1998 SEMIANNUAL REPORT
IDS
Growth
Fund
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>
Going for growth
In the long run, a company's stock price usually reflects its business fortunes.
Therefore, if a company thrives, its stock tends to follow suit. That's why many
long-term investors, including Growth Fund, focus on growth stocks -- those of
companies that enjoy rising sales and profits. While there will be interruptions
along the way, patient investors look forward to sharing in that same
prosperity.
Contents
From the chairman 3
From the portfolio manager 3
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 24
Board members and officers 27
IDS mutual funds 28
<PAGE>
To our shareholders
From the chairman
If you're an experienced investor, you know that the past few years have
been unusually strong in many financial markets. Perhaps just as
important, 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. We saw
evidence of that last October, when financial turmoil in Southeast Asia
sparked a sharp decline in worldwide stock markets, including the U.S.
That fact reinforces the need for investors to review periodically 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 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) William R. Pearce
William R. Pearce
Chairman of the board
<PAGE>
From the portfolio manager
IDS Growth Fund recorded a negative performance during the past six
months, as concerns arose regarding corporate earnings prospects for
high-growth U.S. companies. For the first half of the fiscal year --
August 1997 through January 1998 -- the Fund's Class A shares lost 8.0%.
The tremendous bull market for stocks came to a temporary halt when the
period began last August, as rising interest rates took a toll on most
issues. Rates came down in September, though, allowing the market to make
up the lost ground.
The Asian flu
But the biggest problem materialized in the following month, when
currencies and stock markets in Southeast Asia went into a virtual
free-fall. The result was severely weakened economies in many countries
that had been substantial buyers of U.S. goods, particularly
technology-related products. The unstable situation immediately cast doubt
on American companies' ability to sustain their earnings growth and soon
spawned a wave of stock-selling. Despite the earnings concerns, the stock
market managed to right itself in November, and ultimately finished the
six months in positive territory.
For the Fund, the situation overseas was a particular problem, given that
technology stocks, including those of small and mid-size companies,
constituted the largest portion of the portfolio during the six months.
Some of the Fund's major holdings, which had helped power it to generous
returns in the past three years, saw their prices decline as much as
one-third in a matter of days. The good part of the downturn was that, in
several cases, I was able to add shares of what I believe are excellent
companies at bargain prices.
Financial services, healthcare do well
Also on the positive side, holdings among financial services stocks,
including those of brokerage and insurance providers, generally performed
well over the six months, thanks largely to a decline in long-term
interest rates. The Fund's consumer staple stocks, including those of
food/beverage and health care companies, also held up quite well.
The volatility that has characterized the market during recent months
will, in my view, stay with us in 1998. Nevertheless, most of the
underpinnings that have supported stocks for some time are still in place:
The economy continues to grow at a healthy rate; inflation remains
well-behaved; and long-term interest rates are low. While upheaval in
emerging foreign markets may cause some near-term concern about the
prospects for corporate profits and, thus, stock prices, I think the
longer- term outlook continues to be very promising.
