1998 SEMIANNUAL REPORT
IDS
Progressive
Fund
(icon of) shooting star
The goal of IDS Progressive Fund Inc. is long-term growth of capital. The
Fund invests primarily in undervalued common stocks.
American Express Financial Advisors
Distributed by American Express Financial Advisors Inc.
<PAGE>
The power of
patience
Everyone likes to get a bargain. In the investment world, bargains are
known as "value" stocks -- stocks whose prices are believed to be low in
relation to the true worth of their respective companies. In the case of
Progressive Fund, the focus is on small-company value stocks, which can
get overlooked as investors try to find a new "high-flier." Many of these
companies have already proved themselves in the marketplace and are
financially sound. Patient investors may benefit, however, when such
stocks get rediscovered and eventually rise to their fair values.
Contents
From the chairman 3
From the portfolio manager 3
The Fund's ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 24
Board members and officers 27
IDS mutual funds 28
<PAGE>
To our shareholders
From the chairman
If you're an experienced investor, you know that the past few years have
been unusually strong in many financial markets. Perhaps just as
important, history shows that bull markets don't last forever. Though
they're often unpredictable, declines -- whether they're brief or
long-lasting, moderate or substantial -- are always a possibility.
That potential for such volatility reinforces the need for investors to
periodically review their long-term goals and examine whether their
investment program remains on track to achieving them. Your quarterly
investment statements are one part of that monitoring process. The other
is a meeting with your American Express financial advisor. That becomes
even more important if there's a major change in your financial situation
or in the financial markets.
Before closing, I want to introduce a new portfolio manager for this fund
-- Kurt Winters, who assumed that role last January. For a review of the
past period, please consult his letter, which begins on this page.
William R. Pearce
(picture of) William R. Pearce
William R. Pearce
Chairman of the Board
<PAGE>
From the portfolio manager
A repositioned portfolio and a strong stock market combined to produce a
double-digit gain by IDS Progressive Fund during the first half of the
fiscal year -- October 1997 through March 1998. For investors in Class A
shares, the total return came to 11.7% for the six months. (Part of the
Fund's return came in the form of a capital gain paid to shareholders in
December 1997, which reduced the Fund's net asset value by a like amount
at that time.)
The period began on a sour note, as the spillover from financial crisis in
Asia sent the U.S. stock market tumbling last fall. Investors spent much
of the next few months trying to fathom how the Asian situation would
ultimately play out for U.S. companies, a conundrum that kept stocks off
balance through January.
By that time, investors apparently had decided that the effect of the
"Asian flu" wouldn't be serious. Soon, with their spirits fortified by
ongoing reports of low inflation and good economic growth here at home,
they moved aggressively back into stocks, resulting in a resounding rally
during February and March.
Less-volatile performance
As for the Fund, its performance basically tracked that of the broad
market, the chief difference being that it held up better during last
fall's downturn, while it slightly lagged the market during the subsequent
rebound. The second point was essentially a function of the fact that the
market continued to be driven by large-capitalization growth stocks, as
opposed to the smaller and less highly valued stocks that form the
foundation of this fund's portfolio.
Beginning late last year, I raised the median market capitalization of the
portfolio by adding more mid-cap stocks. In addition, to position the Fund
for greater potential appreciation, I substantially reduced the level of
cash reserves -- in effect, putting more money to work in stocks. This
strategy also proved beneficial when the market rallied late in the
period. Finally, I reduced holdings among industrial stocks in favor of
more consumer-related issues, which also enhanced performance.
These changes have positioned the Fund to be more market-sensitive than in
the past. Over the long run, this should allow the Fund to generate higher
returns. What remains unchanged is the Fund's emphasis on stocks that
offer good investment value relative to their price. This strategy has
proved to be quite rewarding over time, and I also think it makes good
sense at this juncture in the bull market of the 1990s.
