1997 SEMIANNUAL REPORT
IDS
Managed
Allocation
Fund
The goal of IDS Managed Allocation Fund, a part of IDS Managed Retirement Fund,
Inc., is to maximize total return through a combination of growth of capital and
current income.
Distributed by American Express Financial Advisors Inc., Member SIPC.
Going where
the action is
Today's investment marketplace is changing faster than ever. The key is to be in
the right place at the right time. Managed Allocation Fund has that potential
because it has the flexibility to make sweeping shifts in its asset mix to take
advantage of expected trends in financial markets. While the focus historically
has been on U.S. stocks, the Portfolio can also hold foreign stocks, as well as
domestic and foreign bonds, plus cash-equivalent investments. For investors,
such flexibility can mean opportunity.
Contents
From the president 3
From the portfolio management team 3
The Portfolio's ten largest holdings 5
Financial statements (Fund) 6
Notes to financial statements (Fund) 9
Financial statements (Portfolio) 17
Notes to financial statements (Portfolio) 20
Investments in securities 31
Board members and officers 43
IDS mutual funds 44
<PAGE>
To our shareholders
From the president
If you're an experienced investor, you know that the past two years have
been unusually strong ones in many financial markets. Perhaps just as
important, you also know that history shows that bull markets don't last
forever. Though they're often unpredictable, declines -- whether they're
brief or long-lasting, moderate or substantial -- are always a
possibility.
That fact 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.
William R. Pearce
(picture of )William R. Pearce
President of the Fund
<PAGE>
From the portfolio management team
IDS Managed Allocation Fund provided positive results during the first
half of its fiscal year -- October 1996 through March 1997-- in what
proved to be a volatile period for the U.S. stock and bond markets. For
the six months, the Fund's total return was 5.2% for Class A shares. (This
figure includes a substantial captial gain that was paid to shareholders
last December and reduced the Fund's net asset value by the same amount at
that time.)
The period began with the U.S. stock and bond markets basking in an
environment of low inflation, low interest rates and healthy corporate
profits. Aside from a moderate dip in December, each market recorded a
substantial gain through the end of 1996, enabling the Fund to enjoy its
best performance of the six months.
Rate rise upsets markets
The new year brought considerable change. Stocks continued their advance
until mid-February, when higher long-term interest rates drove them into
retreat. Bonds, on the other hand, got off on the wrong foot almost
immediately, and struggled throughout nearly all of the first quarter
under the perceived threat of higher inflation.
On the foreign front, our stocks in the major European markets were
generally sluggish during the six months. A bright spot, though, were
bonds in emerging markets such as Russia, Mexico, Argentina and Indonesia,
which gave the Fund a nice performance boost.
More-defensive strategy
We continued to keep the portfolio well-diversified during the period, but
we did make some shifts late in 1996 based on our belief that financial
assets, especially stocks, had become more vulnerable to a downturn. These
moves included reducing both the U.S. and foreign stock exposure, and
putting the extra money created by the reductions into cash reserves,
which rose to about 15% of assets. In addition, to avoid the negative
effect of a potential interest-rate rise in the U.S., we shortened the
duration of our U.S. bond holdings and focused our emerging market
investments on securities that are unaffected by rate changes in the U.S.
This more-defensive portfolio structure paid off in the first quarter of
1997, when U.S. interest rates rose and the stock and bond markets hit
tough going.
Heading into the second half of the fiscal year, we're sticking with our
recent structure as we expect the U.S. financial markets to remain
unsettled until interest rates level off. At that point, which could be
some months away, we may take a more aggressive position to capitalize on
what should be a more favorable investment environment.
Steven Merrell
Portfolio team member
(picture of) Steven Merrell
Portfolio team member
<PAGE>
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1997 $ 11.20
Sept. 30, 1996 $ 12.20
Decrease $ 1.00
Distributions
Oct. 1, 1996 - March 31, 1997
From income $ 0.44
From capital gains $ 1.20
Total distributions $ 1.64
Total return* +5.2%**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1997 $ 11.15
Sept. 30, 1996 $ 12.15
Decrease $ 1.00
Distributions
Oct. 1, 1996 - March 31, 1997
From income $ 0.40
From capital gains $ 1.20
Total distributions $ 1.60
Total return* +4.9%**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
March 31 ,1997 $ 11.20
Sept. 30, 1996 $ 12.20
Decrease $ 1.00
Distributions
Oct. 1, 1996 - March 31, 1997
From income $ 0.45
From capital gains $ 1.20
Total distributions $ 1.65
Total return* +5.3%**
*The prospectus discusses the effect of sales charges, if any, on the various
classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
<PAGE>
The Portfolio's ten largest holdings
Percent Value
(of Portfolio's net assets) (as of March 31, 1997)
Royal Dutch Petroleum 1.72% $46,707,500
Coca-Cola 1.62 44,102,138
NationsBank 1.54 41,863,500
UNUM 1.43 38,981,250
$2.34 Cv Pfd
Procter & Gamble 1.43 38,835,500
Federal Natl Mtge Assn 1.33 36,188,712
7.50% 2024-2025
U.S. Treasury 1.18 32,111,680
6.75% 2000
Emerson Electric 1.09 29,592,000
Johnson & Johnson 1.07 29,028,375
CPC Intl 1.06 28,700,000
The ten holdings listed here make up 13.47% of the Portfolio's net assets
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Managed Allocation Fund
March 31, 1997
Assets
(Unaudited)
<S> <C> <C>
Investment in Total Return Portfolio (Note 1) $2,716,420,816
Total assets 2,716,420,816
-------------
Liabilities
Accrued distribution fee 15,897
Accrued service fee 51,147
Accrued transfer agency fee 23,562
Accrued administrative services fee 9,788
Other accrued expenses 431,069
-------
Total liabilities 531,463
-------
Net assets applicable to outstanding capital stock $2,715,889,353
==============
Represented by
Capital stock-- authorized 10,000,000,000 shares of $.01 par value $ 2,426,125
Additional paid-in capital 2,389,426,363
Excess of distributions over net investment income (2,229,352)
Accumulated net realized gain (Note 1) 160,902,826
Unrealized appreciation of investments and on translation of assets
and liabilities in foreign currencies 165,363,391
-----------
Total-- representing net assets applicable to outstanding capital stock $2,715,889,353
==============
Net assets applicable to outstanding shares: Class A $2,416,874,717
Class B $ 189,393,365
Class Y $ 109,621,271
Net asset value per share of outstanding capital stock: Class A shares 215,837,158 $ 11.20
Class B shares 16,985,451 $ 11.15
Class Y shares 9,789,875 $ 11.20
See accompanying notes to financial statements.
