1998 SEMIANNUAL REPORT
IDS
New
Dimensions
Fund
(icon of) dimension
The goal of New Dimensions Fund, Inc. is long-term growth of capital. The Fund
invests primarily in common stocks of companies showing potential for
significant growth and operating in areas where economic or technological
changes are occurring.
AMERICAN EXPRESS Financial Advisors
Distributed by American Express Financial Advisors Inc.
<PAGE>
(icon of) dimension
Fast-track stocks
What type of stock has been the driving force behind the dramatic increases
posted by U.S. and foreign stock markets in recent years? The answer is growth
stocks -- that is stocks of companies that have a track record of increasing
their business and profits at a rapid pace. These companies, some large and
well-known, others smaller and newly discovered, form the foundation of IDSNew
Dimensions Fund. The Fund looks for companies from around the world that not
only have a history of continuous growth, but are poised to continue growing due
to their superior management, marketing innovation and/or technological
advances.
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) 19
Notes to financial statements (Portfolio) 22
Investments in securities 30
Board members and officers 35
IDS mutual funds 36
<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, you also know that history shows that bull markets don't last
forever. Though they're often unpredictable, declines -- whether they're
brief or long-lasting, moderate or substantial -- are always a
possibility. 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 an investor 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 American
Express financial advisor. That becomes even more important if there's a
major change in your financial situation or in the financial markets.
William R. Pearce
(picture of) William R. Pearce
William R. Pearce
Chairman of the board
<PAGE>
From the portfolio manager
The past six months was a highly volatile period for stocks, especially
the growth sector. In the end, though, IDS New Dimensions Fund generated
positive results for the first half of the fiscal year -- August 1997
through January 1998. For the Fund's Class A shares, the total return was
1.3%. (A portion of the return came in the form of a capital gain, which
was paid to shareholders last December and reduced the Fund's net asset by
a like amount.)
After racking up spectacular gains in the preceding months, the stock
market was kept off balance much of the past six months. The initial
problem was a rise in long-term interest rates, which caused stocks to
stumble last August. After a rebound in September, stocks then were
confronted with the far-reaching effect of financial turmoil in Asia. This
new phenomenon immediately raised concern that profits of American
companies -- particularly those in technology-related businesses, for
which Asia is an important market -- might soon erode. The result was a
sharp decline for stocks in late October.
Although the `Asian flu' lingered over the winter, stocks, thanks to
support provided by ongoing low inflation, a decline in long-term interest
rates and solid economic growth, experienced a fairly speedy recovery. By
the end of the period, the market had managed to climb out of last fall's
nose dive and finish the six months in positive territory.
Core investments little changed
The Fund's performance pattern generally followed that of the broad
market, although its fluctuations were somewhat more dramatic. For the
most part, that stemmed from the Fund's substantial holdings among
technology stocks, which were whipsawed by the Asian storm. The Fund's
other major areas of exposure -- health care and financial/business
services stocks -- fared considerably better, as their profit prospects
appeared more stable.
I made only modest changes to the portfolio during the six months, the two
most notable being a reduction in technology stocks and in increase in
mid-cap (or medium-size) stocks, both occurring last fall. Still, the core
of the Fund's investments remained in large-cap stocks, which have most
often led the market's advance in recent years. Cash reserves made up
about 12% of portfolio assets during the past period.
As I write this in mid-February, 1998 has gotten off to an uncertain
start. While the economy remains in good shape and inflation continues to
be well-behaved, the future strength of corporate earnings is still in
some doubt. I expect that to foster ongoing market volatility and,
perhaps, bring a temporary halt to the unusually generous returns stocks
have provided in recent years.