Kurt Winters
(picture of) Kurt Winters
Kurt Winters
Portfolio Manager
<PAGE>
To our shareholders
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1998 $ 10.39
Sept. 30, 1997 $ 10.17
Increase $ .22
Distributions
Oct. 1, 1997 - March 31, 1998
From income $ 0.34
From capital gains $ 0.52
Total distributions$ 0.86
Total return* +11.7%**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1998 $ 10.26
Sept. 30, 1997 $ 10.03
Increase $ .23
Distributions
Oct. 1, 1997 - March 31, 1998
From income $ 0.29
From capital gains $ 0.52
Total distributions$ 0.81
Total return* +11.3%**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1998 $ 10.40
Sept. 30, 1997 $ 10.18
Increase $ .22
Distributions
Oct. 1, 1997 - March 31, 1998
From income $ 0.35
From capital gains $ 0.52
Total distributions$ 0.87
Total return* +11.7%**
* 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 Fund's ten largest holdings
Percent Value
(of Fund's net assets) (as of March 31, 1998)
Cincinnati Bell 2.26% $14,962,500
First Virginia Banks 2.06 13,638,374
TCF Financial 1.85 12,217,499
Sterling Software 1.79 11,864,999
Hormel Foods 1.79 11,837,812
Danaher 1.72 11,390,625
Sierra Pacific Resources 1.70 11,268,749
U.S. Foodservice 1.70 11,227,813
Southtrust 1.66 10,992,188
Petroleum Geo-Services ADR 1.66 10,984,374
(icon of) shooting star
The ten holdings listed here make up 18.19% of the Fund's net assets
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Progressive Fund, Inc.
March 31, 1998
Assets
(Unaudited)
Investment in securities, at value (Note 1)
<S> <C>
Investments in securities of unaffiliated issuers (identified cost $541,971,105) $664,398,423
Investments in securities of affiliated issuer (identified cost $5,695,964) 7,171,874
---------
Total investments in securities (identified cost $547,667,069) 671,570,297
Cash in bank on demand deposit 302,171
Dividends and accrued interest receivable 407,646
Receivable for investment securities sold 3,827,010
---------
Total assets 676,107,124
-----------
Liabilities
Payable for investment securities purchased 6,622,281
Payable upon return of securities loaned (Note 4) 7,700,000
Accrued investment management services fee 11,151
Accrued distribution fee 1,778
Accrued service fee 3,135
Accrued administrative services fees 1,004
Other accrued expenses 39,476
------
Total liabilities 14,378,825
----------
Net assets applicable to outstanding capital stock $661,728,299
============
Represented by
Capital stock-- $.01 par value (Note 1) $ 637,898
Additional paid-in capital 451,605,825
Undistributed net investment income 1,161,101
Accumulated net realized gain (loss) (Note 1) 83,892,776
Unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies (Note 6) 124,430,699
-----------
Total-- representing net assets applicable to outstanding capital stock $661,728,299
============
Net assets applicable to outstanding shares: Class A $564,616,685
Class B $ 87,188,301
Class Y $ 9,923,313
Net asset value per share of outstanding capital stock: Class A shares 54,333,904 $ 10.39
Class B shares 8,501,536 $ 10.26
Class Y shares 954,376 $ 10.40
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
IDS Progressive Fund, Inc.
Six months ended March 31, 1998
Investment income
(Unaudited)
Income:
<S> <C>
Dividends (including $27,000 earned from affiliates) $ 3,007,058
Interest 2,019,276
Less foreign taxes withheld (8,217)
Total income 5,018,117
Expenses (Note 2):
Investment management services fee 1,904,779
Distribution fee -- Class B 261,452
Transfer agency fee 373,300
Incremental transfer agency fee-- Class B 4,111
Service fee
Class A 433,564
Class B 60,830
Class Y 4,099
Administrative services fees and expenses 166,207
Compensation of board members 5,736
Custodian fees 39,403
Postage11,400
Registration fees 42,919
Reports to shareholders 7,011
Audit fees 12,250
------
Total expenses 3,327,061
Earnings credits on cash balances (Note 2) (37,217)
-------
Total net expenses 3,289,844
Investment income (loss)-- net 1,728,273
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 81,139,484
Financial futures contracts (Note 6) 2,752,105
Foreign currency transactions 1,900
-----
Net realized gain (loss) on investments 83,893,489
Net change in unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies (17,281,608)
-----------
Net gain (loss) on investments and foreign currencies 66,611,881
----------
Net increase (decrease) in net assets resulting from operations $68,340,154
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Progressive Fund, Inc.