<PAGE>
Statement of operations
IDS Managed Allocation Fund
Six months ended March 31, 1997
Investment income
(Unaudited)
Income:
Interest $ 16,020,105
Dividends 28,068,456
----------
Total income 44,088,561
----------
Expenses (Note 2):
Expenses, including investment management services fee
allocated from Total Return Portfolio 6,809,404
Distribution fee -- Class B 671,850
Transfer agency fee 1,785,251
Incremental transfer agency fee-- Class B 11,182
Service fee
Class A 2,164,794
Class B 155,885
Administrative services fees and expenses 439,075
Compensation of board members 5,683
Compensation of officers 7,045
Postage 69,295
Registration fees 139,588
Reports to shareholders 81,206
Audit fees 14,250
Other 4,928
-----
Total expenses 12,359,436
Earnings credits on cash balances (Note 2) (73,950)
- -------
Total net expenses 12,285,486
----------
Investment income -- net 31,803,075
----------
Realized and unrealized gain (loss) -- net
Net realized gain on security and foreign currency transactions 169,566,076
Net realized loss on option contracts written (85,119)
Net realized loss on financial futures contracts (1,527,976)
----------
Net realized gain on investments and foreign currencies 167,952,981
Net change in unrealized appreciation or depreciation of investments and on
translation of assets and liabilities in foreign currencies (54,542,428)
-----------
Net gain on investments and foreign currencies 113,410,553
-----------
Net increase in net assets resulting from operations $145,213,628
============
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
IDS Managed Allocation Fund
Operations and distributions March 31, 1997 Sept. 30, 1996
Six months ended Ten-month
(Unaudited) period ended
Investment income-- net $ 31,803,075 $ 53,050,579
Net realized gain on investments and foreign currencies 167,952,981 319,044,841
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies (54,542,428) (180,937,833)
----------- ------------
Net increase in net assets resulting from operations 145,213,628 191,157,587
----------- -----------
Distributions to shareholders from:
Net investment income
Class A (29,141,426) (47,854,778)
Class B (1,572,629) (1,808,151)
Class Y (1,427,864) (2,284,060)
Net realized gain
Class A (292,030,274) (123,949,698)
Class B (20,916,577) (3,984,417)
Class Y (13,571,619) (5,524,806)
Excess of distributions over net investment income
Class A (2,021,239) --
Class B (109,077) --
Class Y (99,036) --
-------
Total distributions (360,889,741) (185,405,910)
------------ ------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 107,101,766 255,329,365
Class B shares 38,819,843 99,960,524
Class Y shares 14,094,267 31,094,078
Reinvestment of distributions at net asset value
Class A shares 320,325,326 170,362,163
Class B shares 22,470,914 5,759,750
Class Y shares 15,098,235 7,808,866
Payments for redemptions
Class A shares (341,476,757) (507,852,195)
Class B shares (Note 2) (19,990,253) (20,560,821)
Class Y shares (23,176,220) (40,841,448)
----------- -----------
Increase in net assets from capital share transactions 133,267,121 1,060,282
----------- ---------
Total increase (decrease) in net assets (82,408,992) 6,811,959
Net assets at beginning of period 2,798,298,345 2,791,486,386
------------- -------------
Net assets at end of period
(including undistributed (excess of distributions over)
net investment income of ($2,229,352) and $338,844) $2,715,899,353 $2,798,298,345
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS Managed Allocation Fund
(Unaudited as to March 31, 1997)
1. Summary of significant accounting policies
The Fund is a series of IDS Managed Retirement Fund, Inc. and is
registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. The Fund offers Class
A, Class B and Class Y shares. Class A shares are sold with a front-end
sales charge. Class B shares may be subject to a contingent deferred sales
charge and such shares automatically convert to Class A after eight years.
Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend, liquidation and
other rights, and the same terms and conditions, except that the level of
distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative
net assets.
Investment in Total Return Portfolio
Effective May 13, 1996, the Fund began investing all of its assets in
Total Return Portfolio (the Portfolio), a series of Growth and Income
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. Total Return Portfolio seeks to provide shareholders maximum
total return through a combination of growth of capital and current
income.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at the value that is
equal to the Fund's proportionate ownership interest in the net assets of
the Portfolio. The percentage of the Portfolio owned by the Fund at March
31, 1997 was 99.98%. Valuation of securities held by the Portfolio is
discussed in Note 1 of the Portfolio's Notes to Financial Statements,
which are included elsewhere in this report.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
Federal taxes
Since the Fund's policy is to comply with all sections of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to the shareholders, no provision for
income or excise taxes is required.
Net investment income (loss) and net realized gains (losses) allocated
from the Portfolio may differ for financial statement and tax purposes
primarily because of the deferral of losses on certain futures contracts,
the recognition of certain foreign currency gains (losses) as ordinary
income (loss) for tax purposes, and losses deferred due to "wash sale"
transactions. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing
of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains
(losses) were recorded by the Fund.
Dividends to shareholders
Dividends declared and paid each calendar quarter from net investment
income 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.
<PAGE>
2. Expenses and sales charges
In addition to the expenses allocated from the Portfolio, the Fund accrues
its own expenses as follows:
Effective March 20, 1995, the Fund entered into agreements with American
Express Financial Corporation (AEFC) for providing administrative services
and serving as transfer agent.
Under its Administrative Services Agreement, the Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's
average daily net assets in reducing percentages from 0.04% 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, organizational expenses; and any other
expenses properly payable by the Fund approved by the board.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder
accounts and records. The Fund pays AEFC 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.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $2,365,773 for Class A and $77,988 for Class
B for the six months ended March 31, 1997. The Fund also pays custodian
fees to American Express Trust Company, an affiliate of AEFC.
During the six months ended March 31, 1997, the Fund's transfer agency
fees were reduced by $73,950 as a result of earnings credits from
overnight cash balances.
3. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended March 31, 1997
Class A Class B Class Y
Sold 8,961,880 3,252,073 1,172,513
Issued for reinvested 28,379,977 1,999,112 1,337,652
distributions
Redeemed (28,322,454) (1,667,732) (1,966,654)
Net increase 9,019,403 3,583,453 543,511
Ten months ended Sept. 30,1996
Class A Class B Class Y
Sold 21,638,843 8,496,240 2,625,252
Issued for reinvested 14,606,625 494,566 669,065
distributions
Redeemed (42,955,266) (1,743,550) (3,458,284)
Net increase (decrease) (6,709,798) 7,247,256 (163,967)
4. Change of Fund's fiscal year
The By-Laws of the Fund were amended on Jan. 11, 1996, changing it's
fiscal year end from Nov. 30 to Sept. 30, effective 1996.
<PAGE>
<TABLE>
<CAPTION>
5. 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 changes*
Class A
1997*** 1996** 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $12.20 $12.19 $11.29 $12.16 $11.91 $11.08 $9.01 $10.05 $7.48 $6.82 $6.95
beginning of period
Income from investment operations:
Net investment income .14 .24 .21 .13 .17 .21 .20 .27 .26 .16 .13
Net gains (losses) .50 .58 1.65 .03 1.07 2.04 2.45 (.39) 2.51 .66 (.13)
(both realized and
unrealized)
Total from investment .64 .82 1.86 .16 1.24 2.25 2.65 (.12) 2.77 .82 --
operations
Less distributions:
Dividends from net (.15) (.23) (.16) (.12) (.19) (.21) (.27) (.25) (.20) (.16) (.13)
investment income
Distributions from (1.49) (.58) (.80) (.90) (.80) (1.20) (.31) (.67) -- -- --
realized gains
Excess distributions of -- -- -- (.01) -- (.01) -- -- -- -- --
realized gains
Total distributions (1.64) (.81) (.96) (1.03) (.99) (1.42) (.58) (.92) (.20) (.16) (.13)
Net asset value, $11.20 $12.20 $12.19 $11.29 $12.16 $11.91 $11.08 $9.01 $10.05 $7.48 $6.82
end of period
Ratios/supplemental data
Class A
1997*** 1996** 1995 1994 1993 1992 1991 1990 1989 1988 1987
Net assets, end of $2,417 $2,523 $2,602 $2,252 $1,845 $1,425 $1,007 $715 $700 $644 $673
period (in millions)
Ratio of expenses to .84%+ .80%+ .83% .85% .83% .85% .90% .90% .92% .88% .88%
average daily net assets#
Ratio of net income to 2.31%+ 2.29%+ 1.85% 1.13% 1.46% 1.94% 1.98% 2.94% 2.82% 2.07% 1.83%
average daily net assets
Portfolio turnover rate 47% 142% 90% 66% 61% 46% 81% 78% 73% 102% 87%
(exluding short-term
securities) for the
underlying Portfolio
Total return++ 5.2% 7.1% 18.0% 1.0% 11.2% 22.3% 30.9% (1.2%) 37.3% 12.0% (0.3%)
Average brokerage $.0330 $.0303 -- -- -- -- -- -- -- -- --
commission rate for the
underlying Portfolio+++
*For a share outstanding throughout the period. Rounded to the nearest cent.