Gordon Fines
(picture of) Gordon Fines
Gordon Fines
Portfolio manager
<PAGE>
To our shareholders
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1998 $ 24.07
July 31, 1997 $ 25.69
Decrease $ 1.62
Distributions
Aug. 1, 1997 - Jan. 31, 1998
From income $ 0.17
From capital gains $ 1.73
Total distributions $ 1.90
Total return* +1.3%**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1998 $ 23.80
July 31, 1997 $ 25.38
Decrease $ 1.58
Distributions
Aug. 1, 1997 - Jan. 31, 1998
From income $ 0.03
From capital gains $ 1.73
Total distributions $ 1.76
Total return* +1.2%**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1998 $ 24.08
July 31, 1997 $ 25.72
Decrease $ 1.64
Distributions
Aug. 1, 1997 - Jan. 31, 1998
From income $ 0.20
From capital gains $ 1.73
Total distributions $ 1.93
Total return* +1.4%**
*The prospectus discusses the effect of sales charges, if any, on the
various classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
<PAGE>
The Portfolio's ten largest holdings
Percent Value
(of Portfolio's net assets) (as of Jan. 31, 1998)
General Electric 3.97% $589,000,000
Pfizer 2.87 426,075,000
Norwest 2.70 401,500,000
Cisco Systems 2.34 346,843,749
Deere & Co 2.10 311,225,000
Intel 2.07 307,800,000
Compaq Computer 2.03 300,625,000
Travelers Group 2.00 297,000,000
SmithKline Beecham ADR 1.95 290,087,500
BellSouth 1.88 278,587,500
(picture of) pie chart
The ten holdings listed here make up 23.91% of the Portfolio's net assets
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS New Dimensions Fund, Inc.
Jan. 31, 1998
Assets
(Unaudited)
<S> <C>
Investment in Growth Trends Portfolio (Note 1) $14,823,445,839
---------------
Liabilities
Disbursements in excess of cash on demand deposit 19,262
Accrued distribution fee 38,503
Accrued service fee 62,715
Accrued transfer agency fee 39,170
Accrued administrative services fee 13,411
Other accrued expenses 679,053
Total liabilities 852,114
-------
Net assets applicable to outstanding capital stock $14,822,593,725
---------------
Represented by
Capital stock-- $.01 par value (Note 1) $ 6,166,860
Additional paid-in capital 9,544,554,322
Undistributed net investment income 7,939,765
Accumulated net realized gain (loss) 393,372,437
Unrealized appreciation (depreciation) on investments 4,870,560,341
Total-- representing net assets applicable to outstanding capital stock $14,822,593,725
---------------
Net assets applicable to outstanding shares: Class A $ 9,021,547,330
===============
Class B $ 1,886,156,854
Class Y $ 3,914,889,541
Net asset value per share of outstanding capital stock: Class A shares 374,869,866 $ 24.07
Class B shares 79,249,816 $ 23.80
Class Y shares 162,566,297 $ 24.08
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
IDS New Dimensions Fund, Inc.
Six months ended Jan. 31, 1998
Investment income
(Unaudited)
Income:
<S> <C>
Dividends $ 67,228,345
Interest 41,373,135
Less foreign taxes withheld (486,427)
--------
Total income 108,115,053
-----------
Expenses (Note 2):
Expenses allocated from Growth Trends Portfolio 35,181,736
Distribution fee -- Class B 6,323,576
Transfer agency fee 6,768,781
Incremental transfer agency fee-- Class B 84,951
Service fee
Class A 7,483,813
Class B 1,466,779
Class Y 1,894,708
Administrative services fees and expenses 2,412,635
Compensation of board members 13,041
Postage 218,081
Registration fees 554,096
Reports to shareholders 100,002
Audit fees 5,125
Other 4,517
-----
Total expenses 62,511,841
Earnings credits on cash balances (Note 2) (586,575)
--------
Total net expenses 61,925,266
Investment income (loss) -- net 46,189,787
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions 883,506,272
Net change in unrealized appreciation (depreciation) on investments (727,005,006)
------------
Net gain (loss) on investments 156,501,266
-----------
Net increase (decrease) in net assets resulting from operations $202,691,053
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS New Dimensions Fund, Inc.
Operations and distributions Jan. 31, 1998 July 31, 1997
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income (loss)-- net $ 46,189,787 $ 77,245,186
Net realized gain (loss) on investments 883,506,272 558,596,748
Net change in unrealized appreciation (depreciation) on investments (727,005,006) 3,419,852,495
------------ -------------
Net increase (decrease) in net assets resulting from operations 202,691,053 4,055,694,429
----------- -------------
Distributions to shareholders from:
Net investment income
Class A (58,194,887) (39,669,181)
Class B (1,969,568) (1,734,180)
Class Y (29,211,427) (20,903,051)
Net realized gain
Class A (598,215,942) (211,691,845)
Class B (123,782,372) (30,220,222)
Class Y (262,398,412) (89,184,320)
------------ -----------
Total distributions (1,073,772,608) (393,402,799)
-------------- ------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 1,041,745,976 1,503,550,276
Class B shares 387,139,303 685,227,207
Class Y shares 636,698,483 1,132,923,031
Reinvestment of distributions at net asset value
Class A shares 631,280,177 245,314,571
Class B shares 125,170,979 31,850,456
Class Y shares 291,609,838 110,087,371
Payments for redemptions
Class A shares (781,801,947) (1,035,073,877)
Class B shares (Note 2) (75,958,960) (105,961,908)
Class Y shares (522,385,130) (829,208,400)
------------ ------------
Increase (decrease) in net assets from capital share transactions 1,733,498,719 1,738,708,727
------------- -------------
Total increase (decrease) in net assets 862,417,164 5,401,000,357
Net assets at beginning of period 13,960,176,561 8,559,176,204
-------------- -------------
Net assets at end of period $14,822,593,725 $13,960,176,561
=============== ===============
Undistributed net investment income $ 7,939,765 $ 51,125,860
--------------- ---------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS New Dimensions Fund, Inc.