Operations and distributions March 31, 1998 Sept. 30, 1997
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income (loss)-- net $ 1,728,273 $ 3,998,467
Net realized gain (loss) on investments 83,893,489 44,680,881
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (17,281,608) 87,815,921
----------- ----------
Net increase (decrease) in net assets resulting from operations 68,340,154 136,495,269
---------- -----------
Distributions to shareholders from:
Net investment income
Class A (3,791,505) (3,537,075)
Class B (198,408) (139,272)
Class Y (65,315) (37,540)
Net realized gain
Class A (38,328,394) (26,372,964)
Class B (5,367,116) (2,052,354)
Class Y (588,363) (238,498)
-------- --------
Total distributions (48,339,101) (32,377,703)
----------- -----------
Capital share transactions (Note 5)
Proceeds from sales
Class A shares (Note 2) 48,189,717 58,138,297
Class B shares 22,864,958 27,926,302
Class Y shares 2,501,262 3,669,597
Reinvestment of distributions at net asset value
Class A shares 40,467,589 29,257,627
Class B shares 5,514,029 2,173,196
Class Y shares 653,678 276,038
Payments for redemptions
Class A shares (31,682,500) (57,382,629)
Class B shares (Note 2) (3,852,399) (4,832,125)
Class Y shares (976,636) (1,092,897)
-------- ----------
Increase (decrease) in net assets from capital share transactions 83,679,698 58,133,406
---------- ----------
Total increase (decrease) in net assets 103,680,751 162,250,972
Net assets at beginning of period 558,047,548 395,796,576
----------- -----------
Net assets at end of period $661,728,299 $558,047,548
============ ============
Undistributed net investment income $ 1,161,101 $ 3,488,056
------------ ------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS Progressive Fund, Inc.
(Unaudited as to March 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 has 10 billion authorized shares of capital stock. The Fund invests
primarily in undervalued common stocks. 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.
Significant accounting policies followed by the Fund 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 Fund 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 Fund also may
buy or 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 Fund gives up the opportunity of profit
if the market price of the security increases. The risk in writing a put
option is that the Fund 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 Fund pays a premium whether or not the option is
exercised. The Fund 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
Fund 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 Fund may buy and sell financial futures contracts traded on any U.S.
or foreign exchange. The Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Fund is subject to
the credit risk that the other party will not complete the obligations of
the contract.
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 shareholders, no provision for
income or excise taxes is required.
Net investment income (loss) and net realized gains (losses) 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.
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
Expenses and
sales charges
Effective March 20, 1995, the Fund entered into agreements with American
Express Financial Corporation (AEFC) for managing its portfolio and
providing administrative services. Under its Investment Management
Services Agreement, AEFC determines which securities will be purchased,
held or sold. The management fee is a percentage of the Fund's average
daily net assets in reducing percentages from 0.64% to 0.515% annually.
The fee is adjusted upward or downward by a performance incentive
adjustment based on the Fund's average daily net assets over a rolling
twelve-month period as measured against the change in the Lipper Capital
Appreciation Fund Index. The maximum adjustment is 0.12% of the Fund's
average daily net assets after deducting 1% from the performance
difference. If the performance difference is less than 1%, the adjustment
will be zero. The adjustment increased the fee by $98,544 for the six
months ended March 31, 1998.