**The Fund's fiscal year-end was changed from Nov. 30 to Sept. 30, effective 1996.
***Six months ended March 31, 1997 (Unaudited).
#Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales charge.
+++Effective fiscal year 1996, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of portfolio
securities for the period by the total number of related shares purchased
and sold.
<PAGE>
Fiscal period ended Sept. 30,
Per share income and capital changes*
Class B Class Y
1997# 1996** 1995*** 1997# 1996** 1995***
Net asset value, $12.15 $12.16 $10.41 $12.20 $12.19 $10.41
beginning of period
Income from investment operations:
Net investment income .10 .15 .11 .15 .26 .16
Net gains (both .50 .57 1.74 .50 .58 1.76
realized and unrealized)
Total from investment .60 .72 1.85 .65 .84 1.92
operations
Less distributions:
Dividends from net (.11) (.15) (.10) (.16) (.25) (.14)
investment income
Distributions from (1.49) (.58) -- (1.49) (.58) --
realized gains
Total distributions (1.60) (.73) (.10) (1.65) (.83) (.14)
Net asset value, $11.15 $12.15 $12.16 $11.20 $12.20 $12.19
end of period
Ratios/supplemental data
Class B Class Y
1997# 1996** 1995*** 1997# 1996** 1995***
Net assets, end of $189 $163 $75 $110 $113 $115
period (in millions)
Ratio of expenses to 1.60%+ 1.57%+ 1.58%+ .67%+ .63%+ .65%+
average daily net assets##
Ratio of net income to 1.57%+ 1.61%+ .94%+ 2.47%+ 2.45%+ 1.95%+
average daily net assets
Portfolio turnover rate 47% 142% 90% 47% 142% 90%
(excluding short-term
securities) for the
underlying Portfolio
Total return++ 4.9% 6.5% 17.7% 5.3% 7.3% 18.4%
Average brokerage $.0330 $.0303 -- $.0303 $.0303 --
commission rate for the
underlying Portfolio+++
*For a share outstanding throughout the period. Rounded to the nearest cent.
**The Fund's fiscal year-end was changed from Nov. 30 to Sept. 30, effective 1996.
***Inception date was March 20, 1995 for Class B and Class Y.
#Six months ended March 31, 1997 (Unaudited).
##Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales charge.
+++Effective fiscal year 1996, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of portfolio
securities for the period by the total number of related shares purchased
and sold.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
Total Return Portfolio
March 31, 1997
Assets
<S> <C>
(Unaudited)
Investments in securities, at value (Note 1)
Investments in securities of unaffiliated issuers
(identified cost $2,613,103,704) $2,787,732,044
Investments in securities of affiliated issuers
(identified cost $16,709,176) 6,765,000
Dividends and accrued interest receivable 11,461,076
Receivable for investment securities sold 129,731,294
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 4) 29,765
U.S. government securities held as collateral (Note 5) 10,694,263
- ----------
Total assets 2,946,413,442
-------------
Liabilities
Disbursements in excess of cash on demand deposit 1,358,434
Payable for investment securities purchased 66,680,606
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 4) 41,136
Payable upon return of securities loaned (Note 5) 160,953,113
Accrued investment management services fee 148,255
Other accrued expenses 184,782
-------
Total liabilities 229,366,326
-----------
Net assets $2,717,047,116
==============
See accompanying notes to financial statements.
<PAGE>
Statement of operations
Total Return Portfolio
Six months ended March 31, 1997
Investment Income
(Unaudited)
Income:
Interest $ 28,047,942
Dividends (net of foreign taxes withheld of $601,063) 16,023,591
----------
Total income 44,071,533
----------
Expenses (Note 2):
Investment management services fee 6,308,880
Compensation of board members 15,418
Custodian fees 444,890
Audit fees 14,250
Administrative services fees and expenses 15,119
Other 16,605
------
Total expenses 6,815,162
Earnings credits on cash balances (Note 2) (4,283)
- ------
Total net expenses 6,810,879
---------
Investment income -- net 37,260,654
----------
Realized and unrealized gain (loss) -- net
Net realized gain on security and foreign currency transactions
(including gain of $1,605,311 from foreign currency transactions) (Note 3) 170,781,999
Net realized loss on sale of affiliated issuer (1,184,513)
Net realized loss on option contracts written (Note 7) (85,137)
Net realized loss on financial futures contracts (1,528,313)
----------
Net realized gain on investments and foreign currencies 167,984,036
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies (54,550,752)
-----------
Net gain on investments and foreign currencies 113,433,284
-----------
Net increase in net assets resulting from operations $150,693,938
============
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
Total Return Portfolio
Operations
Six months ended For the period from
March 31 ,1997 May 13, 1996* to
(Unaudited) Sept. 30 ,1996
Investment income-- net $ 37,260,654 $ 31,175,277
Net realized gain on investments and foreign currencies 167,984,036 26,015,535
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies (54,550,752) 75,342,945
----------- ----------
Net increase in net assets resulting from operations 150,693,938 132,533,757
Net contributions (withdrawals) (232,836,687) 2,666,631,108
------------ -------------
Total increase (decrease) in net assets (82,142,749) 2,799,164,865
Net assets at beginning of period (Note 1) 2,799,189,865 25,000
- ------------- ------
Net assets at end of period $2,717,047,116 $2,799,189,865
============== ==============
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Total Return Portfolio
(Unaudited as to March 31, 1997)>
1. Summary of significant accounting policies
Total Return 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. Total Return Portfolio seeks to provide maximum total return
through a combination of growth of capital and current income by investing
in U.S. equity securities, U.S. and foreign debt securities, foreign
equity securities and money market instruments. The Declaration of Trust
permits the Trustees to issue non-transferable interests in the Portfolio.
On April 15, 1996, American Express Financial Corporation (AEFC)
contributed $25,000 to the Portfolio. Operations did not formally commence
until May 13, 1996, at which time, an existing fund transferred its assets
to the Portfolio in return for an ownership percentage of the Portfolio.
Significant accounting polices followed by the Portfolio are summarized
below:
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities
traded on national securities exchanges or included in national market
systems are valued at the last quoted sales price; securities for which
market quotations are not readily available, including illiquid
securities, are valued at fair value according to methods selected in good
faith by the board. Determination of fair value involves, among other
things, reference to market indexes, matrixes and data from independent
brokers. Short-term securities maturing in more than 60 days from the
valuation date are valued at the market price or approximate market value
based on current interest rates; those maturing in 60 days or less are
valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate
buying and selling of securities for investment purposes, the Portfolio
may buy or write options traded on any U.S. or foreign exchange or in the
over-the-counter market where the completion of the obligation is
dependent upon the credit standing of the other party. The Portfolio also
may buy 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 Portfolio gives up the opportunity of
profit if the market price of the security increases. The risk in writing
a put option is that the Portfolio may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an
option is that the Portfolio pays a premium whether or not the option is
exercised. The Portfolio also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The
Portfolio will realize a gain or loss upon expiration or closing of the
option transaction. When an option is exercised, the proceeds on sales for
a written call option, the purchase cost for a written put option or the
cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Portfolio may buy and sell financial futures contracts traded on any
U.S. or foreign exchange. The Portfolio also may buy or write put and call
options on these futures contracts. Risks of entering into futures
contracts and related options include the possibility that there may be an
illiquid market and that a change in the value of the contract or option
may not correlate with changes in the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to
deposit either cash or securities in an amount (initial margin) equal to a
certain percentage of the contract value. Subsequent payments (variation
margin) are made or received by the Portfolio each day. The variation
margin payments are equal to the daily changes in the contract value and
are recorded as unrealized gains and losses. The Portfolio recognizes a
realized gain or loss when the contract is closed or expires.