(Unaudited as to Jan. 31, 1998)
1
Summary of
significant
accounting policies
The Fund is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. The
Fund offers Class A, Class B and Class Y shares. Class A shares are sold
with a front-end sales charge. Class B shares 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 Trends Portfolio
Effective May 13, 1996, the Fund began investing all of its assets in the
Growth Trends 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
Trends Portfolio invests primarily in common stocks of companies showing
potential for significant growth and operating in areas where economic or
technological changes are occuring.
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 99.87%. 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 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:
Effective March 20, 1995, the Fund entered into agreements with American
Express Financial Corporation (AEFC) for providing administrative services
and serving as transfer agent. Under its Administrative Services
Agreement, the Fund pays AEFC 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 0.025% annually. Additional
administrative service expenses paid by the Fund are office expenses,
consultant's fees and compensation of officers and employees. Under this
agreement, the Fund also pays taxes, audit and certain legal fees,
registration fees for shares, compensation of board members, corporate
filing fees, organizational expenses and any other expenses properly
payable by the Fund 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 for
distributing Fund shares were $13,730,395 for Class A and $625,401 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 $586,575 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 41,963,122 15,762,298 25,492,189
Issued for reinvested 27,068,061 5,423,366 12,496,136
distributions
Redeemed (31,391,153) (3,097,294) (21,033,728)
----------- ---------- -----------
Net increase (decrease) 37,640,030 18,088,370 16,954,597
Year ended July 31, 1997
Class A Class B Class Y
Sold 69,802,144 32,213,213 52,586,867
Issued for reinvested 11,712,924 1,532,597 5,254,015
distributions
Redeemed (47,748,549) (4,867,366) (38,295,346)
----------- ---------- -----------
Net increase (decrease) 33,766,519 28,878,444 19,545,536
<PAGE>
<TABLE>
<CAPTION>
IDS New Dimensions Fund, Inc.
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 1996c 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $25.69 $18.54 $17.24 $14.06 $14.87 $12.57 $12.01 $9.45 $10.45 $7.94 $9.84
beginning of period
Income from investment operations:
Net investment .09 .15 .17 .16 .09 .06 .06 .15 .24 .16 .14
income (loss)
Net gains (losses) .19 .78 .18 .36 (.18) .30 .11 .35 (.52) .23 (.11)
(both realized and
unrealized)
Total from investment .28 .79 .20 .38 (.09) .30 .11 .37 (.28) .25 (.98)
operations
Less distributions:
Dividends from net (.17) (.13) (.15) (.12) (.07) (.04) (.14) (.22) (.19) (.04) (.12)
investment income
Distribution from (.17) (.67) (.60) (.50) (.65) (.73) (.49) (.96) (.53) -- (.80)
realized gains
Total distributions (.19) (.80) (.75) (.62) (.72) (.77) (.63) (.11) (.72) (.04) (.92)
Net asset value, $24.07 $25.69 $18.54 $17.24 $14.06 $14.87 $12.57 $12.01 $9.45 $10.45 $7.94
end of perod
Ratios/supplemental data
Class A
1998b 1997 1996c 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of $9,022 $8,663 $5,626 $4,575 $4,296 $3,544 $2,253 $1,553 $815 $762 $636
period (in millions)
Ratio of expenses to .81%d .91% .94%d .90% .90% .92% .95% .90% .88% .82% .87%
average daily net assetse
Ratio of net income .72%d .73% .78%d 1.07% .75% .51% .57% 1.65% 2.43% 1.70% 1.65%
(loss) to average daily
net assets
Portfolio turnover rate 19% 32% 41% 54% 48% 60% 75% 81% 91% 67% 119%
(excluding short-term
securities)
Total returnf 1.3% .4% .1% .2% (.7%) .2% .9% .4% (.2%) .3% (.9%)
Average brokerage $.0474 $.0511 -- -- -- -- -- -- -- -- --
commission rateg
aFor a share outstanding throughout the period. Rounded to the nearest
cent.