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 0.06% to 0.035%
annually. Additional administrative service expenses paid by the Fund are
office expenses, consultants' fees and compensation of officers and
employees. Under this agreement, the Fund also pays taxes, audit and
certain legal fees, registration fees for shares, compensation of board
members, corporate filing fees, organizational expenses and any other
expenses properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client
Service Corporation (AECSC) maintains shareholder accounts and records.
The Fund pays AECSC an annual fee per shareholder account for this service
as follows:
oClass A $15
oClass B $16
oClass Y $15
Also effective March 20, 1995, the Fund entered into agreements with
American Express Financial Advisors Inc. for distribution and shareholder
servicing-related services. Under a Plan and Agreement of Distribution,
the Fund pays a distribution fee at an annual rate of 0.75% of the Fund's
average daily net assets attributable to Class B shares for
distribution-related services.
Under a Shareholder Service Agreement, the Fund pays a fee for service
provided to shareholders by financial advisors and other servicing agents.
The fee is calculated at a rate of 0.175% of the Fund's average daily net
assets attributable to Class A and Class B shares and commencing on May 9,
1997, the fee is calculated at a rate of 0.10% of the Fund's average daily
net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $646,323 for Class A and $16,676 for Class B
for the six months ended March 31, 1998. The Fund also pays custodian fees
to American Express Trust Company, an affiliate of AEFC.
During the six months ended March 31, 1998, the Fund's custodian and
transfer agency fees were reduced by $37,217 as a result of earnings
credits from overnight cash balances.
3
Securities
transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $453,770,504 and $362,218,556,
respectively, for the six months ended March 31, 1998. Realized gains and
losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $24,768
for the six months ended March 31, 1998.
4
Lending of
portfolio
securities
At March 31, 1998, securities valued at $7,606,250 were on loan to
brokers. For collateral, the Fund received $7,700,000 in cash. Income from
securities lending amounted to $67,595 for the six months ended March 31,
1998. The risks to the Fund of securities lending are that the borrower
may not provide additional collateral when required or return the
securities when due.
5
Capital share
transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended March 31, 1998
Class A Class B Class Y
Sold 4,900,253 2,357,696 258,181
Issued for reinvested 4,355,107 600,137 70,318
distributions
Redeemed (3,223,293) (399,772) (98,491)
Net increase (decrease) 6,032,067 2,558,061 230,008
Year ended Sept. 30, 1997
Class A Class B Class Y
Sold 6,618,226 3,202,387 420,561
Issued for reinvested 3,597,404 269,232 33,932
distributions
Redeemed (6,614,552) (559,212) (125,747)
Net increase (decrease) 3,601,078 2,912,407 328,746
6
Stock index
futures contracts
At March 31, 1998, cash was pledged as collateral to cover initial margin
deposits on 135 open purchase contracts. The market value of the open
purchase contracts at March 31, was $19,053,125 with a net unrealized gain
of $527,440. See "Summary of significant accounting policies."
<PAGE>
<TABLE>
<CAPTION>
Notes to financial statements
7
Financial highlights
The tables below show certain important financial information for
evaluating the Fund's results.
