IDS
Growth Fund
1999 SEMIANNUAL REPORT
(icon of) ruler
The goal of IDS Growth Fund, Inc.
is long-term growth of capital.
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
<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
Fund Facts 5
The 10 Largest Holdings 6
Financial Statements (Fund) 7
Notes to Financial Statements (Fund) 10
Financial Statements (Portfolio) 16
Notes to Financial Statements (Portfolio) 19
Investments in Securities 24
<PAGE>
From the Chairman
(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
It is an honor for me to join the IDSMutual Fund Group as chairman of the board
and chief executive officer for each of the funds. I have served for the past
eight years as governor of Minnesota and also for the past 20 years as a
constitutional officer responsible for the pension investments made on behalf of
governmental employees. My responsibility in the coming years is to serve your
interests.
By law, half the members of a mutual fund board must be independent of their
investment manager and distributor. I am one of those persons. I am not an
employee of American Express Financial Corporation, nor do I own stock in
American Express Company. Both are fine companies, but the law clearly states
that to fully represent your interests I must be independent.
Having said that, I have a great deal of respect for the capabilities of
American Express Financial Corporation and for the services it provides
investors. Your financial advisor assists you in financial planning, conducts
regular investment reviews, and responds to your questions and needs. This is a
very personal service that makes AEFCa partner in your financial future. I know
that AEFC has an investment focus on the long-term performance of our economy.
AEFC wants you to participate in that growth. Our board is here to serve you and
to represent your interests in a professional manner.
Arne H. Carlson
From the Portfolio Manager
(picture of) Mitzi Malevich
Mitzi Malevich
Portfolio manager
Despite a severe setback at the outset of the period, IDS Growth Fund enjoyed a
very productive six months. For the first half of the fiscal year -- August 1998
through January 1999 -- the total return from the Fund's Class A shares was
16.50%. (A portion of the return came in the form of a capital gain, which was
paid to shareholders in December 1998 and reduced the Fund's net asset value by
a like amount at that time.)
As the period began, the fallout from crumbling economies in Asia, Russia and
Latin America was taking a toll on U.S. stocks. The prevailing view was that
American companies' profits would suffer because of reduced business overseas,
and that technology-related companies were especially vulnerable. The result was
heavy stock-selling that, by the end of August, drove the Fund's value down by
nearly 20%.
But, in another display of the remarkable resilience it has shown in recent
years, the market eventually righted itself and began a tentative advance. Soon,
buoyed by three reductions in short-term interest rates by the Federal Reserve
Board during the fall, the recovery turned into a roaring rally. The Fund
responded in strong fashion, recording five straight months of healthy gains.
TECH LEADS THE WAY
Leading the comeback were technology stocks, easily the largest exposure for the
Fund. Prominent performers included Microsoft, Cisco Systems, Worldcom, IBM and
Intel. Early in the period, I increased the technology exposure by adding to
several holdings that had experienced price declines. That additional buying,
along with subsequent substantial price run-ups on a number of stocks, pushed
the technology exposure to approximately 50% of total Fund assets by period-end.
Looking ahead, concerns about the strength of corporate earnings dominated the
investment environment as the new fiscal year began in February. While it's true
that earnings could present a periodic problem for the market in the months
ahead, I think the favorable factors of low inflation and a still-healthy
economy are likely to stay with us. As for the Fund, I continue to concentrate
investments in stocks of companies that impress me as having excellent long-term
profit potential.
