Strategist Growth Fund, Inc.
1998 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) 13
Notes to financial statements (Growth Portfolio) 16
Investments in securities (Growth Portfolio) 20
Financial statements (Growth Trends Portfolio) 27
Notes to financial statements (Growth Trends Portfolio) 30
Investments in securities (Growth Trends Portfolio) 35
Financial statements (Aggressive Growth Portfolio) 46
Notes to financial statements (Aggressive Growth Portfolio) 49
Investments in securities (Aggressive Growth Portfolio) 54
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<CAPTION>
Financial statements
Statements of assets and liabilities
Strategist Growth Fund, Inc.
Jan. 31, 1998 (Unaudited)
Strategist Strategist Strategist
Growth Growth Special
Fund Trends Fund Growth Fund
Assets
<S> <C> <C> <C>
Investment in corresponding Portfolio (Note 1) $20,609,999 $19,539,117 $1,512,750
Organizational costs (Note 1) 1,707 1,707 --
----- -----
Total assets 20,611,706 19,540,824 1,512,750
========== ========== =========
Liabilities
Accrued distribution fee 141 133 10
Accrued transfer agency fee 34 24 7
Accrued administrative services fees 28 27 2
Other accrued expenses 20,477 54,759 27,082
------ ------ ------
Total liabilities 20,680 54,943 27,101
------ ------ ------
Net assets applicable to outstanding capital stock $20,591,026 $19,485,881 $1,485,649
----------- ----------- ----------
Represented by
Capital stock-- $.01 par value (Note 1) $ 6,156 $ 7,303 $ 2,678
Additional paid-in capital 13,994,192 11,553,604 1,315,194
Undistributed (excess of distributions over)
net investment income (45,285) 9,973 (188)
Accumulated net realized gain (loss) (Note 4) (1,268,134) 556,767 110,913
Unrealized appreciation (depreciation)
on investments 7,904,097 7,358,234 57,052
--------- --------- ------
Total -- representing net assets applicable
to outstanding capital stock $20,591,026 $19,485,881 $1,485,649
----------- ----------- ----------
Shares outstanding 615,576 730,326 267,774
------- ------- -------
Net asset value per share of
outstanding capital stock $ 33.45 $ 26.68 $ 5.55
-------- -------- --------
See accompanying notes to financial statements.
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<CAPTION>
Statements of operations
Strategist Growth Fund, Inc.
Six months ended Jan. 31, 1998 (Unaudited)
Strategist Strategist Strategist
Growth Growth Special
Fund Trends Fund Growth Fund
Investment income
Income:
<S> <C> <C> <C>
Dividends $ 49,436 $ 97,915 $ 8,154
Interest 15,742 60,355 1,037
Less foreign taxes withheld (233) (725) (6)
---- ---- --
Total income 64,945 157,545 9,185
------ ------- -----
Expenses (Note 2):
Expenses allocated from corresponding Portfolio 61,362 51,101 4,546
Distribution fee 27,858 25,636 1,698
Transfer agency fee 6,161 4,224 1,117
Administrative services fees and expenses 5,572 5,127 407
Compensation of board members 2,811 4,479 --
Postage 102 102 102
Registration fees 2,474 265 11,437
Reports to shareholders 102 102 102
Audit fees 3,250 3,500 1,600
Other 538 212 --
--- --- ---
Total expenses 110,230 94,748 21,009
Less expenses reimbursed by AEFC (Note 2) -- -- (11,583)
------- ------ -------
Total net expenses 110,230 94,748 9,426
------- ------ -----
Investment income (loss)-- net (45,285) 62,797 (241)
------- ------ ----
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions 962,240 1,353,843 266,879
Financial futures contracts -- -- 4,737
----- ----- -----
Net realized gain (loss) on investments 962,240 1,353,843 271,616
Net change in unrealized appreciation
(depreciation) on investments (2,826,562) (1,168,579) (276,727)
---------- ---------- --------
Net gain (loss) on investments (1,864,322) 185,264 (5,111)
---------- ------- ------
Net increase (decrease) in net assets
resulting from operations $(1,909,607) $ 248,061 $ (5,352)
----------- ---------- ---------
See accompanying notes to financial statements.
