point (early
February) I continue to believe that the positives will outweigh the potential
negatives for stocks over the next few years. I also expect many of the best
investment opportunities will again be found among technology- and
consumer-related companies, and I'm maintaining an emphasis on such stocks in
the Fund. Six months from now, I'll update you on the Fund's progress.
Mitzi Malevich
(picture of William R. Pearce)
William R. Pearce
President of the Fund
(picture of Mitzi Malevich)
Mitzi Malevich
Portfolio Manager
<PAGE>
Class A
6-month performance
(all figures per share)
Net asset value (NAV)
Jan. 31, 1997 $29.09
July 31, 1996 $23.16
Increase $ 5.93
Distributions
Aug. 1, 1996 - Jan. 31, 1997
From income $ --
From capital gains $ .68
Total distributions $ .68
Total return* +28.8%**
Class B
6-month performance
(all figures per share)
Net asset value (NAV)
Jan. 31, 1997 $28.67
July 31, 1996 $22.92
Increase $ 5.75
Distributions
Aug. 1. 1996 - Jan. 31, 1997
From income $ --
From capital gains $ .68
Total distributions $ .68
Total return* +28.3%**
Class Y
6-month performance
(all figures per share)
Net asset value (NAV)
Jan. 31, 1997 $29.18
July 31, 1996 $23.21
Increase $ 5.97
Distributions
Aug. 1, 1996 - Jan. 31, 1997
From income $ --
From capital gains $ .68
Total distributions $ .68
Total return* +28.9%**
* 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.
<PAGE>
IDS Growth Portfolio
The Portfolio's ten largest holdings
(Picture of: Pie Chart)
Pie Chart: The ten holdings listed here make up 27.07% of the
Portfolio's net assets
- --------------------------------------------------------------------
Percent Value
(of Portfolio's net assets) (as Jan. 31, 1997)
- --------------------------------------------------------------------
Cisco Systems 3.53% $111,600,000
A leader in the "router" segment of the networks industry.
Cisco routers allow interconnection of PC's, minicomputers
and mainframe to local and global networks.
HEALTHSOUTH 3.31 104,700,000
A fast-growing chain of hospitals and outpatient centers.
The company specializes in patient rehabilitation that
enables patients to return to a normal lifestyle as soon as
possible after accidents, surgery or illness.
Tellabs 3.12 98,850,000
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.
Travelers Group 2.65 83,800,000
Among the world's largest multi-line financial services
companies, focusing on insurance, managed health care and
investments.
Boston Scientific 2.59 81,900,000
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.
Intel 2.57 81,125,000
The world's number one semiconductor manufacturer, Intel
produces microcomputer components, modules and systems.
Schlumberger 2.46 77,787,500
A holding company, that, through its subsidiaries, is
engaged in the production and sale of wine, champagne and
other alcoholic and non-alcoholic beverages, as well as food
and non-food products.
Pfizer 2.35 74,300,000
A leading producer of pharmaceutical, hospital products,
animal health items, non-prescription medications and
specialty chemicals.
USA Waste Service 2.28 72,087,500
Provides integrated solid waste management services to
municipal, commercial, industrial and residential customers.
Coca-Cola 2.21 69,837,762
The world's largest producer and distributor of soft drinks,
concentrates and syrups.
<PAGE>
Financial statements
Statement of assets and liabilities
IDS Growth Fund
Jan. 31, 1997
Assets (Unaudited)
Investment in Growth Portfolio (Note 1) $ 3,133,193,199
------------------
Total assets 3,133,193,199
------------------
Liabilities
Accrued distribution fee 10,051
Accrued service fee 14,315
Accrued transfer agency fee 8,797
Accrued administrative services fees 3,753
Other accrued expenses 157,377
------------------
Total liabilities 194,293
------------------
Net assets applicable to outstanding capital stock $ 3,132,998,906
==================
Represented by
Capital stock -- $.01 par value $ 1,079,324
Additional paid-in capital 1,880,326,403
Investment loss -- net (3,599,816)
Accumulated net realized gain (Note 1) 29,676,295
Unrealized appreciation 1,225,516,700
==================
Total -- representing net assets applicable to
outstanding capital stock $ 3,132,998,906
==================
Net assets applicable to outstanding shares: Class A $ 2,557,735,694
Class B $ 502,890,182
Class Y $ 72,373,030
Net asset value per share of outstanding capital stock:
Class A shares 87,910,890 $ 29.09
Class B shares 17,541,538 $ 28.67
Class Y shares 2,479,947 $ 29.18
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statement of operations
IDS Growth Fund
Six months ended Jan. 31, 1997
Investment income (Unaudited)
Income:
Dividends (net of foreign taxes withheld of $9,657) $ 6,868,775
Interest 4,306,373
------------------
Total income 11,175,148
------------------
Expenses (Note 2):
Expenses, including investment management services fees
allocated from Growth Portfolio 8,591,471
Distribution fee -- Class B 1,484,336
Transfer agency fee 1,540,163
Incremental transfer agency fee -- Class B 24,926
Service fee
Class A 1,940,501
Class B 345,298
Administrative services fees and expenses 614,854
Compensation of board members 3,776
Compensation of officers 8,077
Postage 84,650
Registration fees 121,457
Reports to shareholders 22,636
Audit fees 6,000
Administrative 9,305
Other 1,558
------------------
Total expenses 14,799,008
Earnings credits on cash balances (Note 2) (31,423)
------------------
Total net expenses 14,767,585
------------------
Investment loss -- net (3,592,437)
------------------
Realized and unrealized gain -- net
Net realized gain on security transactions 33,410,554
Net change in unrealized appreciation or depreciation 630,294,773
------------------
Net gain on investments 663,705,327
------------------
Net increase in net assets resulting from operations $ 660,112,890
==================
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statement of changes in net assets
IDS Growth Fund
Operations and distributions Jan. 31, 1997 July 31, 1996
Six months ended Year ended
(Unaudited)
Investment loss -- net $ (3,592,437) $ (1,105,179)
Net realized gain on investments 33,410,554 111,623,533
Net change in unrealized appreciation
or depreciation 630,294,773 76,579,003
------------------ ------------------
Net increase in net assets resulting
from operations 660,112,890 187,097,357
------------------ ------------------
Distributions to shareholders from:
Net investment income
Class A -- (745,861)
Class Y -- (10,284)
Net realized gain
Class A (58,065,667) (76,543,593)
Class B (11,178,720) (5,509,162)
Class Y (1,197,889) (639,403)
------------------ ------------------
Total distributions (70,442,276) (83,448,303)
------------------ ------------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 446,159,558 705,002,561
Class B shares 145,766,476 251,558,924
Class Y shares 37,285,474 25,249,056
Reinvestment of distributions at net asset value
Class A shares 56,449,178 75,873,952
Class B shares 11,139,690 5,493,274
Class Y shares 1,197,889 649,686
Payments for redemptions
Class A shares (312,961,504) (394,806,319)
Class B shares (Note 2) (18,020,806) (12,785,969)
Class Y shares (5,424,852) (5,236,466)
------------------ ------------------
Increase in net assets from capital
share transactions 361,591,103 650,998,699
------------------ ------------------
Total increase in net assets 951,261,717 754,647,753
Net assets at beginning of period 2,181,737,189 1,427,089,436
------------------ ------------------
Net assets at end of period $ 3,132,998,906 $ 2,181,737,189
================== ==================
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
IDS Growth Fund
(Unaudited as to Jan. 31, 1997)
- --------------------------------------------------------------------------------
1. Summary of significant accounting policies
IDS Growth Fund (a series of IDS Growth Fund, Inc.) 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.
Class A shares are sold with a front-end sales charge. Class B shares may be
subject to a contingent deferred sales charge and such shares automatically
convert to Class A after eight years. Class Y shares 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.
