IDS New
Dimensions
Fund
1999 SEMIANNUAL REPORT
(icon of) ruler
The goal of IDS New Dimensions Fund, Inc.
is long-term growth of capital.
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
<PAGE>
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
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) Gordon Fines
Gordon Fines
Portfolio manager
Growth stocks overcame a steep summer decline to move substantially higher
during the past six months. IDS New Dimensions Fund's Class A shares took
advantage of the rebound to generate a 15.51% total return for the period --
August 1998 through January 1999. (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.)
The U.S. stock market was in the throes of a sell-off when the period began
last August. Worried about worsening economic problems in Asia, Russia and Latin
America, investors had earlier concluded that American corporate profits were at
considerable risk. Most vulnerable, they reasoned, were technology companies,
whose stocks were hit especially hard during the decline. For the Fund, the
result was a loss of nearly 16% in August.
That was a deep hole to climb out of, but stocks wasted no time in doing it.
Supported in large part by three reductions in short-term interest rates by the
Federal Reserve Board, the market made up all of its lost ground by the end of
November, then followed that with two more months of strong gains.
RECOVERY LED BY LARGE-CAPS
The large-capitalization growth stocks that have been the mainstays of the Fund
in recent years continued to prove their worth during the rebound. General
Electric, Cisco Systems, Microsoft, Pfizer, IBM and Wal-Mart -- all among the
Fund's largest holdings -- were particularly strong.
As for stock sectors, the emphasis remained on technology, health care,
financial services and business services. In the only change of note, during the
fall I did establish a modest position in utility stocks to provide some cushion
for the Fund in the event of additional market downturns. Should the investment
environment become more stable, I'll probably eliminate that position in order
to structure the Fund more aggressively.
Looking toward the second half of the fiscal year, the biggest question facing
the market is likely to revolve around how strong corporate earnings will be. I
think large-cap growth stocks continue to have an advantage in that regard and,
therefore, offer the best potential for gain. Only time will tell, of course,
and six months from now, I'll discuss how things turned out.
Gordon Fines
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1999 $30.03
July 31, 1998 $27.59
Increase $ 2.44
Distributions -- Aug. 1, 1998 - Jan. 31, 1999
From income $ 0.11
From capital gains $ 1.64
Total distribution $ 1.75
Total return* +15.51%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1999 $29.50
July 31, 1998 $27.19
Increase $ 2.31
Distributions -- Aug. 1, 1998 - Jan. 31, 1999
From income $ 0.05
From capital gains $ 1.64
Total distribution $ 1.69
Total return* +15.08%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1999 $30.05
July 31, 1998 $27.62
Increase $ 2.43
Distributions -- Aug. 1, 1998 - Jan. 31, 1999
From income $ 0.13
From capital gains $ 1.64
Total distribution $ 1.77
Total return* +15.54%**
*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 10 Largest Holdings
Percent Value
(of net assets) (as of Jan. 31, 1999)
Cisco Systems 4.22% $892,499,999
General Electric 3.47 734,125,000
Wal-Mart Stores 3.42 722,400,000
Intl Business Machines 3.12 659,700,000
Microsoft 2.98 630,000,000
Pfizer 2.74 578,812,500
America Online 2.49 527,062,500
Safeway 2.39 505,125,000
Intel 2.33 493,281,250
Time Warner 2.13 450,000,000
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 29.29% of net assets
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<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
IDS New Dimensions Fund, Inc.
Jan. 31, 1999 (Unaudited)
Assets
<S> <C>
Investment in Growth Trends Portfolio (Note 1) $21,102,959,471
---------------
Liabilities
Accrued distribution fee 66,632
Accrued service fee 87,443
Accrued transfer agency fee 49,045
Accrued administrative services fee 17,302
Other accrued expenses 351,563
-------
Total liabilities 571,985
-------
Net assets applicable to outstanding capital stock $21,102,387,486
===============
Represented by
Capital stock-- $.01 par value (Note 1) $ 7,046,067
Additional paid-in capital 11,965,385,836
Undistributed net investment income 23,542,964
Accumulated net realized gain (loss) 32,815,546
Unrealized appreciation (depreciation) on investments 9,073,597,073
-------------
Total -- representing net assets applicable to outstanding capital stock $21,102,387,486
===============
Net assets applicable to outstanding shares: Class A $12,485,497,384
Class B $ 3,347,326,341
Class Y $ 5,269,563,761
Net asset value per share of outstanding capital stock: Class A shares 415,786,648 $ 30.03
Class B shares 113,457,420 $ 29.50
Class Y shares 175,362,585 $ 30.05
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statement of operations
IDS New Dimensions Fund, Inc.