Foreign currency translations and
foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities and income and expenses are translated at the exchange rate on
the transaction date. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net
realized gains or losses from foreign currency transactions may arise from
sales of foreign currency, closed forward contracts, exchange gains or
losses realized between the trade date and settlement dates on securities
transactions, and other translation gains or losses on dividends, interest
income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts
for operational purposes and to protect against adverse exchange rate
fluctuation. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Portfolio and the resulting unrealized
appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Portfolio is
subject to the credit risk that the other party will not complete the
obligations of the contract.
Illiquid securities
Investments in securities included issues that are illiquid. The Portfolio
currently limits investments in illiquid securities to 10% of the net
assets, at market value, at the time of purchase. The aggregate value of
such securities at March 31, 1997 was $14,956,950 representing 0.55% of
the net assets. Pursuant to guidelines adopted by the board, certain
unregistered securities are determined to be liquid and are not included
within the 10% limitation specified above.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the
Portfolio on a forward-commitment or when-issued basis can take place one
month or more after the transaction date. During this period, such
securities are subject to market fluctuations, and they may affect the
Portfolio's net assets the same as owned securities. The Portfolio
designates cash or liquid high-grade debt securities at least equal to the
amount of its commitment. As of March 31, 1997, the Portfolio had entered
into outstanding when-issued or forward-commitments of $3,732,430.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership
and each investor in the Portfolio is treated as the owner of its
proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Portfolio. Accordingly, as a
"pass-through" entity, the Portfolio does not pay any income dividends or
capital gain distributions.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
and interest income, including level-yield amortization of premium and
discount, is accrued daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment
Management Services Agreement with AEFC for managing its portfolio. Under
this agreement, AEFC determines which securities will be purchased, held
or sold. The management fee is a percentage of the Portfolio's average
daily net assets in reducing percentages from 0.53% to 0.40% 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 Managed Allocation
Fund to the Lipper Growth and Income Fund Index. Subsequently, the index
used changed to Lipper Flexible Portfolio Fund Index as of July 1996. The
maximum adjustment is 0.08% of the Portfolio's average daily net assets on
an annual basis. The adjustment decreased the fee by $509,802 for the six
months ended March 31, 1997.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees to be paid to an
affiliate of AEFC, 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, approved by the
board.
During the six months ended March 31, 1997, the Portfolio's custodian fees
were reduced by $4,283 as a result of earnings credits from overnight cash
balances.
Pursuant to a Placement Agency Agreement, American Express Financial
Advisors Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $1,215,447,560 and $1,711,115,837,
respectively, for the six months ended March 31, 1997. For the same
period, the portfolio turnover rate was 47%. Realized gains and losses are
determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $154,169
for the six months ended March 31, 1997.
4. Foreign currency contracts
At March 31, 1997, the Portfolio had entered into five foreign currency
exchange contracts that obligate the Portfolio to deliver currencies at
specified future dates. The unrealized appreciation and/or depreciation
(see Summary of significant accounting policies) on these contracts is
included in the accompanying financial statements. The terms of the open
contracts are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
April 1, 1997 631,444 1,016,050 $ -- $22,801
British Pound U.S. Dollar
April 1, 1997 522,878 309,029 -- 4,447
Deutsche Mark U.S. Dollar
April 2, 1997 673,046 401,915 -- 1,590
Deutsche Mark U.S. Dollar
April 3, 1997 4,357,125 2,599,887 -- 12,298
Deutsche Mark U.S. Dollar
April 10, 1997 1,429,540 2,736,854 29,765 --
U.S. Dollar Dutch Guilder
------- -------
$29,765 $41,136
5. Lending of portfolio securities
At March 31, 1997, securities valued at $155,386,041 were on loan to
brokers. For collateral, the Portfolio received $150,258,850 in cash and
government securities valued at $10,694,263. Income from securities
lending amounted to $260,898 for the six months ended March 31, 1997. 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.
6. Interest rate futures contracts
At March 31, 1997, investments in securities included securities valued at
$20,809,500 that were pledged as collateral to cover initial margin
deposits on 400 open sale contracts. The market value of the open sale
contracts at March 31, 1997 was $42,371,875 with a net unrealized gain
(see Summary of significant accounting policies) of $675,313.
7. Option contracts written
The number of contracts and premium amounts associated with option
contracts written (see Summary of significant accounting policies) is as
follows:
Period ended March 31, 1997
Calls
Contracts Premium
Balance Sept. 30, 1996 -- $ --
Opened 49,000 107,800
Closed (49,000) (107,800)
Balance March 31, 1997 -- $ --
<PAGE>
Investments in securities
Total Return Portfolio
March 31, 1997 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Investments in securities of unaffiliated issuers
Common stocks (67.2%)
Issuer Shares Value(a)
Aerospace & defense (1.2%)
Allied Signal 25,000 $ 1,781,250
Boeing 42,066 4,148,759
General Dynamics 22,000 1,482,250
Raytheon 496,200 22,391,025
Rockwell Intl 30,000 1,946,250
United Technologies 20,000 1,505,000
Total 33,254,534
Airlines (0.5%)
AMR 166,300 13,719,750
Automotive & related (1.6%)
Chrysler 523,800(c) 15,714,000
Ford Motor 189,700 5,951,837
General Motors 375,700 20,804,387
Total 42,470,224
Banks and savings & loans (4.0%)
Bank of Boston 350,000 23,450,000
Barnett Banks 127,000(d) 5,905,500
Citicorp 120,000 12,990,000
First Union 112,964 9,164,205
KeyCorp 115,800 5,645,250
Mellon Bank 58,200 4,234,050
NationsBank 756,000 41,863,500
Norwest 124,800 5,772,000
Total 109,024,505
Beverages & tobacco (2.4%)
