American Express Financial Direct
Strategist Growth Fund, Inc.
1997 Semi-Annual Report
Strategist Growth Fund
Strategist Growth Trends Fund
Strategist Special Growth Fund
<PAGE>
Table of Contents
Financial statements (Strategist Growth Fund, Inc.) 1
Notes to financial statements (Strategist Growth Fund, Inc.) 6
Financial statements (Growth Portfolio) 11
Notes to financial statements (Growth Portfolio) 14
Investments in securities (Growth Portfolio) 18
Financial statements (Growth Trends Portfolio) 26
Notes to financial statements (Growth Trends Portfolio) 29
Investments in securities (Growth Trends Portfolio) 33
Financial statements (Aggressive Growth Portfolio) 46
Notes to financial statements (Aggressive Growth Portfolio) 49
Investments in securities (Aggressive Growth Portfolio) 53
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<TABLE>
<CAPTION>
Financial statements
Statements of assets and liabilities
Strategist Growth Fund, Inc.
Jan. 31, 1997
Strategist Strategist Strategist
Growth Growth Special
Fund Trends Fund Growth Fund
Assets
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Investment in corresponding Portfolio (Note 1) $28,769,138 $ 27,661,555 $ 994,866
Expense receivable from AEFC -- 1,900 261
Organizational costs (Note 1) 2,228 2,228 --
---------------- --------------- -----------
Total assets 28,771,366 27,665,683 995,127
---------------- --------------- -----------
Liabilities
Accrued distribution fee 192 185 7
Accrued transfer agency fee 21 14 --
Accrued administrative services fees 38 37 --
Other accrued expenses 39,686 94,341 5,334
---------------- --------------- -----------
Total liabilities 39,937 94,577 5,341
---------------- --------------- -----------
Net assets applicable to outstanding capital stock $28,731,429 $ 27,571,106 $ 989,786
================ =============== ===========
Represented by
Capital stock -- authorized 3,000,000,000 shares per Fund of $.01
par value; outstanding 963,954; 1,220,687 and 173,854 shares $ 9,640 $ 12,207 $ 1,739
Additional paid-in capital 24,384,062 22,966,757 895,468
Undistributed net investment income (34,924) (5,606) 56
Accumulated net realized gain (loss) (Note 1) (2,056,562) (1,249,663) 71,399
Unrealized appreciation 6,429,213 5,847,411 21,124
================ =============== ===========
Total -- representing net assets applicable to
outstanding capital stock $ 28,731,429 $ 27,571,106 $ 989,786
================ =============== ===========
Net asset value per share of outstanding capital stock $ 29.81 $ 22.59 $ 5.69
See accompanying notes to financial statements.
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Financial statements
Statements of operations
Strategist Growth Fund, Inc.
Six months ended Jan. 31, 1997
Strategist Strategist Strategist
Growth Growth Special
Fund Trends Fund Growth Fund*
Investment income
(Unaudited) (Unaudited) (Unaudited)
Income:
Dividends $ 67,980 $ 129,697 $ 3,975
Interest 42,514 76,775 2,312
---------------- --------------- ------------
Total income 110,494 206,472 6,287
---------------- --------------- ------------
Expenses (Note 2):
Distribution fee 33,200 33,557 858
Transfer agency fee 2,015 1,289 315
Administrative services fees and expenses 6,640 6,677 206
Compensation of board members 6,420 1,509 --
Postage 777 5,152 4,219
Registration fees 10,723 28,421 13,065
Reports to shareholders 358 2,760 2,693
Audit fees 6,357 21,443 785
Administrative 64 156 244
Other 1,227 4,260 2,913
---------------- --------------- -----------
Total feeder expenses 67,781 105,224 25,298
Expenses allocated from corresponding Portfolio 84,599 81,140 2,654
---------------- --------------- -----------
Total expenses 152,380 186,364 27,952
Less expenses reimbursed by AEFC (6,962) (11,760) (23,138)
---------------- --------------- -----------
Total net expenses 145,418 174,604 4,814
---------------- --------------- -----------
---------------- --------------- -----------
Investment income (loss) -- net (34,924) 31,868 1,473
---------------- --------------- -----------
Realized and unrealized gain -- net
Net realized gain on security transactions 64,424 145,499 69,789
Net realized gain on financial futures contracts -- -- 2,610
---------------- --------------- -----------
Net realized gain on investments 64,424 145,499 72,399
Net change in unrealized appreciation or depreciation 6,544,527 5,111,331 21,124
---------------- --------------- -----------
Net gain on investments 6,608,951 5,256,830 93,523
---------------- --------------- -----------
================ =============== ===========
Net increase in net assets resulting from operations $ 6,574,027 $ 5,288,698 $ 94,996
================ =============== ============
* For the period from Aug. 19, 1996 (commencement of operations) to Jan. 31, 1997.
See accompanying notes to financial statements.
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Financial statements
Statements of changes in net assets
Strategist Growth Fund, Inc.
Strategist Growth Fund
Operations Jan. 31, 1997 For the period
Six months ended from May 13, 1996*
(Unaudited) to July 31, 1996
Investment loss -- net $ (34,924) $ (19,369)
Net gain (loss) on investments 64,424 (2,120,986)
Net change in unrealized appreciation or depreciation 6,544,527 (115,314)
--------------- ---------------
Net increase (decrease) in net assets resulting from operations 6,574,027 (2,255,669)
--------------- ---------------
Capital share transactions (Note 3)
Proceeds from sales 1,649,325 25,205,431
Payments for redemptions (2,491,685) --
--------------- ---------------
Increase (decrease) in net assets from capital share transactions (842,360) 25,205,431
--------------- ---------------
Total increase in net assets 5,731,667 22,949,762
Net assets at beginning of period (Note 1) 22,999,762 50,000
=============== ===============
Net assets at end of period $ 28,731,429 $ 22,999,762
=============== ===============
* Commencement of operations.
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statements of changes in net assets
Strategist Growth Fund, Inc.
Strategist Growth Trends Fund
Operations and distributions Jan. 31, 1997 For the period
Six months ended from May 13, 1996*
(Unaudited) to July 31, 1996
Investment income -- net $ 31,868 $ 21,361
Net gain (loss) on investments 145,499 (1,395,162)
Net change in unrealized appreciation or depreciation 5,111,331 736,080
--------------- -------------
Net increase (decrease) in net assets resulting from operations 5,288,698 (637,721)
--------------- -------------
Distributions to shareholders from:
Net investment income (58,835) --
--------------- -------------
Capital share transactions (Note 3)
Proceeds from sales 1,003,210 25,146,624
Reinvestment of distributions at net asset value 58,835 --
Payments for redemptions (3,279,705) --
--------------- -------------
Increase (decrease) in net assets from capital share transactions (2,217,660) 25,146,624
--------------- -------------
Total increase in net assets 3,012,203 24,508,903
Net assets at beginning of period (Note 1) 24,558,903 50,000
--------------- -------------
Net assets at end of period (including undistributed net investment income of
$(5,606) and $21,361) $ 27,571,106 $ 24,558,903
================ ===============
*Commencement of operations.
<PAGE>
See accompanying notes to financial statements.
Financial statements
Statement of changes in net assets
Strategist Growth Fund, Inc.
Strategist Special Growth Fund
For the period from
Aug. 19, 1996* to Jan. 31, 1997
Operations and distributions (Unaudited)
Investment income -- net $ 1,473
Net gain on investments 72,399
Net change in unrealized appreciation or depreciation 21,124
---------------
Net increase in net assets resulting from operations 94,996
---------------
Distributions to shareholders from:
Net investment income (1,417)
Net realized gain (1,000)
---------------
Total distributions (2,417)
---------------
Capital share transactions (Note 3)
Proceeds from sales 912,577
Reinvestment of distributions at net asset value 2,417
Payments for redemptions (18,787)
---------------
Increase in net assets from capital share transactions 896,207
---------------
Total increase in net assets 988,786
Net assets at beginning of period (Note 1) 1,000
---------------
Net assets at end of period
(including undistributed net investment income of $56) $989,786
===============
* Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Strategist Growth Fund, Inc.
(Unaudited as to Jan. 31, 1997)
_______________________________________________________________________
1. Summary of significant accounting policies
Strategist Growth Fund (Growth Fund), Strategist Growth Trends Fund (Growth
Trends Fund) and Strategist Special Growth Fund (Special Growth Fund) are series
of capital stock within Strategist Growth Fund, Inc. Each Fund is registered
under the Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. On April 15, 1996, American Express Financial
Corporation (AEFC) invested $50,000 in Growth Fund and Growth Trends Fund, which
represented 1,966 and 2,632 shares, respectively. Operations did not formally
commence until May 13, 1996. On Aug. 16, 1996, AEFC invested $1,000 in Special
Growth Fund that represented 200 shares.