Investment in Growth Portfolio
Effective May 13, 1996, the Fund began investing all of its assets in the Growth
Portfolio (the Portfolio), a series of Growth 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. Growth 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 net assets of the Portfolio.
The percentage of the Portfolio owned by the Fund at Jan. 31, 1997 was 99.09%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's "Notes to financial statements," which are included elsewhere in
this report.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Federal taxes
Since the Fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to the shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) allocated from the
Portfolio may differ for financial statement and tax purposes primarily because
of the deferral of losses on certain futures contracts, the recognition of
certain foreign currency gains (losses) as ordinary income (loss) for tax
purposes, and losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Fund.
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.
- --------------------------------------------------------------------------------
2. Expenses and sales charges
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
Effective March 20, 1995, the Fund entered into agreements with American Express
Financial Corporation (AEFC) for providing administrative services and serving
as transfer agent. Under its 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.
Additional administrative services paid by the Fund are office expenses,
consultant's 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,
organizational expenses, and any other expenses properly payable by the Fund
approved by the board.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts
and records. The Fund pays AEFC an annual fee per shareholder account for this
service as follows:
Class A $15
Class B $16
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 . 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.
Sales charges received by American Express Financial Advisors, Inc. for
distributing Fund shares were $4,210,473 for Class A and $132,459 for Class B
for the period ended Jan. 31, 1997.
During the six months ended Jan. 31, 1997, the Fund's transfer agency fees were
reduced by $31,423 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, 1997
Class A Class B Class Y
- ------------------------------------------------------------------------
Sold 16,684,563 5,534,252 1,369,073
Issued for reinvested 2,071,763 414,638 43,835
distributions
Redeemed (11,636,133) (672,485) (195,933)
- ------------------------------------------------------------------------
Net increase 7,120,193 5,276,405 1,216,975
- ------------------------------------------------------------------------
Year ended July 31, 1996
Class A Class B Class Y
- ------------------------------------------------------------------------
Sold 30,026,905 10,775,556 1,074,249
Issued for reinvested 3,405,937 248,093 29,133
distributions
Redeemed (16,841,935) (550,504) (222,683)
- ------------------------------------------------------------------------
Net increase 16,590,907 10,473,145 880,699
- ------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. Financial highlights
The tables below show certain important financial information for evaluating the
Fund's results.
<TABLE>
<CAPTION>
Fiscal period ended July 31,
Per share income and capital changes*
Class A
1997** 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $23.16 $21.50 $17.39 $17.99 $18.57 $17.62 $24.05 $23.24 $17.17 $25.88
beginning of period
Income from investment operations:
Net investment (.02) -- .03 .02 -- .08 .19 .34 .27 .23
income (loss)
Net gains (both 6.63 2.81 5.63 1.24 2.40 2.66 .69 2.89 5.90 (6.87)
realized and unrealized)
Total from investment 6.61 2.81 5.66 1.26 2.40 2.74 .88 3.23 6.17 (6.64)
operations
Less distributions:
Dividends from net -- (.01) (.04) -- -- (.18) (.33) (.27) (.10) (.23)
investment income
Distributions from (.68) (1.14) (1.51) (1.86) (2.98) (1.61) (6.98) (2.15) -- (1.84)
realized gains
Total distributions (.68) (1.15) (1.55) (1.86) (2.98) (1.79) (7.31) (2.42) (.10) (2.07)
Net asset value, $29.09 $23.16 $21.50 $17.39 $17.99 $18.57 $17.62 $24.05 $23.24 $17.17
end of period
Ratios/supplemental data
Class A
1997** 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of $2,558 $1,871 $1,380 $952 $933 $863 $780 $756 $732 $633
period (in millions)
Ratio of expenses .98%+ 1.04% .93% .83% .87% .88% .87% .73% .64% .66%
to average daily
net assets#
Ratio of net income (.16%)+ -- .18% .11% -- .41% 1.36% 1.40% 1.39% 1.17%
to average daily
net assets
Total return++ 28.8% 13.3% 35.2% 7.0% 13.0% 15.1% 12.4% 15.3% 36.2% (25.4%)
Portfolio turnover rate 10% 22% 30% 56% 44% 83% 75% 49% 23% 28%
(excluding short-term
securities) for the
underlying Portfolio
Average brokerage $0.0521 -- -- -- -- -- -- -- -- --
commission rate for the
underlying Portfolio##
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Six months ended Jan. 31, 1997 (Unaudited).
+ Adjusted to an annual basis.
++ Total return does not reflect payment of a sales charge.
# Effective fiscal year 1996, expense ratio is based on total expense of the
Fund before applying earnings credits on cash balances.
## Effective fiscal year 1997, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of portfolio
securities for the period by the total number of related shares purchased
and sold.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal period ended July 31,
Per share income and capital changes*
Class B Class Y
1997*** 1996 1995** 1997*** 1996 1995**
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $22.92 $21.45 $17.85 $23.21 $21.51 $17.85
beginning of period
Income from investment operations:
Net investment (.10) (.02) (.03) -- .01 .03
income (loss)
Net gains (both 6.53 2.63 3.63 6.65 2.85 3.63
realized and unrealized)
Total from investment 6.43 2.61 3.60 6.65 2.86 3.66
operations
Less distributions:
Dividends from net -- -- -- -- (.02) --
investment income
Distributions from (.68) (1.14) -- (.68) (1.14) --
realized gains
Total distributions (.68) (1.14) -- (.68) (1.16) --
Net asset value, $28.67 $22.92 $21.45 $29.18 $23.21 $21.51
end of period
Ratios/supplemental data
Class B Class Y
1997*** 1996 1995** 1997*** 1996 1995**
Net assets, end of $503 $281 $38 $72 $29 $8
period (in millions)
Ratio of expenses 1.75%+ 1.82% 1.76%+ .82%+ .88% .85%+
to average daily
net assets#
Ratio of net income (.93%)+ (.80%) (.70%)+ (.01%)+ .13% .26%+
to average daily
net assets
Total return++ 28.3% 12.4% 20.2% 28.9% 13.4% 20.5%
Portfolio turnover rate 10% 22% 30% 10% 22% 30%
(excluding short-term
securities) for the
underlying Portfolio
Average brokerage $0.0521 -- -- $0.0521 -- --
commission rate for the
underlying Portfolio##
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Inception date was March 20, 1995 for Class B and Class Y.
*** Six months ended Jan. 31, 1997 (Unaudited).
+ Adjusted to an annual basis.
++ Total return does not reflect payment of a sales charge.
# Effective fiscal year 1996, expense ratio is based on total expense of the
Fund before applying earnings credits on cash balances.