Six months ended Jan. 31, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 70,784,608
Interest 35,075,452
Less foreign taxes withheld (416,181)
--------
Total income 105,443,879
-----------
Expenses (Note 2):
Expenses allocated from Growth Trends Portfolio 46,068,791
Distribution fee-- Class B 9,924,734
Transfer agency fee 8,336,993
Incremental transfer agency fee-- Class B 127,516
Service fee
Class A 9,009,220
Class B 2,302,664
Class Y 2,219,547
Administrative services fees and expenses 2,820,139
Compensation of board members 14,573
Postage 310,973
Registration fees 693,343
Reports to shareholders 146,940
Audit fees 5,375
Other 41,834
------
Total expenses 82,022,642
Earnings credits on cash balances (Note 2) (269,390)
--------
Total net expenses 81,753,252
----------
Investment income (loss) -- net 23,690,627
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 36,448,820
Options contracts written 582,941
-------
Net realized gains (loss) on investments 37,031,761
Net change in unrealized appreciation (depreciation) on investments 2,761,232,843
-------------
Net gain (loss) on investments 2,798,264,604
-------------
Net increase (decrease) in net assets resulting from operations $2,821,955,231
==============
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
IDS New Dimensions Fund, Inc.
Jan. 31,1999 July 31, 1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ 23,690,627 $ 72,450,747
Net realized gain (loss) on investments 37,031,761 1,597,073,321
Net change in unrealized appreciation (depreciation) on investments 2,761,232,843 714,798,883
Net increase (decrease) in net assets resulting from operations 2,821,955,231 2,384,322,951
Distributions to shareholders from:
Net investment income
Class A (23,043,273) (58,234,507)
Class B (26,649) (2,003,179)
Class Y (12,552,851) (29,212,970)
Net realized gain
Class A (657,559,948) (598,215,942)
Class B (175,200,623) (123,782,372)
Class Y (277,045,972) (262,398,411)
Total distributions (1,145,429,316) (1,073,847,381)
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 1,324,355,604 2,300,157,947
Class B shares 540,765,143 859,557,938
Class Y shares 693,775,594 1,354,680,110
Reinvestment of distributions at net asset value
Class A shares 644,356,503 631,313,264
Class B shares 174,181,094 125,206,650
Class Y shares 289,598,823 291,611,382
Payments for redemptions
Class A shares (1,040,315,682) (1,829,011,859)
Class B shares (Note 2) (151,989,722) (198,219,683)
Class Y shares (697,940,645) (1,156,873,021)
Increase (decrease) in net assets from capital share transactions 1,776,786,712 2,378,422,728
Total increase (decrease) in net assets 3,453,312,627 3,688,898,298
Net assets at beginning of period 17,649,074,859 13,960,176,561
Net assets at end of period $21,102,387,486 $17,649,074,859
Undistributed net investment income $ 23,542,964 $ 35,475,110
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
IDS New Dimensions Fund, Inc.
(Unaudited as to Jan. 31, 1999)
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 has 10 billion
authorized shares of capital stock.
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 such
shares 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 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 Portfolio's net assets. The
percentage of the Portfolio owned by the Fund at Jan. 31, 1999, was 99.89%.
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 0.025% 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 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 $17,740,099 for Class A and $1,188,702 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 $269,390 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 49,568,448 20,543,371 25,793,402
Issued for reinvested distributions 22,657,590 6,228,996 10,176,713
Redeemed (39,104,385) (5,820,408) (26,221,332)
Net increase (decrease) 33,121,653 20,951,959 9,748,783
Year ended July 31, 1998
Class A Class B Class Y
Sold 88,920,630 33,593,016 52,176,081
Issued for reinvested distributions 27,069,484 5,424,914 12,496,203
Redeemed (70,554,955) (7,673,915) (44,670,182)
Net increase (decrease) 45,435,159 31,344,015 20,002,102
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.