bSix months ended Jan. 31, 1998 (Unaudited).
cThe Fund's fiscal year-end was changed from Sept 30 to July 31, effective
1996.
dAdjusted to an annual basis.
e Effective fiscal year 1996, expense ratio is based on total expenses of
the Fund before reduction of earnings credits on cash balances.
fTotal return does not reflect payment of a sales charge. reduction of
earnings credits on cash balances.
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>
IDS New Dimensions Fund, Inc.
Fiscal period ended July 31,
Per share income and capital changesa
Class B Class Y
1998b 1997 1996c 1995d 1998b 1997 1996c 1995d
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $25.38 $18.38 $17.18 $14.21 $25.72 $18.56 $17.26 $14.21
beginning of period
of
period
Income from investment operations:
Net investment .01 (.02) .03 .02 .09 .18 .19 .10
income (loss)
Net gains (losses) .17 7.73 .18 .29 .20 .78 .18 .29
(both realized
and unrealized)
Total from investment .18 7.71 .19 .29 .29 .79 .20 .30
operations
Less distributions:
Dividends from net (.03) (.04) (.11) -- (.20) (.16) (.17) --
investment income
Distribution from (.17) (.67) (.60) -- (.17) (.67) (.60) --
realized gains
Total distributions (.17) (.71) (.71) -- (.19) (.83) (.77) --
Net asset value, $23.80 $25.38 $18.38 $17.18 $24.08 $25.72 $18.56 $17.26
end of period
Ratios/supplemental data
Class B Class Y
1998b 1997 1996c 1995d 1998b 1997 1996c 1995d
Net assets, end of $1,886 $1,552 $593 $150 $3,915 $3,745 $2,340 $1,792
period (in millions)
Ratio of expenses to 1.57%e 1.67% 1.71%e 1.72%e .74%e .76% .77%e .76%e
average daily net assetsf
Ratio of income (loss) (.04%)e (.02%) .01%e .33%e .80%e .88% .95%e 1.26%e
to average daily net assets
Portfolio turnover rate 19% 32% 41% 54% 19% 32% 41% 54%
(excluding short-term
securities)
Total returng 1.2% 42.7% 11.5% 20.9% 1.4% 44.0% 12.3% 21.5%
Average brokerage $.0474 $.0511 -- -- $.0474 $.0511 -- --
commission rateh
aFor a share outstanding throughout the period. Rounded to the nearest
cent.
bSix months ended Jan. 31, 1998 (Unaudited).
cThe Fund's fiscal year-end was changed from Sept. 30 to July 31,
effective 1996.
dInception date was March 20, 1995.
eAdjusted to an annual basis.
fEffective fiscal year 1996, expense ratio is based on total expenses of
the Fund before reduction of earnings credits on cash balances.
gTotal return does not reflect payment of a sales charge.