Anheuser-Busch 520,200 21,913,425
Coca-Cola 789,300 44,102,138
Total 66,015,563
Building materials & construction (0.7%)
Georgia-Pacific 13,200 957,000
Tyco Intl 279,100 15,350,500
Weyerhaeuser 69,100 3,083,587
Total 19,391,087
Chemicals (0.1%)
Monsanto 64,500 2,467,125
Communications equipment & services (0.1%)
Tellabs 50,000(b) 1,806,250
Computers & office equipment (4.2%)
Cisco Systems 121,900(b) 5,866,438
Compaq Computer 152,600(b) 11,692,975
Computer Associates Intl 230,500 8,960,687
Computer Sciences 5,530(b) 341,477
Dell Computer 32,000(b) 2,164,000
First Data 372,800 12,628,600
Hewlett-Packard 235,000 12,513,750
Ikon Office Solutions 307,000 10,284,500
Microsoft 215,400(b) 19,749,487
Oracle 357,450(b) 13,784,166
Seagate Technology 45,000 (b) 2,019,375
Silicon Graphics 465,800(b) 9,083,100
3Com 171,300(b) 5,610,075
Total 114,698,630
Electronics (1.0%)
AMP 90,000 3,093,750
Intel 150,000 20,868,750
LSI Logic 27,500(b) 955,625
Natl Semiconductor 50,000(b) 1,375,000
Thomas & Betts 5,974 255,388
Total 26,548,513
Energy (0.6%)
Unocal 410,000 15,631,250
Financial services (0.7%)
Federal Home Loan
Mortgage 380,400 10,365,900
Travelers Group 164,000 7,851,500
Total 18,217,400
Food (1.6%)
CPC Intl 350,000 28,700,000
Quaker Oats 400,000 14,600,000
Total 43,300,000
Health care (6.8%)
ALZA 228,100(b) 6,272,750
American Home Products 409,200 24,552,000
Amgen 191,000(b) 10,672,125
Baxter Intl 300,000 12,937,500
Boston Scientific 91,400(b) 5,643,950
Bristol-Myers Squibb 387,400 22,856,600
Guidant 95,000 5,842,500
Johnson & Johnson 549,000 29,028,375
Lilly (Eli) 209,100 17,198,475
Medtronic 151,300 9,418,425
Merck 153,600 12,940,800
Pfizer 69,100 5,813,037
Pharmacia & Upjohn 13,200 483,450
Schering-Plough 300,000 21,825,000
Total 185,484,987
Health care services (1.1%)
Service Corp Intl 568,400 16,909,900
Tenet Healthcare 300,000(b) 7,387,500
United Healthcare 112,300 5,348,287
Total 29,645,687
Household products (1.8%)
Colgate-Palmolive 50,000 4,981,250
Gillette 81,800 5,940,725
Procter & Gamble 337,700 38,835,500
Total 49,757,475
Industrial equipment & services (1.5%)
Deere & Co 377,300 16,412,550
General Signal 383,200 14,992,700
Illinois Tool Works 126,000 10,284,750
Total 41,690,000
Insurance (0.7%)
AON 26,900 1,647,625
Providian 294,000 15,729,000
Total 17,376,625
Media (--%)
CS Wireless Systems 2,255(o) --
Metals (1.0%)
Aluminum Co of America 330,800 22,494,400
Freeport McMoRan Copper
& Gold Cl B 150,000 4,556,250
Total 27,050,650
Multi-industry conglomerates (2.4%)
Emerson Electric 657,600 29,592,000
General Electric 227,300 22,559,525
Honeywell 45,000 3,054,375
Minnesota Mining & Mfg 93,300 7,883,850
Westinghouse Electric 148,000 2,627,000
Total 65,716,750
Paper & packaging (0.7%)
Champion Intl 8,500 386,750
Crown Cork & Seal 270,600 13,969,725
Intl Paper 72,800 2,830,100
Jefferson Smurfit 615,500 1,625,252
Total 18,811,827
Restaurants & lodging (0.3%)
Hilton Hotels 280,000 6,790,000
Retail (3.0%)
American Stores 300,000 13,350,000
AutoZone 190,000(b) 4,275,000
CUC Intl 370,000(b) 8,325,011
Federated Dept Stores 170,500(b) 5,605,188
Kroger 101,600(b) 5,156,200
Lowe's 187,500 7,007,813
Rite Aid 268,500 11,277,000
Wal-Mart Stores 966,700 26,946,762
Total 81,942,974
Textiles & apparel (0.1%)
Nike Cl B 41,400 2,566,800
Utilities--gas (0.5%)
Sonat 248,850 13,562,325
Utilities--telephone (2.8%)
AirTouch Communications 646,600(b) 14,871,800
Ameritech 175,000 10,762,500
BellSouth 260,000 10,985,000
GTE 270,000 12,588,750
MCI Communications 697,000 24,830,625
WorldCom 140,000(b) 3,080,000
Total 77,118,675
Foreign (25.8%)(e)
Australia (1.2%)
Broken Hill Proprietary 63,895 851,539
MIM Holdings 2,621,088 3,513,715
Pasminco 3,807,000 7,344,857
Westpac Banking 1,359,000(d) 7,883,881
WMC Limited 740,900(b,d) 4,681,483
Woodside Petroleum 1,145,000 8,432,278
Total 32,707,753
Austria (0.1%)
Boehler-Uddeholm 43,600(b,f) 3,015,690
Brazil (0.4%)
CEMIG 85,000(b) 3,570,000
Petroleo Brasileiro 170,000 3,421,250
Telebras ADR 33,000 3,378,375
Total 10,369,625
Canada (0.6%)
Northern Telecommunications257,800 16,853,675
Toronto-Dominion Bank 3,257 82,116
Total 16,935,791
France (2.2%)
Accor 61,732 8,993,994
Credit Commercial de France230,000(b) 11,040,164
Groupe AB 332,900(b) 3,204,163
Lafarge-Coppee 137,115 9,519,535
Lyonnaise des Eaux 98,555(b) 10,093,352
Michelin Cl B 134,050 7,986,415
SGS-THOMSON
Microelectronics 48,280 3,396,669
Total Petroleum Cl B 81,000 7,024,472
Total 61,258,764
Germany (1.7%)
Bayer 217,000(d) 9,022,144
Daimler-Benz Aktieng 115,000(b) 9,197,242
Degussa 2,097(d) 895,122
Deutsche Telekom 483,921(b,d) 11,111,615
Hoechst 238,050(d) 9,640,454
SGL Carbon 47,170(b) 6,475,977
Total 46,342,554
Hong Kong (1.8%)
Cheung Kong Holdings 1,048,000 9,230,710
Hong Kong
Telecom 2,000,000 3,419,928
HSBC Holdings 594,000 13,798,444
HSBC Holdings Group 121,797(b) 2,993,678
Hutchison Whampoa 569,000 4,277,395
New World Development 1,534,000(b) 8,275,091
Sun Hung Kai Properties 620,000 6,561,100
Wharf Holdings 410,000 1,568,844
Total 50,125,190
Italy (1.3%)
Credito Italiano 3,421,840(b) 4,864,152
ENI 2,468,420(d) 12,547,522
Stet Risp 2,196,600 7,799,593
Telecom Italia 4,170,900(b,d) 10,431,938
Total 35,643,205
Japan (3.7%)
Banyu Pharmaceutical 260,000 3,952,454
Dai Nippon Printing 370,000(b) 6,193,094
Denso 113,000 2,220,344
Fujitsu 457,000 4,656,101
Kirin Brewery 519,000 4,280,585
Mitsubishi Materials 1,057,000(b) 3,692,277
Mitsubishi Motors 409,000(b) 3,032,692
Mitsumi Electric 340,000(d) 6,240,802
NEC 645,000(b) 7,301,690
Nippon Express 710,000 4,730,654
Nippon Steel 1,746,000(b) 4,800,194
Secom 113,000(b) 6,350,368
Shinko Electric 133,000 4,581,386
Sony Corp ADR 81,000(b) 5,665,481
Sumitomo Electric Inds ADR 260,000(b) 3,531,980
Sumitomo Trust & Banking 1,050,000(b) 7,063,960
Takashimaya 471,000 4,532,142
TDK 160,000(b) 10,997,008
Yasuda Fire & Marine 1,260,000(b) 6,214,926
Total 100,038,138
Malaysia (0.4%)
Perushaan Otomobil 309,000(b) 1,957,551
Tenaga Nasional Bhd 393,000(b) 1,918,813
United Engineers Malaysia 810,000(b) 7,059,820
Total 10,936,184
Mexico (0.5%)
Cemex ADR Cl B 724,000(d) 5,882,500
Grupo Industrial 1,044,000 5,859,617
Grupo Televisa 35,700 888,038
Total 12,630,155
Netherlands (3.5%)
Akzo Nobel 44,040(b) 6,326,149
Gucci 94,300(b) 6,898,590
Intl Nederlanden Groep 204,000(b) 8,038,391
Philips Electronics NV 348,150 16,243,102
Royal Dutch Petroleum 266,900 46,707,500
Schlumberger 25,000 2,681,250
Unilever 330,400 8,778,705
Total 95,673,687
New Zealand (0.1%)
Carter Holt Harvey 1,068,000(b) 2,262,916
Phillipines (0.1%)
Manila Electric 220,000(b) 1,752,323
Singapore (2.0%)
City Developments 1,161,000(b) 10,287,850
Fraser & Neave 449,000 3,667,843
Keppel 591,000(b) 3,723,157
Malayan Banking 948,000 10,806,415
Overseas Chinese Banking 376,200 4,479,501
Overseas Union Bank 771,000 5,310,799