Mitzi Malevich
(picutre of) Mitzi Malevich
Mitzi Malevich
Portfolio manager
<PAGE>
To our shareholders
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1998 $ 31.67
July 31, 1997 $ 35.47
Decrease $ 3.80
Distributions
Aug. 1, 1997 - Jan. 31, 1998
From income $ --
From capital gains $ .96
Total distributions $ .96
Total return* (8.0%)**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1998 $ 30.95
July 31, 1997 $ 34.82
Decrease $ 3.87
Distributions
Aug. 1, 1997 - Jan. 31, 1998
From income $ --
From capital gains $ .96
Total distributions $ .96
Total return* (8.3%)**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1998 $ 31.80
July 31, 1997 $ 35.60
Decrease $ 3.80
Distributions
Aug. 1, 1997 - Jan. 31, 1998
From income $ --
From capital gains $ .96
Total distributions $ .96
Total return* (7.9%)**
* 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>
The Portfolio's ten largest holdings
Percent Value
(of Portfolio's net assets) (as of Jan. 31, 1998)
Travelers Group 4.17% $178,200,000
Washington Mutual 3.75 160,625,000
Microsoft 3.14 134,268,750
Tellabs 3.11 133,087,500
Schlumberger 3.10 132,637,500
Pfizer 3.06 131,100,000
Coca-Cola 3.04 129,933,825
Merrill Lynch & Co 2.95 126,250,000
Intel 2.84 121,500,000
WorldCom 2.68 114,600,000
(icon of) pie chart
The ten holdings listed here make up 31.84% of the Portfolio's net assets
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Growth Fund
Jan. 31, 1998
Assets
(Unaudited)
<S> <C>
Investment in Growth Portfolio (Note 1) $4,257,496,404
--------------
Liabilities
Accrued distribution fee 16,078
Accrued service fee 19,616
Accrued transfer agency fee 12,526
Accrued administrative services fee 4,897
Other accrued expenses 345,288
Total liabilities 398,405
-------
Net assets applicable to outstanding capital stock $4,257,097,999
--------------
Represented by
Capital stock-- of $.01 par value (Note 1) $ 1,349,528
Additional paid-in capital 2,723,627,091
Investment loss-- net (8,834,012)
Accumulated net realized gain (loss) 99,319,561
Unrealized appreciation (depreciation) on investments 1,441,635,831
Total-- representing net assets applicable to outstanding capital stock $4,257,097,999
--------------
Net assets applicable to outstanding shares: Class A $3,108,139,950
==============
Class B $ 787,149,959
Class Y $ 361,808,090
Net asset value per share of outstanding capital stock: Class A shares 98,142,018 $ 31.67
Class B shares 25,433,676 $ 30.95
Class Y shares 11,377,091 $ 31.80
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
IDS Growth Fund
Six months ended Jan. 31, 1998
Investment income
(Unaudited)
Income:
<S> <C>
Dividends $ 9,207,597
Interest 2,929,805
Less foreign taxes withheld (42,517)
-------
Total income 12,094,885
----------
Expenses (Note 2):
Expenses allocated from Growth Portfolio 11,338,224
Distribution fee -- Class B 2,783,330
Transfer agency fee 2,050,641
Incremental transfer agency fee-- Class B 36,738
Service fee
Class A 2,697,359
Class B 645,987
Class Y 131,183
Administrative services fees and expenses 878,956
Compensation of board members 5,701
Postage84,450
Registration fees 377,899
Reports to shareholders 50,380
Audit fees 4,125
Other 3,426
-----
Total expenses 21,088,399
Earnings credits on cash balances (Note 2) (159,502)
- --------
Total net expenses 20,928,897
----------
Investment income (loss) -- net (8,834,012)
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions 173,975,089
Net change in unrealized appreciation (depreciation) on investments (506,242,592)
------------
Net gain (loss) on investments (332,267,503)
------------
Net increase (decrease) in net assets resulting from operations $(341,101,515)
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Growth Fund
Operations and distributions Jan. 31, 1998 July 31, 1997
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income (loss)-- net $ (8,834,012) $ (8,800,585)
Net realized gain (loss) on investments 173,975,089 50,532,417
Net change in unrealized appreciation (depreciation) on investments (506,242,592) 1,352,656,496
------------ -------------
Net increase (decrease) in net assets resulting from operations (341,101,515) 1,394,388,328
------------ -------------
Distributions to shareholders from:
Net realized gain
Class A (90,597,922) (58,071,851)
Class B (22,985,960) (11,182,049)
Class Y (7,852,912) (1,197,889)
---------- ----------
Total distributions (121,436,794) (70,451,789)
------------ -----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 651,758,505 922,677,836
Class B shares 170,896,095 269,793,922
Class Y shares 252,454,277 132,599,010
Reinvestment of distributions at net asset value
Class A shares 86,655,301 56,453,549
Class B shares 22,895,435 11,143,020
Class Y shares 7,852,912 1,197,889
Payments for redemptions
Class A shares (498,516,189) (708,866,842)
Class B shares (Note 2) (33,844,722) (58,625,798)
Class Y shares (47,832,566) (24,729,054)
----------- -----------
Increase (decrease) in net assets from capital share transactions 612,319,048 601,643,532
----------- -----------
Total increase (decrease) in net assets 149,780,739 1,925,580,071
Net assets at beginning of period 4,107,317,260 2,181,737,189
------------- -------------
Net assets at end of period $4,257,097,999 $4,107,317,260
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS Growth Fund
(Unaudited as to Jan. 31, 1998)
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 shares during the
ninth calendar year of ownership. 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
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, 1998 was 99.52%. 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 an Administrative Services Agreement,
the Fund pays AEFC a fee for administration and accounting services at a
percentage of the Fund's average daily net assets in reducing percentages
from 0.05% to 0.03% annually. Additional administrative service expenses
paid by the Fund are office expenses, consultants' fees and compensation
of officers and employees. Under this agreement, the Fund also pays taxes,
audit and certain legal fees, registration fees for shares, compensation
of board members, corporate filing fees, organizational expenses and any
other expenses properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client
Service Corporation (AECSC) maintains shareholder accounts and records.