hEffective 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 Trends Portfolio
Jan. 31, 1998
Assets
(Unaudited)
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $10,066,650,897) $14,944,487,759
Cash in bank on demand deposit 20,895,546
Dividends and accrued interest receivable 11,011,868
Receivable for investment securities sold 30,140,482
Receivable from investment advisor 295,453
-------
Total assets 15,006,831,108
--------------
Liabilities
Payable for investment securities purchased 135,657,850
Payable upon return of securities loaned (Note 4) 26,490,000
Accrued investment management services fee 210,262
Option contracts written, at value
(premium received $1,547,025) (Note 5) 1,465,312
Other accrued expenses 22,728
------
Total liabilities 163,846,152
-----------
Net assets $14,842,984,956
===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of operations
Growth Trends Portfolio
Six months ended Jan. 31, 1998
Investment income
(Unaudited)
Income:
<S> <C>
Dividend $ 67,326,260
Interest 41,560,090
Less foreign taxes withheld (487,152)
--------
Total income 108,399,198
-----------
Expenses (Note 2):
Investment management services fee 34,824,337
Compensation of board members 28,010
Custodian fees 306,520
Audit fees 15,375
Other 58,595
------
Total expenses 35,232,837
----------
Investment income (loss) -- net 73,166,361
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) 884,860,115
Net change in unrealized appreciation (depreciation) on investments (728,173,585)
------------
Net gain (loss) on investments 156,686,530
-----------
Net increase (decrease) in net assets resulting from operations $229,852,891
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Growth Trends Portfolio
Operations Jan. 31, 1998 July 31, 1997
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income (loss)-- net $ 73,166,361 $ 117,732,767
Net realized gain (loss) on investments 884,860,115 559,194,834
Net change in unrealized appreciation (depreciation) on investments (728,173,585) 3,427,643,228
------------ -------------
Net increase (decrease) in net assets resulting from operations 229,852,891 4,104,570,829
Net contributions (withdrawals) from partners 631,002,712 1,292,719,326
----------- -------------
Total increase (decrease) in net assets 860,855,603 5,397,290,155
Net assets at beginning of period 13,982,129,353 8,584,839,198
-------------- -------------
Net assets at end of period $14,842,984,956 $13,982,129,353
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Growth Trends Portfolio
(Unaudited as to Jan. 31, 1998)
1
Summary of
significant
accounting policies
Growth Trends 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
Trends Portfolio invests primarily in common stocks of companies showing
potential for significant growth and operating in areas where economic or
technological changes are occurring. 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 0.49% annually. The
fees may be increased or decreased by a performance adjustment based on a
comparison of the performance of Class A shares of IDS New Dimensions 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 $2,051,975 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.
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 $3,357,164,429 and $2,565,360,443,
respectively, for the six months ended Jan. 31, 1998. For the same period,
the portfolio turnover rate was 19%. Realized gains and losses are
determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $835,690
for the six months ended Jan. 31, 1998.
4
Lending of
portfolio
securities
At Jan. 31, 1998, securities valued at $25,964,842 were on loan to
brokers. For collateral, the Portfolio received $26,490,000 in cash.
Income from securities lending amounted to $355,559 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.
5
Option
contracts
written
The number of contracts and premium amounts associated with options
contracts written is as follows:
Six months ended Jan. 31, 1998
Calls
Contracts Premium
Balance July 31, 1997 -- $ --
Opened 15,630 1,547,025
Balance Jan. 31, 1998 15,630 $1,547,025
See summary of significant accounting policies.
<PAGE>
Investments in securities
Growth Trends Portfolio (Percentages represent