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<CAPTION>
Statements of changes in net assets
Strategist Growth Fund, Inc.
Strategist Growth Fund
Six months ended Year ended
Jan. 31, 1998 July 31, 1997
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ (45,285) $ (51,484)
Net realized gain (loss) on investments 962,240 (109,388)
Net change in unrealized appreciation
(depreciation) on investments (2,826,562) 10,845,973
Net increase (decrease) in net assets
resulting from operations (1,909,607) 10,685,101
---------- ----------
Capital share transactions (Note 3)
Proceeds from sales 946,223 3,196,032
Payments for redemptions (1,826,173) (13,500,312)
---------- -----------
Increase (decrease) in net assets from
capital share transactions (879,950) (10,304,280)
-------- -----------
Total increase (decrease) in net assets (2,789,557) 380,821
Net assets at beginning of period 23,380,583 22,999,762
---------- ----------
Net assets at end of period $20,591,026 $23,380,583
=========== ===========
See accompanying notes to financial statements.
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<CAPTION>
Statements of changes in net assets
Strategist Growth Fund, Inc.
Strategist Growth Trends Fund
Six months ended Year ended
Jan. 31, 1998 July 31, 1997
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 62,797 $ 145,311
Net realized gain (loss) on investments 1,353,843 598,086
Net change in unrealized appreciation
(depreciation) on investments (1,168,579) 7,790,733
---------- ---------
Net increase (decrease) in net assets
resulting from operations 248,061 8,534,130
------- ---------
Distributions to shareholders from:
Net investment income (163,002) (72,259)
-------- -------
Capital share transactions (Note 3)
Proceeds from sales 801,389 1,812,239
Reinvestment of distributions at net asset value 163,002 72,259
Payments for redemptions (2,189,907) (14,278,934)
---------- -----------
Increase (decrease) in net assets
from capital share transactions (1,225,516) (12,394,436)
---------- -----------
Total increase (decrease) in net assets (1,140,457) (3,932,565)
Net assets at beginning of period 20,626,338 24,558,903
---------- ----------
Net assets at end of period $19,485,881 $20,626,338
=========== ===========
Undistributed net investment income $ 9,973 $ 110,178
----------- -----------
See accompanying notes to financial statements.
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<CAPTION>
Statement of changes in net assets
Strategist Growth Fund, Inc.
Strategist Special Growth Fund
Six months ended For the period
Jan. 31, 1998 from Aug. 19, 1996*
(Unaudited) to July 31, 1997
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ (241) $ 6,303
Net realized gain (loss) on investments 271,616 106,146
Net change in unrealized appreciation
(depreciation) on investments (276,727) 333,779
-------- -------
Net increase (decrease) in net assets
resulting from operations (5,352) 446,228
------ -------
Distributions to shareholders from:
Net investment income (4,833) (1,417)
Net realized gain (265,849) (1,000)
-------- ------
Total distributions (270,682) (2,417)
-------- ------
Capital share transactions (Note 3)
Proceeds from sales 246,814 8,268,135
Reinvestment of distributions at net asset value 270,682 2,417
Payments for redemptions (29,431) (7,441,745)
------- ----------
Increase (decrease) in net assets from
capital share transactions 488,065 828,807
------- -------
Total increase (decrease) in net assets 212,031 1,272,618
Net assets at beginning of period (Note 1) 1,273,618 1,000
--------- -----
Net assets at end of period $1,485,649 $1,273,618
========== ==========
Undistributed (excess of distributions over)
net investment income $ (188) $ 4,886
---------- ----------
*Commencement of operations.
See accompanying notes to financial statements.
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Notes to financial statements
Strategist Growth Fund, Inc.