## Effective fiscal year 1997, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of portfolio
securities for the period by the total number of related shares purchased
and sold.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
Growth Portfolio
Jan. 31, 1997
Assets
(Unaudited)
Investments in securities, at value (Note 1)
<S> <C> <C>
Investments in securities of unaffiliated issuers (identified cost $1,982,642,905) $ 3,216,982,635
Investments is securities of affiliated issuer (identified cost $17,078,680) 14,684,863
Cash in bank on demand deposit 4,013,130
Dividends and accrued interest receivable 777,028
U.S. government securities held as collateral (Note 4) 59,810,952
--------------------
Total assets 3,296,268,608
--------------------
Liabilities
Payable upon return of securities loaned (Note 4) 134,046,052
Accrued investment management services fee 221,059
Other accrued expenses 39,160
--------------------
Total liabilities 134,306,271
--------------------
Net assets $ 3,161,962,337
====================
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statement of operations
Growth Portfolio
Six months ended Jan. 31, 1997
Investment income
(Unaudited)
Income:
Interest $ 4,340,323
Dividends (net of foreign taxes withheld of $9,750) 6,936,756
--------------------
Total income 11,277,079
--------------------
Expenses (Note 2):
Investment management services fee 8,571,306
Compensation of board members 4,878
Compensation of officers 799
Custodian fees 48,786
Registration fees 125
Audit fees 29,674
Administrative 10,240
Other 13,086
--------------------
Total expenses 8,678,894
Earnings credits on cash balances (Note 2) (2,824)
--------------------
Total net expenses 8,676,070
--------------------
Investment income -- net 2,601,009
--------------------
Realized and unrealized gain -- net
Net realized gain on security transactions (Note 3) 33,474,978
Net change in unrealized appreciation or depreciation 636,839,300
--------------------
Net gain on investments 670,314,278
====================
Net increase in net assets resulting from operations $ 672,915,287
====================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Growth Portfolio
Operations
Six months ended For the period from
Jan. 31, 1997 May 13, 1996* to
(Unaudited) July 31, 1996
<S> <C> <C>
Investment income - - net $ 2,601,009 $ 1,339,597
Net realized gain on investments 33,474,978 12,989,728
Net change in unrealized appreciation or depreciation 636,839,300 (176,108,355)
------------------- ------------------
Net increase (decrease) in net assets resulting from operations 672,915,287 (161,779,030)
Net contributions 283,879,902 2,366,896,178
-------------------- -----------------
Total increase in net assets 956,795,189 2,205,117,148
Net assets at beginning of period (Note 1) 2,205,167,148 50,000
===================== ================
Net assets at end of period $ 3,161,962,337 $ 2,205,167,148
===================== ================
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Growth Portfolio
(Unaudited as to Jan. 31, 1997)
- --------------------------------------------------------------------------------
1. Summary of significant accounting policies
The 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. On April 15, 1996, American Express
Financial Corporation (AEFC ) contributed $50,000 to the Portfolio. Operations
did not formally commence until May 13, 1996, at which time, an existing fund
transferred its assets to the Portfolio in return for an ownership percentage of
the Portfolio.
Significant accounting policies followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price; securities for which market quotations
are not readily available are valued at fair value according to methods selected
in good faith by the board. 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 Portfolio 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 Portfolio also may buy and sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Portfolio may incur a
loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolio pays a premium whether or not
the option is exercised. The Portfolio also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell stock index futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations
and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete the obligations of the contract.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend 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 increased the fee by $707,530 for the six months ended
Jan. 31, 1997.
Under the agreement, the Trust also pays taxes and nonadvisory expenses, which
include custodian fees to be paid to an affiliate of AEFC, audit and certain
legal fees, fidelity bond premiums, registration fees for units, Portfolio
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, approved by
the board.
For the six months ended Jan. 31, 1997, the Portfolio's custodian fees were
reduced by $2,824 as a result of earnings credits from overnight cash balances.
Pursuant to a Placement Agency Agreement, American Express
Financial Advisors Inc. acts as placement agent of the units
of the Trust.
- --------------------------------------------------------------------------------
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $564,456,392 and $248,431,803, respectively, for the six
months ended Jan. 31, 1997. For the same period, the portfolio turnover rate was
10%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $63,250 for this
period.
- --------------------------------------------------------------------------------
4. Lending of portfolio securities
At Jan. 31, 1997, securities valued at $137,345,962 were on
loan to brokers.
For collateral, the Portfolio received $74,235,100 in cash
and U.S. government securities valued at $59,810,952.
Income from securities lending amounted to $198,876 for the
six months ended Jan. 31, 1997. The risks to the Portfolio
of securities lending are that the borrower may not provide
additional collateral when required or return the securities
when due.
<PAGE>
<TABLE>
<CAPTION>
Growth Portfolio (Percentages represent value of
Jan. 31, 1997 (Unaudited) investments compared to net assets)
Investments in securities of unaffiliated issuers
- --------------------------------------------------------------------------------------------------------------
Common stocks (95.3%)
- --------------------------------------------------------------------------------------------------------------
Issuer Shares Value (a)
- --------------------------------------------------------------------------------------------------------------
Airlines (0.7%)
<S> <C> <C>
Northwest Airlines 600,000 (b) $20,400,000
- --------------------------------------------------------------------------------------------------------------
Automotive & related (0.3%)
Gentex 500,000 (b) 10,000,000
- --------------------------------------------------------------------------------------------------------------
Banks and savings & loans (1.6%)
MBNA 1,500,000 51,750,000
- --------------------------------------------------------------------------------------------------------------
Beverages & tobacco (2.2%)
Coca-Cola 1,206,700 69,837,762
- --------------------------------------------------------------------------------------------------------------
Building materials & construction (1.8%)
Tyco Intl 1,000,000 57,125,000
- --------------------------------------------------------------------------------------------------------------
Chemicals (4.5%)
Culligan Water Technology 400,000 (b) 13,300,000
Monsanto 1,500,000 56,812,500
USA Waste Service 1,975,000 (b) 72,087,500
--------------------
Total 142,200,000
- --------------------------------------------------------------------------------------------------------------
Communications equipment & services (8.1%)
ADC Telecommunications 1,200,000 (b) 43,050,000
Advanced Fibre Communications 11,400 (b) 544,350
Andrew 1,200,000 (b) 68,925,000
Mastec 700,000 (b,d) 44,625,000
Tellabs 2,400,000 (b) 98,850,000
--------------------
Total 255,994,350
- --------------------------------------------------------------------------------------------------------------
Computers & office equipment (16.2%)
ABR Information Services 400,000 (b) 17,550,000
Cisco Systems 1,600,000 (b) 111,600,000
Compaq Computer 700,000 (b) 60,812,500
CSG Systems Intl 50,600 (b) 948,750
First Data 1,868,720 (d) 67,273,920
Gemstar Intl 150,000 (b) 2,700,000
Ikon Office Solutions 1,200,000 52,950,000
Intuit 200,000 (b) 5,850,000
Keane 400,000 (b) 12,450,000
Microsoft 400,000 (b) 40,800,000
NETCOM On-Line Communication Services 400,000 (b) 5,350,000
Oracle 1,350,000 (b) 52,481,250
Silicon Graphics 1,600,000 (b) 43,800,000
Solectron 625,000 (b) 37,656,250
--------------------
Total 512,222,670
- --------------------------------------------------------------------------------------------------------------
Electronics (7.6%)
Applied Materials 800,000 39,500,000
DuPont Photomasks 22,500 (b) 1,226,250
Harman Intl 500,000 23,187,500
Intel 500,000 81,125,000
Maxim Intergrated Products 1,000,000 (b) 56,250,000
Texas Instruments 300,000 23,512,500
Vishay Intertechnology 630,000 (b) 15,198,750
--------------------
Total 240,000,000
- --------------------------------------------------------------------------------------------------------------
Energy (0.8%)
Mobil 200,000 26,250,000
- --------------------------------------------------------------------------------------------------------------
Energy equipment & services (1.7%)
Fluor 750,000 53,343,750
- --------------------------------------------------------------------------------------------------------------
Financial services (6.3%)
First Virtual Holding 100,000 (b) 900,000
Green Tree Financial 1,200,000 46,650,000
Merrill Lynch 800,000 67,400,000
Travelers Group 1,600,000 83,800,000