Jan. 31, 1998 (Unaudited) value of investments
compared to net assets)
Common stocks (91.1%)
Issuer Shares Value(a)
Aerospace & defense (1.4%)
Boeing 1,000,000 $ 47,562,500
United Technologies 2,000,000 163,250,000
Total 210,812,500
Airlines (1.7%)
AMR2,000,000(b) 252,500,000
Banks and savings & loans (6.9%)
BankAmerica 1,300,000 92,381,250
Citicorp 2,000,000 238,000,000
Norwest 11,000,000 401,500,000
State Street 3,900,000 218,400,000
Wachovia 1,000,000 77,750,000
Total 1,028,031,250
Beverages & tobacco (1.3%)
Coca-Cola 2,500,000 161,875,000
Fortune Brands 955,200 36,536,400
Total 198,411,400
Building materials & construction (1.2%)
Tyco Intl 4,000,000 177,500,000
Chemicals (2.1%)
Air Products & Chemicals 800,000 64,050,000
Monsanto 2,000,000 94,875,000
USA Waste Services 4,000,000(b) 147,000,000
Total 305,925,000
Communications equipment & services (1.9%)
ADC Telecommunications 2,000,000(b) 38,000,000
Lucent Technologies 1,100,000 97,350,000
Motorola 500,000 29,718,750
Tellabs 2,200,000(b) 112,612,500
Total 277,681,250
Computers & office equipment (11.9%)
Automatic Data Processing 525,400 31,425,488
BMC Software 1,000,000(b) 67,750,000
Cisco Systems 5,500,000(b) 346,843,749
Compaq Computer 10,000,000(f) 300,625,000
Computer Associates Intl 3,500,000 186,156,250
Computer Sciences 500,000(b) 42,437,500
Hewlett-Packard 3,400,000 204,000,000
Intl Business Machines 2,000,000 197,375,000
Microsoft 1,700,000(b) 253,618,750
Oracle 700,000(b) 16,275,000
PeopleSoft 1,000,000(b) 35,000,000
Xerox 1,000,000 80,375,000
Total 1,761,881,737
Electronics (2.8%)
AMP 864,950 34,598,000
Applied Materials 1,000,000(b) 32,812,500
Intel 3,800,000 307,800,000
Texas Instruments 800,000 43,700,000
Total 418,910,500
Energy (1.8%)
Exxon 2,300,000 136,418,750
Mobil 2,000,000 136,250,000
Total 272,668,750
Energy equipment & services (0.5%)
Baker Hughes 2,000,000 77,125,000
Financial services (5.1%)
Associates First
Capital Cl A 1,000,000 68,000,000
Fannie Mae 334,900 20,680,075
MBNA 5,000,000 155,312,500
Morgan Stanley, Dean 3,000,000 175,125,000
Witter, Discover & Co
Paychex 800,000 38,250,000
Travelers Group 6,000,000 297,000,000
Total 754,367,575
Food (2.1%)
ConAgra 8,600,000 271,975,000
General Mills 500,000 37,218,750
Total 309,193,750
Health care (9.0%)
Bristol-Myers Squibb 1,900,000 189,406,250
Genentech 26,500(b) 1,722,500
Johnson & Johnson 3,000,000 200,812,500
Lilly (Eli) 1,600,000 108,000,000
Medtronic 3,500,000 178,718,750
Merck & Co 2,000,000 234,500,000
Pfizer 5,200,000 426,075,000
Total 1,339,235,000
Health care services (3.3%)
Cardinal Health 1,700,000 131,643,750
HBO & Co 2,800,000 146,475,000
HEALTHSOUTH
Rehabilitation 2,700,000(b) 60,581,250
Service Corp Intl 2,000,000 78,000,000
United Healthcare 1,400,000 71,750,000
Total 488,450,000
Household products (2.3%)
Gillette 1,800,000 177,750,000
Procter & Gamble 2,000,000 156,750,000
Total 334,500,000
Industrial equipment & services (2.7%)
Deere & Co 5,900,000 311,225,000
Illinois Tool Works 1,500,000 83,531,250
Total 394,756,250
Insurance (1.7%)
American Intl Group 1,500,000 165,468,750
SunAmerica 215,700 8,668,444
UNUM 1,500,000 72,937,500
Total 247,074,694
Leisure time & entertainment (1.6%)
Marriot Intl 3,000,000 207,375,000
Mirage Resorts 1,600,000(b) 36,900,000
Total 244,275,000
Media (2.3%)
CBS 4,600,000 137,712,500
Clear Channel
Communications 600,000(b) 46,200,000
Gannett 2,600,000 157,300,000
Total 341,212,500
Metals (0.6%)
Aluminum Co of America 1,100,000 84,012,500
Multi-industry conglomerates (6.6%)
AccuStaff 2,400,000(b) 61,800,000
Emerson Electric 3,700,000 223,850,000
General Electric 7,600,000 589,000,000
Minnesota Mining & Mfg 1,200,000 100,200,000
Total 974,850,000
Restaurants & lodging (0.5%)
Promus Hotel 1,700,000(b) 76,818,750
Retail (5.4%)
Cendant 3,800,000 128,725,000
CVS 1,800,000 118,012,500
Dayton Hudson 1,500,000 107,906,250
Kroger 1,200,000(b) 46,950,000
Safeway 3,800,000 252,462,500
Wal-Mart Stores 3,800,000 151,525,000
Total 805,581,250
Transportation (0.4%)
CNF Transportation 1,200,000 54,825,000
Utilities -- electric (0.9%)
CMS Energy 3,000,000 127,687,500
Utilities -- gas (0.9%)
El Paso Natural Gas 2,200,000 140,662,500
Utilities -- telephone (5.0%)
AirTouch Communications 2,000,000(b) 87,750,000