(Unaudited as to Jan. 31, 1998)
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. Strategist Growth Fund, Inc. has 3 billion
authorized shares of capital stock that can be allocated among the separate
series as designated by the board. On Aug. 16, 1996, American Express Financial
Corporation (AEFC) invested $1,000 in Special Growth Fund that represented 200
shares. Operations commenced on Aug. 19, 1996.
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 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 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 U.S. and foreign
companies showing potential for significant growth and operating in 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 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, 1998, the percentages of the corresponding Portfolio
owned by Growth Fund, Growth Trends Fund and Special Growth Fund were 0.48%,
0.13% and 0.43%, 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
Each 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 from net investment income, declared and paid at
the end of the calendar year, 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, 1998, AEFC owned 1,966 shares of Growth Fund, 2,659 shares of Growth
Trends Fund and 123,193 shares of Special Growth Fund. At Jan. 31, 1998,
American Express Company (the parent company of AEFC) owned 496,980 shares of
Growth Fund and 628,873 shares of 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. Under an Administrative Services Agreement, each Fund pays AEFC a fee
for administration and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.05% to 0.03% (0.06% to 0.03% for
Special Growth Fund) annually.
Under a separate Transfer Agency Agreement, American Express Client Services
Corporation (AECSC) maintains shareholder accounts and records. Each Fund pays
AECSC 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 Fund expenses through Dec. 31, 1998. Under this agreement, each Fund's
total expenses would not exceed 1.30% (1.40% for Special Growth Fund) of each of
the Fund's average daily net assets.
3. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Jan. 31, 1998
Growth Special
Growth Trends Growth
Fund Fund Fund
Sold 27,443 30,913 39,119
Issued for reinvested distributions -- 6,303 49,575
Redeemed (54,949) (83,658) (5,544)
------- ------- ------
Net increase (decrease) (27,506) (46,442) 83,150
Period ended July 31, 1997
Growth Special
Growth Trends Growth
Fund Fund Fund*
Sold 113,943 85,325 1,430,220
Issued for reinvested distributions -- 3,331 439
Redeemed (464,310) (637,972) (1,246,235)
-------- -------- ----------
Net increase (decrease) (350,367) (549,316) 184,424
*Inception date was Aug. 19, 1996.
4. Capital loss carryover
For federal income tax purposes, Growth Fund and Growth Trends Fund
had capital loss carryovers at July 31, 1997 of $2,230,374 and $790,530,
respectively, that will expire in 2004 through 2006 for Growth Fund and 2004 for
Growth Trends Fund 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 its available capital loss carryover has been offset or expires.
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5. Financial highlights
The tables below show certain important information for evaluating each Fund's
results.
Financial highlights
Per share income and capital changesa
Growth Fund
Fiscal period ended July 31, 1998c 1997 1996b
<S> <C> <C> <C>
Net asset value, beginning of period $36.36 $23.15 $25.43
Income from investment operations:
Net investment income (loss) -- (.08) (.02)
Net gains (losses) (both realized
and unrealized) (2.91) 13.29 (2.26)
Total from investment operations (2.91) 13.21 (2.28)
Less distributions:
Total distributions -- -- --
Net asset value, end of period $33.45 $36.36 $23.15
Ratios/supplemental data:
Net assets, end of period (in millions) $21 $23 $23
Ratio of expenses to average
daily net assetse .99%d 1.01% 1.30%d
Ratio of net income (loss)
to average daily net assets (.41%)d (.20%) (.37%)d
Portfolio turnover rate
(excluding short-term securities) 17% 24% 5%
Total return (8.0%) 57.1% (9.0%)
Average brokerage commission ratef $.0471 $.0463 --
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was May 13, 1996.
c Six months ended Jan. 31, 1998 (Unaudited).
d Adjusted to an annual basis.
e The Advisor and Distributor voluntarily limited total operating expenses.
Without this agreement, the ratio of expenses to average daily net assets would
have been 1.03% and 1.86% for Growth Fund for the periods ended 1997 and 1996,
respectively.
f Effective fiscal year 1997, each Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions are
charged. The comparability of this information may be affected by the fact that
commission rates per share vary significantly among foreign countries.