--------------------
Total 198,750,000
- --------------------------------------------------------------------------------------------------------------
Food (0.5%)
Delta & Pine Land 428,250 (d) 16,005,844
- --------------------------------------------------------------------------------------------------------------
Health care (10.2%)
Amgen 800,000 (b) 45,100,000
Boston Scientific 1,200,000 (b) 81,900,000
Gensia 161 674
IDEXX Laboratories 500,000 (b) 16,750,000
Johnson & Johnson 700,000 40,337,500
Medtronic 600,000 41,100,000
Perclose 34,800 (b) 787,350
Pfizer 800,000 74,300,000
Physio-Control Intl 700,000 (b) 15,225,000
Sola Intl 200,000 7,375,000
--------------------
Total 322,875,524
- --------------------------------------------------------------------------------------------------------------
Healthcare services (6.9 %)
HealthCare COMPARE 1,000,000 (b) 42,625,000
HEALTHSOUTH 2,400,000 (b) 104,700,000
Service Corp Intl 2,400,000 69,600,000
--------------------
Total 216,925,000
- --------------------------------------------------------------------------------------------------------------
Industrial equipment & services (2.6%)
Caterpillar 400,000 31,050,000
Deere & Co 1,200,000 51,300,000
--------------------
Total 82,350,000
- --------------------------------------------------------------------------------------------------------------
Industrial transportation (1.2%)
Wisconsin Central 1,000,000 (b) 37,125,000
- --------------------------------------------------------------------------------------------------------------
Leisure time & entertainment (3.4%)
Harley-Davidson 300,000 13,275,000
Marriot Intl 1,000,000 53,125,000
Mattel 1,500,000 42,187,500
--------------------
Total 108,587,500
- --------------------------------------------------------------------------------------------------------------
Metals (2.9%)
Birmingham Steel 1,100,000 21,862,500
Nucor 1,200,000 62,400,000
Stillwater Mining 400,000 (b) 7,100,000
--------------------
Total 91,362,500
- --------------------------------------------------------------------------------------------------------------
Multi-industry conglomerates (1.5%)
AccuStaff 600,000 (b) 12,975,000
Apollo Group 800,000 (b) 26,600,000
Manpower 200,000 6,400,000
--------------------
Total 45,975,000
- --------------------------------------------------------------------------------------------------------------
Paper & packaging (0.4%)
Unisource Worldwide 600,000 13,050,000
- --------------------------------------------------------------------------------------------------------------
Textiles & apparel (2.6%)
Nike Cl B 1,000,000 67,875,000
St. John Knits 300,000 13,650,000
--------------------
Total 81,525,000
- --------------------------------------------------------------------------------------------------------------
Utilities -- telephone (2.6%)
AirTouch Communications 900,000 (b) 23,287,500
WorldCom 2,400,000 (b) 60,300,000
--------------------
Total 83,587,500
- --------------------------------------------------------------------------------------------------------------
Foreign (8.7%) (c)
Danka Business Systems ADR 1,500,000 (d) 66,750,000
Ericsson (LM) ADR 1,500,000 50,507,812
Northern Telecom 800,000 (b,d) 58,900,000
SGS-THOMSON Microelectronics 300,000 (b) 21,225,000
Schlumberger 700,000 77,787,500
--------------------
Total 275,170,312
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Total common stocks
(Cost: $1,795,118,333) $3,012,412,712
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Short-term securities (6.5%)
- --------------------------------------------------------------------------------------------------------------
Issuer Annualized Amount Value (a)
yield on payable at
date of maturity
purchase
- --------------------------------------------------------------------------------------------------------------
U.S. government agency (0.1%)
Federal Home Loan Mtge Corp Disc Nt
02-26-97 5.48% $3,300,000 $3,286,462
- --------------------------------------------------------------------------------------------------------------
Banker's acceptance (0.2 %)
First Union
02-04-97 5.36 5,000,000 4,997,775
- --------------------------------------------------------------------------------------------------------------
Commercial paper (6.0%)
ABB Treasury
03-12-97 5.37 1,800,000 (e) 1,788,938
Albertson's
02-28-97 5.31 6,750,000 6,723,219
American General Capital
03-12-97 5.40 5,000,000 (e) 4,969,271
American General Finance
02-12-97 5.38 5,500,000 5,491,009
Aon
02-03-97 5.36 3,700,000 3,698,816
BellSouth Capital
02-27-97 5.33 6,500,000 6,475,072
BHP Finance
02-06-97 5.35 4,600,000 4,596,588
CAFCO
03-25-97 5.38 6,300,000 (e) 6,248,846
Cargill
03-10-97 5.34 5,000,000 4,972,310
04-07-97 5.40 4,800,000 4,751,424
Ciesco LP
02-11-97 5.44 4,500,000 4,493,250
02-19-97 5.33 3,200,000 3,191,520
02-25-97 5.39 7,100,000 7,074,677
Commercial Credit
02-20-97 5.33 5,300,000 5,285,175
Dean Witter Discover & Co
03-27-97 5.35 7,200,000 7,142,652
Deutsche Finance
02-10-97 5.41 7,500,000 7,489,922
Ford Motor Credit
03-05-97 5.33 3,500,000 3,483,511
Household Finance
03-06-97 5.32 5,900,000 5,871,336
03-11-97 5.34 4,700,000 4,673,656
04-09-97 5.42 5,000,000 4,947,867
Merrill Lynch
03-03-97 5.34 4,600,000 4,579,645
03-17-97 5.40 6,900,000 6,851,462
Metlife Funding
02-12-97 5.37 5,600,000 5,589,637
02-18-97 5.37 5,000,000 4,985,829
02-27-97 5.30 4,000,000 3,984,776
Natl Australia Funding (Delaware)
02-04-97 5.36 1,100,000 1,099,511
Novartis Finance
03-07-97 5.32 2,300,000 (e) 2,288,487
Reed Elsevier
02-14-97 5.34 4,600,000 (e) 4,591,163
SAFECO Credit
03-28-97 5.37 3,500,000 3,471,499
SBC Communications
02-11-97 5.39 4,600,000 (e) 4,593,164
02-18-97 5.44 3,600,000 (e) 3,589,880
Sysco
02-25-97 5.38 7,500,000 (e) 7,468,779
Toyota Motor Credit
02-07-97 5.35 1,800,000 1,798,042
02-14-97 5.40 3,000,000 2,993,424
03-07-97 5.37 7,800,000 7,760,736
Transamerica Financial
04-28-97 5.40 5,600,000 5,525,296
USAA Capital
02-13-97 5.41 3,700,000 3,693,377
02-24-97 5.45 5,000,000 4,980,877
U S WEST Communications
02-21-97 5.40 6,500,000 6,477,082
--------------------
Total 189,691,725
- --------------------------------------------------------------------------------------------------------------
Letter of credit (0.2%)
Bank of America -
AES Barber Point
02-07-97 5.53 6,600,000 6,593,961
- --------------------------------------------------------------------------------------------------------------
Total short-term securities
(Cost: $204,603,252) $ 204,569,923
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Total investments in securities of unaffiliated issuers
(Cost: $1,982,642,905) $3,216,982,635
- --------------------------------------------------------------------------------------------------------------
Investments in securities of affiliated issuers (f )
- --------------------------------------------------------------------------------------------------------------
Common stocks (0.4%)
- --------------------------------------------------------------------------------------------------------------
Issuer Shares Value (a)
- --------------------------------------------------------------------------------------------------------------
Risk Capital Holdings 883,300 $ 14,684,863
- --------------------------------------------------------------------------------------------------------------
Total investments in securities of affiliated issuer
(Cost: $17,078,680) $ 14,684,863
- --------------------------------------------------------------------------------------------------------------
Total investments in securities
(Cost: $1,999,721,585) (g) $3,231,667,498
- --------------------------------------------------------------------------------------------------------------
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) 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
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) Investment 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, 1997 are as follows:
Affiliates Beginning Purchase Sales Ending Dividend
cost cost cost cost income
- --------------------------------------------------------------------------------------------------------------
Risk Capital Holdings* $17,078,680 $ -- $ -- $17,078,680 $ --
Oxford Resources Cl A* 10,236,220 -- 10,236,220 -- --
- --------------------------------------------------------------------------------------------------------------
Total $27,314,900 $ -- $10,236,220 $17,078,680 $ --
- --------------------------------------------------------------------------------------------------------------
*Issuer was not an affiliate for the entire period.
(g) At Jan. 31, 1997, the cost of securities for federal income tax purposes was approximately $1,999,722,000
and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $1,257,909,000
Unrealized depreciation (25,964,000)
--------------------
Net unrealized appreciation $1,231,945,000
--------------------
</TABLE>
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world globe
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of 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 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 Global Balanced Fund
Invests in stocks-and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale of globes
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
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. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
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 Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) building
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 Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) flower
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of 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
Growth and income funds
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.