Ameritech 1,000,000 42,937,500
AT&T 1,400,000 87,675,000
BellSouth 4,600,000 278,587,500
Cincinnati Bell 1,900,000 68,162,500
US WEST Communications
Group 2,000,000 96,250,000
WorldCom 2,200,000(b,e) 78,787,500
Total 740,150,000
Foreign (7.3%)(c)
ACE 2,300,000 214,043,750
Elan ADR 1,450,000(b,e) 75,309,375
Northern Telecom 2,500,000 112,812,500
Royal Dutch Petroleum 4,000,000 205,000,000
Schlumberger 2,600,000 191,587,500
SmithKline Beecham
ADR 4,600,000 290,087,500
Total 1,088,840,625
Total common stocks
(Cost: $8,649,514,794) $13,527,940,281
Short-term securities (9.6%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agency (0.1%)
Federal Home Loan Mtge Corp Disc Nt
02-09-98 5.39% $10,000,000 $ 9,986,575
Banker's acceptance (0.1%)
First Bank Natl
02-05-98 5.55 10,000,000 9,992,319
Certificate of deposit (0.1%)
US Bank Minneapolis
04-28-98 5.54 15,000,000 14,794,667
Commercial paper (9.1%)
Abbott Laboratories
02-13-98 5.51 2,500,000 2,495,035
Alabama Power
02-12-98 5.48 22,470,000 22,429,030
American General
02-19-98 5.50 7,200,000 7,179,214
03-13-98 5.50 6,300,000 6,260,824
American General Finance
03-11-98 5.53 11,500,000 11,431,479
Ameritech Capital Funding
02-03-98 5.73 16,700,000 16,692,068
Associates Corp North America
02-18-98 5.49 10,000,000 9,972,650
03-03-98 5.50 12,000,000 11,943,477
03-12-98 5.54 20,000,000 19,877,555
Avco Financial Services
03-02-98 5.52 5,000,000 4,977,083
Barclays U.S. Funding
02-11-98 5.50 14,300,000 14,276,055
BBV Finance (Delaware)
04-08-98 5.49 8,200,000 8,113,262
Bell Atlantic Financial Services
02-10-98 5.47 16,400,000 16,375,172
02-25-98 5.49 12,400,000 12,352,897
Beneficial
03-02-98 5.49 15,000,000 14,931,750
03-04-98 5.50 15,000,000 14,927,067
03-05-98 5.50 19,000,000 18,904,731
03-06-98 5.51 15,000,000 14,922,367
03-11-98 5.51 15,000,000 14,910,950
03-26-98 5.55 10,000,000 9,917,350
BHP Finance
02-24-98 5.84 7,500,000 7,465,165
02-25-98 5.49 16,000,000 15,939,222
03-18-98 5.61 14,500,000 14,393,782
BOC Group
02-17-98 5.81 5,100,000 5,085,676
03-16-98 5.50 30,000,000 29,799,800
03-23-98 5.51 10,000,000 9,922,508
CAFCO
02-03-98 5.91 7,700,000(d) 7,696,233
02-24-98 5.85 600,000(d) 599,733
03-19-98 5.50 11,000,000(d) 10,921,588
03-23-98 5.52 18,100,000(d) 17,929,662
04-01-98 5.49 8,000,000(d) 7,924,089
Ciesco LP
02-25-98 5.48 10,200,000 10,161,396
03-12-98 5.50 17,900,000(d) 17,791,407
CIT Group Holdings
02-05-98 5.88 7,800,000 7,793,663
Colgate-Palmolive
02-24-98 5.82 10,000,000(d) 9,957,184
Commercial Credit
03-13-98 5.51 10,000,000 9,933,101
03-18-98 5.51 21,100,000 20,952,523
Commerzbank U.S. Finance
02-13-98 5.50 5,500,000 5,489,116
02-18-98 5.48 8,500,000 8,476,795
02-20-98 5.49 17,100,000 17,048,035
Daimler-Benz
02-11-98 5.82 15,000,000 14,968,611
02-11-98 5.56 2,900,000 2,895,082
02-24-98 5.49 9,500,000 9,465,357
03-19-98 5.77 2,600,000 2,580,535
Delaware Funding
02-10-98 5.50 5,949,000(d) 5,939,944
02-11-98 5.50 22,819,000(d) 22,780,791
02-18-98 5.50 19,428,000(d) 19,374,767
02-20-98 5.48 15,924,000(d) 15,875,697
Deutsche Bank Financial
02-02-98 5.54 14,100,000 14,095,672
02-17-98 5.48 17,500,000 17,454,920
02-18-98 5.49 10,000,000 9,972,675
Fleet Funding
02-26-98 5.49 10,600,000(d) 10,558,201
03-10-98 5.51 6,400,000(d) 6,362,980
Ford Motor Credit
02-23-98 5.50 15,000,000 14,947,483
02-26-98 5.48 25,000,000 24,901,596
03-06-98 5.52 7,500,000 7,461,113
04-02-98 5.51 10,000,000 9,874,347
Gannett
02-24-98 5.48 9,600,000(d) 9,565,120
02-26-98 5.48 17,400,000(d) 17,331,512
Gateway Fuel
02-26-98 5.50 5,630,000 5,607,718
03-05-98 5.51 6,955,000 6,920,063
03-10-98 5.50 6,680,000 6,641,430
Goldman Sachs Group
02-04-98 5.77 10,000,000 9,991,626
04-06-98 5.53 20,700,000 20,426,864
05-12-98 5.52 10,000,000 9,841,900
05-13-98 5.52 10,000,000 9,840,350
05-14-98 5.50 20,000,000 19,645,344
Heinz (HJ)
02-06-98 5.82 4,700,000 4,695,472
02-17-98 5.80 25,000,000 24,918,236
03-17-98 5.50 13,500,000 13,407,863
Harris Trust
02-04-98 5.55 14,900,000 14,900,000
03-05-98 5.50 15,000,000 15,000,000
Household Finance
02-27-98 5.48 25,000,000 24,897,811
03-10-98 5.53 20,000,000 19,883,889
03-11-98 5.51 15,800,000 15,706,201
03-12-98 5.51 20,000,000 19,878,222
Intl Lease Finance
03-03-98 5.50 9,800,000 9,753,839
Merrill Lynch