The Fund pays AECSC an annual fee per shareholder account for this service
as follows:
oClass A $15
oClass B $16
oClass 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 and commencing on May 9,
1997, the fee is calculated at a rate of 0.10% of the Fund's average daily
net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $5,642,578 for Class A and $240,004 for
Class B for the six months ended Jan. 31, 1998.
During the six months ended Jan. 31, 1998, the Fund's transfer agency fees
were reduced by $159,502 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, 1998
Class A Class B Class Y
Sold 19,599,222 5,234,324 7,550,765
Issued for reinvested 2,812,209 759,815 253,811
distributions
Redeemed (14,913,032) (1,042,298) (1,448,162)
----------- ---------- ----------
Net increase (decrease) 7,498,399 4,951,841 6,356,414
--------- --------- ---------
Year ended July 31, 1997
Class A Class B Class Y
Sold 32,797,263 9,867,021 4,567,735
Issued for reinvested 2,071,924 414,765 43,835
distributions
Redeemed (25,016,265) (2,065,084) (853,865)
----------- ---------- --------
Net increase (decrease) 9,852,922 8,216,702 3,757,705
--------- --------- ---------
<PAGE>
<TABLE>
<CAPTION>
4
Financial
highlights
The tables below show certain important financial information for
evaluating the Fund's results.
Fiscal period ended July 31,
Per share income and capital changesa
Class A
1998b 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $35.47 $23.16 $21.50 $17.39 $17.99 $18.57 $ 17.62 $24.05 $23.24 $17.17
beginning of period
Income from investment operations:
Net investment (.05) (.05) -- .03 .02 -- .08 .19 .34 .27
income (loss)
Net gains (losses) (both (2.84) 13.04 2.81 5.63 1.24 2.40 2.66 .69 2.89 5.90
realized and unrealized)
Total from investment (2.79) 12.99 2.81 5.66 1.26 2.40 2.74 .88 3.23 6.17
operations
Less distributions:
Dividends from net -- -- (.01) (.04) -- -- (.18) (.33) (.27) (.10)
investment income
Distributions from (.96) (.68) (1.14) (1.51) (1.86) (2.98) (1.61) (6.98) (2.15) --
realized gains
Total distributions (.96) (.68) (1.15) (1.55) (1.86) (2.98) (1.79) (7.31) (2.42) (.10)
Net asset value, $31.67 $35.47 $23.16 $21.50 $17.39 $17.99 $18.57 $17.62 $24.05 $23.24
end of period
Ratios/supplemental data
Class A
1998b 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of $3,108 $3,215 $1,871 $1,380 $952 $933 $863 $780 $756 $732
period (in millions)
Ratio of expenses 0.89%d .97% 1.04% .93% .83% .87% .88% .87% .73% .64%
to average daily net assetsc
Ratio of net income (0.30%)d (.18%) --% .18% .11% --% .41% 1.36% 1.40% 1.39%
(loss) to average daily net assets
Portfolio turnover rate 17% 24% 22% 30% 56% 44% 83% 75% 49% 23%
(excluding short-term
securities)
Total returne (8.0%) 57.0% 13.3% 35.2% 7.0% 13.0% 15.1% 12.4% 15.3% 36.2%
Average brokerage $0.0471 $.0463 -- -- -- -- -- -- -- --
commission ratef
aFor a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Jan. 31, 1998 (Unaudited).
