IDS
Stock Fund
1999 SEMIANNUAL REPORT
(icon of) magnifying glass
The goals of IDS Stock Fund, Inc.
are current income and growth
of capital.
Distributed by American Express Financial Advisors Inc.
<PAGE>
Big Names,
Big Business
While some investors like to strive for the potentially outstanding returns that
can be generated by stocks of newer companies, others are more comfortable with
the usually steadier performance provided by stocks of more established
businesses. IDS Stock Fund focuses on stocks in the latter group, many of which
long ago made their marks in American enterprise and, in some cases, also have a
strong international business presence. These stocks offer the potential dual
benefit of growth along with a steady stream of dividend income.
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>
(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
It is an honor for me to join the IDS Mutual 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
government employees. My responsibility in the upcoming 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 (AEFC), 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 AEFC
and for the services it provides to 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 AEFC a
partner in your financial future. I know that AEFAC has an investment focus on
the long-term performance of our economy and that it wants you to participate in
that growth. Consistent with that, our board is here to serve you and represent
your interests in a professional manner.
Arne H. Carlson
<PAGE>
(picture of) Richard H. Warden
Richard H. Warden
Portfolio manager
From the Portfolio Managers
Taking advantage of a powerful rebound by the stock market, IDS Stock Fund
produced a substantial gain during the first half of the fiscal year. For the
period -- October 1998 through March 1999 -- the Fund's Class A shares generated
a total return of 20.98%.
(A portion of the return came in the form of a capital gain, which was paid to
shareholders in December 1998 and reduced the Fund's net asset value by the same
amount at that time.)
(picture of) Michael Kennedy
Michael Kennedy
Portfolio manager
At the outset of the six months, stocks were trying to regroup from a steep,
late-summer decline that drove down the broad market by nearly 20% and cut
prices on certain stocks roughly in half. But with the remarkable resilience
that has been its hallmark in recent years, the market gathered itself and began
to move forward. Supported by three reductions in short-term interest rates by
the Federal Reserve Board during the fall, stocks quickly turned a tentative
advance into a roaring rally that, by late March, propelled the market to an
all-time high. Of the six months, every one but February, when long-term
interest rates rose rather sharply, showed a solid gain.
Consistent with the trend of recent years, the market's resurgence was driven by
large-capitalization stocks. Because of its emphasis on large-cap issues, that
worked to the advantage of the Fund.
BIG HOLDINGS DO WELL
More specifically, the Fund's largest areas of investment were technology,
financial services, retailing, utilities, consumer products and health care, all
of which made positive contributions to performance. Looking at individual
stocks, several of the Fund's largest holdings were also among its best
performers. They included General Electric, Providian Financial, Wal-Mart,
Microsoft, American International Group and MCI WorldCom.
As for changes to the portfolio, we added to the technology exposure about
mid-period and reduced the level of cash reserves (from about 14% last fall to
about 5% at period-end). The higher-than-usual cash level came about from the
sale of a number of stocks to reduce the capital gain that had built up and was
due to be paid to shareholders as a taxable distribution last December. As it
turned out, the cash reduction enhanced performance because more money was to
put work in stocks, especially technology issues, which provided a better return
than cash.
Looking to the second half of the fiscal year, inflation remains remarkably low,
long-term interest rates have yet to experience a sustained increase and the
economy continues to chug along. At this point (mid-April), the biggest
potential hurdle for the stock market is the strength of corporate profits in
1999. In any event, though, large-cap stocks appear to still be in favor and
should do well if the market manages to advance in the months ahead.