</TABLE>
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<TABLE>
<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 1996c 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $27.59 $25.69 $18.54 $17.24 $14.06
Income from investment operations:
Net investment income (loss) .04 .13 .15 .17 .16
Net gains (losses) (both realized and unrealized) 4.15 3.67 7.80 1.88 3.64
Total from investment operations 4.19 3.80 7.95 2.05 3.80
Less distributions:
Dividends from net investment income (.06) (.17) (.13) (.15) (.12)
Distributions from realized gains (1.69) (1.73) (.67) (.60) (.50)
Total distributions (1.75) (1.90) (.80) (.75) (.62)
Net asset value, end of period $30.03 $27.59 $25.69 $18.54 $17.24
Ratios/supplemental data
Class A
1999b 1998 1997 1996c 1995
Net assets, end of period (in millions) $12,485 $10,559 $8,663 $5,626 $4,575
Ratio of expenses to average daily net assetse .84%d .82% .91% .94%d .90%
Ratio of net investment income (loss)
to average daily net assets .37%d .55% .73% .78%d 1.07%
Portfolio turnover rate
(excluding short-term securities) 17% 38% 32% 41% 54%
Total returnf 15.51% 16.19% 43.81% 12.18% 28.42%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Jan. 31, 1999 (Unaudited).
c The Fund's fiscal year-end was changed from Sept. 30, to July 31, effective
1996.
d Adjusted 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.
f 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 1996c 1995d 1999b 1998 1997 1996c 1995d
Net asset value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period $27.19 $25.38 $18.38 $17.18 $14.21 $27.62 $25.72 $18.56 $17.26 $14.21
Income from investment operations:
Net investment income (loss) (.03) -- (.02) .03 .02 .06 .15 .18 .19 .10
Net gains (losses)
(both realized and unrealized) 4.03 3.57 7.73 1.88 2.95 4.14 3.68 7.81 1.88 2.95
Total from investment operations 4.00 3.57 7.71 1.91 2.97 4.20 3.83 7.99 2.07 3.05
Less distributions:
Dividends from
net investment income -- (.03) (.04) (.11) -- (.08) (.20) (.16) (.17) --
Distributions from realized gains (1.69) (1.73) (.67) (.60) -- (1.69) (1.73) (.67) (.60) --
Total distributions (1.69) (1.76) (.71) (.71) -- (1.77) (1.93) (.83) (.77) --
Net asset value, end of period $29.50 $27.19 $25.38 $18.38 $17.18 $30.05 $27.62 $25.72 $18.56 $17.26
Ratios/supplemental data
Class B Class Y
1999b 1998 1997 1996c 1995d 1999b 1998 1997 1996c 1995d
Net assets, end of period
(in millions) $3,347 $2,515 $1,552 $593 $150 $5,270 $4,575 $3,745 $2,340 $1,792
Ratio of expenses to
average daily net assetsf 1.60%e 1.58% 1.67% 1.71%e 1.72%e .77%e .75% .76% .77%e .76%e
Ratio of net investment income
(loss) to average daily net assets (.40%)e (.23%) (.02%) .01%e .33%e .44%e .62% .88% .95%e 1.26%e
Portfolio turnover rate
(excluding short-term securities) 17% 38% 32% 41% 54% 17% 38% 32% 41% 54%
Total returng 15.08% 15.31% 42.72% 11.47% 20.89% 15.54% 16.28% 44.02% 12.34% 21.48%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Jan. 31, 1999 (Unaudited).
c The Fund's fiscal year-end was changed from Sept. 30, to July 31, effective
1996.
d Inception date was March 20, 1995.
e Adjusted to an annual basis.
f Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
g Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
Financial Statements
Statement of assets and liabilities
Growth Trends Portfolio
Jan. 31, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $12,189,236,528) $21,274,849,334
Cash in bank on demand deposit 11,735,317
Dividends and accrued interest receivable 12,078,112
Receivable for investment securities sold 101,942,665
U.S. government securities held as collateral (Note 4) 115,757,087
-----------
Total assets 21,516,362,515
--------------
Liabilities
Payable for investment securities purchased 105,860,482
Payable upon return of securities loaned (Note 4) 283,354,587
Accrued investment management services fee 286,582
Other accrued expenses 9,977
-----
Total liabilities 389,511,628
-----------
Net assets $21,126,850,887
===============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Growth Trends Portfolio
Six months ended Jan. 31, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividend $ 70,865,528
Interest 34,988,486
Less foreign taxes withheld (416,661)
--------
Total income 105,437,353
-----------
Expenses (Note 2):
Investment management services fee 45,518,278
Compensation of board members 25,852
Custodian fees 463,487
Audit fees 15,625
Other 103,045
-------
Total expenses 46,126,287
Earnings credits on cash balances (Note 2) (4,852)
------
Total net expenses 46,121,435
----------
Investment income (loss) -- net 59,315,918
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 36,671,780
Options contracts written (Note 5) 583,819
-------
Net realized gain (loss) on investments 37,255,599
Net change in unrealized appreciation (depreciation) on investments 2,764,148,052
-------------
Net gain (loss) on investments 2,801,403,651
-------------
Net increase (decrease) in net assets resulting from operations $2,860,719,569
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Growth Trends Portfolio
Jan. 31, 1999 July 31, 1998
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss) -- net $ 59,315,918 $ 132,492,409
Net realized gain (loss) on investments 37,255,599 1,599,514,857
Net change in unrealized appreciation (depreciation) on investments 2,764,148,052 715,372,594
------------- -----------
Net increase (decrease) in net assets resulting from operations 2,860,719,569 2,447,379,860
Net contributions (withdrawals) from partners 595,131,879 1,241,490,226
----------- -------------
Total increase (decrease) in net assets 3,455,851,448 3,688,870,086
Net assets at beginning of period 17,670,999,439 13,982,129,353
-------------- --------------
Net assets at end of period $21,126,850,887 $17,670,999,439
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Growth Trends Portfolio
(Unaudited as to Jan. 31, 1999)
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 U.S. and foreign 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.
The Portfolio's 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 its 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 0.49% 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 increased the fee by $427,706 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 $4,852 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 $3,137,241,323 and $2,897,019,657, respectively, for the
six months ended Jan. 31, 1999. For the same year, the portfolio turnover rate
was 17%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $1,316,197 for
the six months ended Jan. 31, 1999.
4. LENDING OF PORTFOLIO SECURITIES
At Jan. 31, 1999, securities valued at $290,337,350 were on loan to brokers. For
collateral, the Portfolio received $167,597,500 in cash and U.S. government