Fiscal period ended Sept. 30,
Per share income and capital changesa
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998b 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net asset value, $10.17 $8.23 $7.66 $6.94 $7.11 $6.26 $5.77 $5.03 $7.16 $6.40
beginning of period
Income from investment operations:
Net investment income (loss) .03 .08 .09 .13 .11 .10 .12 .18 .23 .31
Net gains (losses) 1.05 2.54 .96 1.01 .44 .88 .53 .81 (1.24) .52
(both realized
and unrealized)
Total from investment 1.08 2.62 1.05 1.14 .55 .98 .65 .99 (1.01) .83
operations
Less distributions:
Dividends from net (.08) (.08) (.13) (.12) (.11) (.09) (.16) (.20) (.34) (.07)
investment income
Distributions from (.78) (.60) (.35) (.30) (.61) (.04) -- (.05) (.78) --
realized gains
Total distributions (.86) (.68) (.48) (.42) (.72) (.13) (.16) (.25) (1.12) (.07)
Net asset value, 10.39 $10.17 $8.23 $7.66 $6.94 $7.11 $6.26 $5.77 $5.03 $7.16
end of period
Ratios/supplemental data
Class A
1998b 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of $565 $491 $368 $337 $277 $255 $174 $132 $127 $176
period (in millions)
Ratio of expenses to 1.06%f 1.10% 1.04% 1.04% .99% 1.09% 1.06% .98% .79% .75%
average daily net assetsc
Ratio of net income .69%f .95% 1.21% 1.85% 1.65% 1.64% 2.07% 3.11% 3.38% 4.23%
(loss) to average
daily net assets
Portfolio turnover rate 69% 60% 56% 60% 77% 75% 87% 125% 86% 132%
(excluding short-term
securities)
Total returnd 11.7% 33.9% 14.4% 17.6% 7.9% 15.9% 11.4% 20.8% (16.3%) 13.1%
Average brokerage $.0520 $.0375 $.0504 -- -- -- -- -- -- --
commission ratee
a For a share outstanding throughout the period. Rounded to the nearest cent.
b For the six months ended March 31, 1998 (Unaudited).
c Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on
cash balances.
d Total return does not reflect payment of a sales charge.
e Effective fiscal year 1996, 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.
f Adjusted to an annual basis.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal period ended Sept. 30,
Per share income and capital changesa
Class B Class Y
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998c 1997 1996 1995b 1998c 1997 1996 1995b
Net asset value, 10.03 $8.15 $7.63 $6.88 10.18 $8.24 $7.67 $6.88
beginning of period
Income from investment operations:
Net investment income (loss) -- .03 .06 .02 .03 .09 .11 .06
Net gains 1.04 2.49 .92 .73 1.06 2.54 .95 .73
(both realized
and unrealized)
Total from investment 1.04 2.52 .98 .75 1.09 2.63 1.06 .79
operations
Less distributions:
Dividends from net (.03) (.04) (.11) -- (.09) (.09) (.14) --
investment income
Distributions from (.78) (.60) (.35) -- (.78) (.60) (.35) --
realized gains
Total distributions (.81) (.64) (.46) -- (.87) (.69) (.49) --
Net asset value, $10.26 $10.03 $8.15 $7.63 $10.40 $10.18 $8.24 $7.67
end of period
Ratios/supplemental data
Class B Class Y
1998c 1997 1996 1995b 1998c 1997 1996 1995b
Net assets, end of $87 $60 $25 $7 $10 $7 $3 $2
period (in millions)
Ratio of expenses to 1.82%d 1.87% 1.81% 1.84%d .98%d .98% .87% .88%d
average daily net assetse
Ratio of net income (.09)%d .21% .36% 1.03%d .74%d 1.09% 1.31% 1.95%d
(loss) to averag
daily net assets
Portfolio turnover rate 69% 60% 56% 60% 69% 60% 56% 60%
(excluding short-term
securities)
Total returnf 11.3% 32.9% 13.5% 10.9% 11.7% 34.1% 14.6% 11.5%
Average brokerage $.0520 $.0375 $.0504 -- $.0520 $.0375 $.0504 --
commission rateg
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was March 20, 1995.
c For the six months ended March 31, 1998 (Unaudited).
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.
g Effective fiscal year 1996, 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>
Investments in securities
IDS Progressive Fund, Inc.