Richard H. Warden
G. Michael Kennedy
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1999 $26.98
Sept. 30, 1998 $24.18
Increase $ 2.80
Distributions -- Oct. 1, 1998 - March 31, 1999
From income $ 0.17
From capital gains $ 2.00
Total distributions $ 2.17
Total return* +20.98%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1999 $26.81
Sept. 30, 1998 $24.05
Increase $ 2.76
Distributions -- Oct. 1, 1998 - March 31, 1999
From income $ 0.08
From capital gains $ 2.00
Total distributions $ 2.08
Total return* +20.52%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1999 $26.98
Sept. 30, 1998 $24.18
Increase $ 2.80
Distributions -- Oct. 1, 1998 - March 31, 1999
From income $ 0.18
From capital gains $ 2.00
Total distributions $ 2.18
Total return* +21.02%**
*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 March 31, 1999)
Microsoft 3.78% $179,249,999
General Electric 3.50 165,937,500
Providian Financial 2.78 132,000,000
America Online 2.46 116,800,000
Wal-Mart Stores 2.33 110,624,999
American Intl Group 2.30 109,105,313
AT&T 1.94 91,846,229
Safeway 1.89 89,796,875
Intl Business Machines 1.87 88,625,000
Clear Channel Communications 1.70 80,475,000
For further detail about these holdings, please refer to the section entitled
"Investments in Securities" herein.
The 10 holdings listed here
make up 24.55% of net assets
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
IDS Stock Fund, Inc.
March 31, 1999 (Unaudited)
Assets
<S> <C>
Investments in Equity Portfolio (Note 1) $4,742,345,896
--------------
Liabilities
Accrued distribution fee 7,027
Accrued service fee 20,608
Accrued transfer agency fee 12,119
Accrued administrative services fee 3,518
Other accrued expenses 112,497
-------
Total liabilities 155,769
-------
Net assets applicable to outstanding capital stock $4,742,190,127
==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,758,696
Additional paid-in capital 3,198,908,631
Undistributed net investment income 1,073,177
Accumulated net realized gain (loss) 91,082,709
Unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies 1,449,366,914
-------------
Total-- representing net assets applicable to outstanding capital stock $4,742,190,127
==============
Net assets applicable to outstanding shares: Class A $3,264,815,492
Class B $ 338,631,943
Class Y $1,138,742,692
Net asset value per share of outstanding capital stock: Class A shares 121,030,205 $ 26.98
Class B shares 12,630,916 $ 26.81
Class Y shares 42,208,436 $ 26.98
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
IDS Stock Fund, Inc.
Six months ended March 31, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 30,121,485
Interest 10,967,916
Less foreign taxes withheld (263,834)
--------
Total income 40,825,567
----------
Expenses (Note 2):
Expenses allocated from Equity Portfolio 11,475,660
Distribution fee-- Class B 1,136,117
Transfer agency fee 1,891,261
Incremental transfer agency fee
Class A 75,444
Class B 29,727
Service fee
Class A 2,648,808
Class B 263,764
Class Y 556,012
Administrative services fees and expenses 623,581
Compensation of board members 7,151
Postage 325,900
Registration fees 123,679
Reports to shareholders 56,523
Audit fees 4,938
Other 13,486
------
Total expenses 19,232,051
Earnings credits on cash balances (Note 2) (69,562)
-------
Total net expenses 19,162,489
----------
Investment income (loss) -- net 21,663,078
----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions 91,368,461
Foreign currency transactions (595)
----
Net realized gain (loss) on investments 91,367,866
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 731,624,858
-----------
Net gain (loss) on investments and foreign currencies 822,992,724
-----------
Net increase (decrease) in net assets resulting from operations $844,655,802
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Stock Fund, Inc.