Operations commenced on Aug. 19, 1996 for Special Growth Fund.
Investments in Portfolios
Each of the Funds seeks to achieve its investment objectives by investing all of
its net investable assets in a corresponding series (the Portfolio) of Growth
Trust (the Trust).
Growth Fund invests all of its assets in the Growth Portfolio, an open-end
investment company that has the same objectives as the Fund. Growth Portfolio
invests primarily in stocks of U.S. and foreign companies that appear to offer
growth opportunities.
Growth Trends Fund invests all of its assets in the Growth Trends Portfolio, an
open-end investment company that has the same objectives as the Fund. Growth
Trends Portfolio invests primarily in common stocks of companies showing
potential for significant growth and operating areas where economic or
technological changes are occurring.
Special Growth Fund invests all of its assets in Aggressive Growth Portfolio, an
open-end investment company that has the same objectives as the Fund. Aggressive
Growth Portfolio invests primarily in the equity securities of companies that
comprise the S&P 500.
Each Fund records daily its share of the corresponding Portfolio's income,
expenses and realized and unrealized gains and losses. The financial statements
of the Portfolios are included elsewhere in this report and should be read in
conjunction with the Funds' financial statements.
Each Fund records its investment in the corresponding Portfolio at value that is
equal to the Fund's proportionate ownership interest in the net assets of the
Portfolio. As of Jan. 31, 1997, the percentages of the corresponding Portfolio
owned by Growth Fund, Growth Trends Fund and Special Growth Fund were 0.91%,
0.24% and 0.69%, respectively. Valuation of securities held by the Portfolios is
discussed in Note 1 of the Portfolios' "Notes to financial statements," which
are included elsewhere in this report.
Organizational costs
Growth Fund and Growth Trends Fund incurred organizational expenses in
connection with the start-up and initial registration of the Fund. These costs
will be amortized over 60 months on a straight-line basis beginning with the
commencement of operations. If any or all of the shares held by AEFC
representing initial capital of the Fund are redeemed during the amortization
period, the redemption proceeds will be reduced by the pro rata portion of the
unamortized organizational cost balance.
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 each 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
Portfolios 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 Funds.
Dividends to shareholders
An annual dividend declared and paid at the end of the calendar year from net
investment income is reinvested in additional shares of the Funds at net asset
value or payable in cash. Capital gains, when available, are distributed along
with the income dividend.
Other
At Jan. 31, 1997, AEFC owned 1,966 shares for Strategist Growth Fund, 2,637
shares for Strategist Growth Trends Fund and 100,067 shares for Special Growth
Fund. At Jan. 31, 1997, American Express Company (the parent company of AEFC)
owned 896,463 shares for Strategist Growth Fund and 1,166,617 shares for
Strategist Growth Trends Fund.
_______________________________________________________________________
2.Expenses and sales charges
In addition to the expenses allocated from the Portfolio, each Fund accrues its
own expenses as follows:
Each Fund entered into agreements with AEFC for providing administrative
services and transfer agent services. Under its Administrative Services
Agreement, each Fund pays AEFC for administration and accounting services at a
percentage of the Fund's average daily net assets in reducing percentages from
0.05% to 0.03% (0.06% to 0.03% for Special Growth Fund) annually. Additional
administrative services paid by each Fund are office expenses, consultants' fees
and compensation of officers and employees. Under this agreement, each 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 Funds approved by the board.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts
and records. Each Fund pays AEFC an annual fee per shareholder account of $20.
Under a Plan and Agreement of Distribution, each Fund pays American Express
Service Corporation (the Distributor) a distribution fee at an annual rate of
0.25% of the Fund's average daily net assets for distribution related services.
AEFC and the Distributor have agreed to waive certain fees and to absorb certain
other of Fund expenses until July 31, 1997. Under this agreement, each Fund's
total expenses will not exceed 1.30% (1.40% for Special Growth Fund) of each of
the Fund's average daily net assets.
A redemption fee of up to 1.0% is applied and retained by each Fund, if shares
are redeemed or exchanged within one year of purchase. Special Growth Fund has
no present intention to implement a redemption fee within the first year of
operation.
<PAGE>
_______________________________________________________________________
3. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Jan. 31, 1997
Growth Growth Special
Fund Trends Growth
Fund Fund*
Sold 62,462 47,328 176,520
Issued for reinvested -- 2,719 439
distributions
Redeemed (91,957) (155,444) (3,305)
- --------------------------------------------------------------------------------
Net increase (decrease) (29,495) (105,397) 173,654
- --------------------------------------------------------------------------------
*Inception date was Aug. 19, 1996.
Period ended July 31, 1996*
Growth Growth
Fund Trends
Fund
Sold 993,449 1,326,084
- --------------------------------------------------------------------------------
Net increase 993,449 1,326,084
- --------------------------------------------------------------------------------
*Inception date was May 13, 1996.
_______________________________________________________________________
4. Capital loss carryover
For federal income tax purposes, capital loss carryovers were $2,120,986 for
Strategist Growth Fund and $1,395,162 for Strategist Growth Trends Fund at July
31, 1996. These capital loss carryovers will expire in 2004 if not offset by
subsequent capital gains. It is unlikely the board will authorize a distribution
of any net realized capital gains for a fund until the respective capital loss
carryover has been offset or expires.
<PAGE>
Notes to financial statements
_______________________________________________________________________
5. Financial highlights
<TABLE>
<CAPTION>
The tables below show certain important information for evaluating each Fund's
results.
Fiscal period ended July 31, Strategist Strategist Growth Strategist Special
Per share income and capital changes* Growth Fund Trends Fund Growth Fund
1997# 1996** 1997# 1996** 1997***
<S> <C> <C> <C> <C> <C>
Net asset value, $23.15 $25.43 $18.52 $19.00 $5.00
beginning of period
Income from investment operations:
Net investment income (loss) (.04) (.02) .03 .01 .01
Net gains (losses) 6.70 (2.26) 4.09 (.49) .70
(both realized
and unrealized)
Total from investment 6.66 (2.28) 4.12 (.48) .71
operations
Less distributions:
Dividends from net -- -- (.05) -- (.01)
investment income
Distributions from -- -- -- -- (.01)
realized gains
Total distributions -- -- (.05) -- (.02)
Net asset value, $29.81 $23.15 $22.59 $18.52 $5.69
end of period
Ratios/supplemental data:
Net assets, end of $29 $23 $28 $25 $1
period (in millions)
Ratio of expenses to 1.09%+ 1.30%+ 1.30%+ 1.30%+ 1.40%+
average daily net assets++
Ratio of net income (.26%)+ (.37%)+ .24%+ .39%+ .43%+
(loss) to average
daily net assets
Total return 28.8% (9.0%) 22.2% (2.5%) 14.1%
Portfolio turnover rate 10% 5% 15% 7% 82%
(excluding short-term
securities) for the
underlying Portfolio
Average brokerage commission $0.0521 -- $0.0569 -- $0.0358
rate for the underlying
Portfolio##
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Inception date was May 13, 1996.
*** Inception date was Aug. 19, 1996. Period from Aug. 19, 1996 to
Jan. 31, 1997 is unaudited.
+ Adjusted to an annual basis.
++ The Advisor and Distributor voluntarily limited total operating expenses
to 1.30% (1.40% for Strategist Special Growth Fund) of average daily net
assets. Without this agreement, the ratio of expenses to average daily
net assets would have been 1.14% and 1.86% for Strategist Growth Fund and
1.39% and 1.76% for Strategist Growth Trends Fund for the periods ended
1997 and 1996, respectively; and 8.12% for Strategist Special Growth Fund
for the period ended Jan 31, 1997.