cEffective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
dAdjusted to an annual basis.
eTotal return does not reflect payment of a sales charge.
fEffective fiscal year 1997, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions are
charged. The comparability of this information may be affected by the fact that
commission rates per share vary significantly among foreign countries. IDS
Growth Fund
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal period ended July 31,
Per share income and capital changesa
Class B Class Y
1998c 1997 1996 1995b 1998c 1997 1996 1995b
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $34.82 $22.92 $21.45 $17.85 $35.60 $23.21 $21.51 $17.85
beginning of period
Income from investment operations:
Net investment (.15) (.22) (.02) (.03) (.03) (.01) .01 .03
income (loss)
Net gains (both (2.76) 12.80 2.63 3.63 (2.81) 13.08 2.85 3.63
realized and unrealized)
Total from investment (2.91) 12.58 2.61 3.60 (2.84) 13.07 2.86 3.66
operations
Less distributions:
Dividends from net -- -- -- -- -- -- (.02) --
investment income
Distributions from (.96) (.68) (1.14) -- (.96) (.68) (1.14) --
realized gains
Total distributions (.96) (.68) (1.14) -- (.96) (.68) (1.16) --
Net asset value, $30.95 $34.82 $22.92 $21.45 $31.80 $35.60 $23.21 $21.51
end of period
Ratios/supplemental data
Class B Class Y
1998c 1997 1996 1995b 1998c 1997 1996 1995b
Net assets, end of $787 $713 $281 $38 $362 $179 $29 $8
period (in millions)
Ratio of expenses 1.65%e 1.74% 1.82% 1.76%e 0.82%e .85% .88% .85%e
to average daily net assetsd
Ratio of net income (1.05%)e (.94%) (.80%) (.70%) (0.21%)e (.07%) .13% .26%e
(loss) to average daily net assets
Portfolio turnover rate 17% 24% 22% 30% 17% 24% 22% 30%
(excluding short-term
securities)
Total returnf (8.3%) 55.8% 12.4% 20.2% (7.9%) 57.2% 13.4% 20.5%
Average brokerage $.0471 $.0463 -- -- $.0471 $.0463 -- --
commission rateg
aFor a share outstanding throughout the period. Rounded to the nearest cent.
bInception date was March 20, 1995.
c Six months ended Jan. 31, 1998 (Unaudited).
dEffective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
eAdjusted to an annual basis.
fTotal return does not reflect payment of a sales charge.
gEffective fiscal year 1997, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions are
charged. The comparability of this information may be affected by the fact that
commission rates per share vary significantly among foreign countries.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
Growth Portfolio
Jan. 31, 1998
Assets
(Unaudited)
Investments in securities, at value (Note 1):
Investment in securities of unaffiliated issuers
<S> <C>
(identified cost $2,830,645,244) $4,282,739,272
Investment in securities of affiliated issuers
(identified cost $60,266,600) 57,712,500
Cash in bank on demand deposit 3,525,348
Dividends and accrued interest receivable 1,131,952
Receivable for investment securities sold 5,113,543
U.S. government securities held as collateral (Note 4) 33,671,375
Receivable from investment advisor 291,685
-------
Total assets 4,384,185,675
-------------
Liabilities
Payable for investment securities purchased 13,878,961
Payable upon return of securities loaned (Note 4) 92,115,770
Accrued investment management services fee 65,557
Other accrued expenses 18,984
------
Total liabilities 106,079,272
-----------
Net assets $4,278,106,403
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of operations
Growth Portfolio
Six months ended Jan. 31, 1998
Investment income
(Unaudited)
Income:
<S> <C>
Dividend $ 9,257,033
Interest 2,938,245
Less foreign taxes withheld (42,750)
-------
Total income 12,152,528
----------
Expenses (Note 2):
Investment management services fee 11,211,172
Compensation of board members 10,434
Custodian fees 158,540
Audit fees 12,375
Other 15,875
------
Total expenses 11,408,396
Earnings credits on cash balances (Note 2) (8,810)
------
Total net expenses 11,399,586
----------
Investment income (loss) -- net 752,942
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) 174,937,329
Net change in unrealized appreciation (depreciation) on investments (509,069,154)
------------
Net gain (loss) on investments (334,131,825)
------------
Net increase (decrease) in net assets resulting from operations $(333,378,883)
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Growth Portfolio
Operations Jan. 31, 1998 July 31, 1997
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income (loss)-- net $ 752,942 $ 5,221,628
Net realized gain (loss) on investments 174,937,329 50,423,029
Net change in unrealized appreciation (depreciation) on investments (509,069,154) 1,363,502,469
------------ -------------