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 pine 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 Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) spinning toy
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stocks 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
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) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised 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) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to 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
Income funds
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 Extra Income Fund
Invests in a Portfolio comprised 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) two coins
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
IDS Selective Fund
Invests in a Portfolio comprised primarily of 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 in a Portfolio comprised primarily of 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) shield with eagle head
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
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 star
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 High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of 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 Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
Money market funds
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current
income consistent with these objectives. An investment in
these funds is neither insured nor guaranteed by the U.S. government,
and there can be no assurance that these funds
will be able to maintain a stable net asset value of $1.00
per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (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
<PAGE>
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
<PAGE>
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 (TouchTone(R) 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
PAGE
AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Growth Fund Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
1997 semiannual report
IDS
Research
Opportunities
American Express Financial Advisors
(icon of magnifying glass)
The goal of IDS Research
Opportunities Fund, a part of IDS Growth Fund, Inc., is long-term growth of
capital. The Portfolio will be managed using a research methodology developed by
American Express Financial Corporation, which is designed to give investors the
opportunity to achieve a return in excess of the Standard & Poor's 500 Composite
Stock Price Index (S&P 500).
The rewards
of research
Behind every decision to buy or sell a stock is information -- in most cases,
information gathered by a research analyst. IDS Research Opportunities Fund is
designed to make the most of that research by investing only in Standard &
Poor's 500 stocks that carry our analysts' highest rating. The intention is to
construct a portfolio that has the potential to outperform the stock market as a
whole.
Contents
From the president 3
From the portfolio manager 3
Ten largest holdings 5
Financial statements (Fund) 6
Notes to financial statements (Fund) 9
Financial statements (Portfolio) 16
Notes to financial statements (Portfolio) 19
Investments in securities 24
Board members and officers 27
IDS mutual funds 28
<PAGE>
To our shareholders
(picture of William R. Pearce)
William R. Pearce
President of the Fund
From the president
If you're an experienced investor, you know that the past two years have been
unusually strong ones in many financial markets. Perhaps just as important, you
also know that history shows that bull markets don't last forever. Though
they're often unpredictable, declines -- whether they're brief or long-lasting,
moderate or substantial -- are always a possibility.
That fact reinforces the need for investors to periodically review their
long-term goals and examine whether their investment program remains on track to
achieving them. Your quarterly investment statements are one part of that
monitoring process. The other is a meeting with your American Express financial
advisor. That becomes even more important if there's a major change in your
financial situation or in the financial markets.
William R. Pearce
(picture of Guru Baliga)
Guru Baliga
Portfolio manager
From the portfolio manager
Solid securities selection and a soaring stock
market combined to generate a healthy gain for IDS Research Opportunities Fund
in its initial reporting period.
From Aug. 19, 1996 (the Fund's inception date) through January 1997, investors
in Class A shares realized a total return of 13.6%.
Although accidental, the timing of the Fund's introduction date coincided with a
remarkable rally by the stock market. After suffering through a mid-summer
slump, stocks started moving higher last August, and aside from a handful of
modest setbacks along the way, kept climbing until they reached a record high in
mid-January. Although unable to match the broad market's overall gain, the
Fund's performance roughly tracked its pattern.
We start with the S&P
The stock selections for the Fund's portfolio are taken from the Standard &
Poor's 500 Stock Index (S&P 500), an unmanaged list of mostly large, blue chip
stocks commonly used as a proxy for the stock market as a whole. Our research
analysts assign a numerical rating to each of the 500 stocks, and only those
with the highest ratings are included in the Fund's portfolio.
By the end of the period in January, just under 50 stocks were owned in the
portfolio. Among the best performers during the past several months were Boston
Scientific, Norwest Bank, Silicon Graphics, Medtronic, Kroger, Johnson &
Johnson, Alcoa, Tyco Labs, Northern Telecom, NationsBank, General Signal and
Emerson Electric.
Two other holdings, Oracle and Computer Associates, also had been strong
performers until late December, when they experienced sharp declines. Because
they represented major positions in the portfolio, their downturns had a
substantial impact on Fund performance during the past period. Also tempering
the Fund's gain somewhat was a lack of holdings among energy-related stocks,
whose analyst ratings were not high enough to warrant being added to the
portfolio, but nevertheless proved to be outstanding performers during the fall
and winter.
Little change in fundamentals
At this point (mid-February), while the chances of the stock market managing a
repeat of its powerful performance in each of the past two years would seem
remote, the underlying fundamentals that have been supporting stocks -- namely,
low inflation, generally reasonable valuations and substantial cash flows into
stock mutual funds -- remain in place.
But the investment environment doesn't mark time forever. Should the market as a
whole find the going tougher in 1997, I suspect that sharp stock-picking will
play a more important role than it has in recent years. If that proves true, I
think the ability of our research analysts could come to the forefront and give
the Fund an advantage over the broad market in the months ahead.
Guru Baliga
<PAGE>
Class A
Aug. 19, 1996* - Jan. 31, 1997
(All figures per share)
Net asset value (NAV)
- ---------------------------------------------
Jan. 31, 1997 $ 5.67
- ---------------------------------------------
Aug. 19, 1996* $ 5.00
- ---------------------------------------------
Increase $ 0.67
- ---------------------------------------------
Distributions
Aug. 19, 1996* - Jan. 31. 1997
- ---------------------------------------------
From income $ --
- ---------------------------------------------
From capital gains $ 0.01
- ---------------------------------------------
Total distributions $ 0.01
- ---------------------------------------------
Total return** +13.6***
- ---------------------------------------------
Class B
Aug. 19, 1996* - Jan. 31, 1997
(All figures per share)
Net asset value (NAV)
- ---------------------------------------------
Jan. 31, 1997 $ 5.66
- ---------------------------------------------
Aug. 19, 1996* $ 5.00
- ---------------------------------------------
Increase $ 0.66
- ---------------------------------------------
Distributions
Aug. 19, 1996* - Jan. 31, 1997
- ---------------------------------------------
From income $ --
- ---------------------------------------------
From capital gains $ 0.01
- ---------------------------------------------
Total distributions $ 0.01
- ---------------------------------------------
Total return** +13.2***
- ---------------------------------------------
Class Y
Aug. 19, 1996* - Jan. 31, 1997
(All figures per share)
Net asset value (NAV)
- ---------------------------------------------
Jan. 31, 1997 $ 5.67
- ---------------------------------------------
Aug. 19, 1996* $ 5.00
- ---------------------------------------------
Increase $ 0.67
- ---------------------------------------------
Distributions
Aug. 19, 1996* - Jan. 31, 1997
- ---------------------------------------------
From income $ --
- ---------------------------------------------
From capital gains $ 0.01
- ---------------------------------------------
Total distributions $ 0.01
- ---------------------------------------------
Total return** +13.7***
- ---------------------------------------------
* Inception date.
** The prospectus discusses the effect of sales charges, if any, on the
various classes.
*** The total return is a hypothetical investment in the Fund with all
distributions reinvested.
<PAGE>
Aggressive Growth Portfolio
The Portfolio's ten largest holdings
(Pie chart)
The ten holdings listed here make up 38.60% of the Portfolio's net assets
Percent Value
(of Portfolio's net assets) (as of Jan. 31, 1997)
NationsBank 4.42% $6,566,400
A bank holding company with a strong presence in North Carolina,
South Carolina, Texas, Virginia, Florida and Georgia.
Bank of Boston 4.29 6,369,750
A multi bank holding company which, through its
subsidiaries both nationally and internationally, provides a wide range of
financial services to corporate and institutional customers, governments,
individuals and other financial institutions.
Coca-Cola 4.22 6,273,650
The world's largest producer and distributor of soft drinks, concentrates
and syrups.