Sime Darby 1,486,000(b) 5,426,530
Straits Steamship Land 1,901,000 5,869,476
United Overseas Bank 398,000 4,077,812
Total 53,649,383
South Korea (0.1%)
Samsung Electronics 20,100 1,606,676
Spain (0.4%)
Repsol 81,360 3,397,799
Telefonica de Espana 310,050(b) 7,494,749
Total 10,892,548
Sweden (0.7%)
Asea Free Cl B 74,490(d) 8,448,809
Ericsson (LM) Tel Cl B ADR 320,160 11,310,670
Total 19,759,479
Switzerland (1.5%)
Ciba Specialty Chemicals 17,100(b) 1,414,107
CS Holdings 66,069(d) 7,931,494
La-Roche Holdings 1,150(b) 9,945,622
Novartis 17,100(b) 21,223,489
Total 40,514,712
United Kingdom (3.5%)
British Gas 2,156,920 5,766,405
EMI Group 204,347 3,748,530
Glaxo Wellcome 855,425 15,712,978
Granada Group 509,260 7,687,117
Great Universal Stores 1,042,000 11,442,919
Johnson Matthey 316,230 2,843,224
Kingfisher 906,980(b) 10,452,584
Lloyds TSB Group 639,900 5,258,543
NFC 2,065,378(b) 5,623,611
Premier Farnell 462,030(b) 3,534,606
Redland 952,400 5,640,787
Shell Transport & Trading 449,488 8,027,231
Siebe 593,402(b) 10,021,340
Total 95,759,875
Total common stocks of unaffiliated issuers
(Cost: $1,649,666,310) $1,825,934,254
Preferred stocks & other (1.9%)
Issuer Shares Value(a)
AKZO
Warrants 82,040 $ 1,093,604
Bar Technologies
Warrants 3,000 150,000
BNP
Warrants 125,500 1,246,171
Henkel 140,400 7,743,885
5.35%
Paxson Communications
12.5% Pay-in-kind 19,700(m) 1,945,375
Straits Steamship
Warrants 303,000(b) 316,739
Station Casinos
7% Cv 15,000 646,875
UNUM
$2.34 Cv 550,000 38,981,250
Total preferred stocks & other
(Cost: $43,201,931) $52,123,899
<TABLE>
<CAPTION>
Bonds (16.0%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
U.S. government obligations (2.9%)
<S> <C> <C> <C> <C>
U.S. Treasury 3.375% 2007 $ 8,008,320 $ 7,875,622
5.75 1997 26,000,000 26,005,980
6.25 2023 14,700,000(c) 13,043,310
6.75 2000 32,000,000(c) 32,111,680
Total 79,036,592
Mortgage-backed securities (2.7%)
Federal Home Loan Mtge Corp 7.00 2026 182,063 174,644
7.50 2025 27,678,102 27,262,930
8.50 2026 7,050,433 7,228,815
Federal Natl Mtge Assn 7.00 2025 98,892 94,645
7.50 2024-25 36,781,628 36,188,712
Structured Assets Securities Corp
Collateralized Mtge Obligation 6.76 2028 2,500,000 2,473,047
Total 73,422,793
Aerospace & defense (0.3%)
Alliant Techsystems
Sr Sub Nts 11.75 2003 2,000,000 2,192,500
Newport News Ship 8.625 2006 800,000 820,000
Northrop Grumman 7.75 2016 5,000,000 4,812,850
Total 7,825,350
Airlines (0.2%)
Northwest Airlines Cl B 8.07 2015 3,968,199 3,964,825
Northwest Airlines Cl C 8.97 2015 1,973,418 2,017,307
Total 5,982,132
Banks & savings and loans (0.1%)
First Nationwide 10.625 2003 1,960,000(f) 2,072,700
U.S. Trust Capital A 8.40 2027 1,500,000(f) 1,482,585
Total 3,555,285
Building materials & construction (0.2%)
AAF McQuay
Sr Nts 8.875 2003 3,330,000 3,267,563
Southdown 10.00 2006 2,350,000 2,502,750
Total 5,770,313
Communications equipment & services (0.7%)
Geotek Communications
Cv 12.00 2001 2,780,000(g) 2,363,000
Intl Cable Telephone
Cv 7.25 2005 14,500,000 14,282,500
Shared Technologies
Zero Coupon Cv 12.25 2006 4,250,000(h) 3,500,938
Total 20,146,438
Electronics (0.2%)
Thomas & Betts 6.50 2006 4,500,000 4,167,270
Energy (0.1%)
Forcenergy
Sr Sub Nts 9.50 2006 1,000,000 992,500
Transamerican Refining 18.00 2002 $2,000,000(i) 1,835,000
Total 2,827,500
Energy equipment & services (0.2%)
Cliff's Drilling
Sr Nts 10.25 2003 3,500,000 3,657,500
Noble Drilling 9.125 2006 1,000,000 1,070,000
Total 4,727,500
Financial services (0.2%)
Cityscape Financial 11.00 1998 6,000,000(g) 6,000,600
Furniture & appliances (0.2%)
Interface 9.50 2005 2,500,000 2,575,000
Lifestyle Furnishings 10.875 2006 3,250,000 3,461,250
Total 6,036,250
Health care (0.2%)
Dade Intl
Sr Sub Nts 11.125 2006 2,000,000 2,247,500
Lilly (Eli) 6.77 2036 5,000,000 4,389,250
Total 6,636,750
Health care services (0.4%)
Manor Care 7.50 2006 7,000,000 6,930,350
Owens & Minor
Sr Sub Nts 10.875 2006 1,200,000 1,293,000
Tenet Healthcare
Sr Nts 8.625 2003 2,000,000 2,035,000
Total 10,258,350
Industrial equipment & services (0.1%)
AGCO 8.50 2006 2,800,000 2,852,500
Insurance (0.7%)
American United Life 7.75 2026 5,000,000(g) 4,573,350
Executive Risk Capital Trust 8.675 2027 1,500,000 1,470,720
Metropolitan Life 7.80 2025 4,800,000(f) 4,568,688
Minnesota Mutual Life 8.25 2025 4,500,000(f) 4,579,335
Nationwide Trust
Credit Sensitive Nts 9.875 2025 3,500,000 3,735,060
Total 18,927,153
Leisure time & entertainment (0.1%)
Trump Atlantic City Funding
1st Mtge 11.25 2006 3,725,000 3,454,937
Media (1.2%)
Cablevision Systems
Sr Sub Deb 10.50 2016 3,000,000 3,022,500
CS Wireless Systems
Zero Coupon 11.38 2001 8,200,000(h) 2,583,000
Heritage Media Services
Sr Sub Nts 8.75 2006 5,000,000 5,175,000
Lamar Advertising 9.625 2006 800,000 806,000
News American Holdings 10.125 2012 2,175,000 2,428,148
Time Warner 9.15 2023 10,000,000 10,651,500
Univision Network
Zero Coupon 15.18 2002 7,500,000(h) 6,965,625
Total 31,631,773
Metals (0.1%)
Bar Technologies 13.50 2001 3,000,000(f) 2,992,500
Retail (0.7%)
Dayton Hudson 8.50 2022 2,500,000 2,476,325
Grand Union 12.00 2004 2,500,000(d) 2,456,250
Kroger 8.15 2006 5,000,000 5,075,000
Wal-Mart Stores 7.00 2006 9,711,323 9,596,341
Total 19,603,916
Transportation (0.1%)
Enterprise Rent-A-Car
Medium-term Nts 6.95 2006 3,000,000(f) 2,865,000
Utilities--electric (0.4%)
El Paso Electric
1st Mtge 7.75 2001 5,000,000 4,987,450
Public Service Electric & Gas
1st Mtge 6.75 2016 7,365,000 6,750,464
Total 11,737,914
Utilities--gas (0.2%)
Columbia Gas System 7.32 2010 5,043,000 4,768,409
Utilities--telephone (0.3%)
Omnipoint
Sr Nts 11.625 2006 5,000,000 4,200,000
WorldCom 7.75 2007 3,000,000 2,971,290
Total 7,171,290
Miscellaneous (0.7%)
Adams Outdoor Advertising
Sr Nts 10.75 2006 3,900,000 4,095,000
Outsourcing Solutions 11.00 2006 1,075,000(f) 1,134,125
Pierce Leahy
Sr Sub Nts 11.125 2006 750,000 821,250
Prime Succession
Sr Sub Nts 10.75 2004 1,275,000 1,373,813
SC Intl 13.00 2005 4,000,000 4,440,000
USI American Holdings
Sr Nts 7.25 2006 3,500,000(f) 3,318,350
Unifi Communications
with Warrants 14.00 2004 3,000,000(f) 2,970,000
Total 18,152,538
Foreign (2.8%)(e)
Airplanes GPA Cl D
(U.S. Dollar) 10.875 2019 2,750,000 $3,011,250
ALFA Bank Loan Participation
(U.S. Dollar) 11.10 1997 1,000,000(i) 1,000,000
Banque Audi
(U.S. Dollar) Sr Unsub Nts 9.375 2001 1,000,000(f) 1,025,000
CEI Citicorp
(Argentine Peso) 8.50 2002 1,000,000(f) 986,250
(U.S. Dollar) 11.25 2007 2,000,000(f) 1,912,500
Celestica Intl
(U.S. Dollar) Sr Sub Nts 10.50 2006 1,000,000 1,076,250
Corp Andina De Fomento
(U.S. Dollar) 7.10 2003 6,500,000 6,336,070
Dao Heng Bank
(U.S. Dollar) Sr Sub Nts 7.75 2007 2,500,000(f) 2,440,625
Dominion Textiles
(U.S. Dollar) 9.25 2006 3,500,000 3,570,000
FSW Intl
(U.S. Dollar) Sr Nts 12.50 2006 2,250,000 2,306,250
Globo Communicacoes