securities valued at $115,757,087. Income from securities lending amounted to
$393,712 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.
5. OPTIONS CONTRACTS WRITTEN
The number of contracts and premium amounts associated with options contracts
written is as follows:
Six months ended Jan. 31, 1999
Calls
Contracts Premium
Balance July 31, 1998 -- $ --
Opened 2,925 583,819
Expired (2,925) (583,819)
Balance Jan. 31, 1999 -- $ --
See "Summary of significant accounting policies."
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
Growth Trends Portfolio
Jan. 31, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (93.4%)
Issuer Shares Value(a)
Aerospace & defense (0.6%)
<S> <C> <C>
United Technologies 1,000,000 $119,437,500
Airlines (1.5%)
AMR 2,000,000(b) 117,500,000
Southwest Airlines 7,700,000 206,937,500
Total 324,437,500
Automotive & related (0.8%)
Ford Motor 2,600,000 159,737,500
Banks and savings & loans (4.1%)
BankAmerica 2,000,000 133,750,000
State Street 4,000,000 286,000,000
Wachovia 1,000,000 88,625,000
Wells Fargo 10,000,000 349,375,000
Total 857,750,000
Beverages & tobacco (0.9%)
Coca-Cola 3,000,000 196,312,500
Chemicals (1.5%)
Waste Management 6,400,000 319,600,000
Communications equipment & services (2.2%)
Lucent Technologies 2,700,000 303,918,750
Tellabs 1,800,000(b) 154,350,000
Total 458,268,750
Computers & office equipment (19.9%)
America Online 3,000,000(b) 527,062,500
BMC Software 3,000,000(b,e) 140,062,500
Cisco Systems 8,000,000(b) 892,499,999
Compaq Computer 8,500,000 404,812,500
Compuware 1,600,000(b) 106,000,000
EMC 3,000,000(b) 326,625,000
Hewlett-Packard 2,500,000 195,937,500
Intl Business Machines 3,600,000 659,700,000
Microsoft 3,600,000(b) 630,000,000
Network Associates 2,000,000(b,e) 104,750,000
Novell 5,000,000 101,875,000
Xerox 1,000,000 124,000,000
Total 4,213,324,999
Electronics (5.0%)
Applied Materials 1,700,000(b) 107,418,750
Intel 3,500,000 493,281,250
Teradyne 300,000(b) 19,762,500
Texas Instruments 3,250,000 321,343,750
Uniphase 1,300,000(b,e) 118,462,500
Total 1,060,268,750
Energy (1.9%)
Exxon 2,300,000 162,006,250
Mobil 2,000,000 175,375,000
Royal Dutch Petroleum 1,500,000(c) 60,093,750
Total 397,475,000
Energy equipment & services (0.1%)
Schlumberger 300,000(c) 14,287,500
Financial services (6.1%)
Associates First Capital Cl A 3,000,000 121,687,500
Citigroup 5,800,000 325,162,500
Fannie Mae 3,400,000 247,775,000
MBNA 7,500,000 209,531,250
Morgan Stanley, Dean Witter, Discover & Co 3,000,000 260,437,500
Paychex 2,400,000 116,850,000
Schwab (Charles) 200,000 14,062,500
Total 1,295,506,250
Health care (11.2%)
ALZA 1,000,000(b) $50,562,500
Boston Scientific 2,000,000(b) 48,875,000
Bristol-Myers Squibb 3,400,000 435,837,500
Elan ADR 2,500,000(b,c,e) 168,750,000
Johnson & Johnson 1,000,000 85,000,000
Medtronic 2,900,000 231,093,750
Merck & Co 2,000,000 293,500,000
Pfizer 4,500,000 578,812,500
Schering-Plough 4,800,000 261,600,000
Warner-Lambert 2,900,000 209,343,750
Total 2,363,375,000
Health care services (2.9%)
Cardinal Health 4,000,000 295,750,000
HEALTHSOUTH Rehabilitation 200,000(b) 2,712,500
IMS Health 3,000,000 109,875,000
McKesson HBOC 2,400,000 180,300,000
Service Corp Intl 1,290,100 20,480,338
Total 609,117,838
Household products (1.1%)
Gillette 2,400,000 141,000,000
Procter & Gamble 1,100,000 99,962,500
Total 240,962,500
Industrial equipment & services (0.5%)
Illinois Tool Works 1,700,000 102,531,250
Insurance (1.5%)
ACE 4,000,000(c) 112,000,000
American Intl Group 2,000,000 205,875,000
Total 317,875,000
Media (5.5%)
CBS 6,000,000 204,000,000
Clear Channel Communications 2,000,000(b) 123,750,000
Comcast Special Cl A 700,000 47,589,063
Gannett 4,200,000 276,412,500
New York Times Cl A 2,000,000 68,625,000