Mitzi Malevich
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IDS GROWTH FUND
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1999 $40.74
July 31, 1998 $36.58
Increase $ 4.16
Distributions -- Aug. 1, 1998 - Jan. 31, 1999
From income $ --
From capital gains $ 1.70
Total distributions $ 1.70
Total return* +16.50%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1999 $39.46
July 31, 1998 $35.61
Increase $ 3.85
Distributions -- Aug. 1, 1998 - Jan. 31, 1999
From income $ --
From capital gains $ 1.70
Total distributions $ 1.70
Total return* +16.06%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1999 $40.95
July 31, 1998 $36.74
Increase $ 4.21
Distributions -- Aug. 1, 1998 - Jan. 31, 1999
From income $ --
From capital gains $ 1.70
Total distributions $ 1.70
Total return* +16.55%**
*The prospectus discusses the effect of sales charge, if any, on the various
classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
<PAGE>
The 10 Largest Holdings
Percent Value
(of net assets) (as of Jan. 31, 1999)
Microsoft 5.73% $367,499,999
Cisco Systems 5.40 345,843,750
MCI WorldCom 4.85 311,025,000
EMC 4.42 283,075,000
Intel 4.40 281,875,000
Tellabs 4.15 265,825,000
Intl Business Machines 3.72 238,225,000
Texas Instruments 3.55 227,412,500
Pfizer 3.21 205,800,000
Applied Materials 2.96 189,562,500
For further detail about these holdings, please refer to the section entitled
"Investments in Securities" herein.
(icon of) pie chart
The 10 holdings listed here
make up 42.39% of net assets
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<CAPTION>
Financial Statements
Statement of assets and liabilities
IDS Growth Fund
Jan. 31, 1999 (Unaudited)
Assets
<S> <C>
Investment in Growth Portfolio (Note 1) $6,384,841,202
--------------
Liabilities
Disbursements in excess of cash on demand deposit 136
Accrued distribution fee 25,438
Accrued service fee 27,935
Accrued transfer agency fee 15,677
Accrued administrative services fee 6,708
Other accrued expenses 168,720
-------
Total liabilities 244,614
-------
Net assets applicable to outstanding capital stock $6,384,596,588
==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,576,427
Additional paid-in capital 3,512,971,860
Net operating loss (3,997,770)
Accumulated net realized gain (loss) (74,493,781)
Unrealized appreciation (depreciation) on investments 2,948,539,852
-------------
Total -- representing net assets applicable to outstanding capital stock $6,384,596,588
==============
Net assets applicable to outstanding shares: Class A $4,328,556,811
Class B $1,286,149,459
Class Y $ 769,890,318
Net asset value per share of outstanding capital stock: Class A shares 106,246,539 $ 40.74
Class B shares 32,594,951 $ 39.46
Class Y shares 18,801,183 $ 40.95
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statement of operations
IDS Growth Fund
Six months ended Jan. 31, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 12,668,021
Interest 8,483,202
---------
Total income 21,151,223
----------
Expenses (Note 2):
Expenses allocated from Growth Portfolio 12,933,674
Distribution fee-- Class B 3,778,777
Transfer agency fee 2,697,848
Incremental transfer agency fee-- Class B 50,014
Service fee
Class A 3,020,533
Class B 876,491
Class Y 298,371
Administrative services fees and expenses 1,052,007
Compensation of board members 6,316
Postage 122,285
Registration fees 308,413
Reports to shareholders 72,999
Audit fees 4,375
Other 17,605
------
Total expenses 25,239,708
Earnings credits on cash balances (Note 2) (90,715)
-------
Total net expenses 25,148,993
----------
Investment income (loss) -- net (3,997,770)
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (74,476,799)
Net change in unrealized appreciation (depreciation) on investments 993,245,605
-----------
Net gain (loss) on investments 918,768,806
-----------
Net increase (decrease) in net assets resulting from operations $914,771,036
============
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Growth Fund
Jan. 31, 1999 July 31, 1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ (3,997,770) $ (15,832,745)
Net realized gain (loss) on security transactions (74,476,799) 329,053,735
Net change in unrealized appreciation (depreciation) on investments 993,245,605 7,415,824
----------- ---------
Net increase (decrease) in net assets resulting from operations 914,771,036 320,636,814
----------- -----------
Distributions to shareholders from:
Net realized gain
Class A (172,397,588) (90,606,005)
Class B (52,232,570) (22,988,716)
Class Y (29,774,192) (7,852,912)
----------- ----------
Total distributions (254,404,350) (121,447,633)
------------ ------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 719,072,162 1,333,555,813
Class B shares 152,210,386 338,050,707
Class Y shares 209,747,183 488,734,157
Reinvestment of distributions at net asset value
Class A shares 162,785,607 86,660,124
Class B shares 51,934,659 22,898,191
Class Y shares 29,774,192 7,852,912
Payments for redemptions
Class A shares (678,310,956) (1,090,747,624)
Class B shares (Note 2) (69,922,182) (87,327,778)
Class Y shares (136,583,983) (122,660,109)
------------ ------------
Increase (decrease) in net assets from capital share transactions 440,707,068 977,016,393
----------- -----------
Total increase (decrease) in net assets 1,101,073,754 1,176,205,574
Net assets at beginning of period 5,283,522,834 4,107,317,260
------------- -------------
Net assets at end of period $6,384,596,588 $5,283,522,834
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
IDS Growth Fund
(Unaudited as to Jan. 31, 1999)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of IDS Growth Fund, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. IDS Growth Fund, Inc. has 10 billion authorized
shares of capital stock that can be allocated among the separate series as
designated by the board.