March 31, 1999 Sept. 30, 1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 21,663,078 $ 49,153,951
Net realized gain (loss) on investments 91,367,866 401,321,846
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 731,624,858 (356,905,833)
----------- ------------
Net increase (decrease) in net assets resulting from operations 844,655,802 93,569,964
----------- ----------
Distributions to shareholders from:
Net investment income
Class A (16,034,059) (34,053,523)
Class B (521,177) (1,035,340)
Class Y (6,226,765) (13,773,535)
Net realized gain
Class A (231,636,045) (361,177,439)
Class B (22,611,501) (27,613,854)
Class Y (85,949,857) (141,133,199)
----------- ------------
Total distributions (362,979,404) (578,786,890)
------------ ------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 91,459,456 209,142,594
Class B shares 48,592,005 83,702,125
Class Y shares 129,768,334 287,113,337
Reinvestment of distributions at net asset value
Class A shares 227,238,082 363,515,355
Class B shares 22,916,860 28,398,853
Class Y shares 82,426,830 136,978,202
Payment for redemptions
Class A shares (167,157,289) (337,312,915)
Class B shares (Note 2) (21,708,354) (29,364,342)
Class Y shares (221,014,708) (351,776,526)
------------ ------------
Increase (decrease) in net assets from capital share transactions 192,521,216 390,396,683
----------- -----------
Total increase (decrease) in net assets 674,197,614 (94,820,243)
Net assets at beginning of period 4,067,992,513 4,162,812,756
------------- -------------
Net assets at end of period $4,742,190,127 $4,067,992,513
============== ==============
Undistributed net investment income $ 1,073,177 $ 2,192,100
-------------- --------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
IDS Stock Fund, Inc.
(Unaudited as to March 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
automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class specific
expenses) and realized and unrealized gains or losses on investments are
allocated to each class of shares based upon its relative net assets.
Investment in Equity Portfolio
The Fund invests all of its assets in Equity Portfolio (the Portfolio), a series
of Growth and Income Trust (the Trust), an open-end investment company that has
the same objectives as the Fund. This was accomplished by transferring the
Fund's assets to the Portfolio in return for a proportionate ownership interest
in the Portfolio. The Portfolio invests primarily in common stocks and
securities convertible into common stocks.
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 March 31, 1999 was 99.98%.
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
Dividends from net investment income, declared and paid each calendar quarter,
are reinvested in additional shares of the Fund at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last income
dividend of the calendar year.
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 0.04% to 0.02% annually. Additional administrative service expenses paid by
the Fund are office expenses, consultants' fees and compensation of officers and
employees. Under this agreement, the Fund also pays taxes, audit and certain
legal fees, registration fees for shares, compensation of board members,
corporate filing fees and any other expenses properly payable by the Fund and
approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $19
o Class B $20
o Class Y $15
Under terms of a prior agreement that ended Jan. 31, 1999, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $15 for Class A
and $16 for Class B. Effective April 1, 1999, the annual rate per shareholder
account will change to $17 for Class Y.
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 $1,438,819 for Class A and $122,644 for Class B
for the six months ended March 31, 1999.
During the six months ended March 31, 1999, the Fund's transfer agency fees were
reduced by $69,562 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 March 31, 1999
Class A Class B Class Y
<S> <C> <C> <C>
Sold 3,468,385 1,860,499 4,936,987
Issued for reinvested distributions 8,803,397 893,794 3,192,647
Redeemed (6,352,613) (832,363) (8,398,239)
---------- -------- ----------
Net increase (decrease) 5,919,169 1,921,930 (268,605)
--------- --------- --------
Year ended Sept. 30, 1998
Class A Class B Class Y
Sold 7,948,725 3,199,817 10,902,147
Issued for reinvested distributions 15,104,728 1,189,453 5,689,092
Redeemed (12,795,608) (1,118,982) (13,550,987)
----------- ---------- -----------
Net increase (decrease) 10,257,845 3,270,288 3,040,252
---------- --------- ---------
</TABLE>
<PAGE>
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 March
31, 1999.