March 31, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Common stocks - 92.8%
Issuer Shares Value(a)
Aerospace & defense - 2.1%
Goodrich (BF) 135,000 $6,893,438
Howmet Intl 375,000(b) 6,703,125
Total 13,596,563
Automotive & related - 3.9%
Danaher 150,000 11,390,625
Dura Automotive
Systems Cl A 220,000(b) 7,067,500
Tower Automotive 168,200(b) 7,569,000
Total 26,027,125
Banks and savings & loans - 7.8%
Charter One Financial 125,000 8,367,188
First Security 275,000 6,548,438
First Virginia Banks 243,000 13,638,374
Southtrust 262,500 10,992,188
TCF Financial 360,000 12,217,499
Total 51,763,687
Beverages & tobacco - 1.5%
Fortune Brands 255,000 10,168,125
Building materials & construction - 2.6%
Martin Marietta Materials 166,700 7,199,356
Southern Energy Homes 300,000(b) 3,637,500
Toll Brothers 225,000(b) 6,328,125
Total 17,164,981
Chemicals - 1.9%
Airgas 395,000(b) 6,813,750
BetzDearborn 100,000 5,643,750
Total 12,457,500
Communications equipment & services - 1.8%
Andrew Corp 240,000(b) 4,755,000
DSC Communications 335,000(b) 6,092,813
Norstan 35,000 866,250
Total 11,714,063
Computers & office equipment - 8.6%
American Management
Systems 360,000(b) 9,900,000
Learning Co 350,000(b) 8,093,750
Network Associates 110,000(b) 7,287,500
Platinum Technology 105,000(b) 2,703,750
Policy Management Systems 127,500(b) 10,239,844
Solectron 146,000(b) 6,168,500
Sterling Software 210,000(b) 11,864,999
Total 56,258,343
Electronics - 1.2%
Lattice Semiconductor 90,000(b) 4,629,375
Thomas & Betts 55,900 3,577,600
Total 8,206,975
Energy - 3.0%
Anadarko Petroleum 100,000 $6,900,000
Newfield Exploration 399,600(b) 10,414,575
Vastar Resources 61,000 2,649,688
Total 19,964,263
Energy equipment & services - 2.1%
Jacobs Engineering Group 110,000(b) 3,561,250
Tidewater 240,000 10,515,000
Total 14,076,250
Financial services - 2.9%
Allmerica Financial 85,600 5,467,700
CIT Group Cl A 275,000 8,971,875
Providian Financial 80,000 4,595,000
Total 19,034,575
Food - 3.5%
Hormel Foods 305,000 11,837,812
U.S. Foodservice 305,000(b) 11,227,813
Total 23,065,625
Foreign - 5.2%(c)
ACE 288,819 10,884,866
Elan ADR 145,000(b,d) 9,370,625
MOL Magyar Olaj-es
Gazipari GDR 50,000(b) 1,532,500
Petroleum Geo-Services ADR 185,000(b) 10,984,374
Yanzhou Coal Mining ADR 100,000(b) 1,600,000
Total 34,372,365
Furniture & appliances - 1.4%
Leggett & Platt 36,400 1,872,325
Maytag 150,000 7,171,875
Total 9,044,200
Health care - 4.3%
DePuy 295,000 8,942,188
Life Technologies 258,350 9,946,475
Watson Pharmaceuticals 260,000(b) 9,360,000
Total 28,248,663
Health care services - 1.2%
Beverly Enterprises 615,000(b) 8,187,188
Industrial equipment & services - 4.3%
AGCO 165,000 4,898,438
AMETEK 115,000 3,442,813
Cincinnati Milacron 225,000(g) 7,171,874
Kennametal 108,000 5,683,500
Wyman-Gordon 305,000(d) 6,976,875
Total 28,173,500
Insurance - 2.4%
Executive Risk 150,000 $10,687,500
Nationwide Financial
Services Cl A 120,000 5,205,000
Total 15,892,500
Leisure time & entertainment - 0.5%
Polaris Inds 90,000 3,330,000
Media - 2.5%