The Fund offers Class A, Class B and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge and
automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class specific
expenses) and realized and unrealized gains or losses on investments are
allocated to each class of shares based upon its relative net assets.
Investment in Growth Portfolio
The Fund invests all of its assets in Growth Portfolio (the Portfolio), a series
of Growth Trust (the Trust), an open-end investment company that has the same
objectives as the Fund. This was accomplished by transferring the Fund's assets
to the Portfolio in return for a proportionate ownership interest in the
Portfolio. The Portfolio invests primarily in stocks of U.S. and foreign
companies that appear to offer growth opportunities.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at the value that is equal to
the Fund's proportionate ownership interest in the Portfolio's net assets. The
percentage of the Portfolio owned by the Fund at Jan. 31, 1999 was 99.61%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's "Notes to financial statements" (included elsewhere in this report).
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute all of its
taxable income to the shareholders. No provision for income or excise taxes is
thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
An annual dividend from net investment income, declared and paid at the end of
the calendar year, is reinvested in additional shares of the Fund at net asset
value or payable in cash. Capital gains, when available, are distributed along
with the income dividend.
2. EXPENSES AND SALES CHARGES
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
The Fund entered into an agreement with American Express Financial Corporation
(AEFC) to provide administrative services. Under an Administrative Services
Agreement, the Fund pays AEFC a fee for administration and accounting services
at a percentage of the Fund's average daily net assets in reducing percentages
from 0.05% to 0.03% annually. Additional administrative service expenses paid by
the Fund are office expenses, consultants' fees and compensation of officers and
employees. Under this agreement, the Fund also pays taxes, audit and certain
legal fees, registration fees for shares, compensation of board members,
corporate filing fees, and any other expenses properly payable by the Fund and
approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $15
o Class B $16
o Class Y $15
The Fund entered into agreements with American Express Financial Advisors Inc.
for distribution and shareholder services. Under a Plan and Agreement of
Distribution, the Fund pays a distribution fee at an annual rate of 0.75% of the
Fund's average daily net assets attributable to Class B shares for distribution
services.
Under a Shareholder Service Agreement, the Fund pays a fee for service provided
to shareholders by financial advisors and other servicing agents. The fee is
calculated at a rate of 0.175% of the Fund's average daily net assets
attributable to Class A and Class B shares and 0.10% of the Fund's average daily
net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $4,764,150 for Class A and $475,046 for Class B
for the six months ended Jan. 31, 1999.
During the six months ended Jan. 31, 1999, the Fund's transfer agency fees were
reduced by $90,715 as a result of earnings credits from overnight cash balances.