(U.S. Dollar) 10.50 2006 500,000(f) 507,500
Govt of Poland PDI Euro
(U.S. Dollar) 3.75 2014 4,150,000(i) 3,299,250
Govt of Russia
(U.S. Dollar) 6.60 2049 2,500,000(l) 1,681,250
(U.S. Dollar) 9.25 2001 850,000(f) 830,875
Grupo Televisa
(U.S. Dollar) Sr Nts 11.375 2003 2,750,000 2,901,250
GST Telecommunications
(U.S. Dollars) Zero Coupon Cv 0.42 2000 1,000,000(h) 765,000
Imexsa Export Trust
(U.S. Dollar) 10.125 2003 3,000,000(f) 3,048,750
MDC Communications
(U.S. Dollar) 10.50 2006 1,000,000 1,035,000
Perez Companc
(U.S. Dollar) 9.00 2004 1,000,000(f) 972,500
Phillipine Long Distance
(U.S. Dollar) 7.85 2007 1,250,000(f) 1,181,138
(U.S. Dollar) 8.35 2017 1,000,000(f) 931,250
PLD Telekom
(U.S. Dollar)
Zero Coupon with Warrants 16.19 2004 3,000,000(h) 2,587,500
Plitt Theatres
(U.S Dollar) 10.875 2004 5,000,000 5,037,500
Polysindo Intl Finance
(U.S. Dollar) 11.375 2006 1,375,000 1,476,406
Ras Laffan Liquid Natural Gas
(U.S. Dollar) 8.30 2014 5,000,000 5,024,050
Republic of Brazil
(U.S. Dollar) C Bonds 8.00 2014 2,753,425(i) 2,047,860
Republic of Columbia
(U.S. Dollar) 8.70 2016 2,250,000 2,238,750
Republic of Panama
(U.S. Dollar) 7.875 2002 1,000,000(f) 973,280
Russian Principal Loans
(U.S. Dollar) Zero Coupon 6.38 2020 3,500,000(h,l) 1,960,000
Rogers Cantel Mobile
(U.S. Dollar) 9.375 2008 2,800,000 2,870,000
Transport Martima Mex
(U.S. Dollar) 10.00 2006 1,525,000 1,465,906
Veninfotel
Pay-in-kind Cv 10.00 2002 2,000,000(g,m) 2,020,000
Vneshekonom
(U.S. Dollar) Zero Coupon 8.10 1997 1,000,000 (n) 781,250
Zhuhai Highway
(U.S. Dollar) 11.50 2008 5,000,000(f) 5,643,750
Total 74,944,210
Total bonds
(Cost: $445,838,163) $435,495,263
</TABLE>
Short-term securities (17.5%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agency (0.1%)
Federal Natl Mtge Assn Disc Nt
04-04-97 5.26% $1,700,000 $ 1,699,257
Certificate of deposit (0.7%)
Morgan Guaranty
04-28-97 5.40 20,000,000 19,909,874
Commercial paper (16.4%)
ABB Treasury Center USA
04-30-97 5.57 10,000,000(j) 9,955,292
05-08-97 5.36 2,700,000(j) 2,685,237
Ameritech Capital Funding
04-14-97 5.37 4,600,000(j) 4,590,540
04-29-97 5.30 4,476,000(j) 4,456,392
ANZ (Delaware)
05-01-97 5.41 1,400,000 1,393,401
Associates Corp North America
04-07-97 5.32 10,200,000 10,191,024
Bank of America
06-02-97 5.41 10,700,000 10,694,365
Barclays U.S. Funding
04-16-97 5.31 10,000,000 9,974,597
05-14-97 5.37 4,800,000 4,767,375
BBV Finance (Delaware)
04-18-97 5.35 6,900,000 6,882,633
Beneficial
05-07-97 5.36 9,300,000 9,245,873
BHP Finance
04-08-97 5.37 9,100,000 9,088,692
CAFCO
04-25-97 5.31 5,300,000(j) 5,281,379
05-05-97 5.31 5,000,000(j) 4,973,065
05-16-97 5.40 2,100,000(j) 2,085,182
CIT Group Holdings
05-13-97 5.58 600,000 596,115
CPC Intl
04-30-97 5.55 12,200,000(j) 12,145,751
05-13-97 5.40 5,600,000(j) 5,561,294
Cargill
04-21-97 5.28 4,600,000 4,584,367
Cargill Global
11-18-97 5.49 1,800,000(j) 1,731,676
Ciesco LP
04-01-97 5.36 9,200,000 9,200,000
04-03-97 5.36 5,000,000(j) 4,997,436
Clorox
04-17-97 5.44 6,800,000 6,781,155
Commercial Credit
04-10-97 5.28 1,500,000 1,498,031
Commerzbank U.S. Finance
04-21-97 5.30 7,500,000 7,478,083
05-12-97 5.36 8,000,000 7,946,669
05-19-97 5.44 10,000,000 9,925,275
Fleet Funding
04-07-97 5.30 5,000,000(j) 4,995,608
Ford Motor Credit
04-09-97 5.28 10,000,000 9,988,333
04-24-97 5.35 6,400,000 6,378,247
Goldman Sachs Group
04-11-97 5.32 4,400,000 4,393,522
04-15-97 5.33 5,900,000 5,887,839
Household Finance
04-23-97 5.33 5,200,000 5,183,158
Kellogg
04-03-97 5.28 3,300,000 3,299,038
04-22-97 5.33 5,000,000 4,984,542
Kredietbank North America Finance
04-18-97 5.30 4,300,000 4,289,319
Lincoln Natl
04-11-97 5.32 3,200,000(j) 3,195,289
Merrill Lynch
05-13-97 5.54 6,700,000 6,657,008
Metlife Funding
04-22-97 5.34 5,605,000 5,587,639
04-28-97 5.52 8,487,000 8,451,991
05-02-97 5.58 3,800,000 3,781,839
05-05-97 5.34 10,800,000 10,745,940
Michigan Consolidated Gas
04-23-97 5.36 3,500,000 3,488,578
Mobil Australia Finance (Delaware)
04-02-97 5.37 6,200,000(j) 6,198,754
08-22-97 5.41 10,000,000(j) 9,764,400
Morgan Stanley Group
05-14-97 5.33 1,400,000 1,390,348
Motorola
05-08-97 5.58 9,400,000 9,346,381
Natl Australia Funding (Delaware)
04-28-97 5.49 6,300,000 6,274,202
05-12-97 5.36 10,000,000 9,934,754
05-15-97 5.37 7,100,000 7,050,851
Novartis Finance
04-22-97 5.35 4,700,000(j) 4,685,387
Paccar Financial
05-22-97 5.33 3,900,000 3,868,187
Pitney Bowes
05-09-97 5.37 6,800,000 6,758,732
Rabobank USA Finance
04-17-97 5.44 10,000,000 9,974,155
Reed Elsevier
04-16-97 5.40 9,900,000(j) 9,875,951
04-28-97 5.57 1,700,000(j) 1,692,924
05-23-97 5.57 22,000,000(j) 21,824,587
Southwestern Bell Telephone
04-14-97 5.32 11,900,000 11,874,749
SAFECO Credit
05-15-97 5.39 6,700,000 6,654,512
Siemens
04-28-97 5.40 11,600,000 11,553,281
05-16-97 5.40 7,500,000 7,449,750
USAA Capital
05-01-97 5.31 8,000,000 7,961,551
05-06-97 5.35 7,300,000 7,262,314
05-14-97 5.35 9,000,000 8,940,217
05-27-97 5.43 10,000,000 9,907,958
08-26-97 5.39 4,200,000 4,098,299
Total 444,361,033
Letters of credit (0.3%)
Bank of America -
Hyundai Motor Finance
05-19-97 5.37 5,000,000 4,960,285
First Chicago -
Commed Fuel
04-08-97 5.42 500,000 499,260
Student Loan Marketing Assn
05-02-97 5.53 2,762,000 2,748,919
Total 8,208,464
Total short-term securities
(Cost: $474,397,300) $ 474,178,628
Total investments in securities of unaffiliated issuers
(Cost: $2,613,103,704) $2,787,732,044
Investment in securities of affiliated issuer (k)
Common stock (0.3%)
Issuer Shares Value(a)
China North Inds
Investment 16,500,000(b) $6,765,000
Total investments in securities of affiliated issuer
(Cost: $16,709,176) $6,765,000
Total investments in securities
(Cost: $2,629,812,880)(p) $2,794,497,044
See accompanying notes to investments in securities.
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 6 to the financial statements):
Type of security Notional amount
Sale contracts
U.S. Treasury Bonds June 1997 $40,000,000
(d) Security is partially or fully on loan. See Note 5 to the financial
statements.
(e) Foreign security values are stated in U. S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(f) 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.
(g) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at March 31, 1997, is as follows:
Acquisition
Security date Cost
American United Life *
7.75% 2026 02-13-96 $5,000,000
Cityscape Financial
11.00% 1998 11-21-96 thru 3-13-97 6,000,000
Geotek Communications
12.00% Cv 2001 03-05-96 2,780,000
Veninfotel
10.00% 2002 03-06-97 2,000,000
*Represents a security sold under Rule 144A, which is exempt from registration
under theSecurities Act of 1933, as amended.
(h) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(i) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on March 31, 1997.