# Six months ended Jan. 31, 1997 (Unaudited).
## Each 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>
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<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
Growth Portfolio
Jan. 31, 1997
Assets
(Unaudited)
Investments in securities, at value (Note 1)
<S> <C> <C>
Investments in securities of unaffiliated issuers (identified cost $1,982,642,905) $ 3,216,982,635
Investments is securities of affiliated issuer (identified cost $17,078,680) 14,684,863
Cash in bank on demand deposit 4,013,130
Dividends and accrued interest receivable 777,028
U.S. government securities held as collateral (Note 4) 59,810,952
--------------------
Total assets 3,296,268,608
--------------------
Liabilities
Payable upon return of securities loaned (Note 4) 134,046,052
Accrued investment management services fee 221,059
Other accrued expenses 39,160
--------------------
Total liabilities 134,306,271
--------------------
Net assets $ 3,161,962,337
====================
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statement of operations
Growth Portfolio
Six months ended Jan. 31, 1997
Investment income
(Unaudited)
Income:
Interest $ 4,340,323
Dividends (net of foreign taxes withheld of $9,750) 6,936,756
--------------------
Total income 11,277,079
--------------------
Expenses (Note 2):
Investment management services fee 8,571,306
Compensation of board members 4,878
Compensation of officers 799
Custodian fees 48,786
Registration fees 125
Audit fees 29,674
Administrative 10,240
Other 13,086
--------------------
Total expenses 8,678,894
Earnings credits on cash balances (Note 2) (2,824)
--------------------
Total net expenses 8,676,070
--------------------
Investment income -- net 2,601,009
--------------------
Realized and unrealized gain -- net
Net realized gain on security transactions (Note 3) 33,474,978
Net change in unrealized appreciation or depreciation 636,839,300
--------------------
Net gain on investments 670,314,278
====================
Net increase in net assets resulting from operations $ 672,915,287
====================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Growth Portfolio
Operations
Six months ended For the period from
Jan. 31, 1997 May 13, 1996* to
(Unaudited) July 31, 1996
<S> <C> <C>
Investment income - - net $ 2,601,009 $ 1,339,597
Net realized gain on investments 33,474,978 12,989,728
Net change in unrealized appreciation or depreciation 636,839,300 (176,108,355)
------------------- ------------------
Net increase (decrease) in net assets resulting from operations 672,915,287 (161,779,030)
Net contributions 283,879,902 2,366,896,178
-------------------- -----------------
Total increase in net assets 956,795,189 2,205,117,148
Net assets at beginning of period (Note 1) 2,205,167,148 50,000
===================== ================
Net assets at end of period $ 3,161,962,337 $ 2,205,167,148
===================== ================
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Growth Portfolio
(Unaudited as to Jan. 31, 1997)
- --------------------------------------------------------------------------------
1. Summary of significant accounting policies
The Growth Portfolio (the Portfolio) is a series of Growth Trust (the Trust) and
is registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. Growth Portfolio invests
primarily in stocks of U.S. and foreign companies that appear to offer growth
opportunities. 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 $50,000 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 policies followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price; securities for which market quotations
are not readily available 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 and sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Portfolio may incur a
loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolio pays a premium whether or not
the option is exercised. The Portfolio also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell stock index 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.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
- --------------------------------------------------------------------------------
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.6% to 0.5% annually. The fees may be increased or decreased
by a performance adjustment based on a comparison of the performance of Class A
shares of the IDS Growth Fund to the Lipper Growth Fund Index. The maximum
adjustment is 0.12% of the Portfolio's average daily net assets on an annual
basis. The adjustment increased the fee by $707,530 for the six months ended
Jan. 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.
For the six months ended Jan. 31, 1997, the Portfolio's custodian fees were
reduced by $2,824 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 $564,456,392 and $248,431,803, respectively, for the six
months ended Jan. 31, 1997. For the same period, the portfolio turnover rate was
10%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $63,250 for this
period.
- --------------------------------------------------------------------------------
4. Lending of portfolio securities
At Jan. 31, 1997, securities valued at $137,345,962 were on
loan to brokers.
For collateral, the Portfolio received $74,235,100 in cash
and U.S. government securities valued at $59,810,952.
Income from securities lending amounted to $198,876 for the
six months ended Jan. 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.
<PAGE>
<TABLE>
<CAPTION>
Growth Portfolio (Percentages represent value of
Jan. 31, 1997 (Unaudited) investments compared to net assets)
Investments in securities of unaffiliated issuers
- --------------------------------------------------------------------------------------------------------------
Common stocks (95.3%)
- --------------------------------------------------------------------------------------------------------------
Issuer Shares Value (a)
- --------------------------------------------------------------------------------------------------------------
Airlines (0.7%)
<S> <C> <C>
Northwest Airlines 600,000 (b) $20,400,000
- --------------------------------------------------------------------------------------------------------------
Automotive & related (0.3%)
Gentex 500,000 (b) 10,000,000
- --------------------------------------------------------------------------------------------------------------
Banks and savings & loans (1.6%)
MBNA 1,500,000 51,750,000
- --------------------------------------------------------------------------------------------------------------
Beverages & tobacco (2.2%)
Coca-Cola 1,206,700 69,837,762
- --------------------------------------------------------------------------------------------------------------
Building materials & construction (1.8%)
Tyco Intl 1,000,000 57,125,000
- --------------------------------------------------------------------------------------------------------------
Chemicals (4.5%)
Culligan Water Technology 400,000 (b) 13,300,000
Monsanto 1,500,000 56,812,500
USA Waste Service 1,975,000 (b) 72,087,500
--------------------
Total 142,200,000
- --------------------------------------------------------------------------------------------------------------
Communications equipment & services (8.1%)
ADC Telecommunications 1,200,000 (b) 43,050,000
Advanced Fibre Communications 11,400 (b) 544,350
Andrew 1,200,000 (b) 68,925,000
Mastec 700,000 (b,d) 44,625,000
Tellabs 2,400,000 (b) 98,850,000
--------------------
Total 255,994,350
- --------------------------------------------------------------------------------------------------------------
Computers & office equipment (16.2%)
ABR Information Services 400,000 (b) 17,550,000
Cisco Systems 1,600,000 (b) 111,600,000
Compaq Computer 700,000 (b) 60,812,500
CSG Systems Intl 50,600 (b) 948,750
First Data 1,868,720 (d) 67,273,920
Gemstar Intl 150,000 (b) 2,700,000
Ikon Office Solutions 1,200,000 52,950,000
Intuit 200,000 (b) 5,850,000
Keane 400,000 (b) 12,450,000
Microsoft 400,000 (b) 40,800,000
NETCOM On-Line Communication Services 400,000 (b) 5,350,000
Oracle 1,350,000 (b) 52,481,250
Silicon Graphics 1,600,000 (b) 43,800,000
Solectron 625,000 (b) 37,656,250
--------------------
Total 512,222,670
- --------------------------------------------------------------------------------------------------------------
Electronics (7.6%)
Applied Materials 800,000 39,500,000
DuPont Photomasks 22,500 (b) 1,226,250
Harman Intl 500,000 23,187,500
Intel 500,000 81,125,000
Maxim Intergrated Products 1,000,000 (b) 56,250,000
Texas Instruments 300,000 23,512,500
Vishay Intertechnology 630,000 (b) 15,198,750
--------------------
Total 240,000,000
- --------------------------------------------------------------------------------------------------------------
Energy (0.8%)
Mobil 200,000 26,250,000
- --------------------------------------------------------------------------------------------------------------
Energy equipment & services (1.7%)
Fluor 750,000 53,343,750
- --------------------------------------------------------------------------------------------------------------