Net increase (decrease) in net assets resulting from operations (333,378,883) 1,419,147,126
Net contributions (withdrawals) from partners 480,401,563 506,769,449
----------- -----------
Total increase (decrease) in net assets 147,022,680 1,925,916,575
Net assets at beginning of period 4,131,083,723 2,205,167,148
------------- -------------
Net assets at end of period $4,278,106,403 $4,131,083,723
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Growth Portfolio
(Unaudited as to Jan. 31, 1998)
1
Summary of
significant
accounting policies
Growth Portfolio (the Portfolio) is a series of Growth Trust (the Trust)
and is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. Growth Portfolio
invests primarily in stocks of U.S. and foreign companies that appear to
offer growth opportunities. The Declaration of Trust permits the Trustees
to issue non-transferable interests in the Portfolio.
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. Debt securities are
generally traded in the over-the-counter market and are valued at a price
deemed best to reflect fair value as quoted by dealers who make markets in
these securities or by an independent pricing service. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current
interest rates; those maturing in 60 days or less are valued at amortized
cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate
buying and selling of securities for investment purposes, the Portfolio
may buy and write options traded on any U.S. or foreign exchange or in the
over-the-counter market where the completion of the obligation is
dependent upon the credit standing of the other party. The Portfolio also
may buy and sell put and call options and write covered call options on
portfolio securities and may write cash-secured put options. The risk in
writing a call option is that the Portfolio gives up the opportunity of
profit if the market price of the security increases. The risk in writing
a put option is that the Portfolio may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an
option is that the Portfolio pays a premium whether or not the option is
exercised. The Portfolio also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The
Portfolio will realize a gain or loss upon expiration or closing of the
option transaction. When an option is exercised, the proceeds on sales for
a written call option, the purchase cost for a written put option or the
cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Portfolio may buy and sell financial futures contracts traded on any
U.S. or foreign exchange. The Portfolio also may buy and write put and
call options on these futures contracts. Risks of entering into futures
contracts and related options include the possibility that there may be an
illiquid market and that a change in the value of the contract or option
may not correlate with changes in the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to
deposit either cash or securities in an amount (initial margin) equal to a
certain percentage of the contract value. Subsequent payments (variation
margin) are made or received by the Portfolio each day. The variation
margin payments are equal to the daily changes in the contract value and
are recorded as unrealized gains and losses. The Portfolio recognizes a
realized gain or loss when the contract is closed or expires.
Foreign currency translations
and foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities and income and expenses are translated at the exchange rate on
the transaction date. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net
realized gains or losses from foreign currency transactions may arise from
sales of foreign currency, closed forward contracts, exchange gains or
losses realized between the trade date and settlement dates on securities
transactions, and other translation gains or losses on dividends, interest
income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts
for operational purposes and to protect against adverse exchange rate
fluctuation. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Portfolio and the resulting unrealized
appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Portfolio is
subject to the credit risk that the other party will not complete the
obligations of the contract.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership
and each investor in the Portfolio is treated as the owner of its
proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Portfolio. Accordingly, as a
"pass-through" entity, the Portfolio does not pay any income dividends or
capital gain distributions.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
and interest income, including level-yield amortization of premium and
discount, is accrued daily.