<PAGE>
<TABLE>
<CAPTION>
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Jan. 31, 1999
Class A Class B Class Y
<S> <C> <C> <C>
Sold 21,015,706 4,579,790 6,073,595
Issued for reinvested distributions 4,405,567 1,450,126 801,761
Redeemed (19,806,790) (2,106,821) (3,900,273)
Net increase (decrease) 5,614,483 3,923,095 2,975,083
Year ended July 31, 1998
Class A Class B Class Y
Sold 38,522,405 9,983,484 14,058,750
Issued for reinvested distributions 2,812,368 759,904 253,811
Redeemed (31,346,336) (2,553,367) (3,507,138)
Net increase (decrease) 9,988,437 8,190,021 10,805,423
4. BANK BORROWINGS
The Fund entered into a revolving credit agreement with U.S. Bank, N.A., whereby
the Fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The Fund must have asset coverage for
borrowings not to exceed the aggregate of 333% of advances equal to or less than
five business days plus 367% of advances over five business days. The agreement,
which enables the Fund to participate with other IDS Funds, permits borrowings
up to $200 million, collectively. Interest is charged to each Fund based on its
borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the
Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90
days after such loan is executed. The Fund also pays a commitment fee equal to
its pro rata share of the amount of the credit facility at a rate of 0.05% per
annum. The Fund had no borrowings outstanding during the six months ended Jan.
31, 1999.
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<CAPTION>
5. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Fiscal period ended July 31,
Per share income and capital changesa
Class A
1999b 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $36.58 $35.47 $23.16 $21.50 $17.39
Income from investment operations:
Net investment income (loss) -- (.07) (.05) -- .03
Net gains (losses) (both realized and unrealized) 5.86 2.14 13.04 2.81 5.63
Total from investment operations 5.86 2.07 12.99 2.81 5.66
Less distributions:
Dividends from net investment income -- -- -- (.01) (.04)
Distributions from realized gains (1.70) (.96) (.68) (1.14) (1.51)
Total distributions (1.70) (.96) (.68) (1.15) (1.55)
Net asset value, end of period $40.74 $36.58 $35.47 $23.16 $21.50
Ratios/supplemental data
Class A
1999b 1998 1997 1996 1995
Net assets, end of period (in millions) $4,329 $3,681 $3,215 $1,871 $1,380
Ratio of expenses to average daily net assetsc 0.85%d .87% .97% 1.04% .93%
Ratio of net investment income (loss)
to average daily net assets (.01%)d (.22%) (.18%) --% .18%
Portfolio turnover rate
(excluding short-term securities) 11% 28% 24% 22% 30%
Total returne 16.50% 6.32% 57.00% 13.29% 35.15%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Jan. 31, 1999 (Unaudited).
c Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
d Adjusted to an annual basis.
e Total return does not reflect payment of a sales charge.
</TABLE>
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<TABLE>
<CAPTION>
Fiscal period ended July 31,
Per share income and capital changesa
Class B Class Y
1999b 1998 1997 1996 1995c 1999b 1998 1997 1996 1995c
Net asset value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period $35.61 $34.82 $22.92 $21.45 $17.85 $36.74 $35.60 $23.21 $21.51 $17.85
Income from investment operations:
Net investment income (loss) (.12) (.29) (.22) (.02) (.03) .01 (.04) (.01) .01 .03
Net gains (losses)
(both realized and unrealized) 5.67 2.04 12.80 2.63 3.63 5.90 2.14 13.08 2.85 3.63
Total from investment operations 5.55 1.75 12.58 2.61 3.60 5.91 2.10 13.07 2.86 3.66
Less distributions:
Dividends from
net investment income -- -- -- -- -- -- -- -- (.02) --
Distributions from realized gains (1.70) (.96) (.68) (1.14) -- (1.70) (.96) (.68) (1.14) --
Total distributions (1.70) (.96) (.68) (1.14) -- (1.70) (.96) (.68) (1.16) --
Net asset value, end of period $39.46 $35.61 $34.82 $22.92 $21.45 $40.95 $36.74 $35.60 $23.21 $21.51
Ratios/supplemental data
Class B Class Y
1999b 1998 1997 1996 1995c 1999b 1998 1997 1996 1995c
Net assets, end of period
(in millions) $1,286 $1,021 $713 $281 $38 $770 $582 $179 $29 $8
Ratio of expenses to
average daily net assetsd 1.61%e 1.63% 1.74% 1.82% 1.76%e .78%e .80% .85% .88% .85%e
Ratio of net investment income
(loss) to average daily net assets (.78%)e (.97%) (.94%) (.80%) (.70%)e .05%e (.12%) (.07%) .13% .26%e
Portfolio turnover rate
(excluding short-term securities) 11% 28% 24% 22% 30% 11% 28% 24% 22% 30%
Total returnf 16.06% 5.52% 55.81% 12.43% 19.99% 16.55% 6.40% 57.23% 13.48% 20.36%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Jan. 31, 1999 (Unaudited).