Financial services (6.3%)
First Virtual Holding 100,000 (b) 900,000
Green Tree Financial 1,200,000 46,650,000
Merrill Lynch 800,000 67,400,000
Travelers Group 1,600,000 83,800,000
--------------------
Total 198,750,000
- --------------------------------------------------------------------------------------------------------------
Food (0.5%)
Delta & Pine Land 428,250 (d) 16,005,844
- --------------------------------------------------------------------------------------------------------------
Health care (10.2%)
Amgen 800,000 (b) 45,100,000
Boston Scientific 1,200,000 (b) 81,900,000
Gensia 161 674
IDEXX Laboratories 500,000 (b) 16,750,000
Johnson & Johnson 700,000 40,337,500
Medtronic 600,000 41,100,000
Perclose 34,800 (b) 787,350
Pfizer 800,000 74,300,000
Physio-Control Intl 700,000 (b) 15,225,000
Sola Intl 200,000 7,375,000
--------------------
Total 322,875,524
- --------------------------------------------------------------------------------------------------------------
Healthcare services (6.9 %)
HealthCare COMPARE 1,000,000 (b) 42,625,000
HEALTHSOUTH 2,400,000 (b) 104,700,000
Service Corp Intl 2,400,000 69,600,000
--------------------
Total 216,925,000
- --------------------------------------------------------------------------------------------------------------
Industrial equipment & services (2.6%)
Caterpillar 400,000 31,050,000
Deere & Co 1,200,000 51,300,000
--------------------
Total 82,350,000
- --------------------------------------------------------------------------------------------------------------
Industrial transportation (1.2%)
Wisconsin Central 1,000,000 (b) 37,125,000
- --------------------------------------------------------------------------------------------------------------
Leisure time & entertainment (3.4%)
Harley-Davidson 300,000 13,275,000
Marriot Intl 1,000,000 53,125,000
Mattel 1,500,000 42,187,500
--------------------
Total 108,587,500
- --------------------------------------------------------------------------------------------------------------
Metals (2.9%)
Birmingham Steel 1,100,000 21,862,500
Nucor 1,200,000 62,400,000
Stillwater Mining 400,000 (b) 7,100,000
--------------------
Total 91,362,500
- --------------------------------------------------------------------------------------------------------------
Multi-industry conglomerates (1.5%)
AccuStaff 600,000 (b) 12,975,000
Apollo Group 800,000 (b) 26,600,000
Manpower 200,000 6,400,000
--------------------
Total 45,975,000
- --------------------------------------------------------------------------------------------------------------
Paper & packaging (0.4%)
Unisource Worldwide 600,000 13,050,000
- --------------------------------------------------------------------------------------------------------------
Textiles & apparel (2.6%)
Nike Cl B 1,000,000 67,875,000
St. John Knits 300,000 13,650,000
--------------------
Total 81,525,000
- --------------------------------------------------------------------------------------------------------------
Utilities -- telephone (2.6%)
AirTouch Communications 900,000 (b) 23,287,500
WorldCom 2,400,000 (b) 60,300,000
--------------------
Total 83,587,500
- --------------------------------------------------------------------------------------------------------------
Foreign (8.7%) (c)
Danka Business Systems ADR 1,500,000 (d) 66,750,000
Ericsson (LM) ADR 1,500,000 50,507,812
Northern Telecom 800,000 (b,d) 58,900,000
SGS-THOMSON Microelectronics 300,000 (b) 21,225,000
Schlumberger 700,000 77,787,500
--------------------
Total 275,170,312
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Total common stocks
(Cost: $1,778,039,653) $3,012,412,712
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Short-term securities (6.5%)
- --------------------------------------------------------------------------------------------------------------
Issuer Annualized Amount Value (a)
yield on payable at
date of maturity
purchase
- --------------------------------------------------------------------------------------------------------------
U.S. government agency (0.1%)
Federal Home Loan Mtge Corp Disc Nt
02-26-97 5.48% $3,300,000 $3,286,462
- --------------------------------------------------------------------------------------------------------------
Banker's acceptance (0.2 %)
First Union
02-04-97 5.36 5,000,000 4,997,775
- --------------------------------------------------------------------------------------------------------------
Commercial paper (6.0%)
ABB Treasury
03-12-97 5.37 1,800,000 (e) 1,788,938
Albertson's
02-28-97 5.31 6,750,000 6,723,219
American General Capital
03-12-97 5.40 5,000,000 (e) 4,969,271
American General Finance
02-12-97 5.38 5,500,000 5,491,009
Aon
02-03-97 5.36 3,700,000 3,698,816
BellSouth Capital
02-27-97 5.33 6,500,000 6,475,072
BHP Finance
02-06-97 5.35 4,600,000 4,596,588
CAFCO
03-25-97 5.38 6,300,000 (e) 6,248,846
Cargill
03-10-97 5.34 5,000,000 4,972,310
04-07-97 5.40 4,800,000 4,751,424
Ciesco LP
02-11-97 5.44 4,500,000 4,493,250
02-19-97 5.33 3,200,000 3,191,520
02-25-97 5.39 7,100,000 7,074,677
Commercial Credit
02-20-97 5.33 5,300,000 5,285,175
Dean Witter Discover & Co
03-27-97 5.35 7,200,000 7,142,652
Deutsche Finance
02-10-97 5.41 7,500,000 7,489,922
Ford Motor Credit
03-05-97 5.33 3,500,000 3,483,511
Household Finance
03-06-97 5.32 5,900,000 5,871,336
03-11-97 5.34 4,700,000 4,673,656
04-09-97 5.42 5,000,000 4,947,867
Merrill Lynch
03-03-97 5.34 4,600,000 4,579,645
03-17-97 5.40 6,900,000 6,851,462
Metlife Funding
02-12-97 5.37 5,600,000 5,589,637
02-18-97 5.37 5,000,000 4,985,829
02-27-97 5.30 4,000,000 3,984,776
Natl Australia Funding (Delaware)
02-04-97 5.36 1,100,000 1,099,511
Novartis Finance
03-07-97 5.32 2,300,000 (e) 2,288,487
Reed Elsevier
02-14-97 5.34 4,600,000 (e) 4,591,163
SAFECO Credit
03-28-97 5.37 3,500,000 3,471,499
SBC Communications
02-11-97 5.39 4,600,000 (e) 4,593,164
02-18-97 5.44 3,600,000 (e) 3,589,880
Sysco
02-25-97 5.38 7,500,000 (e) 7,468,779
Toyota Motor Credit
02-07-97 5.35 1,800,000 1,798,042
02-14-97 5.40 3,000,000 2,993,424
03-07-97 5.37 7,800,000 7,760,736
Transamerica Financial
04-28-97 5.40 5,600,000 5,525,296
USAA Capital
02-13-97 5.41 3,700,000 3,693,377
02-24-97 5.45 5,000,000 4,980,877
U S WEST Communications
02-21-97 5.40 6,500,000 6,477,082
--------------------
Total 189,691,725
- --------------------------------------------------------------------------------------------------------------
Letter of credit (0.2%)
Bank of America -
AES Barber Point
02-07-97 5.53 6,600,000 6,593,961
- --------------------------------------------------------------------------------------------------------------
Total short-term securities
(Cost: $204,603,252) $ 204,569,923
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Total investments in securities of unaffiliated issuers
(Cost: $1,982,642,905) $3,216,982,635
- --------------------------------------------------------------------------------------------------------------
Investments in securities of affiliated issuers (f )
- --------------------------------------------------------------------------------------------------------------
Common stocks (0.4%)
- --------------------------------------------------------------------------------------------------------------
Issuer Shares Value (a)
- --------------------------------------------------------------------------------------------------------------
Risk Capital Holdings 883,300 $ 14,684,863
- --------------------------------------------------------------------------------------------------------------
Total investments in securities of affiliated issuer
(Cost: $17,078,680) $ 14,684,863
- --------------------------------------------------------------------------------------------------------------
Total investments in securities
(Cost: $1,999,721,585) (g) $3,231,667,498
- --------------------------------------------------------------------------------------------------------------
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Security is partially or fully on loan. See Note 4 to the financial statements.
(e) Commercial paper sold within terms of a private placement memorandum, exempt
under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers
in that program or other "accredited investors." This security has been determined to be
liquid under guidelines established by the board.
(f) Investment 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 Jan. 31, 1997 are as follows:
Affiliates Beginning Purchase Sales Ending Dividend
cost cost cost cost income
- --------------------------------------------------------------------------------------------------------------
Risk Capital Holdings* $17,078,680 $ -- $ -- $17,078,680 $ --
Oxford Resources Cl A* 10,236,220 -- 10,236,220 -- --
- --------------------------------------------------------------------------------------------------------------
Total $27,314,900 $ -- $10,236,220 $17,078,680 $ --
- --------------------------------------------------------------------------------------------------------------
*Issuer was not an affiliate for the entire period.