Time Warner 7,200,000 450,000,000
Total 1,170,376,563
Multi-industry conglomerates (4.9%)
General Electric 7,000,000 734,125,000
Tyco Intl 4,000,000(c) 308,250,000
Total 1,042,375,000
Restaurants & lodging (1.0%)
Marriott Intl Cl A 6,000,000 210,750,000
Retail (12.5%)
Costco Companies 3,000,000(b) 248,625,000
CVS 4,500,000 246,375,000
Dayton Hudson 6,100,000 388,875,000
Home Depot 5,600,000 338,100,000
Kroger 2,500,000(b,e) 158,750,000
Safeway 9,000,000(b) 505,125,000
TJX Companies 1,000,000 29,562,500
Wal-Mart Stores 8,400,000 722,400,000
Total 2,637,812,500
Transportation (--%)
Kansas City Southern Inds 152,700 7,253,250
Utilities -- electric (1.1%)
CMS Energy 3,400,000 145,562,500
Duke Energy 1,270,000 78,501,875
Total 224,064,375
Utilities -- gas (0.5%)
El Paso Energy 3,500,000 115,500,000
Utilities -- telephone (6.1%)
AirTouch Communications 2,000,000(b) 193,125,000
BellSouth 10,000,000 446,250,000
MCI WorldCom 4,700,000(b) 374,825,000
U S WEST Communications Group 4,300,000 265,256,250
Total 1,279,456,250
Total common stocks
(Cost: $10,651,921,191) $19,737,855,775
See accompanying notes to investments in securities
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (7.3%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (0.8%)
Federal Home Loan Bank Disc Nt
<S> <C> <C> <C>
03-19-99 4.75% $12,000,000 $11,924,480
Federal Home Loan Mtge Corp Disc Nts
02-08-99 4.82 29,100,000 29,065,080
02-10-99 5.04 30,200,000 30,153,769
02-12-99 5.07 13,800,000 13,774,884
02-16-99 5.07 35,400,000 35,293,698
03-11-99 4.79 20,800,000 20,689,991
03-19-99 4.75 13,000,000 12,918,187
03-22-99 4.74 22,100,000 21,952,538
Total 175,772,627
Certificates of deposit (0.1%)
Harris Trust
02-22-99 5.15 16,300,000 16,300,000
U.S. Bank Minneapolis
08-09-99 4.89 13,700,000 13,700,000
Total 30,000,000
Commercial paper (5.9%)
ABB Treasury Center USA
02-18-99 5.14 27,200,000(d) 27,090,053
Alcoa Aluminum Co of America
03-03-99 5.19 5,000,000 4,966,060
American General Finance
04-26-99 5.14 5,000,000 4,940,550
05-07-99 4.89 9,400,000 9,274,614
ANZ (Delaware)
02-11-99 4.87 21,900,000 21,864,594
04-12-99 4.91 10,000,000 9,878,500
Avco Financial Services
02-16-99 5.29 4,400,000 4,389,092
03-26-99 5.13 15,200,000 15,082,307
BBV Finance (Delaware)
04-14-99 4.87 20,000,000 19,795,000
Bear Stearns
04-15-99 4.87 11,200,000 11,083,669
04-23-99 4.85 4,400,000 4,349,488
05-26-99 4.86 7,100,000 6,986,933
BMW US Capital
03-01-99 4.84 6,100,000 6,075,498
03-05-99 4.84 4,400,000 4,379,991
CAFCO
02-19-99 5.42 8,000,000(d) 7,973,756
05-10-99 4.85 7,600,000(d) 7,495,521
Cargill Global
03-05-99 4.92 12,000,000(d) 11,944,580
Ciesco LP
02-24-99 4.88 20,900,000 20,829,607
03-19-99 4.88 8,400,000(d) 8,337,848
04-12-99 4.85 14,500,000 14,355,338
CIT Group Holdings
02-23-99 4.87 22,500,000 22,427,250
03-01-99 4.89 20,000,000 19,919,000
Consolidated Natural Gas
02-08-99 5.21 22,455,000 22,425,977
02-09-99 5.26 15,447,000 15,424,602
Corporate Receivables
02-01-99 5.42 10,000,000(d) 9,997,014
03-12-99 5.18 15,000,000(d) 14,911,003
CXC
03-04-99 4.91 11,500,000(d) 11,448,557
03-19-99 4.91 13,000,000(d) 12,912,357
Daimler-Benz
03-18-99 5.25 18,800,000 18,677,904
Delaware Funding
02-18-99 5.26 10,000,000(d) 9,954,134
02-22-99 4.87 15,400,000(d) 15,352,281
02-25-99 4.88 5,768,000(d) 5,747,796
02-26-99 5.26 10,000,000(d) 9,954,476
04-22-99 4.85 3,600,000(d) 3,559,164
Duke Energy
02-09-99 5.25 18,200,000 18,173,610
Exxon Asset Management
02-01-99 4.82 20,800,000(d) 20,794,430
Falcon Asset
02-22-99 4.89 5,800,000(d) 5,781,954
03-09-99 4.87 8,100,000(d) 8,058,618
03-11-99 4.92 10,000,000(d) 9,945,667
Fleet Funding
02-02-99 4.93 2,900,000(d) 2,898,811
02-24-99 4.88 18,016,000(d) 17,955,321