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<CAPTION>
Financial highlights
Per share income and capital changesa
Growth Trends Fund
Fiscal period ended July 31, 1998c 1997 1996b
<S> <C> <C> <C>
Net asset value, beginning of period $26.55 $18.52 $19.00
Income from investment operations:
Net investment income (loss) .08 .16 .01
Net gains (losses) (both realized
and unrealized) .25 7.93 (.49)
Total from investment operations .33 8.09 (.48)
Less distributions:
Dividends from net investment income (.20) (.06) --
Net asset value, end of period $26.68 $26.55 $18.52
Ratios/supplemental data:
Net assets, end of period (in millions) $19 $21 $25
Ratio of expenses to average
daily net assetse .92%d 1.06% 1.30%d
Ratio of net income (loss)
to average daily net assets .61%d .58% .39%d
Portfolio turnover rate
(excluding short-term securities) 19% 32% 7%
Total return 1.3% 43.7% (2.5%)
Average brokerage commission ratef $.0474 $.0511 --
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was May 13, 1996.
c Six months ended Jan. 31, 1998 (Unaudited).
d Adjusted to an annual basis.
e The Advisor and Distributor voluntarily limited total operating expenses.
Without this agreement, the ratio of expenses to average daily net assets would
have been 1.10% and 1.76% for Growth Trends Fund for the periods ended 1997 and
1996, respectively.
f Effective fiscal year 1997, each Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions are
charged. The comparability of this information may be affected by the fact that
commission rates per share vary significantly among foreign countries.
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<CAPTION>
Financial highlights
Per share income and capital changesa
Special Growth Fund
<S> <C> <C>
Fiscal period ended July 31, 1998c 1997b
Net asset value, beginning of period $6.90 $5.00
Income from investment operations:
Net investment income (loss) -- .04
Net gains (losses) (both realized and unrealized) (.09) 1.88
Total from investment operations (.09) 1.92
Less distributions:
Dividends from net investment income (.02) (.01)
Distributions from realized gains (1.24) (.01)
Total distributions (1.26) (.02)
Net asset value, end of period $5.55 $6.90
Ratios/supplemental data:
Net assets, end of period (in millions) $1 $1
Ratio of expenses to average daily net assetse 1.39%d 1.36%d
Ratio of net income (loss)
to average daily net assets (.04%)d .26%d
Portfolio turnover rate
(excluding short-term securities) 85% 171%
Total return (1.0%) 38.4%
Average brokerage commission ratef $.0522 $.0405
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was Aug. 19, 1996.
c Six months ended Jan. 31, 1998 (Unaudited).
d Adjusted to an annual basis.
e The Advisor and Distributor voluntarily limited total operating expenses.
Without this agreement, the ratio of expenses to average daily net assets would
have been 3.17% for Special Growth Fund for the period ended July 31, 1997.
f Effective fiscal year 1997, each Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions are
charged. The comparability of this information may be affected by the fact that
commission rates per share vary significantly among foreign countries.
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<CAPTION>
Financial statements
Statement of assets and liabilities
Growth Portfolio
Jan. 31, 1998
Assets (Unaudited)
Investments in securities, at value (Note 1):
<S> <C>
Investments in securities of unaffiliated issuers $4,282,739,272
(identified cost $2,830,645,244)
Investments in securities of affiliated issuers 57,712,500
(identified cost $60,266,600)
Cash in bank on demand deposit 3,525,348
Dividends and accrued interest receivable 1,131,952
Receivable for investment securities sold 5,113,543
U.S. government securities held as collateral (Note 4) 33,671,375
Receivable for investment advisor 291,685
-------
Total assets 4,384,185,675
=============
Liabilities
Payable for investment securities purchased 13,878,961
Payable upon return of securities loaned (Note 4) 92,115,770
Accrued investment management services fee 65,557
Other accrued expenses 18,984
------
Total liabilities 106,079,272
-----------
Net assets $4,278,106,403
==============
See accompanying notes to financial statements.