<PAGE>
<TABLE>
<CAPTION>
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
1999b 1998 1997 1996c 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $24.18 $27.44 $22.49 $19.96 $19.48
Income from investment operations:
Net investment income (loss) .13 .29 .39 .43 .52
Net gains (losses) (both realized and unrealized) 4.84 .22 6.11 3.17 1.96
Total from investment operations 4.97 .51 6.50 3.60 2.48
Less distributions:
Dividends from net investment income (.14) (.30) (.43) (.39) (.49)
Distributions from realized gains (2.03) (3.47) (1.12) (.68) (1.51)
Total distributions (2.17) (3.77) (1.55) (1.07) (2.00)
Net asset value, end of period $26.98 $24.18 $27.44 $22.49 $19.96
Ratios/supplemental data
Class A
1999b 1998 1997 1996c 1995
Net assets, end of period (in millions) $3,265 $2,783 $2,877 $2,307 $1,984
Ratio of expenses to average daily net assetsd .82%e .77% .78% .80%e .79%
Ratio of net investment income (loss)
to average daily net assets .99%e 1.14% 1.58% 2.19%e 2.61%
Portfolio turnover rate
(excluding short-term securities) 31% 79% 82% 71% 69%
Total returnf 20.98% 2.04% 30.22% 18.60% 14.44%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended March 31, 1999 (Unaudited).
c The Fund's fiscal year-end was changed from Oct. 31 to Sept. 30, effective
1996.
d Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
e Adjusted to an annual basis.
f Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal period ended Sept. 30,
Per share income and capital changesa
Class B Class Y
1999b 1998 1997 1996c 1995d 1999b 1998 1997 1996c 1995d
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $24.05 $27.32 $22.42 $19.91 $18.03 $24.18 $27.44 $22.49 $19.96 $18.03
Income from investment operations:
Net investment income (loss) .04 .10 .22 .28 .27 .14 .31 .42 .47 .29
Net gains (losses) (both
realized and unrealized) 4.80 .21 6.05 3.17 1.92 4.84 .22 6.11 3.17 2.01
Total from investment operations 4.84 .31 6.27 3.45 2.19 4.98 .53 6.53 3.64 2.30
Less distributions:
Dividends from net investment income (.05) (.11) (.25) (.26) (.31) (.15) (.32) (.46) (.43) (.37)
Distributions from realized gains (2.03) (3.47) (1.12) (.68) -- (2.03) (3.47) (1.12) (.68) --
Total distributions (2.08) (3.58) (1.37) (.94) (.31) (2.18) (3.79) (1.58) (1.11) (.37)
Net asset value, end of period $26.81 $24.05 $27.32 $22.42 $19.91 $26.98 $24.18 $27.44 $22.49 $19.96
Ratios/supplemental data
Class B Class Y
1999b 1998 1997 1996c 1995d 1999b 1998 1997 1996c 1995d
Net assets, end of period (in millions) $339 $258 $203 $107 $29 $1,139 $1,027 $1,082 $870 $738
Ratio of expenses to
average daily net assetse 1.59%f 1.53% 1.55% 1.57%f 1.61%f .74%f .70% .66% .63%f .64%f
Ratio of net investment income
(loss) to average daily net assets .22%f .39% .85% 1.61%f 1.37%f 1.07%f 1.21% 1.71% 2.36%f 2.38%f
Portfolio turnover rate
(excluding short-term securities) 31% 79% 82% 71% 69% 31% 79% 82% 71% 69%
Total returng 20.52% 1.27% 29.23% 17.78% 12.10% 21.02% 2.12% 30.38% 18.79% 12.80%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended March 31, 1999 (Unaudited).
c The Fund's fiscal year-end was changed from Oct. 31 to Sept. 30, effective
1996.
d Inception date was March 20, 1995.
e Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
f Adjusted to an annual basis.
g Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
Equity Portfolio
March 31, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1):
<S> <C>
Investments in securities of unaffiliated issuers (identified cost $3,266,002,145) $4,688,886,704
Investments in securities of affiliated issuers (identified cost $27,605,473) 54,398,438
----------
Total investments in securities (identified cost $3,293,607,618) 4,743,285,142
Dividends and accrued interest receivable 5,562,029
Receivable for investment securities sold 59,338,078
U.S. government securities held as collateral (Note 4) 9,918,396
---------
Total assets 4,818,103,645
-------------
Liabilities
Disbursements in excess of cash on demand deposit 1,342,514
Payable for investment securities purchased 35,345,889
Payable upon return of securities loaned (Note 4) 37,709,296
Accrued investment management services fee 60,975
Other accrued expenses 156,494
-------
Total liabilities 74,615,168
----------
Net assets $4,743,488,477
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Equity Portfolio
Six months ended March 31, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 30,128,564
Interest 10,943,262
Less foreign taxes withheld (263,895)
--------
Total income 40,807,931
----------
Expenses (Note 2):
Investment management services fee 11,209,160
Compensation of board members 11,076
Custodian fees 202,915
Audit fees 14,813
Other 45,244
------
Total expenses 11,483,208
Earnings credit on cash balances (Note 2) (4,848)
------
Total net expenses 11,478,360
----------
Investment income (loss) -- net 29,329,571
----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions 91,380,320
Foreign currency transactions (595)
----
Net realized gain (loss) on investments 91,379,725
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 731,805,357
-----------
Net gain (loss) on investments and foreign currencies 823,185,082
-----------
Net increase (decrease) in net assets resulting from operations $852,514,653
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Equity Portfolio
March 31, 1999 Sept. 30, 1998
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 29,329,571 $ 62,955,925
Net realized gain (loss) on investments 91,379,725 401,372,703
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 731,805,357 (356,961,919)
----------- ------------
Net increase (decrease) in net assets resulting from operations 852,514,653 107,366,709
Net contributions (withdrawals) from partners (178,179,100) (202,014,550)
------------ ------------
Total increase (decrease) in net assets 674,335,553 (94,647,841)
Net assets at beginning of period 4,069,152,924 4,163,800,765
------------- -------------
Net assets at end of period $4,743,488,477 $4,069,152,924
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Equity Portfolio
(Unaudited as to March 31, 1999)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Equity Portfolio (the Portfolio) is a series of Growth and Income Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. Equity Portfolio
invests primarily in common stocks and securities convertible into common
stocks. 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 0.53% to 0.4% 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 Stock Fund to the Lipper Growth and
Income Fund Index. The maximum adjustment is 0.08% of the Portfolio's average
daily net assets on an annual basis. The adjustment increased the fee by
$698,688 for the six months ended March 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 March 31, 1999, the Portfolio's custodian fees were
reduced by $4,848 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 $1,306,780,251 and $1,400,098,654, respectively, for the
six months ended
March 31, 1999. For the same period, the portfolio turnover rate was 31%.
Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $60,296 for the
six months ended March 31, 1999.
4. LENDING OF PORTFOLIO SECURITIES
As of March 31, 1999, securities valued at $36,132,475 were on loan to brokers.
For collateral, the Portfolio received $27,790,900 in cash and U.S. government
securities valued at $9,918,396. Income from securities lending amounted to
$82,608 for the six months ended March 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
Contracts and premium amounts associated with options contracts written are as
follows:
Six months ended March 31, 1999
Calls
Contracts Premium
Balance Sept. 30, 1998 -- $ --
Opened 1,000 162,690
Closed (1,000) (162,690)
Balance March 31, 1999 -- $ --
See "Summary of significant accounting policies."