02-24-99 4.93 8,400,000(d) 8,371,417
02-25-99 4.87 2,700,000 (d) 2,690,542
Ford Motor Credit
04-07-99 4.84 30,000,000 29,721,200
Gateway Fuel
02-12-99 4.87 6,254,000 6,243,024
GMAC
02-02-99 5.11 15,000,000 14,991,200
02-23-99 4.88 20,800,000 20,732,608
03-02-99 4.85 30,000,000 29,875,224
03-02-99 4.86 18,100,000 18,024,563
03-10-99 4.85 30,000,000 29,843,350
Goldman Sachs Group
02-24-99 4.85 6,400,000 6,378,533
GTE Funding
02-04-99 5.28 2,000,000 1,998,542
02-08-99 5.21 5,200,000 5,193,279
02-09-99 5.29 2,800,000 2,795,917
02-10-99 5.23 29,000,000 28,954,010
02-18-99 4.83 7,700,000 7,680,412
Heinz (HJ)
02-26-99 5.24 13,700,000 13,646,570
Household Finance
02-01-99 5.18 2,300,000 2,299,250
03-03-99 4.85 30,000,000 29,871,200
03-09-99 4.84 22,300,000 22,186,543
Intl Lease Finance
02-19-99 5.19 10,000,000 9,968,513
Morgan Stanley, Dean Witter, Discover & Co
02-01-99 4.85 26,200,000 26,192,941
02-08-99 5.17 16,000,000 15,975,059
Natl Rural Utilities
03-29-99 5.16 13,000,000 12,895,449
NBD Bank Canada
02-16-99 4.88 12,500,000 12,471,313
03-01-99 4.85 21,200,000 21,114,670
03-02-99 5.19 13,200,000 13,139,598
New Center Asset Trust
02-10-99 5.12 2,400,000 2,395,637
02-10-99 5.19 10,000,000 9,984,264
02-16-99 5.30 4,100,000 4,088,601
02-19-99 5.13 7,700,000 7,674,745
06-04-99 4.93 7,400,000 7,251,762
Preferred Receivables
02-23-99 5.26 8,600,000(d) 8,558,315
04-26-99 4.86 12,400,000(d) 12,252,564
Reed Elsevier
03-09-99 4.90 23,500,000(d) 23,372,969
03-16-99 4.89 9,800,000(d) 9,737,729
Salomon Smith Barney
05-06-99 4.86 7,500,000 7,400,979
Sheffield Receivables
02-05-99 5.21 10,000,000(d) 9,989,146
03-04-99 4.88 19,000,000(d) 18,915,355
03-16-99 4.89 11,900,000(d) 11,827,708
03-17-99 4.94 18,500,000(d) 18,379,884
Societe Generale North America
04-21-99 4.85 20,000,000 19,775,867
04-28-99 4.85 7,200,000 7,112,424
Toyota Motor Credit
02-04-99 5.18 14,200,000 14,187,201
USAA Capital
02-02-99 5.41 8,900,000 8,896,002
U.S. Bank Minneapolis
08-09-99 4.89 13,700,000 13,700,000
Variable Funding Capital
02-01-99 4.81 40,000,000(d) 39,989,310
02-17-99 4.92 18,542,000(d) 18,496,572
03-01-99 4.87 13,500,000(d) 13,445,437
03-15-99 4.90 5,000,000(d) 4,969,176
04-20-99 4.88 3,200,000(d) 3,164,576
Westpac Capital
04-08-99 4.88 15,800,000 15,617,679
06-10-99 4.92 19,840,000 19,483,541
Windmill Funding
02-08-99 5.34 15,300,000(d) 15,279,728
03-17-99 4.89 14,900,000(d) 14,804,245
Total 1,237,719,268
Letters of credit (0.5%)
Bank of America-
AES Hawaii
02-04-99 4.86 12,826,000(d) 12,817,360
02-04-99 5.28 14,600,000 14,589,354
02-04-99 5.35 10,279,000 10,271,405
02-05-99 5.22 20,900,000 20,881,920
02-22-99 5.22 8,700,000(d) 8,666,831
Chase Manhattan Bank-
Somerset Railroad
02-18-99 4.87 5,800,000 5,785,123
First Chicago-
Commed Fuel
02-17-99 5.25 6,000,000 5,981,446
04-15-99 4.86 8,600,000 8,510,675
U.S. Bank Minneapolis-
Midwest Capital
02-02-99 4.91 6,000,000 5,997,550
Total 93,501,664
Total short-term securities
(Cost: $1,537,315,337) $1,536,993,559
Total investments in securities
(Cost: $12,189,236,528)(f) $21,274,849,334
</TABLE>
<PAGE>
(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 3.14% of net assets.
(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, 1999, the cost of securities for federal income tax purpose was
approximately $12,189,237,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $9,158,897,000
Unrealized depreciation (73,285,000)
Net unrealized appreciation $9,085,612,000
<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 CLIENT SERVICE CORPORATION
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
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S-6441 N (3/99)
IDS New Dimensions Fund
IDS Tower 10
Minneapolis, MN 55440-0010