(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) 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, 1997 are as follows:
<TABLE>
<CAPTION>
Beginning Purchase Sales Ending Dividend
Issuer cost cost cost cost income
<S> <C> <C> <C> <C> <C>
China North Inds Investment $18,789,176 $-- $2,080,000 $16,709,176 $--
</TABLE>
(l) At March 31, 1997, the cost of securities purchased, including interest
purchased, on a when-issued basis was $3,732,430.
(m) Pay-in-kind securities are securities in which the issuer has the option to
make interest payments in cash or in additional securities. The securities
issued as interest usually have the same terms, including maturity date, as the
pay-in-kind securities.
(n) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of aquisition.
(o) Negligible market value.
(p) At March 31, 1997, the cost of securities for federal income tax purposes
was approximately $2,629,809,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation.........................$241,442,000
Unrealized depreciation..........................(76,754,000)
-----------
Net unrealized appreciation.....................$164,688,000
============
<PAGE>
Board members and officers of the Fund
President and interested
board member
William R. Pearce
President and director, Board Services Corporation (provides
administrative services to boards including the boards of the IDS and
IDSLife funds and Master Trust portfolios).
Independent
board members
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.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
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.
Interested board
members who are
officers and/or
employees of AEFC
William H. Dudley
Executive vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
Officers who also
are officers and/or
employees of AEFC
Peter J. Anderson
Senior vice president, AEFC. Vice president - Investments for the Fund.
Melinda S. Urion
Senior vice president and chief financial officer, AEFC. Treasurer for the
Fund.
Other officer
Leslie L. Ogg
Vice president, treasurer and corporate secretary of Board Services
Corporation. Vice president, general counsel and secretary for the Fund.
Refer to the SAI for the board members' and officers' biographies.
Board members and officers of the Fund
President and interested
board member
William R. Pearce
President and director, Board Services Corporation (provides
administrative services to boards including the boards of the IDS and
IDSLife funds and Master Trust portfolios).
Independent
board members
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.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
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.
Interested board
members who are
officers and/or
employees of AEFC
William H. Dudley
Executive vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
Officers who also
are officers and/or
employees of AEFC
Peter J. Anderson
Senior vice president, AEFC. Vice president - Investments for the Fund.
Melinda S. Urion
Senior vice president and chief financial officer, AEFC. Treasurer for the
Fund.
Other officer
Leslie L. Ogg
Vice president, treasurer and corporate secretary of Board Services
Corporation. Vice president, general counsel and secretary for the Fund.
Refer to the SAI for the board members' and officers' biographies.
Board members and officers of the Fund
President and interested
board member
William R. Pearce
President and director, Board Services Corporation (provides
administrative services to boards including the boards of the IDS and
IDSLife funds and Master Trust portfolios).
Independent
board members
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.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
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.
Interested board
members who are
officers and/or
employees of AEFC
William H. Dudley
Executive vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
Officers who also
are officers and/or
employees of AEFC
Peter J. Anderson
Senior vice president, AEFC. Vice president - Investments for the Fund.
Melinda S. Urion
Senior vice president and chief financial officer, AEFC. Treasurer for the
Fund.
Other officer
Leslie L. Ogg
Vice president, treasurer and corporate secretary of Board Services
Corporation. Vice president, general counsel and secretary for the Fund.
Refer to the SAI for the board members' and officers' biographies.
<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 globe
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) flower
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 and 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.
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) spinning toy
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stocks 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 in 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.
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IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
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IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to provide
income to residents of each respective state that is exempt from federal, state
and local income taxes. (New York is the only state that is exempt at the local
level.)
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IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve greater
risk of principal and income.
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IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
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Money market funds
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current
income consistent with these objectives. An investment in
these funds is neither insured nor guaranteed by the U.S. government,
and there can be no assurance that these funds
will be able to maintain a stable net asset value of $1.00
per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (CDs) and other bank securities.
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IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and local
governments to seek high current income exempt from federal income taxes.
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Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
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National/Minnesota:
800-437-3133
Mpls./St. Paul area:
671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchTone(R) phones only), including current fund
prices and performance, account values and recent account transactions
National/Minnesota:
800-272-4445
Mpls./St. Paul area:
671-1630
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AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Managed Allocation Fund
IDS Tower 10
Minneapolis, MN 55440-0010