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
Equity Portfolio
March 31, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (82.9%)
Issuer Shares Value(a)
Aerospace & defense (1.8%)
<S> <C> <C>
Gulfstream Aerospace 847,900(b) $36,777,663
Raytheon Cl B 800,000 46,900,000
Total 83,677,663
Airlines (0.6%)
Southwest Airlines 1,000,000 30,250,000
Automotive & related (1.3%)
Delphi Automotive Systems 889,200(b) 15,783,300
Federal-Mogul 385,000 16,555,000
Ford Motor 500,000 28,375,000
Total 60,713,300
Banks and savings & loans (4.3%)
Bank One 810,000 44,600,625
BankAmerica 700,000 49,437,500
Wachovia 620,000 50,336,250
Washington Mutual 750,000 30,656,250
Wells Fargo 800,000 28,050,000
Total 203,080,625
Beverages & tobacco (1.0%)
Coca-Cola 800,000 49,100,000
Building materials & construction (1.4%)
Martin Marietta Materials 1,200,000 68,475,000
Chemicals (0.5%)
Waste Management 547,375 24,289,766
Communications equipment & services (1.2%)
Nokia Oyj ADR Cl A 250,000(c) 38,937,500
Tellabs 200,000(b) 19,550,000
Total 58,487,500
Computers & office equipment (13.7%)
3Com 600,000(b) 13,987,500
America Online 800,000 116,800,000
Ascend Communications 650,000(b) 54,396,875
Cisco Systems 600,000(b) 65,737,500
Compaq Computer 1,500,000 47,531,250
Equant 400,000(b,c,d) 30,100,000
Gateway 2000 450,000(b) 30,853,125
Intl Business Machines 500,000 88,625,000
Microsoft 2,000,000(b) 179,249,999
Solectron 396,449(b) 19,252,555
Total 646,533,804
Electronics (2.7%)
Altera 347,826(b) 20,695,647
Intel 500,000 59,562,500
Texas Instruments 500,000 49,625,000
Total 129,883,147
Energy (2.4%)
Conoco Cl A 1,267,100 31,123,144
Exxon 600,000 42,337,500
Mobil 450,000 39,600,000
Total 113,060,644
Energy equipment & services (0.7%)
Schlumberger 525,000(c) 31,598,438
Financial services (4.5%)
Associates First Capital Cl A 566,120 25,475,400
Mutual Risk Management 1,525,000(c,d) 58,331,250
Providian Financial 1,200,000 132,000,000
Total 215,806,650
Food (1.8%)
General Mills 500,000 37,781,250
Sara Lee 2,000,000 49,500,000
Total 87,281,250
Health care (10.0%)
American Home Products 700,000 45,675,000
Amgen 500,000(b) 37,437,500
Baxter Intl 750,000 49,500,000
Bristol-Myers Squibb 1,000,000 64,312,500
Guidant 1,150,000 69,575,000
Medtronic 400,000 28,700,000
Pfizer 400,000 55,500,000
Schering-Plough 1,300,000 71,906,249
Warner-Lambert 750,000 49,640,625
Total 472,246,874
Household products (2.7%)
Gillette 500,000 29,718,750
Procter & Gamble 600,000 58,762,500
Unilever 600,000(c) 39,862,500
Total 128,343,750
Industrial equipment & services (1.0%)
Illinois Tool Works 800,000 49,500,000
Insurance (3.6%)
ACE 750,000(c) 23,390,625
American Intl Group 904,500 109,105,313
XL Capital Cl A 650,000 39,487,500
Total 171,983,438
Media (3.7%)
Clear Channel Communications 1,200,000(b) 80,475,000
Infinity Broadcasting Cl A 1,317,000(b) 33,912,750
MediaOne Group 500,000(b) 31,750,000
USA Networks 800,000(b) 28,650,000
Total 174,787,750
Metals (1.1%)
Stillwater Mining 2,062,500(b,e) 54,398,438
Multi-industry conglomerates (4.2%)
Emerson Electric 615,380 32,576,679
General Electric 1,500,000 165,937,500
Total 198,514,179
Paper & packaging (0.9%)
Intl Paper 1,000,000 42,187,500
Retail (9.5%)
American Stores 700,000 23,100,000
Circuit City Stores 450,000 34,481,250
Dayton Hudson 1,100,000 73,287,500