c Inception date was March 20, 1995.
d Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
e Adjusted to an annual basis.
f Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
Financial Statements
Statement of assets and liabilities
Growth Portfolio
Jan. 31, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1):
Investment in securities of unaffiliated issuers
(identified cost $3,497,524,535) $6,466,470,830
Investment in securities of affiliated issuers
(identified cost $60,266,600) 53,775,000
----------
Total investments in securities (identified cost $3,557,791,135) 6,520,245,830
Dividends and accrued interest receivable 1,822,000
Receivable for investment securities sold 12,576,743
----------
Total assets 6,534,644,573
-------------
Liabilities
Disbursements in excess of cash on demand deposit 20,529,962
Payable upon return of securities loaned (Note 4) 104,100,000
Accrued investment management services fee 236,096
Other accrued expenses 70,528
------
Total liabilities 124,936,586
-----------
Net assets $6,409,707,987
==============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Growth Portfolio
Six months ended Jan. 31, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividend $ 12,718,638
Interest 8,501,074
---------
Total income 21,219,712
----------
Expenses (Note 2):
Investment management services fee 12,752,323
Compensation of board members 10,686
Custodian fees 179,314
Audit fees 13,125
Other 35,917
------
Total expenses 12,991,365
Earnings credits on cash balances (Note 2) (6,119)
------
Total net expenses 12,985,246
----------
Investment income (loss) -- net 8,234,466
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) (74,639,617)
Net change in unrealized appreciation (depreciation) on investments 996,898,130
-----------
Net gain (loss) on investments 922,258,513
-----------
Net increase (decrease) in net assets resulting from operations $930,492,979
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Growth Portfolio
Jan. 31, 1999 July 31, 1998
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss) -- net $ 8,234,466 $ 5,304,359
Net realized gain (loss) on investments (74,639,617) 330,872,649
Net change in unrealized appreciation (depreciation) on investments 996,898,130 6,947,483
----------- ---------
Net increase (decrease) in net assets resulting from operations 930,492,979 343,124,491
Net contributions (withdrawals) from partners 173,117,371 831,889,423
----------- -----------
Total increase (decrease) in net assets 1,103,610,350 1,175,013,914
Net assets at beginning of period 5,306,097,637 4,131,083,723
------------- -------------
Net assets at end of period $6,409,707,987 $5,306,097,637
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Growth Portfolio
(Unaudited as to Jan. 31, 1999)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Growth Portfolio (the Portfolio) is a series of Growth Trust (the Trust) and is
registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. Growth Portfolio invests
primarily in stocks of U.S. and foreign companies that appear to offer growth
opportunities. The Declaration of Trust permits the Trustees to issue
non-transferable interests in the Portfolio.
The Portfolios' significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions,
if any, may arise from sales of foreign currency, closed forward contracts,
exchange gains or losses realized between the trade date and settlement date on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete it contract obligations.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.6% to 0.5% annually. The fees may be increased or decreased
by a performance adjustment based on a comparison of the performance of Class A
shares of the IDS Growth Fund to the Lipper Growth Fund Index. The maximum
adjustment is 0.12% of the Portfolio's average daily net assets on an annual
basis. The adjustment decreased the fee by $1,453,710 for the six months ended
Jan. 31, 1999.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
During the six months ended Jan. 31, 1999, the Portfolio's custodian fees were
reduced by $6,119 as a result of earnings credits from overnight cash balances.
According to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $703,399,643 and $535,373,391, respectively, for the six
months ended Jan. 31, 1999. For the same period, the portfolio turnover rate was
11%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $135,000 for the
six months ended Jan. 31, 1999.