(g) At Jan. 31, 1997, the cost of securities for federal income tax purposes was approximately $1,999,722,000
and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $1,257,909,000
Unrealized depreciation (25,964,000)
--------------------
Net unrealized appreciation $1,231,945,000
--------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
Growth Trends Portfolio
Jan. 31, 1997
- -------------------------------------------------------------------------------------------------------------
Assets
- -------------------------------------------------------------------------------------------------------------
Investments in securities, at value (Note 1) (Unaudited)
<S> <C> <C>
Investments in securities of unaffiliated issuers (identified cost $7,342,754,112) $ 11,206,666,987
Investments in securities of affiliated issuer (identified cost $79,923,187) 156,600,000
Cash in bank on demand deposit 15,335,357
Dividends and accrued interest receivable 6,347,470
Receivable for investment securities sold 84,904,520
-------------------
Total assets 11,469,854,334
-------------------
Liabilities
- -------------------------------------------------------------------------------------------------------------
Payable for investment securities purchased 104,062,587
Accrued investment management services fee 941,993
Other accrued expenses 889,222
-------------------
Total liabilities 105,893,802
-------------------
Net assets $ 11,363,960,532
===================
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statement of operations
Growth Trends Portfolio
Six months ended Jan. 31, 1997
- -------------------------------------------------------------------------------------------------------------
Investment income
- -------------------------------------------------------------------------------------------------------------
Income: (Unaudited)
Interest $ 29,139,851
Dividends (net of foreign taxes withheld of $114,429) 48,170,898
Dividends earned from affiliates 848,000
-------------------
Total income 78,158,749
-------------------
Expenses (Note 2):
Investment management services fee 29,880,087
Compensation of board members 15,500
Custodian fees 881,263
Audit fees 14,000
Administrative 30,522
Other 35,408
-------------------
Total expenses 30,856,780
Earnings credits on cash balances (Note 2) (9,200)
-------------------
Total net expenses 30,847,580
-------------------
Investment income -- net 47,311,169
-------------------
Realized and unrealized gain -- net
- -------------------------------------------------------------------------------------------------------------
Net realized gain on security transactions (Note 3) 200,388,061
Net change in unrealized appreciation or depreciation 1,762,140,756
-------------------
Net gain on investments 1,962,528,817
===================
Net increase in net assets resulting from operations $ 2,009,839,986
===================
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
Growth Trends Portfolio
- -------------------------------------------------------------------------------------------------------------
Operations
- -------------------------------------------------------------------------------------------------------------
Six months ended For the period from
Jan. 31, 1997 May 13, 1996* to
(Unaudited) July 31, 1996
Investment income -- net $ 47,311,169 $ 20,723,600
Net realized gain on investments 200,388,061 44,047,563
Net change in unrealized appreciation or depreciation 1,762,140,756 (147,155,473)
------------------ ------------------
Net increase (decrease) in net assets resulting from operations 2,009,839,986 (82,384,310)
Net contributions 769,281,348 8,667,173,508
------------------ ------------------
Total increase in net assets 2,779,121,334 8,584,789,198
Net assets at beginning of period (Note 1) 8,584,839,198 50,000
=================== =================
Net assets at end of period $11,363,960,532 $8,584,839,198
=================== =================
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Growth Trends Portfolio
(Unaudited as to Jan. 31, 1997)
- --------------------------------------------------------------------------------
1. Summary of significant accounting policies
The Growth Trends Portfolio (Portfolio) is a series of Growth Trust (Trust) and
is registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. Growth Trends Portfolio
invests primarily in common stocks of companies showing potential for
significant growth and operating in areas where economic or technological
changes are occurring. The Declaration of Trust permits the Trustees to issue
non-transferable interests in the Portfolio. On April 15, 1996, American Express
Financial Corporation (AEFC) contributed $50,000 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 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 and sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Portfolio may incur a
loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolio pays a premium whether or not
the option is exercised. The Portfolio also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell stock index 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.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
- --------------------------------------------------------------------------------
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.6% to 0.5% annually. The fees may be increased or decreased
by a performance adjustment based on a comparison of the performance of Class A
shares of IDS New Dimensions Fund to the Lipper Growth Fund Index. The maximum
adjustment is 0.12% of the Portfolio's average daily net assets on an annual
basis. The adjustment increased the fee by $2,961,635 for the six months ended
Jan. 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.
For the period ended Jan. 31, 1997, the Portfolio's custodian fees were reduced
by $9,200 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 $1,949,477,837 and $1,365,047,483, respectively, for the
six months ended Jan. 31, 1997. For the same period, the portfolio turnover rate
was 15%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $179,373 for
this period.
<PAGE>
<TABLE>
<CAPTION>
Growth Trends Portfolio (Percentages represent value of
Jan. 31, 1997 (Unaudited) investments compared to net assets)
Investments in securities of unaffiliated issuers
- ---------------------------------------------------------------------------------------------------
Common stocks (87.8%)
- ---------------------------------------------------------------------------------------------------
Issuer Shares Value (a)
- ---------------------------------------------------------------------------------------------------
Aerospace & defense (4.3%)
<S> <C> <C>
Boeing 2,250,000 $ 241,031,250
Lockheed Martin 1,200,000 110,400,000
United Technologies 2,000,000 139,500,000
----------------------
Total 490,931,250
- ----------------------------------------------------------------------------------------------------
Airlines (1.1%)
AMR 1,600,000 (b) 128,800,000
- ----------------------------------------------------------------------------------------------------
Automotive & related (1.1%)
Chrysler 3,400,000 118,575,000
- ----------------------------------------------------------------------------------------------------
Banks and savings & loans (7.8%)
Barnett Banks 1,350,000 59,400,000
Citicorp 3,200,000 372,400,000
MBNA 3,000,000 103,500,000
Norwest 4,820,000 229,552,500
State Street Boston 1,700,000 124,312,500
----------------------
Total 889,165,000
- ----------------------------------------------------------------------------------------------------
Beverages & tobacco (2.6%)
Anheuser-Busch 2,500,000 106,250,000
Coca-Cola 3,200,000 185,200,000
----------------------
Total 291,450,000
- ----------------------------------------------------------------------------------------------------
Building materials & construction (0.8%)
Tyco Intl 1,500,000 85,687,500
- ----------------------------------------------------------------------------------------------------
Chemicals (3.8%)
IMC Global 1,600,000 61,000,000
Monsanto 7,000,000 265,125,000
Praxair 800,000 37,100,000
See accompanying notes to investments in securities.
USA Waste Service 2,000,000 (b) 73,000,000
----------------------
Total 436,225,000
- ----------------------------------------------------------------------------------------------------
Communications equipment & services (2.3%)
ADC Telecommunications 2,200,000 (b) 78,925,000
Andrew 1,200,000 (b) 68,925,000
Ascend Communications 400,000 (b) 27,850,000
Tellabs 2,000,000 (b) 82,375,000
----------------------
Total 258,075,000
- ----------------------------------------------------------------------------------------------------
Computers & office equipment (15.5%)
Cisco Systems 6,000,000 (b) 418,500,000
Compaq Computer 2,100,000 (b) 182,437,500
Computer Associates Intl 1,400,000 63,525,000
Computer Sciences 1,500,000 (b) 106,125,000
First Data 3,000,000 108,000,000
Hewlett-Packard 3,400,000 178,925,000
Ikon Office Solutions 1,350,000 59,568,750
Microsoft 2,400,000 (b) 244,800,000
Oracle 3,400,000 (b) 132,175,000
Parametric Technology 2,500,000 (b) 144,375,000
3Com 1,800,000 (b) 120,825,000
----------------------
Total 1,759,256,250
- ----------------------------------------------------------------------------------------------------
Electronics (4.3%)
Intel 3,000,000 486,750,000