Home Depot 1,200,000 74,700,000
Rite Aid 1,795,000 44,875,000
Safeway 1,750,000(b) 89,796,875
Wal-Mart Stores 1,200,000 110,624,999
Total 450,865,624
Utilities -- electric (1.5%)
Carolina Power & Light 350,000 13,234,375
CMS Energy 300,000 12,018,750
Duke Energy 200,000 10,925,000
New Century Energies 150,000 5,109,375
Texas Utilities 350,000 14,590,625
Unicom 400,000 14,625,000
Total 70,503,125
Utilities -- telephone (6.7%)
Ameritech 800,000 46,300,000
AT&T 1,150,775 91,846,229
BellSouth 750,000 30,046,875
MCI WorldCom 875,422(b) 77,529,561
SBC Communications 439,200 20,697,300
U S WEST Communications Group 900,000 49,556,250
Total 315,976,215
Total common stocks
(Cost: $2,532,012,453) $3,931,544,680
Preferred stocks (8.3%)
Issuer Shares Value(a)
BS-Medtronic
5.00% Cv 884,250 $41,913,450
BS-Service Corp Intl
5.00% 1,100,000 16,346,000
CVS
6.00% Cv ACES 200,000(f) 17,100,000
Federal-Mogul Finance Trust
7.00% Cm Cv 270,000 14,478,750
Finova Finance Trust
5.50% Cv 325,000 22,750,000
Glenborough Realty Trust
7.75% Cv Series A 402,105 6,735,259
Host Marriott Finance Trust
6.75% Cv 300,000 11,812,500
Houston Inds
7.00% Cv ACES 325,000(f) 39,162,500
Ingersoll-Rand
6.75% Cv PRIDES 800,000(g) 20,200,000
McKesson
5.00% Cv 200,000(h) 18,050,000
MediaOne Group
6.25% Cv 569,500 47,126,125
MS-Applied Material
6.00% Cv 180,000 8,460,000
MS-Gillette
Cv 186,795 21,714,919
MS-UNUM
3.25% Cv 1,217,092 56,290,505
Newell Finance Trust
5.25% Cm Cv 250,000(h) 13,812,500
PLC Capital Trust II
6.50% Cv PRIDES 85,600(g) 5,333,950
SBH-Cincinnati Bell
6.25% 216,200 15,323,175
Sprint
8.25% Cv 206,925 15,105,525
Total preferred stocks
(Cost: $355,366,716) $391,715,158
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Bonds (2.4%)
Issuer Coupon Principal Value(a)
rate amount
AirTours
(British Pound) Cv Sub Nts
<S> <C> <C> <C>
01-05-04 5.75% 8,216,000(c,h) $15,254,437
Colt Telecom Group
(European Monetary Unit) Cv
08-06-05 1.12 25,000,000(c) 17,057,989
Costco
Zero Coupon Cv Sub Nts
08-01-17 3.51 21,000,000(h,i) 22,470,000
Exodus Communications
Cv Sub Nts
03-15-06 5.00 6,000,000(h) 9,552,300
Network Associates
Zero Coupon Cv Sub Debs
02-13-18 4.09 20,000,000(h,i) 7,200,000
Office Depot
Zero Coupon Cv Nts
11-01-08 3.70 7,300,000(i) 6,332,750
Pennzenergy
Cv
08-15-08 4.90 15,000,000 15,000,000
Telewest Communication
(British Pound) Cv
02-19-07 5.25 12,240,000(c,h) 19,761,474
Total bonds
(Cost: $98,828,610) $112,628,950
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (6.5%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (2.1%)
Federal Home Loan Bank Disc Nt
<S> <C> <C> <C>
05-21-99 4.77% $21,600,000 $21,457,800
Federal Home Loan Mtge Corp Disc Nts
04-08-99 4.82 600,000 599,440
04-14-99 4.78 19,400,000 19,366,724
04-23-99 4.80 24,800,000 24,727,556
05-12-99 4.80 8,100,000 8,055,997
05-17-99 4.77 25,000,000 24,848,582
Total 99,056,099
Commercial paper (4.2%)
Albertson's
04-12-99 4.87 2,100,000(j) 2,096,888
BBV Finance (Delaware)
04-14-99 4.87 10,000,000 9,980,804
05-19-99 4.86 8,200,000 8,146,312
Becton Dickinson
05-10-99 4.86 1,600,000 1,591,611
BMW US Capital
04-22-99 4.86 18,900,000 18,846,639
Ciesco LP
04-12-99 4.85 7,400,000 7,388,334
05-04-99 4.87 5,400,000 5,376,042
05-06-99 4.87 8,200,000 8,161,334
Daimler/Chrysler
04-15-99 4.88 12,700,000 12,675,997
Delaware Funding
04-23-99 4.89 2,000,000(j) 1,994,060