Johnson & Johnson 3.99 5,929,613
A major producer of health-care products, including consumer
products, medical and dental devices and products and a wide
variety of ethical and over-the-counter drugs.
MCI Communications 3.95 5,869,387
The second largest nationwide carrier of long-distance telecommunications
services and the third largest carrier of international long-distance
telecommunications services in the world. MCI provides a wide spectrum of
domestic and international voice and data services, which include long-distance
telephone service, data communications services and electronic messaging
services.
American Home Products 3.80 5,646,713
This company is engaged in the discovery,
development, manufacture, distribution and sale of a diversified line of
products in three business segments; health care products, agricultural products
and food products.
Emerson Electric 3.74 5,549,750
A diversified manufacturer of electrical and electronic products for use in
commercial and industrial products, appliances and construction-related
components.
General Signal 3.73 5,538,600
A manufacturer of equipment for the Process Controls, Electrical
Controls and Industrial Technology industries.
Silicon Graphics 3.66 5,442,150
This company provides computing solutions that range from
cost-effective high perfromance desktop workstations to database and
computer servers to Cray Research supercomputers. Company's systems enhance the
productivity of organizations engaged in technical, scientific, corporate and
entertainment applications acrosss a wide range of industries.
Raytheon 2.80 4,151,687
Designs, manufactures and sells electronic devices,
equipment and systems for government and commercial use. About two-thirds of
sales are to the military (missiles and electronics).
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Research Opportunities Fund
Jan. 31, 1997
Assets (Unaudited)
<S> <C> <C>
Investment in Aggressive Growth Portfolio (Note 1) $147,555,259
Organizational cost $ 110
--------------
Total assets 147,555,369
--------------
Liabilities
Accrued distribution fee 851
Accrued service fee 686
Accrued transfer agency fee 938
Accrued administrative services fee 235
Other accrued expenses 38,395
--------------
Total liabilities 41,105
--------------
--------------
Net assets applicable to outstanding capital stock $147,514,264
==============
Represented by
Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 260,276
Additional paid-in-capital 139,551,088
Investment income -- loss (263,596)
Accumulated net realized gain (Note 1) 4,931,153
Unrealized appreciation of investments 3,035,343
==============
Total - representing net assets applicable to outstanding capital stock $147,514,264
==============
Net assets applicable to outstanding shares: Class A $104,727,151
Class B $ 42,785,980
Class Y $ 1,133
Net asset value per share of outstanding capital stock: Class A shares 18,461,325 $ 5.67
Class B shares 7,566,044 $ 5.66
Class Y shares 200 $ 5.67
See accompanying notes to financial statements.
<PAGE>
Statement of operations
IDS Research Opportunities Fund
For the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Investment income (Unaudited)
Income:
Interest $ 401,925
Dividends 121,719
--------------
Total income 523,644
--------------
Expenses (Note 2):
Expenses, including investment management services fee
allocated from Aggressive Growth Portfolio 244,264
Distribution fee -- Class B 66,087
Transfer agency fee 77,671
Incremental transfer agency fee -- Class B 1,572
Service fee
Class A 42,565
Class B 15,420
Administrative services fees and expenses 19,881
Compensation of board members 3,950
Compensation of officers 263
Custodian fees 3,536
Postage 14,660
Registration fees 288,963
Reports to shareholders 6,664
Audit fees 785
Administrative 916
Other 90
--------------
Total expenses 787,287
Earnings credits on cash balances (Note 5) (47)
--------------
Total net expenses 787,240
--------------
Investment loss -- net (263,596)
--------------
Realized and unrealized gain -- net
Net realized gain on security transactions 4,728,378
Net realized gain on financial futures contracts 319,347
--------------
Net realized gain on investments 5,047,725
Net change in unrealized appreciation or depreciation 3,035,343
--------------
Net gain on investments 8,083,068
--------------
Net increase in net assets resulting from operations $ 7,819,472
==============
See accompanying notes to financial statements.
<PAGE>
Statement of changes in net assets
IDS Research Opportunities Fund
For the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Operations and distributions (Unaudited)
Investment loss - net $ (263,596)
Net realized gain on investments 5,047,725
Net change in unrealized appreciation or depreciation 3,035,343
--------------
Net increase in net assets resulting from operations 7,819,472
--------------
Distributions to shareholders from:
Net realized gain
Class A (83,545)
Class B (33,026)
Class Y (1)
--------------
Total distributions (116,572)
--------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 103,384,574
Class B shares 41,539,910
Reinvestment of distributions at net asset value
Class A shares 80,739
Class B shares 33,011
Class Y shares 1
Payments for redemptions
Class A shares (4,450,610)
Class B shares (Note 2) (779,261)
--------------
Increase in net assets from capital share transactions 139,808,364
--------------
Total increase in net assets 147,511,264
Net assets at beginning of period 3,000
--------------
Net assets at end of period $147,514,264
==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
IDS Research Opportunities Fund
_______________________________________________________________________
1. Summary of significant accounting policies
IDS Research Opportunities Fund (a series of IDS Growth Fund, Inc.) 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. On Aug. 16, 1996, American Express
Financial Corporation (AEFC) invested $3,000 in the Fund which represented 200
shares for Class A, Class B and Class Y. Operations commenced on Aug. 19, 1996.
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 may be subject to a contingent
deferred sales charge and such shares automatically convert to Class A after
eight years. Class Y shares 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.
Investment in Aggressive Growth Portfolio
Effective Aug. 19, 1996, the Fund began investing all of its assets in the
Aggressive Growth Portfolio (the Portfolio), a series of Growth Trust, an
open-end investment company that has the same objectives as the Fund. Aggressive
Growth Portfolio invests primarily in equity securities of companies that
comprise the S&P 500.
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 value which is equal to the
Fund's proportionate ownership interest in the net assets of the Portfolio. The
percentage of the Portfolio owned by the Fund at Jan. 31, 1997 was 99.31%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's "Notes to financial statements," which are included elsewhere in
this report.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period.
Actual results could differ from those estimates.
Federal taxes
Since the Fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to the shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) allocated from the
Portfolio may differ for financial statement and tax purposes primarily because
of the deferral of losses on certain futures contracts, the recognition of
certain foreign currency gains (losses) as ordinary income (loss) for tax
purposes, and losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Fund.
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.
_______________________________________________________________________
2. Expenses and sales charges
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
The Fund entered into agreements with American Express Financial Corporation
(AEFC) for providing administrative services and serving as transfer agent.
Under its 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 0.06% to 0.03% annually.
Additional administrative services 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,
organizational expenses, and any other expenses properly payable by the Fund
approved by the board.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts
and records. The Fund pays AEFC an annual fee per shareholder account for this
service as follows:
o Class A $15
o Class B $16
o Class Y $15
Also effective Aug. 19, 1996, the Fund entered into agreements with American
Express Financial Advisors Inc. for distribution and shareholder
servicing-related 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-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.
Sales charges received by American Express Financial Advisors for distributing
Fund shares were $1,308,659 for Class A and $3,142 for Class B for the period
ended Jan. 31, 1997.
_______________________________________________________________________
3. Capital share transactions
Transactions in shares of capital stock for the period indicated is as follows:
Period ended Jan. 31, 1997*
Class A Class B Class Y
_______________________________________________________________________
Sold 19,252,187 7,699,944 --
Issued for reinvested 14,715 6,032 --
distributions
Redeemed (805,777) (140,132) --
_______________________________________________________________________
Net increase 18,461,125 7,565,844 --
_______________________________________________________________________
* Inception date was Aug. 19, 1996.
<PAGE>
4. Financial highlights
The table below shows certain important financial information for evaluating the
Fund's results.