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<CAPTION>
Statement of operations
Growth Portfolio
Six months ended Jan. 31, 1998
Investment income (Unaudited)
Income:
<S> <C>
Dividend $ 9,257,033
Interest 2,938,245
Less foreign taxes withheld (42,750)
-------
Total income 12,152,528
----------
Expenses (Note 2):
Investment management services fee 11,211,172
Compensation of board members 10,434
Custodian fees 158,540
Audit fees 12,375
Other 15,875
------
Total expenses 11,408,396
Earnings credits on cash balances (Note 2) (8,810)
------
Total net expenses 11,399,586
----------
Investment income (loss) -- net 752,942
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) 174,937,329
Net change in unrealized appreciation (depreciation)
on investments (509,069,154)
------------
Net gain (loss) on investments (334,131,825)
------------
Net increase (decrease) in net assets resulting from operations $(333,378,883)
-------------
See accompanying notes to financial statements.
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<CAPTION>
Statements of changes in net assets
Growth Portfolio
Six months ended Year ended
Jan. 31, 1998 July 31, 1997
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 752,942 $ 5,221,628
Net realized gain (loss) on investments 174,937,329 50,423,029
Net change in unrealized appreciation
(depreciation) on investments (509,069,154) 1,363,502,469
------------ -------------
Net increase (decrease) in net assets
resulting from operations (333,378,883) 1,419,147,126
Net contributions (withdrawals) from partners 480,401,563 506,769,449
----------- -----------
Total increase (decrease) in net assets 147,022,680 1,925,916,575
Net assets at beginning of period 4,131,083,723 2,205,167,148
------------- -------------
Net assets at end of period $4,278,106,403 $4,131,083,723
============== ==============
See accompanying notes to financial statements.
</TABLE>
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Notes to financial statements
Growth Portfolio
(Unaudited as to Jan. 31, 1998)
1. Summary of significant accounting policies
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.
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. Debt securities are generally traded in
the over-the-counter market and are valued at a price deemed best to reflect
fair value as quoted by dealers who make markets in these securities or by an
independent pricing service. Securities for which market quotations are not
readily available are valued at fair value according to methods selected in good
faith by the board. Short-term securities maturing in more than 60 days from the
valuation date are valued at the market price or approximate market value based
on current interest rates; those maturing in 60 days or less are valued at
amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy and
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The 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 and write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the 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 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 decreased the fee by $445,024 for the six months ended
Jan. 31, 1998.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio, and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
For the six months ended Jan. 31, 1998, the Portfolio's custodian fees were
reduced by $8,810 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 $1,154,905,272 and $669,480,957, respectively, for the
six months ended Jan. 31, 1998. For the same period, the portfolio turnover rate
was 17%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $185,253 for the
six months ended Jan. 31, 1998.