- ----------------------------------------------------------------------------------------------------
Energy (2.4%)
Exxon 1,000,000 103,625,000
Mobil 1,000,000 131,250,000
Unocal 1,000,000 42,125,000
----------------------
Total 277,000,000
- ----------------------------------------------------------------------------------------------------
Energy equipment & services (1.0%)
Fluor 1,600,000 113,800,000
- ----------------------------------------------------------------------------------------------------
Financial services (1.5%)
Household Intl 600,000 59,475,000
Morgan Stanley 1,400,000 79,975,000
Travelers Group 597,500 31,294,062
----------------------
Total 170,744,062
- ---------------------------------------------------------------------------------------------------
Food (2.0%)
ConAgra 4,000,000 202,000,000
Pioneer Hi-Bred Intl 400,000 26,950,000
----------------------
Total 228,950,000
- ----------------------------------------------------------------------------------------------------
Health care (9.0%)
Amgen 2,000,000 (b) 112,750,000
Boston Scientific 1,000,000 (b) 68,250,000
Johnson & Johnson 3,800,000 218,975,000
Lilly (Eli) 200,000 17,425,000
Medtronic 1,720,000 117,820,000
Merck 2,100,000 190,575,000
Pfizer 3,200,000 297,200,000
----------------------
Total 1,022,995,000
- ----------------------------------------------------------------------------------------------------
Health care services (1.4%)
Cardinal Health 1,300,000 81,412,500
HBO & Co 1,300,000 81,412,500
----------------------
Total 162,825,000
- ----------------------------------------------------------------------------------------------------
Household products (2.7%)
Gillette 2,100,000 171,150,000
Procter & Gamble 1,200,000 138,600,000
----------------------
Total 309,750,000
- ---------------------------------------------------------------------------------------------------
Industrial equipment & services (1.9%)
Deere & Co 3,600,000 153,900,000
Illinois Tool Works 720,000 58,770,000
----------------------
Total 212,670,000
- ----------------------------------------------------------------------------------------------------
Insurance (2.7%)
ACE Limited 1,600,000 94,600,000
AFLAC 600,000 23,925,000
American Intl Group 1,000,000 121,125,000
UNUM 840,000 63,525,000
----------------------
Total 303,175,000
- ----------------------------------------------------------------------------------------------------
Leisure time & entertainment (1.8%)
Marriot Intl 2,400,000 127,500,000
Mattel 1,000,000 28,125,000
Mirage Resorts 2,000,000 (b) 50,250,000
----------------------
Total 205,875,000
- ----------------------------------------------------------------------------------------------------
Media (0.2%)
Belo (AH) Cl A 700,000 26,687,500
- ----------------------------------------------------------------------------------------------------
Metals (0.6%)
Aluminum Co of America 1,000,000 69,000,000
- ----------------------------------------------------------------------------------------------------
Multi-industry conglomerates (5.9%)
Emerson Electric 1,700,000 167,875,000
General Electric 3,800,000 391,400,000
Minnesota Mining & Mfg 1,000,000 85,250,000
Westinghouse Electric 1,500,000 27,562,500
----------------------
Total 672,087,500
- ----------------------------------------------------------------------------------------------------
Paper & packaging (0.5%)
Crown Cork & Seal 1,000,000 57,500,000
- ----------------------------------------------------------------------------------------------------
Restaurants & lodging (1.0%)
HFS 1,200,000 84,000,000
Promus Hotel 1,000,000 32,625,000
----------------------
Total 116,625,000
- ----------------------------------------------------------------------------------------------------
Retail (2.0%)
Albertson's 760,000 26,600,000
CUC Intl 1,120,000 27,720,000
Home Depot 600,000 29,700,000
Safeway 3,000,000 (b) 143,250,000
----------------------
Total 227,270,000
- ----------------------------------------------------------------------------------------------------
Textiles & apparel (1.0%)
Fruit of the Loom 800,000 32,100,000
Nike Cl B 1,200,000 81,450,000
----------------------
Total 113,550,000
- ----------------------------------------------------------------------------------------------------
Utilities -- electric (0.5%)
CMS Energy 1,750,000 58,625,000
- ----------------------------------------------------------------------------------------------------
Utilities -- telephone (1.1%)
AirTouch Communications 2,000,000 (b) 51,750,000
BellSouth 1,500,000 66,562,500
----------------------
Total 118,312,500
- ----------------------------------------------------------------------------------------------------
Foreign (5.0%)(c)
British Telecommunications ADR 400,000 27,450,000
Ericsson (LM) ADR 4,000,000 134,687,500
Northern Telecommunications 100,000 7,362,500
Royal Dutch Petroleum 1,000,000 173,500,000
Schlumberger 700,000 77,787,500
SmithKline Beecham ADR 2,000,000 144,500,000
----------------------
Total 565,287,500
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Total common stocks of unaffiliated issuers
(Cost: $6,112,887,161) $ 9,977,644,062
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Short-term securities (10.8%)
- ----------------------------------------------------------------------------------------------------
Issuer Annualized Amount Value (a)
yield on payable at
date of maturity
purchase
- ----------------------------------------------------------------------------------------------------
Certificates of deposit (0.4%)
Morgan Guaranty
04-28-97 5.40% $30,800,000 $ 30,389,128
Harris Trust
02-10-97 5.33 16,600,000 16,600,000
Total 46,989,128
- ----------------------------------------------------------------------------------------------------
Commercial paper (10.2%)
ABB Treasury Center (USA)
02-19-97 5.31 7,600,000 (d) 7,579,898
03-12-97 5.37 8,200,000 (d) 8,149,605
ABN Amro
07-21-97 5.50 8,900,000 8,666,219
A.I Credit
04-08-97 5.42 5,400,000 5,344,524
Albertson's
02-14-97 5.33 10,000,000 9,980,825
Aluminum Co of America
03-06-97 5.32 10,000,000 9,951,508
American General Capital
04-10-97 5.40 6,500,000 (d) 6,431,230
04-18-97 5.41 8,800,000 (d) 8,696,101
American General Finance
03-19-97 5.43 8,000,000 7,943,464
Ameritech Capital Funding
03-05-97 5.37 10,000,000 9,949,844
04-14-97 5.37 6,300,000 (d) 6,229,482
ANZ (Delaware)
02-25-97 5.36 9,900,000 9,861,552
05-01-97 5.41 16,900,000 16,665,935
Aon
02-24-97 5.36 10,000,000 9,963,332
03-10-97 5.38 8,500,000 8,451,328
Associates North America
02-21-97 5.38 7,000,000 6,979,195
02-26-97 5.37 15,000,000 14,939,424
03-31-97 5.36 7,500,000 7,432,066
AVCO Financial Services
02-03-97 5.39 10,300,000 10,296,705
03-27-97 5.35 10,000,000 9,914,461
03-28-97 5.35 13,200,000 13,087,924
04-01-97 5.35 14,700,000 14,564,798
05-05-97 5.40 13,800,000 13,600,375
BBV Finance
02-24-97 5.32 8,400,000 8,371,557
BellSouth
02-07-97 5.36 6,900,000 6,893,285
03-13-97 5.42 10,000,000 9,937,038
Beneficial
03-06-97 5.33 8,800,000 8,757,166
CAFCO
02-24-97 5.45 4,300,000 (d) 4,283,904
03-20-97 5.35 12,100,000 12,016,117
04-17-97 5.39 8,000,000 (d) 7,906,773
Cargill
02-10-97 5.31 7,200,000 (d) 7,190,478
03-17-97 5.34 8,400,000 (d) 8,345,587
Chevron
03-13-97 5.35 7,000,000 (d) 6,958,622
Ciesco LP
02-07-97 5.36 8,100,000 8,092,818
02-25-97 5.39 10,600,000 10,562,193
CIT Group
02-18-97 5.33 7,500,000 7,481,229
03-13-97 5.39 3,750,000 3,726,389
Clorox
04-17-97 5.44 13,200,000 13,046,176
Commercial Credit
02-20-97 5.31 10,100,000 10,071,801
02-20-97 5.33 7,000,000 6,980,419
02-28-97 5.33 14,900,000 14,840,661
Commerzbank U.S. Finance
02-04-97 5.37 12,000,000 11,994,670
03-04-97 5.39 10,000,000 9,953,931
Consolidated Natural Gas
02-04-97 5.63 1,600,000 1,599,253
CPC Intl
02-24-97 5.41 17,000,000 (d) 16,936,365
03-05-97 5.39 10,000,000 (d) 9,948,965
03-11-97 5.35 12,000,000 (d) 11,929,043
04-03-97 5.41 13,800,000 (d) 13,668,808
04-07-97 5.41 6,900,000 (d) 6,830,172
05-23-97 5.40 9,000,000 (d) 8,844,880
Dean Witter Discover & Co
03-19-97 5.38 5,600,000 5,559,731
03-20-97 5.34 15,000,000 14,896,208
04-15-97 5.38 15,000,000 14,829,800
04-25-97 5.38 15,000,000 14,806,800
Deutsche Bank Financial
02-10-97 5.37 6,300,000 6,290,307
First Union Bank
02-18-97 5.36 16,800,000 16,751,617
Fleet Funding
02-26-97 5.31 8,000,000 (d) 7,970,611
Ford Motor Credit
02-12-97 5.37 20,200,000 20,156,345
03-05-97 5.33 7,000,000 6,967,022
Gateway Fuel
02-05-97 5.37 9,164,000 9,157,208
02-10-97 5.36 6,850,000 6,840,890
General Electric Capital
03-17-97 5.35 6,700,000 6,656,435
Goldman Sachs
04-17-97 5.39 5,000,000 4,941,733
Household Finance
02-19-97 5.36 11,200,000 11,164,384
03-06-97 5.32 11,800,000 11,742,672
03-11-97 5.34 20,000,000 19,887,900
03-13-97 5.35 6,000,000 5,961,482
Kredietbank North America Finance
02-25-97 5.30 4,900,000 4,882,752
05-06-97 5.42 6,000,000 5,912,283
Merrill Lynch
04-07-97 5.44 10,000,000 9,898,800
Metlife Funding
02-18-97 5.37 6,600,000 6,581,294
02-27-97 5.36 15,054,000 14,987,867
03-06-97 5.37 8,200,000 8,156,672
03-24-97 5.44 7,600,000 7,540,453
Michigan Consolidated Gas
02-11-97 5.41 5,000,000 4,991,643
02-20-97 5.42 5,000,000 4,984,077
02-21-97 5.42 5,000,000 4,982,982
02-28-97 5.36 8,200,000 8,162,734
Mobil Australia Finance (Delaware)
02-03-97 5.36 10,100,000 (d) 10,096,216
03-03-97 5.39 10,000,000 (d) 9,948,214
03-17-97 5.41 6,600,000 (d) 6,553,573
04-02-97 5.37 7,000,000 (d) 6,934,527
Morgan Stanley Group