4. LENDING OF PORTFOLIO SECURITIES
As of Jan. 31, 1999, securities valued at $98,339,800 were on loan to brokers.
For collateral, the Portfolio received $104,100,000 in cash. Income from
securities lending amounted to $88,951 for the six months ended Jan. 31, 1999.
The risks to the Portfolio of securities lending are that the borrower may not
provide additional collateral when required or return the securities when due.
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
Growth Portfolio
Jan. 31, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (95.1%)
Issuer Shares Value(a)
Automotive & related (0.4%)
<S> <C> <C>
Gentex 1,000,000(b) $22,875,000
Banks and savings & loans (4.6%)
BankAmerica 1,357,920 90,810,900
BankBoston 1,200,000 44,325,000
Washington Mutual 3,750,000 157,500,000
Total 292,635,900
Beverages & tobacco (2.4%)
Coca-Cola 2,381,700 155,852,494
Chemicals (3.2%)
Monsanto 800,000 38,050,000
Waste Management 3,375,000 168,539,063
Total 206,589,063
Communications equipment & services (6.7%)
Andrew Corp 2,200,000(b) 39,875,000
Ericsson (LM) ADR Cl B 2,800,000(c) 78,050,000
MasTec 1,800,000(b,g) 53,775,000
Tellabs 3,100,000(b) 265,825,000
Total 437,525,000
Computers & office equipment (29.6%)
America Online 400,000(b) 70,275,000
Cisco Systems 3,100,000(b) 345,843,750
Compaq Computer 2,700,000 128,587,500
EMC 2,600,000(b) 283,075,000
Hewlett-Packard 1,800,000 141,075,000
Intl Business Machines 1,300,000 238,225,000
Keane 1,800,000(b) 58,050,000
Microsoft 2,100,000(b) 367,499,999
Network Associates 2,000,000(b) 104,750,000
Solectron 462,500(b) 41,191,406
Yahoo! 350,000(b,d) 123,987,500
Total 1,902,560,155
Electronics (13.8%)
Applied Materials 3,000,000(b) 189,562,500
Broadcom Cl A 100,000 13,312,500
Intel 2,000,000 281,875,000
Maxim Integrated Products 2,400,000(b) 123,450,000
STMicroelectronics 500,000 52,250,000
Texas Instruments 2,300,000 227,412,500
Total 887,862,500
Energy (1.3%)
Anadarko Petroleum 3,000,000 81,187,500
Energy equipment & services (2.2%)
Halliburton 1,500,000 44,531,250
Schlumberger 2,000,000(c) 95,250,000
Total 139,781,250
Financial services (6.6%)
Citigroup 2,500,000 140,156,250
Merrill Lynch & Co 1,600,000 121,600,000
Providian Financial 1,595,325 160,828,702
Total 422,584,952
Furniture & appliances (0.8%)
Ethan Allen Interiors 1,014,000 48,418,500
Health care (7.5%)
Boston Scientific 2,000,000(b) 48,875,000
Gensia Sicor 161(b) 855
Johnson & Johnson 700,000 59,500,000
Medtronic 500,000 39,843,750
Pfizer 1,600,000 205,800,000
Warner-Lambert 1,800,000 129,937,500
Total 483,957,105
Health care services (1.0%)
HEALTHSOUTH Rehabilitation 4,800,000(b) 65,100,000
Household products (0.8%)
ServiceMaster 2,650,000 50,515,624
Industrial equipment & services (0.6%)
Deere & Co 1,200,000 39,075,000
Insurance (0.7%)
Provident Companies 1,000,000 42,875,000
Leisure time & entertainment (1.1%)
Harley-Davidson 1,000,000 52,000,000
Mattel 900,000 20,418,750
Total 72,418,750
Multi-industry conglomerates (3.2%)
Apollo Group Cl A 1,800,000(b) 49,275,000
Tyco Intl 2,000,000(c) 154,125,000
Total 203,400,000
Restaurants & lodging (1.3%)
Marriott Intl Cl A 2,400,000 84,300,000
Retail (2.3%)
Home Depot 2,400,000 144,900,000
Utilities -- telephone (4.9%)
MCI WorldCom 3,900,000(b) 311,025,000
Total common stocks
(Cost: $3,139,690,618) $6,095,438,793