Fiscal period ended July 31,
Per share income and capital changes*
Class A Class B Class Y
1997** 1997** 1997**
Net asset value, $5.00 $5.00 $5.00
beginning of period
Income from investment operations:
Net investment loss (.01) (.02) (.01)
Net gains .69 .69 .69
(both realized
and unrealized)
Total from investment .68 .67 .68
operations
Less distributions:
Distributions from (.01) (.01) (.01)
realized gains
Net asset value, $5.67 $5.66 $5.67
end of period
Ratios/supplemental data
Class A Class B Class Y
1997** 1997** 1997**
Net assets, end of $105 $43 $ --
period (in millions)
Ratio of expenses to 2.18%+ 2.91%+ 2.18%+
average daily net assets#
Ratio of net loss (.59%)+ (1.36%)+ (.26%)+
to average daily net assets
Total return ++ 13.6% 13.2% 13.7%
Portfolio turnover rate 82% 82% 82%
(excluding short-term
securities) for the
underlying Portfolio
Average brokerage $0.0358 $0.0358 $0.0358
commission rate for
the underlying
Portfolio##
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Inception date. Period from Aug. 19, 1996 to Jan. 31, 1997 (Unaudited).
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales charge.
#Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
##The Fund is required to disclose an average brokerage commission rate.
The rate is calculated by dividing the total brokerage commissions
paid on applicable purchases and sales of portfolio securities for the
period by the total number of related shares purchased and sold.
<PAGE>
Financial statements
Statement of assets and liabilities
Aggressive Growth Portfolio
Jan. 31, 1997
Assets
Investments in securities, at value (Note 1) (Unaudited)
(identified cost $141,659,156) $144,580,923
Cash in bank on demand deposit 1,227,491
Dividends and accrued interest receivable 93,922
Receivable for investment securities sold 6,906,566
----------------
Total assets 152,808,902
----------------
Liabilities
Payable for investment securities purchased 4,236,765
Accrued investment management services fee 2,568
Other accrued expenses 19,444
----------------
Total liabilities 4,258,777
----------------
Net assets $148,550,125
================
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statement of operations
Aggressive Growth Portfolio
For the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Investment income
Income: (Unaudited)
Dividends (net of foreign taxes withheld of $390) $ 405,901
Interest 123,990
----------------
Total income 529,891
----------------
Expenses (Note 2):
Investment management services fee 217,645
Compensation of board members 2,813
Custodian fees 18,546
Audit fees 6,135
Administrative 803
Other 1,319
----------------
Total expenses 247,261
Earnings credits on cash balances (Note 2) (343)
----------------
Total net expenses 246,918
----------------
Investment income -- net 282,973
----------------
Realized and unrealized gain -- net
Net realized gain on security transactions (Note 3) 4,798,167
Net realized gain on financial futures contracts 321,957
----------------
Net realized gain on investments 5,120,124
Net change in unrealized appreciation or depreciation 3,056,467
----------------
Net gain on investments 8,176,591
================
Net increase in net assets resulting from operations $8,459,564
================
See accompanying notes to financial statements.
<PAGE>
Statement of changes in net assets
Aggressive Growth Portfolio
For the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Operations
(Unaudited)
Investment income -- net $ 282,973
Net realized gain on investments 5,120,124
Net change in unrealized appreciation or depreciation 3,056,467
-----------------
Net increase in net assets resulting from operations 8,459,564
Net contributions 140,086,561
-----------------
Total increase in net assets 148,546,125
Net assets at beginning of period (Note 1) 4,000
=================
Net assets at end of period $148,550,125
=================
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
Aggressive Growth Portfolio
(Unaudited as to Jan. 31, 1997)
- ----------------------------------------------------------------------
1. Summary of significant accounting policies
The Aggressive 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. Aggressive Growth
Portfolio invests primarily in equity securities of companies that comprise the
S&P 500. The Declaration of Trust permits the Trustees to issue non-transferable
interests in the Portfolio. On Aug. 16, 1996, American Express Financial
Corporation (AEFC) contributed $4,000 to the Portfolio. Operations commenced on
Aug. 19, 1996.
Significant accounting polices followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price, securities for which market quotations
are not readily available are valued at fair value according to methods selected
in good faith by the board. 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.
<PAGE>
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy and
write options traded on any U.S. or foreign exchange where the completion of the
obligation is dependent upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities and may write cash-secured put options. The risk
in writing a call option is that the Portfolio gives up the opportunity of
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of not being able to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the 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.
<PAGE>
Foreign currency translations
and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete the obligations of the contract.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend 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 0.65% to 0.5% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees to be paid to an affiliate of
AEFC, 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, approved by the board.
For the period ended Jan. 31, 1997, the Portfolio's custodian fees were reduced
by $343 as a result of earnings credits from overnight cash balances.
Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.
- -----------------------------------------------------------------------
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $188,503,109 and $61,527,341, respectively, for the
period ended Jan. 31,1997. For the same period, the portfolio turnover rate was
82%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $1,425 for this
period.
- ---------------------------------------------------------------------
4. Stock index futures contracts
Investments in securities at Jan. 31, 1997, included securities valued at
$997,500 that were pledged as collateral to cover initial margin deposits on 32
purchase contracts. The market value of the open contracts at Jan. 31, 1997, was
$12,718,400 with a net unrealized gain of $134,700.
<TABLE>
<CAPTION>
Investments in securities
Aggressive Growth Portfolio (Percentages represent value of
Jan. 31, 1997 (Unaudited) investments compared to net assets)
- --------------------------------------------------------------------------------------------------------------------
Common stocks (90.7%)
- --------------------------------------------------------------------------------------------------------------------
Issuer Shares Value (a)
- --------------------------------------------------------------------------------------------------------------------
Aerospace & defense (2.8%)
<S> <C> <C>
Raytheon 90,500 $ 4,151,688
- --------------------------------------------------------------------------------------------------------------------
Airlines (0.5%)
AMR 8,900 (b) 716,450
- --------------------------------------------------------------------------------------------------------------------
Automotive & related (3.1%)
Chrysler 67,200 2,343,600
General Motors 39,400 2,324,600
-------------------
Total 4,668,200
- --------------------------------------------------------------------------------------------------------------------
Banks and savings & loans (8.7%)
Bank of Boston 89,400 6,369,750
NationsBank 60,800 6,566,400
-------------------
Total 12,936,150
- --------------------------------------------------------------------------------------------------------------------
Beverages & tobacco (5.4%)
Anheuser-Busch 41,500 1,763,750
Coca-Cola 108,400 6,273,650
-------------------
Total 8,037,400
- --------------------------------------------------------------------------------------------------------------------
Building materials & construction (2.2%)
Tyco Intl 57,400 3,278,975
- --------------------------------------------------------------------------------------------------------------------
Computers & office equipment (11.3%)
Computer Associates Intl 71,700 3,253,387
First Data 75,000 2,700,000
Ikon Office Solutions 14,400 635,400
Oracle 74,600 (b) 2,900,075
Silicon Graphics 198,800 (b) 5,442,150
See accompanying notes to investments in securities.