02-27-97 5.32 8,900,000 8,865,933
Natl Australia Funding (Delaware)
02-05-97 5.34 8,800,000 8,793,483
02-10-97 5.34 6,100,000 6,091,887
03-26-97 5.46 7,000,000 6,941,135
04-16-97 5.41 10,000,000 9,885,000
04-25-97 5.40 5,000,000 4,937,700
NationsBank
02-13-97 5.37 9,600,000 9,580,086
Northern States Power
03-10-97 5.41 10,400,000 10,338,103
03-25-97 5.46 12,000,000 11,902,564
PACCAR
02-27-97 5.32 6,000,000 5,977,033
02-28-97 5.35 6,800,000 6,772,817
Pfizer
03-03-97 5.30 7,000,000 (d) 6,969,258
03-12-97 5.37 10,600,000 (d) 10,532,386
Rabobank USA Finance
04-17-97 5.44 10,000,000 9,883,467
Reed Elsevier
03-14-97 5.36 6,000,000 (d) 5,961,754
03-18-97 5.37 12,300,000 (d) 12,212,016
SAFECO Credit
02-06-97 5.37 10,000,000 9,991,236
03-21-97 5.34 15,000,000 14,894,000
03-24-97 5.52 5,300,000 5,258,474
04-02-97 5.36 6,800,000 6,736,397
04-11-97 5.37 7,000,000 6,927,589
Siemens
03-05-97 5.35 6,000,000 5,971,573
04-14-97 5.41 14,700,000 14,535,458
Societe Generale North America
02-11-97 5.34 9,458,000 9,441,238
02-13-97 5.36 11,000,000 10,977,005
02-14-97 5.35 5,700,000 5,686,922
03-07-97 5.36 6,500,000 6,467,341
Sysco
02-06-97 5.37 2,200,000 (d) 2,198,080
02-25-97 5.38 8,000,000 (d) 7,966,698
Toyota Motor
02-14-97 5.40 4,450,000 4,440,246
Transamerica Financial
02-03-97 5.39 3,200,000 3,198,808
02-21-97 5.35 10,000,000 9,964,396
02-26-97 5.30 5,000,000 4,981,701
03-20-97 5.38 7,300,000 7,247,349
03-27-97 5.47 6,900,000 6,840,978
04-21-97 5.38 9,600,000 9,482,240
USAA Capital
02-14-97 5.37 6,400,000 6,385,904
02-20-97 5.42 13,000,000 12,958,047
02-28-97 5.38 22,600,000 22,497,700
03-10-97 5.37 9,100,000 9,046,945
03-17-97 5.37 10,000,000 9,930,912
05-15-97 5.41 7,100,000 6,986,369
U S WEST Communications
03-07-97 5.37 15,000,000 14,917,282
03-13-97 5.36 12,900,000 12,823,603
03-26-97 5.36 6,200,000 6,151,440
Total 1,161,593,880
- ----------------------------------------------------------------------------------------------------
Letters of credit (0.2%)
Bank of America --
Formosa Plastics
02-04-97 5.40 13,300,000 13,292,483
03-18-97 5.42 7,200,000 7,147,434
Total 20,439,917
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Total short-term securities
(Cost: $1,229,866,951) $ 1,229,022,925
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Total investment in securities of unaffiliated issuers
(Cost: $7,342,754,112) $ 11,206,666,987
- ----------------------------------------------------------------------------------------------------
Investments in securities of affiliated issuer (e)
- ----------------------------------------------------------------------------------------------------
Common stock (1.4%)
Issuer Shares Value (a)
- ----------------------------------------------------------------------------------------------------
Reynolds & Reynolds Cl A 5,800,000 $ 156,600,000
- ----------------------------------------------------------------------------------------------------
Total investments in securities of affiliated issuer
(Cost: $79,923,187) $ 156,600,000
- ----------------------------------------------------------------------------------------------------
Total investments in securities
(Cost: $7,422,677,299)(f) $ 11,363,266,987
- ----------------------------------------------------------------------------------------------------
Notes to investments in securities
- ----------------------------------------------------------------------------------------------------
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Commercial paper sold within terms of a private placement memorandum, exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only
to dealers in that program or other "accredited investors." This security has been determined
to be liquid under guidelines established by the board.
(e) Investment 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 Jan. 31,
1997 are as follows:
Beginning Purchase Sales Ending Dividend
Issuer cost cost cost cost income
- ---------------------------------------------------------------------------------------------------------------------
Reynolds & Reynolds Cl A $72,334,647 $7,588,540 $ -- $79,923,187 $848,000
(f) At Jan. 31, 1997, the cost of securities for federal income tax purposes was approximately
$7,422,677,000 and the approximate aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $ 3,963,500,000
Unrealized depreciation (22,910,000)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation $ 3,940,590,000
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Financial statements
Statement of assets and liabilities
Aggressive Growth Portfolio
Jan. 31, 1997
Assets
Investments in securities, at value (Note 1) (Unaudited)
(identified cost $141,659,156) $144,580,923
Cash in bank on demand deposit 1,227,491
Dividends and accrued interest receivable 93,922
Receivable for investment securities sold 6,906,566
----------------
Total assets 152,808,902
----------------
Liabilities
Payable for investment securities purchased 4,236,765
Accrued investment management services fee 2,568
Other accrued expenses 19,444
----------------
Total liabilities 4,258,777
----------------
Net assets $148,550,125
================
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statement of operations
Aggressive Growth Portfolio
For the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Investment income
Income: (Unaudited)
Dividends (net of foreign taxes withheld of $390) $ 405,901
Interest 123,990
----------------
Total income 529,891
----------------
Expenses (Note 2):
Investment management services fee 217,645
Compensation of board members 2,813
Custodian fees 18,546
Audit fees 6,135
Administrative 803
Other 1,319
----------------
Total expenses 247,261
Earnings credits on cash balances (Note 2) (343)
----------------
Total net expenses 246,918
----------------
Investment income -- net 282,973
----------------
Realized and unrealized gain -- net
Net realized gain on security transactions (Note 3) 4,798,167
Net realized gain on financial futures contracts 321,957
----------------
Net realized gain on investments 5,120,124
Net change in unrealized appreciation or depreciation 3,056,467
----------------
Net gain on investments 8,176,591
================
Net increase in net assets resulting from operations $8,459,564
================
See accompanying notes to financial statements.
<PAGE>
Statement of changes in net assets
Aggressive Growth Portfolio
For the period from Aug. 19, 1996
(commencement of operations) to Jan. 31, 1997
Operations
(Unaudited)
Investment income -- net $ 282,973
Net realized gain on investments 5,120,124
Net change in unrealized appreciation or depreciation 3,056,467
-----------------
Net increase in net assets resulting from operations 8,459,564
Net contributions 140,086,561
-----------------
Total increase in net assets 148,546,125
Net assets at beginning of period (Note 1) 4,000
=================
Net assets at end of period $148,550,125
=================
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
Aggressive Growth Portfolio
(Unaudited as to Jan. 31, 1997)
- ----------------------------------------------------------------------
1. Summary of significant accounting policies
The Aggressive Growth Portfolio (the Portfolio) is a series of Growth Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. Aggressive Growth
Portfolio invests primarily in equity securities of companies that comprise the
S&P 500. The Declaration of Trust permits the Trustees to issue non-transferable
interests in the Portfolio. On Aug. 16, 1996, American Express Financial
Corporation (AEFC) contributed $4,000 to the Portfolio. Operations commenced on
Aug. 19, 1996.
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 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.
<PAGE>
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy and
write options traded on any U.S. or foreign exchange where the completion of the
obligation is dependent upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities and may write cash-secured put options. The risk
in writing a call option is that the Portfolio gives up the opportunity of
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of not being able to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy 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.
<PAGE>
Foreign currency translations
and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete the obligations of the contract.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
- -----------------------------------------------------------------------
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.65% to 0.5% annually.
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.
For the period ended Jan. 31, 1997, the Portfolio's custodian fees were reduced
by $343 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 $188,503,109 and $61,527,341, respectively, for the
period ended Jan. 31,1997. For the same period, the portfolio turnover rate was
82%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $1,425 for this
period.
- ---------------------------------------------------------------------
4. Stock index futures contracts
Investments in securities at Jan. 31, 1997, included securities valued at
$997,500 that were pledged as collateral to cover initial margin deposits on 32
purchase contracts. The market value of the open contracts at Jan. 31, 1997, was
$12,718,400 with a net unrealized gain of $134,700.