Dresdner US Finance
04-13-99 4.88 18,700,000 18,669,706
Fleet Funding
04-16-99 4.88 10,000,000(j) 9,979,750
04-21-99 4.88 11,200,000(j) 11,169,760
Goldman Sachs Group
04-01-99 4.87 10,000,000 10,000,000
GTE Funding
04-05-99 4.90 1,400,000 1,399,241
Household Finance
05-03-99 4.87 6,100,000 6,073,756
Morgan Stanley, Dean Witter, Discover & Co
04-05-99 4.89 7,100,000 7,096,158
04-13-99 4.89 10,000,000 9,983,767
Natl Australia Funding (Delaware)
04-13-99 4.87 9,500,000 9,484,578
Paccar Financial
04-20-99 4.85 9,800,000 9,775,018
Societe Generale North America
04-07-99 4.90 9,300,000 9,292,436
UBS Finance (Delaware)
04-16-99 4.87 11,300,000 11,277,165
Variable Funding Capital
04-05-99 4.87 10,900,000(j) 10,894,102
Total 201,353,458
Letter of credit (0.2%)
Bank of America-
AES Hawaii
04-15-99 4.88 7,000,000 6,986,797
Total short-term securities
(Cost: $307,399,839) $307,396,354
Total investments in securities
(Cost: $3,293,607,618)(k) $4,743,285,142
</TABLE>
<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. For debt securities,
principal amounts are denominated in the currency indicated. As of March 31,
1999, the value of foreign securities represented 5.78% of net assets.
(d) Security is partially or fully on loan. See Note 4 to the financial
statements.
(e) 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, 1999 are as follows:
Issuer Beginning Purchase Sales Ending Dividend Value(a)
cost cost cost cost income
<S> <C> <C> <C> <C> <C> <C>
Stillwater Mining $24,603,388 $3,002,085 $-- $27,605,473 $-- $54,398,438
(f) ACES (Automatically Convertible Equity Securities) are structured as
convertible preferred securities. Investors receive an enhanced yield but based
upon a specific formula, potential appreciation is limited. ACES pay dividends,
have voting rights, are noncallable for at least three years and upon maturity,
convert into shares of common stock.
(g) PRIDES (Preferred Redeemable Increased Dividend Equity Securities) are
structured as convertible preferred securities. Investors receive an enhanced
yield but based upon a specific formula, potential appreciation is limited.
PRIDES pay dividends, have voting rights, are noncallable for three years and
upon maturity, convert into shares of common stock.
(h) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(i) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(j) 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.
(k) At March 31, 1999, the cost of securities for federal income tax purposes
was approximately $3,293,608,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $1,526,462,000
Unrealized depreciation (76,785,000)
-----------
Net unrealized appreciation $1,449,677,000
</TABLE>
<PAGE>
Quick telephone reference
American Express Financial Advisors Telephone Transaction Service
Sales and exchanges, dividend payments or reinvestments and automatic payment
arrangements: 800-437-3133
American Express Client Service Corporation
Fund performance, Fund prices, account values, recent account transactions
and account inquiries: 800-862-7919
TTY Service
For the hearing impaired: 800-846-4852
Ticker Symbol
Class A: INSTX Class B: IDSBX Class Y: IDSYX
S-6365 N (5/99)
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 85
SPENCER, IA
IDS Stock Fund
IDS Tower 10
Minneapolis, MN 55440-0010