3Com 28,200 (b) 1,892,925
-------------------
Total 16,823,937
- --------------------------------------------------------------------------------------------------------------------
Food (4.8%)
CPC Intl 39,500 3,036,563
Quaker Oats 106,800 4,098,450
-------------------
Total 7,135,013
- --------------------------------------------------------------------------------------------------------------------
Health care (17.5%)
ALZA 107,200 (b) 3,095,400
American Home Products 89,100 5,646,712
Amgen 55,700 (b) 3,140,088
Baxter Intl 16,600 765,675
Boston Scientific 10,300 (b) 702,975
Guidant 50,700 2,826,525
Johnson & Johnson 102,900 5,929,613
Medtronic 8,800 602,800
Schering-Plough 43,600 3,297,250
-------------------
Total 26,007,038
- --------------------------------------------------------------------------------------------------------------------
Health care services (2.5%)
Service Corp Intl 33,900 983,100
Tenet Healthcare 43,700 (b) 1,179,900
United Healthcare 30,200 1,472,250
-------------------
Total 3,635,250
- --------------------------------------------------------------------------------------------------------------------
Industrial equipment & services (2.7%)
Deere & Co 38,300 1,637,325
Illinois Tool Works 28,800 2,350,800
-------------------
Total 3,988,125
- --------------------------------------------------------------------------------------------------------------------
Media (1.4%)
Time Warner 53,700 2,067,450
- --------------------------------------------------------------------------------------------------------------------
Metals (1.8%)
Aluminum Co of America 38,500 2,656,500
- --------------------------------------------------------------------------------------------------------------------
Multi-industry conglomerates (7.5%)
Emerson Electric 56,200 5,549,750
General Signal 122,400 5,538,600
-------------------
Total 11,088,350
- --------------------------------------------------------------------------------------------------------------------
Paper & packaging (0.5%)
Crown Cork & Seal 13,800 793,500
- --------------------------------------------------------------------------------------------------------------------
Restaurants & lodging (0.7%)
Hilton Hotels 36,500 (c) 1,040,250
- --------------------------------------------------------------------------------------------------------------------
Retail (7.4%)
American Stores 15,200 638,400
Autozone 56,000 (b) 1,211,000
CUC Intl 47,100 (b) 1,165,725
Federated Dept Stores 61,200 (b) 2,011,950
Kroger 10,900 (b) 520,475
Lowe's 39,600 1,311,750
Rite Aid 15,100 604,000
Wal Mart Stores 149,600 3,553,000
-------------------
Total 11,016,300
- --------------------------------------------------------------------------------------------------------------------
Utilities -- electric (2.0%)
General Public Utilities 86,600 2,901,100
- --------------------------------------------------------------------------------------------------------------------
Utilities -- telephone (5.9%)
AirTouch Communications 110,200 (b) 2,851,425
MCI Communications 167,100 5,869,387
-------------------
Total 8,720,812
- --------------------------------------------------------------------------------------------------------------------
Foreign (2.0%) (d)
Northern Telecom 41,200 3,033,350
- --------------------------------------------------------------------------------------------------------------------
Total common stocks
(Cost: $131,774,071) $ 134,695,838
- --------------------------------------------------------------------------------------------------------------------
Short-term securities (6.6%)
- --------------------------------------------------------------------------------------------------------------------
Issuer Annualized Amount Value (a)
yield on payable at
date of maturity
purchase
- --------------------------------------------------------------------------------------------------------------------
Government agency (0.8%)
Federal Home Loan Mtge Assn Disc Nt
02-13-97 5.24% $1,200,000 $ 1,197,908
- --------------------------------------------------------------------------------------------------------------------
Commercial paper (4.5%)
Bell Atlantic
02-06-97 5.31 2,500,000 2,498,160
Consolidated Natural Gas
02-20-97 5.31 700,000 698,042
Ford Motor Credit
03-10-97 5.35 1,000,000 994,532
Sara Lee
02-05-97 5.28 1,300,000 1,299,237
02-10-97 5.35 1,200,000 1,198,395
-------------------
Total 6,688,366
- --------------------------------------------------------------------------------------------------------------------
Letter of credit (1.3%)
Federal Home Loan Bank
02-05-97 5.35 2,000,000 1,998,811
- --------------------------------------------------------------------------------------------------------------------
Total short-term securities
(Cost: $9,885,085) $ 9,885,085
- --------------------------------------------------------------------------------------------------------------------
Total investment in securities
(Cost: $141,659,156)(e) $ 144,580,923
- --------------------------------------------------------------------------------------------------------------------
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Non-income producing.
(c) Partially pledged as initial deposit on the following stock index futures purchase contracts. (See Note 4
to the financial statements):
Type of security contracts
- ----------------------------------------------------------------------
S&P 500, June 1997 32
(d) Foreign security values are stated in U.S. dollars.
(e) At Jan. 31, 1997, the cost of securities for federal income tax purposes was approximately
$141,659,000 and the approximate aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $6,523,000
Unrealized depreciation (3,601,000)
- -------------------------------------------------------------------------------------
Net unrealized appreciation $2,922,000
- -------------------------------------------------------------------------------------
</TABLE>
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world globe
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of 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 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 Global Balanced Fund
Invests in stocks-and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale of globes
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
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. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
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 Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) building
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 Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) flower
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of 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
Growth and income funds
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.
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 pine 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 Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) spinning toy
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stocks 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
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) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised 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) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to 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
Income funds
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 Extra Income Fund
Invests in a Portfolio comprised 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) two coins
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
IDS Selective Fund
Invests in a Portfolio comprised primarily of 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 in a Portfolio comprised primarily of 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) shield with eagle head
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
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 star
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 High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of 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 Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (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
<PAGE>
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
<PAGE>
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 (TouchTone(R) 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
PAGE
AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Reserch Opportunities Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Research Opportunities Fund
Feb. 28, 1997
Assets (Unaudited)
<S> <C>
Investment in Aggressive Growth Portfolio $165,219,077
Organizational cost 110
--------------
Total assets 165,219,187
--------------
Liabilities
Disbursements in excess of cash on demand deposit 3,694
Accrued distribution fee 1,010
Accrued service fee 794
Accrued transfer agency fee 1,060
Accrued administrative services fee 272
Other accrued expenses 56,283
--------------
Total liabilities 63,113
--------------
--------------
Net assets applicable to outstanding capital stock $165,156,074
==============
Represented by
Capital stock -- $.01 par value $ 288,973
Additional paid-in capital 156,037,856
Investment loss -- net (253,983)
Accumulated net realized gain 8,200,779
Unrealized appreciation 882,449
==============
Total -- representing net assets applicable to outstanding capital stock $165,156,074
==============
Net assets applicable to outstanding shares: Class A $115,952,194
Class B $ 49,202,736
Class Y $ 1,144
Net asset value per share of outstanding capital stock: Class A shares 20,265,513 $ 5.72
Class B shares 8,631,568 $ 5.70
Class Y shares 200 $ 5.72
<PAGE>
Statement of operations
IDS Research Opportunities Fund
For the one month ended Feb. 28, 1997
Investment income (Unaudited)
Income:
Interest $ 70,330
Dividends 129,866
--------------
Total income 200,196
--------------
Expenses:
Expenses, including investment management services fee
allocated from Aggressive Growth Portfolio 80,198
Distribution fee -- Class B 26,213
Transfer agency fee 27,378
Incremental transfer agency fee -- Class B 601
Service fee
Class A 14,804
Class B 6,117
Administrative services fees and expenses 7,173
Custodian fees 600
Postage 2,488
Registration fees 23,339
Reports to shareholders 1,131
Audit fees 134
Administrative 400
Other 7
--------------
Total expenses 190,583
--------------
Investment income -- net 9,613
--------------
Realized and unrealized gain (loss) -- net
Net realized gain on security transactions 3,191,494
Net realized gain on financial futures contracts 78,132
--------------
Net realized gain on investments 3,269,626
Net change in unrealized appreciation or depreciation (2,152,894)
--------------
Net gain on investments 1,116,732
--------------
Net increase in net assets resulting from operations $ 1,126,345
==============
<PAGE>
Statement of changes in net assets
IDS Research Opportunities Fund
For the one month ended Feb. 28, 1997
Operations (Unaudited)
Investment income -- net $ 9,613
Net realized gain on investments 3,269,626
Net change in unrealized appreciation or depreciation (2,152,894)
--------------
Net increase in net assets resulting from operations 1,126,345
--------------
Capital share transactions
Proceeds from sales
Class A shares 12,814,246
Class B shares 6,409,983
Class Y shares 1,000
Payments for redemptions
Class A shares (2,426,992)
Class B shares (282,772)
--------------
Increase in net assets from capital share transactions 16,515,465
--------------
Total increase in net assets 17,641,810
Net assets at beginning of period 147,514,264
--------------
Net assets at end of period $165,156,074
==============
</TABLE>