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
Aggressive Growth Portfolio (Percentages represent value of
Jan. 31, 1997 (Unaudited) investments compared to net assets)
- --------------------------------------------------------------------------------------------------------------------
Common stocks (90.7%)
- --------------------------------------------------------------------------------------------------------------------
Issuer Shares Value (a)
- --------------------------------------------------------------------------------------------------------------------
Aerospace & defense (2.8%)
<S> <C> <C>
Raytheon 90,500 $ 4,151,688
- --------------------------------------------------------------------------------------------------------------------
Airlines (0.5%)
AMR 8,900 (b) 716,450
- --------------------------------------------------------------------------------------------------------------------
Automotive & related (3.1%)
Chrysler 67,200 2,343,600
General Motors 39,400 2,324,600
-------------------
Total 4,668,200
- --------------------------------------------------------------------------------------------------------------------
Banks and savings & loans (8.7%)
Bank of Boston 89,400 6,369,750
NationsBank 60,800 6,566,400
-------------------
Total 12,936,150
- --------------------------------------------------------------------------------------------------------------------
Beverages & tobacco (5.4%)
Anheuser-Busch 41,500 1,763,750
Coca-Cola 108,400 6,273,650
-------------------
Total 8,037,400
- --------------------------------------------------------------------------------------------------------------------
Building materials & construction (2.2%)
Tyco Intl 57,400 3,278,975
- --------------------------------------------------------------------------------------------------------------------
Computers & office equipment (11.3%)
Computer Associates Intl 71,700 3,253,387
First Data 75,000 2,700,000
Ikon Office Solutions 14,400 635,400
Oracle 74,600 (b) 2,900,075
Silicon Graphics 198,800 (b) 5,442,150
See accompanying notes to investments in securities.
3Com 28,200 (b) 1,892,925
-------------------
Total 16,823,937
- --------------------------------------------------------------------------------------------------------------------
Food (4.8%)
CPC Intl 39,500 3,036,563
Quaker Oats 106,800 4,098,450
-------------------
Total 7,135,013
- --------------------------------------------------------------------------------------------------------------------
Health care (17.5%)
ALZA 107,200 (b) 3,095,400
American Home Products 89,100 5,646,712
Amgen 55,700 (b) 3,140,088
Baxter Intl 16,600 765,675
Boston Scientific 10,300 (b) 702,975
Guidant 50,700 2,826,525
Johnson & Johnson 102,900 5,929,613
Medtronic 8,800 602,800
Schering-Plough 43,600 3,297,250
-------------------
Total 26,007,038
- --------------------------------------------------------------------------------------------------------------------
Health care services (2.5%)
Service Corp Intl 33,900 983,100
Tenet Healthcare 43,700 (b) 1,179,900
United Healthcare 30,200 1,472,250
-------------------
Total 3,635,250
- --------------------------------------------------------------------------------------------------------------------
Industrial equipment & services (2.7%)
Deere & Co 38,300 1,637,325
Illinois Tool Works 28,800 2,350,800
-------------------
Total 3,988,125
- --------------------------------------------------------------------------------------------------------------------
Media (1.4%)
Time Warner 53,700 2,067,450
- --------------------------------------------------------------------------------------------------------------------
Metals (1.8%)
Aluminum Co of America 38,500 2,656,500
- --------------------------------------------------------------------------------------------------------------------
Multi-industry conglomerates (7.5%)
Emerson Electric 56,200 5,549,750
General Signal 122,400 5,538,600
-------------------
Total 11,088,350
- --------------------------------------------------------------------------------------------------------------------
Paper & packaging (0.5%)
Crown Cork & Seal 13,800 793,500
- --------------------------------------------------------------------------------------------------------------------
Restaurants & lodging (0.7%)
Hilton Hotels 36,500 (c) 1,040,250
- --------------------------------------------------------------------------------------------------------------------
Retail (7.4%)
American Stores 15,200 638,400
Autozone 56,000 (b) 1,211,000
CUC Intl 47,100 (b) 1,165,725
Federated Dept Stores 61,200 (b) 2,011,950
Kroger 10,900 (b) 520,475
Lowe's 39,600 1,311,750
Rite Aid 15,100 604,000
Wal Mart Stores 149,600 3,553,000
-------------------
Total 11,016,300
- --------------------------------------------------------------------------------------------------------------------
Utilities -- electric (2.0%)
General Public Utilities 86,600 2,901,100
- --------------------------------------------------------------------------------------------------------------------
Utilities -- telephone (5.9%)
AirTouch Communications 110,200 (b) 2,851,425
MCI Communications 167,100 5,869,387
-------------------
Total 8,720,812
- --------------------------------------------------------------------------------------------------------------------
Foreign (2.0%) (d)
Northern Telecom 41,200 3,033,350
- --------------------------------------------------------------------------------------------------------------------
Total common stocks
(Cost: $131,774,071) $ 134,695,838
- --------------------------------------------------------------------------------------------------------------------
Short-term securities (6.6%)
- --------------------------------------------------------------------------------------------------------------------
Issuer Annualized Amount Value (a)
yield on payable at
date of maturity
purchase
- --------------------------------------------------------------------------------------------------------------------
Government agency (0.8%)
Federal Home Loan Mtge Assn Disc Nt
02-13-97 5.24% $1,200,000 $ 1,197,908
- --------------------------------------------------------------------------------------------------------------------
Commercial paper (4.5%)
Bell Atlantic
02-06-97 5.31 2,500,000 2,498,160
Consolidated Natural Gas
02-20-97 5.31 700,000 698,042
Ford Motor Credit
03-10-97 5.35 1,000,000 994,532
Sara Lee
02-05-97 5.28 1,300,000 1,299,237
02-10-97 5.35 1,200,000 1,198,395
-------------------
Total 6,688,366
- --------------------------------------------------------------------------------------------------------------------
Letter of credit (1.3%)
Federal Home Loan Bank
02-05-97 5.35 2,000,000 1,998,811
- --------------------------------------------------------------------------------------------------------------------
Total short-term securities
(Cost: $9,885,085) $ 9,885,085
- --------------------------------------------------------------------------------------------------------------------
Total investment in securities
(Cost: $141,659,156)(e) $ 144,580,923
- --------------------------------------------------------------------------------------------------------------------
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 stock index futures purchase contracts. (See Note 4
to the financial statements):
Type of security contracts
- ----------------------------------------------------------------------
S&P 500, June 1997 32
(d) Foreign security values are stated in U.S. dollars.
(e) At Jan. 31, 1997, the cost of securities for federal income tax purposes was approximately
$141,659,000 and the approximate aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $6,523,000
Unrealized depreciation (3,601,000)
- -------------------------------------------------------------------------------------
Net unrealized appreciation $2,922,000
- -------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial
statements
Statements of assets and liabilities
Strategist Special Growth Fund
Feb. 28, 1997
Assets
(Unaudited)
<S> <C>
Investment in corresponding Portfolio $8,090,607
Expense receivable from AEFC 153
Organizational costs 98
------------
Total assets 8,090,858
------------
Liabilities
Accrued distribution fee 56
Accrued administrative services fees and expenses 13
Other accrued expenses 12,200
------------
Total liabilities 12,269
------------
Net assets applicable to outstanding capital stock $8,078,589
============
Represented by
Capital stock -- authorized 3,000,000,000 shares of $.01
par value; outstanding 1,406,997 shares $ 14,070
Additional paid-in capital 8,134,025
Excess distributions over net investment income (623)
Accumulated net realized gain 74,492
Unrealized depreciation (143,375)
============
Total -- representing net assets applicable to outstanding capital stock $8,078,589
============
Net asset value per share of outstanding capital stock $ 5.74
<PAGE>
Financial statements
Statements of operations
Strategist Special Growth Fund
One month ended Feb. 28, 1997
Investment income
(Unaudited)
Income:
Dividends $ 970
Interest 1,666
------------
Total income 2,636
------------
Expenses:
Distribution fee 587
Transfer agency fee 113
Administrative services fees and expenses 141
Postage 280
Registration fees 5,628
Reports to shareholders 420
Audit fees 134
Administrative 89
Other 286
------------
Total feeder expenses 7,678
Expenses allocated from corresponding Portfolio 1,696
------------
Total expenses 9,374
Less expenses reimbursed by AEFC (6,059)
------------
Total net expenses 3,315
------------
Investment loss -- net (679)
------------
Realized and unrealized gain -- net
Net realized gain on security transactions 6,379
Net realized loss on financial futures contracts (3,286)
------------
Net realized gain on investments 3,093
Net change in unrealized appreciation or depreciation (164,499)
------------
Net loss on investments (161,406)
------------
============
Net decrease in net assets resulting from operations $ (162,085)
============
<PAGE>
Financial statements
Statement of changes in net assets
Strategist Special Growth Fund
One month ended Feb. 28, 1997
Operations (Unaudited)
Investment loss -- net $ (679)
Net gain on investments 3,093
Net change in unrealized appreciation or depreciation of investments (164,499)
------------
Net decrease in net assets resulting from operations (162,085)
------------
Capital share transactions
Proceeds from sales 7,253,926
Payments for redemptions (3,038)
------------
Increase in net assets from capital share transactions 7,250,888
------------
Total increase in net assets 7,088,803
Net assets at beginning of period 989,786
------------
Net assets at end of period (including excess of distributions over net $8,078,589
investment income $623) ============
</TABLE>