2
Fees and
expenses
The Trust, on behalf of the Portfolio, has entered into an Investment
Management Services Agreement with AEFC for managing its portfolio. Under
this agreement, AEFC determines which securities will be purchased, held
or sold. The management fee is a percentage of the Portfolio's average
daily net assets in reducing percentages from 0.6% to 0.5% annually. The
fees may be increased or decreased by a performance adjustment based on a
comparison of the performance of Class A shares of the IDS Growth Fund to
the Lipper Growth Fund Index. The maximum adjustment is 0.12% of the
Portfolio's average daily net assets on an annual basis. The adjustment
decreased the fee by $445,024 for the six months ended Jan. 31, 1998.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain
legal fees, fidelity bond premiums, registration fees for units, office
expenses, consultants' fees, compensation of trustees, corporate filing
fees, expenses incurred in connection with lending securities of the
Portfolio, and any other expenses properly payable by the Trust or
Portfolio and approved by the board.
For the six months ended Jan. 31, 1998, the Portfolio's custodian fees
were reduced by $8,810 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 $1,154,905,272 and $669,480,957,
respectively, for the six months ended Jan. 31, 1998. For the same period,
the portfolio turnover rate was 17%. Realized gains and losses are
determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $185,253
for the six months ended Jan. 31, 1998.
4
Lending of
portfolio securities
At Jan. 31, 1998, securities valued at $91,009,133 were on loan to
brokers. For collateral, the Portfolio received $58,444,395 in cash and
U.S. government securities valued at $33,671,375. Income from securities
lending amounted to $327,388 for the six months ended Jan. 31, 1998. The
risks to the Portfolio of securities lending are that the borrower may not
provide additional collateral when required or return the securities when
due.
<PAGE>
Investments in securities
Growth Portfolio (Percentages represent
Jan. 31, 1998 (Unaudited) value of investments
compared to net assets)
Investments in securities of unaffiliated issuers
Common stocks (96.5%)
Issuer Shares Value(a)
Airlines (0.9%)
Northwest Airlines Cl A 692,450(c)$ 39,123,425
Automotive & related (0.4%)
Gentex 500,000(c) 15,625,000
Banks and savings & loans (5.4%)
BankAmerica 1,000,000 71,062,500
Washington Mutual 2,500,000 160,625,000
Total 231,687,500
Beverages & tobacco (3.0%)
Coca-Cola 2,006,700 129,933,825
Building materials & construction (2.1%)
Tyco Intl 2,000,000 88,750,000
Chemicals (4.0%)
Culligan Water Technologies600,000(c) 22,200,000
Monsanto 1,200,000 56,925,000
USA Waste Services 2,475,000(c) 90,956,250
Total 170,081,250
Communications equipment & services (7.3%)
Advanced Fibre
Communications 1,200,000(c) 35,700,000
Andrew Corp 2,200,000(c) 60,500,000
Northern Telecom 1,800,000 81,225,000
Tellabs 2,600,000(c) 133,087,500
Total 310,512,500
Computers & office equipment (17.4%)
ABR Information Services 800,000(c) 19,700,000
Cisco Systems 1,800,000(c) 113,512,500
Compaq Computer 3,200,000(c) 96,200,000
Computer Associates Intl 800,000 42,550,000
Hewlett-Packard 1,800,000 108,000,000
IKON Office Solutions 400,000 12,600,000
Intl Business Machines 800,000 78,950,000
Keane 1,400,000(c) 56,875,000
Microsoft 900,000(c) 134,268,750
Network Associates 800,000(c) 43,200,000
Solectron 925,000(c) 40,006,250
Total 745,862,500
Electronics (8.9%)
Applied Materials 3,000,000(c) 98,437,500
Intel 1,500,000 121,500,000
Maxim Integrated
Products 2,400,000(c) 83,100,000
SGS-Thomson
Microelectronics 500,000(b,c) 33,968,750
Texas Instruments 800,000 43,700,000