Journal Register 150,000(b) 3,131,250
Lee Enterprises 100,000 3,356,250
Sinclair Broadcast Group Cl A180,000 10,372,500
Total 16,860,000
Metals - 1.7%
Carpenter Technology 135,000 7,290,000
Steel Dynamics 175,000(b) 3,718,750
Total 11,008,750
Miscellaneous - 1.0%
Ocean Energy 286,000(b) 6,738,875
Multi-industry conglomerates - 3.6%
Baldor Electric 245,000 6,599,688
Hubbell Cl B 120,000 6,045,000
Interim Services 240,000(b) 8,100,000
YORK Intl 71,000 3,195,000
Total 23,939,688
Paper & packaging - 3.0%
Bemis 150,000 6,768,749
Champion Intl 65,000 3,530,313
Fort James 125,000 5,726,563
Rayonier 80,000 3,655,000
Total 19,680,625
Real estate investment trust - 2.1%
Arden Realty 250,000 7,125,000
Highwoods Properties 200,000 7,062,500
Total 14,187,500
Restaurants & lodging - 0.5%
Wendy's Intl 150,000 3,346,875
Retail - 4.2%
Food Lion Cl A 700,000 7,481,250
Meyer (Fred) 160,000(b) 7,390,000
OfficeMax 380,000(b) 6,792,500
United Stationers 100,000 6,181,250
Total 27,845,000
Transportation - 1.0%
CNF Transportation 100,000 $3,593,750
Wisconsin Central
Transportation 115,000(b) 3,237,969
Total 6,831,719
Utilities -- electric - 6.5%
Carolina Power & Light 200,000 9,050,000
DPL322,500 6,288,750
KU Energy 180,000 7,706,250
Sierra Pacific Resources 300,000 11,268,749
Teco Energy 300,000 8,475,000
Total 42,788,749
Utilities -- gas - 1.3%
Questar 210,000 8,728,125
Utilities -- telephone - 3.2%
Century Telephone
Enterprises 103,000 6,295,875
Cincinnati Bell 420,000 14,962,500
Total 21,258,375
Total common stocks
(Cost: $490,191,300) $613,960,772
Bond - 1.0%
Issuer Coupon Principal Value(a)
rate amount
Baker Hughes
Zero Coupon Cv Nts
05-05-08 1.69% $7,750,000(f) $6,432,500
Total bond
(Cost: $6,298,744) $6,432,500
Short-term securities - 7.7%(h)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies - 2.5%
Federal Home Loan Mtge Corp Disc Nt
04-13-98 5.47% $5,400,000 $5,390,199
Federal Natl Mtge Assn Disc Nts
04-13-98 5.54 1,100,000 1,097,972
05-04-98 5.48 9,900,000 9,850,451
Total 16,338,622
Commercial paper - 5.1%
ABB Treasury Center USA
04-13-98 5.55 1,100,000(e) 1,097,972
ANZ (Delaware)
04-06-98 5.55 3,200,000 3,197,542
BBV Finance (Delaware)
04-01-98 5.53% $1,800,000 $1,800,000
04-08-98 5.54 3,300,000 3,296,458
Bell Atlantic Finance
04-08-98 5.54 1,800,000 1,798,068
Coca-Cola
04-21-98 5.54 600,000 598,160
Delaware Funding
04-17-98 5.55 5,600,000(e) 5,586,237
Fleet Funding
04-24-98 5.57 1,900,000(e) 1,893,275
Paccar Financial
04-08-98 5.55 5,300,000 5,294,301
Toyota Motor Credit
04-09-98 5.55 4,400,000 4,394,593
USAA Capital
04-22-98 5.55% $5,000,000 $4,983,871
Total 33,940,477
Letter of credit - 0.1%
Bank of America-
AES Hawaii
04-16-98 5.55 900,000 897,926
Total short-term securities
(Cost: $51,177,025) $51,177,025
Total investments in securities
(Cost $547,667,069(i) $671,570,297
See accompanying notes to investments in securities.
<PAGE>
<TABLE>
<CAPTION>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Security is partially or fully on loan. See Note 4 to financial statements.