03-16-98 5.52 11,800,000 11,720,966
03-17-98 5.50 16,200,000 16,089,435
Metlife Funding
02-05-98 5.80 13,105,000 13,094,534
02-18-98 5.83 9,874,000 9,839,395
Morgan Stanley, Dean
Witter, Discover & Co
03-02-98 5.50 10,000,000 9,954,417
03-05-98 5.50 18,800,000 18,705,734
03-06-98 5.50 18,700,000 18,603,394
Natl Australia Funding
(Delaware)
04-15-98 5.50 35,000,000 34,556,517
04-21-98 5.52 3,160,000 3,120,184
NBD Bank Canada
02-09-98 5.58 14,100,000 14,080,401
New Center Asset Trust
02-19-98 5.50 14,600,000 14,557,851
03-04-98 5.50 25,000,000 24,878,443
03-11-98 5.53 10,000,000 9,940,417
04-13-98 5.50 20,500,000 20,230,989
Novartis Finance
02-03-98 5.47 8,305,000(d) 8,301,221
03-09-98 5.52 15,000,000 14,915,363
Pacific Life Insurance
02-20-98 5.48 10,700,000 10,667,543
02-26-98 5.50 15,264,000 15,203,588
Reed Elsevier
03-06-98 5.53 12,100,000(d) 12,037,147
Societe Generale North America
03-16-98 5.48 15,400,000 15,288,421
03-17-98 5.50 15,000,000 14,890,081
03-23-98 5.49 15,900,000 15,760,680
Toyota Motor Credit
02-26-98 5.50 20,900,000 20,817,433
UBS Finance (Delaware)
02-02-98 5.63 20,400,000 20,393,619
Xerox Credit
02-24-98 5.82 9,200,000 9,158,848
Total 1,353,340,546
Letters of credit (0.2%)
Bank of America-
AES Barbers Point
03-20-98 5.50% $10,000,000 $ 9,925,016
First Bank-
Midwest
02-26-98 5.66 10,000,000 9,959,410
First Chicago-
Commed Fuel
03-11-98 5.51 8,600,000 8,548,945
Total 28,433,371
Total short-term securities
(Cost: $1,417,136,103) $ 1,416,547,478
Total investment in securities
(Cost: $10,066,650,897)(g) $14,944,487,759
See accompanying notes to investments in securities.
<PAGE>
Investments in securities
Growth Trends Portfolio
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) 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.
(e) Security is partially or fully on loan. See Note 4 to the financial
statements.
(f) At Jan. 31, 1998, securities valued at $46,987,688 were held to cover open
call options written as follows:
Issuer Shares Exercise Expiration Value(a)
price date
Compaq 1,563,000 $35 April 1998 $1,465,312
Computer
(g) At Jan. 31, 1998, the cost of securities for federal income tax purposes was
approximately $10,066,651,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation.......................................$4,958,979,000
Unrealized depreciation....................................... (81,142,000)
-----------
Net unrealized appreciation...................................$4,877,837,000
<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, treasurer and corporate secretary of Board Services
and secretary Corporation.
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.
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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.
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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.
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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.
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IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
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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.
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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.
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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.
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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.
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IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.)
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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.
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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.
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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.
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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.
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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 New Dimensions Fund
IDS Tower 10
Minneapolis, MN 55440-0010