Total 380,706,250
Energy (1.8%)
Anadarko Petroleum 1,300,000 76,700,000
Energy equipment & services (1.3%)
Halliburton 1,200,000 53,925,000
Financial services (8.3%)
First Virtual Holdings 100,000(c) 181,250
Merrill Lynch & Co 2,000,000 126,250,000
Providian Financial 1,013,550 49,537,256
Travelers Group 3,600,000 178,200,000
Total 354,168,506
Food (0.6%)
Delta & Pine Land 888,975(b) 26,669,253
Furniture & appliances (0.6%)
Ethan Allen Interiors 504,000 24,129,000
Health care (7.5%)
Boston Scientific 900,000(b,c) 45,675,000
Gensia Sicor 161(c) 785
Johnson & Johnson 1,000,000 66,937,500
Medtronic 1,500,000 76,593,750
Pfizer 1,600,000 131,100,000
Total 320,307,035
Health care services (7.0%)
First Health Group 1,000,000(c) 47,625,000
HEALTHSOUTH
Rehabilitation 4,800,000(c) 107,700,000
Service Corp Intl 2,400,000 93,600,000
United Healthcare 1,000,000 51,250,000
Total 300,175,000
Industrial equipment & services (3.3%)
Caterpillar 800,000 38,400,000
Deere & Co 1,200,000 63,300,000
ServiceMaster 1,500,000 41,343,750
Total 143,043,750
Insurance (1.7%)
Provident Cos 2,000,000 72,750,000
Leisure time & entertainment (3.1%)
Harley-Davidson 1,000,000 25,125,000
Marriott Intl 1,200,000 82,950,000
Mattel 600,000 24,300,000
Total 132,375,000
Multi-industry conglomerates (1.7%)
AccuStaff 1,200,000(b,c) 30,900,000
Apollo Group Cl A 900,000(c) 40,725,000
Total 71,625,000
Restaurants & lodging (0.8%)
Promus Hotel 800,000(c) 36,150,000
Retail (1.6%)
Consolidated Stores 383,500(c) 15,771,438
Home Depot 900,000 54,281,250
Total 70,052,688
Textiles & apparel (0.7%)
Nike Cl B 800,000(b) 32,050,000
Utilities -- telephone (2.7%)
WorldCom 3,200,000(b,c)114,600,000
Foreign (4.4%) (d)
Ericsson (LM) ADR 1,400,000 54,075,000
Schlumberger 1,800,000 132,637,500
Total 186,712,500
Total common stocks of unaffiliated issuers
(Cost: $2,675,618,267) $4,127,714,982
Short-term securities (3.6%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies (0.5%)
Federal Home Loan Mtge Corp Disc Nt
02-09-98 5.39% $ 3,200,000 $ 3,195,704
Federal Natl Mtge Assn Disc Nts
02-17-98 5.40 5,000,000 4,987,297
02-24-98 5.45 10,000,000 9,963,800
02-27-98 5.46 5,000,000 4,979,600
Total 23,126,401
Commercial paper (3.1%)
ABB Treasury Center USA
02-26-98 5.51 5,400,000(e) 5,378,589
AIG Funding
02-02-98 5.62 6,500,000 6,497,971
Albertson's
02-27-98 5.50 10,000,000 9,958,900
Ameritech
02-03-98 5.73 6,000,000 5,997,150
Ameritech Capital Funding
02-05-98 5.57 9,800,000(e) 9,792,446
ANZ (Delaware)
02-05-98 5.54% 11,000,000 10,991,567
Barclays U.S. Funding
02-02-98 5.58 3,000,000 2,999,073
02-03-98 5.54 12,200,000 12,194,382
Bell Atlantic Financial Services
02-23-98 5.49 7,700,000 7,673,091
Campbell Soup
02-23-98 5.82 7,000,000 6,971,510
Ciesco LP
02-05-98 5.54 2,300,000(e) 2,298,237
Commerzbank U.S. Finance
02-13-98 5.50 5,600,000 5,588,918
Delaware Funding
02-20-98 5.48 1,300,000(e) 1,296,057
Fleet Funding
03-13-98 5.53 9,000,000(e) 8,943,625
Morgan Stanley, Dean Witter,
Discover & Co
02-19-98 5.48 5,900,000 5,882,998
NBD Bank Canada
02-09-98 5.59 19,500,000 19,472,894
Paccar Financial
02-26-98 5.50 1,800,000 1,792,876
Toyota Motor Credit
02-26-98 5.50 8,200,000 8,167,605
Total 131,897,889
Total short-term securities
(Cost: $155,026,977) $ 155,024,290
Total investments in securities of unaffiliated issuers
(Cost: $2,830,645,244) $4,282,739,272
Investments in securities of affiliated issuer (f)
Common stock (1.3%)
Issuer Shares Value(a)
MasTec 1,800,000(b,c) $57,712,500
Total investments in securities of affiliated issuer
(Cost: $60,266,600) $ 57,712,500
Total investments in securities
(Cost: $2,890,911,844)(g) $4,340,451,772
==============
See accompanying notes to investments in securities.