(e) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(f) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(g) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
six months ended March 31, 1998 are as follows:
Beginning Purchase Sales Ending Dividend Value(a)
Affiliates cost cost cost cost income
<S> <C> <C> <C> <C> <C> <C>
Cincinnati Milacron* $-- $5,695,964 $-- $5,695,964 $27,000 $7,171,874
*Issuer was not an affiliate for the entire period ended March 31, 1998.
(h) At March 31, 1998, cash or short-term securities were pledged as initial
deposit on the following open stock index futures purchase contracts (see Note 6
to the financial statements):
Type of security Contracts
Midcap 400, June 1998 100
Standard & Poor's 500 Stock Index, June 1998 35
(i) At March 31, 1998, the cost of securities for federal income tax purposes
was approximately $547,667,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation.....................................$129,557,000
Unrealized depreciation.......................................(5,654,000)
Net unrealized appreciation.................................$123,903,000
</TABLE>
<PAGE>
Board members and officers
Independent board members and officers
Chairman William R. Pearce*
of the board Chairman of the board, Board Services Corporation (provides
administrative services to boards including the boards of the
IDS and IDSLife funds and Master Trust portfolios).
H. Brewster Atwater, Jr.
Former chairman and chief executive officer, General Mills,
Inc.
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public
Policy Research.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Alan K. Simpson
Former United States senator for Wyoming.
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
Officer
Vice president, Leslie L. Ogg*
general counsel President, 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.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) trees
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of companies with
significant growth potential due to superiority in
technology, marketing or management. The Fund frequently
changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
(icon of) shooting star
Growth & income funds
These funds focus on securities of medium to large, well-established companies
that offer long-term growth of capital and reasonable income from dividends and
interest. Foreign investments may be subject to currency fluctuations and
political and economic risks of the countries in which the investments are made.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks, higher-yielding
equities and bonds. Seeks growth of capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities purchased are
those recommended by our research analysts as the best from each industry
represented on the index. Offers potential for long-term growth as well as
dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek high current
income and growth of income and capital with reduced volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily in high-yielding common stocks to
seek high current income and, secondarily, to benefit from the growth potential
offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks and senior
securities (preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice
Income funds
The funds in this group invest their assets primarily in corporate bonds or
government securities to seek interest income. Secondary objective is capital
growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly of long-term, high-yielding corporate
fixed-income securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) two coins
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk
bond categories, or the equivalent, and in government bonds.
(icon of) Greek column
IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality corporate bonds and
other highly rated debt instruments including government securities and
short-term investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or guaranteed as
to the timely payment of principal and interest by the U.S. government, its
agencies and instrumentalities. Seeks a high level of current income and safety
of principal consistent with its type of investments.
(icon of) shield with eagle head
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government units, with at
least 75% in the four highest rated, lowest risk bond categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
(icon of) shield with star
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to provide
income to residents of each respective state that is exempt from federal, state
and local income taxes. (New York is the only state that is exempt at the local
level.)
(icon of) shield with U.S. enclosed
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve greater
risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (CDs) and other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and local
governments to seek high current income exempt from federal income taxes.
(icon of) shield with piggy bank enclosed
For more complete information about any of these funds, including charges and
expenses, you can obtain a prospectus by contacting your financial advisor or
writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534. Read it carefully before you invest or send money.
<PAGE>
Quick telephone reference
American Express Redemptions and exchanges, National/Minnesota
Financial Advisors dividend payments or 800-437-3133
Telephone Transaction reinvestments and automatic
Service payment arrangements Mpls./St. Paul area:
671-3800
TTY Service For the hearing impaired 800-846-4852
American Express Automated account information 800-862-7919
Financial Advisors (TouchTone(R) phones only),
Easy Access Line including current fund prices
and performance, account values
and recent account transactions
AMERICAN EXPRESS Financial Advisors
IDS Progressive Fund
IDS Tower 10
Minneapolis, MN 55440-0010