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS GROWTH FUND
Bonds (2.7%)
Issuer Coupon Principal Value(a)
rate amount
Resolution Funding Corp
Zero Coupon
<S> <C> <C> <C>
07-15-20 5.95% $400,000,000(f) $118,000,000
10-15-20 6.03 185,000,000(f) 53,804,383
Total bonds
(Cost: $165,090,786) $171,804,383
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (3.9%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (2.2%)
Federal Home Loan Bank Disc Nt
<S> <C> <C> <C>
02-24-99 4.74% $16,600,000 $16,545,473
Federal Home Loan Mtge Corp Disc Nts
02-02-99 5.05 3,600,000 3,598,491
02-09-99 5.07 3,400,000 3,395,249
02-11-99 4.79 10,500,000 10,483,305
02-12-99 4.81 1,900,000 1,896,714
02-17-99 5.06 15,200,000 15,161,848
03-02-99 4.79 14,800,000 14,739,336
03-11-99 4.74 29,000,000 28,847,912
03-16-99 4.75 23,300,000 23,162,384
03-22-99 4.75 26,700,000 26,521,467
Total 144,352,179
Commercial paper (1.2%)
CXC
03-04-99 4.90 $4,100,000(e) 4,081,697
Delaware Funding
02-23-99 4.91 7,600,000(e) 7,575,274
Fleet Funding
02-02-99 4.93 9,200,000(e) 9,196,228
General Electric Capital
02-01-99 4.81 16,100,000 16,095,698
GTE Funding
02-09-99 5.29 3,700,000 3,694,604
02-25-99 4.86 4,000,000 3,985,989
Preferred Receivables
02-03-99 5.45 1,000,000(e) 999,397
Rohm & Haas
02-01-99 4.82 33,900,000(e) 33,890,922
Total 79,519,809
Letter of credit (0.5%)
Bank of America-
AES Hawaii
02-05-99 5.22 16,400,000 16,385,814
02-25-99 5.24 12,800,000 12,744,852
Total 29,130,666
Total short-term securities
(Cost: $253,009,731) $253,002,654
Total investments in securities
(Cost: $3,557,791,135)(h) $6,520,245,830
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
IDS GROWTH FUND
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. As of Jan. 31, 1999, the
value of foreign securities represented 5.11% of net assets.
(d) Security is partially or fully on loan. See Note 4 to the financial
statements.
(e) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(f) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(g) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
six months ended Jan. 31, 1999 are as follows:
Issuer Beginning Purchase Sales Ending Dividend Value(a)
cost cost cost cost income
MasTec $60,266,600 $-- $-- $60,266,600 $-- $53,775,000
(h) At Jan. 31, 1999, the cost of securities for federal income tax purpose was
approximately $3,557,791,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $3,087,513,000
Unrealized depreciation (125,058,000)
------------
Net unrealized appreciation $2,962,455,000
<PAGE>
Quick telephone reference
AMERICAN EXPRESS FINANCIAL ADVISORS TELEPHONE TRANSACTION SERVICE
Sales and exchanges, dividend payments or reinvestments and automatic payment
arrangements
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 612-671-3800
AMERICAN EXPRESS FINANCIAL ADVISORS
Fund performance, objectives and account inquiries: 800-862-7919
TTY SERVICE
For the hearing impaired: 800-846-4852
AMERICAN EXPRESS FINANCIAL ADVISORS
Automated account information (TouchTone(R) telephones only), including current
Fund prices and performance, account values and recent
account transactions: 800-862-7919
TICKER SYMBOL
Class A: INIDX Class B: IGRBX Class Y: IGRYX
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 85
SPENCER, IA
S-6456 M (3/99)
IDS Growth Fund
IDS Tower 10
Minneapolis, MN 55440-0010
AMERICAN EXPRESS Financial Advisors