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
Growth Portfolio
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Security is partially or fully on loan. See Note 4 to the financial
statements.
(c) Non-income producing.
(d) Foreign security values are stated in U.S. dollars.
(e) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(f) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
period ended Jan. 31, 1998 are as follows:
Issuer Beginning Purchase Sales Ending Dividend
cost cost cost cost income
<S> <C> <C> <C> <C> <C>
MasTec $45,512,990 $14,753,610 $ -- $60,266,600 $--
Risk Capital Holdings* 17,078,679 -- 17,078,679 -- --
---------- ----------- ---------- ----------- ----
Total $62,591,669 $14,753,610 $17,078,679 $60,266,600 $--
*Issuer was not an affiliate for the entire period.
(g) At Jan. 31,1998, the cost of securities for federal income tax purposes was
approximately $2,890,912,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation..........................................$1,506,357,000
Unrealized depreciation.......................................... (56,817,000)
-----------
Net unrealized appreciation......................................$1,449,540,000
</TABLE>
<PAGE>
Board members and officers
Independent board members and officers
Chairman William R. Pearce*
of the board Chairman of the board, Board Services Corporation (provides
administrative services to boards including the boards of the
IDS and IDSLife funds and Master Trust portfolios).
H. Brewster Atwater, Jr.
Former chairman and chief executive officer, General Mills,
Inc.
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public
Policy Research.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Alan K. Simpson
Former United States senator for Wyoming.
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
Officer
Vice president, Leslie L. Ogg*
general counsel President of Board Services Corporation.
and secretary
Board members and officers associated with AEFC
President John R. Thomas*
Senior vice president, AEFC.
William H. Dudley*
Senior advisor to the chief executive officer, AEFC.
David R. Hubers*
President and chief executive officer, AEFC.
Officers associated with AEFC
Vice president Peter J. Anderson*
Senior vice president, AEFC
Treasurer Matthew N. Karstetter*
Vice president, AEFC
* Interested person as defined by the Investment Company Act of 1940.
<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 with countries
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) trees
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 & 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. Foreign investments may be subject to currency fluctuations and
political and economic risks of the countries in which the investments are made.
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) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
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 of 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
For more complete information about any of these funds, including charges and
expenses, you can obtain a prospectus by contacting your financial advisor or
writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534. Read it carefully before you invest or send money.
<PAGE>
Quick telephone reference
American Express Redemptions and exchanges, National/Minnesota
Financial Advisors dividend payments or 800-437-3133
Telephone Transaction reinvestments and automatic
Service payment arrangements Mpls./St. Paul area:
671-3800
TTY Service For the hearing impaired 800-846-4852
American Express Automated account information 800-862-7919
Financial Advisors (TouchTone(R) phones only),
Easy Access Line including current fund prices
and performance, account values
and recent account transactions
AMERICAN EXPRESS Financial Advisors
IDS Growth Fund
IDS Tower 10
Minneapolis, MN 55440-0010