4. Lending of portfolio securities
At Jan. 31, 1998, securities valued at $91,009,133 were on loan to brokers. For
collateral, the Portfolio received $58,444,395 in cash and U.S. government
securities valued at $33,671,375. Income from securities lending amounted to
$327,388 for the six months ended Jan. 31, 1998. 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>
Investments in securities
Growth Portfolio
Jan. 31, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Investments in securities of unaffiliated issuers
Common stocks (96.5%)
Issuer Shares Value (a)
Airlines (0.9%)
<S> <C> <C>
Northwest Airlines Cl A 692,450(c) $ 39,123,425
Automotive & related (0.4%)
Gentex 500,000(c) 15,625,000
Banks and savings & loans (5.4%)
BankAmerica 1,000,000 71,062,500
Washington Mutual 2,500,000 160,625,000
-----------
Total 231,687,500
Beverages & tobacco (3.0%)
Coca-Cola 2,006,700 129,933,825
Building materials & construction (2.1%)
Tyco Intl 2,000,000 88,750,000
Chemicals (4.0%)
Culligan Water Technologies 600,000(c) 22,200,000
Monsanto 1,200,000 56,925,000
USA Waste Services 2,475,000(c) 90,956,250
-----------
Total 170,081,250
Communications equipment & services (7.3%)
Advanced Fibre Communications 1,200,000(c) 35,700,000
Andrew Corp 2,200,000(c) 60,500,000
Northern Telecom 1,800,000 81,225,000
Tellabs 2,600,000(c) 133,087,500
-----------
Total 310,512,500
Computers & office equipment (17.4%)
ABR Information Services 800,000(c) 19,700,000
Cisco Systems 1,800,000(c) 113,512,500
Compaq Computer 3,200,000(c) 96,200,000
Computer Associates Intl 800,000 42,550,000
Hewlett-Packard 1,800,000 108,000,000
IKON Office Solutions 400,000 12,600,000
Intl Business Machines 800,000 78,950,000
Keane 1,400,000(c) 56,875,000
Microsoft 900,000(c) 134,268,750
Network Associates 800,000(c) 43,200,000
Solectron 925,000(c) 40,006,250
-----------
Total 745,862,500
Electronics (8.9%)
Applied Materials 3,000,000(c) 98,437,500
Intel 1,500,000 121,500,000
Maxim Intergrated Products 2,400,000(c) 83,100,000
SGS-Thomson Microelectronics 500,000(b,c) 33,968,750
Texas Instruments 800,000 43,700,000
-----------
Total 380,706,250
Energy (1.8%)
Anadarko Petroleum 1,300,000 76,700,000
Energy equipment & services (1.3%)
Halliburton 1,200,000 53,925,000
Financial services (8.3%)
First Virtual Holdings 100,000(c) 181,250
Merrill Lynch & Co 2,000,000 126,250,000
Providian Financial 1,013,550 49,537,256
Travelers Group 3,600,000 178,200,000
-----------
Total 354,168,506
Food (0.6%)
Delta & Pine Land 888,975(b) 26,669,253
Furniture & appliances (0.6%)
Ethan Allen Interiors 504,000 24,129,000
Health care (7.5%)
Boston Scientific 900,000(b,c) 45,675,000
Gensia Sicor 161(c) 785
Johnson & Johnson 1,000,000 66,937,500
Medtronic 1,500,000 76,593,750
Pfizer 1,600,000 131,100,000
-----------
Total 320,307,035
Health care services (7.0%)
First Health Group 1,000,000(c) 47,625,000
HEALTHSOUTH Rehabilitation 4,800,000(c) 107,700,000
Service Corp Intl 2,400,000 93,600,000
United Healthcare 1,000,000 51,250,000
-----------
Total 300,175,000
Industrial equipment & services (3.3%)
Caterpillar 800,000 38,400,000
Deere & Co 1,200,000 63,300,000
ServiceMaster 1,500,000 41,343,750
-----------
Total 143,043,750
Insurance (1.7%)
Provident Cos 2,000,000 72,750,000
Leisure time & entertainment (3.1%)
Harley-Davidson 1,000,000 25,125,000
Marriott Intl 1,200,000 82,950,000
Mattel 600,000 24,300,000
-----------
Total 132,375,000
Multi-industry conglomerates (1.7%)
AccuStaff 1,200,000(b,c) 30,900,000
Apollo Group Cl A 900,000(c) 40,725,000
-----------
Total 71,625,000
Restaurants & lodging (0.8%)
Promus Hotel 800,000(c) 36,150,000
Retail (1.6%)
Consoliated Stores 383,500(c) 15,771,438
Home Depot 900,000 54,281,250
-----------
Total 70,052,688
Textiles & apparel (0.7%)
Nike Cl B 800,000(b) 32,050,000
Utilities -- telephone (2.7%)
WorldCom 3,200,000(b,c) 114,600,000
Foreign (4.4%)(d)
Ericsson (LM) ADR 1,400,000 54,075,000
Schlumberger 1,800,000 132,637,500
-----------
Total 186,712,500
Total common stocks of unaffiliated issuers
(Cost: $2,675,618,267) $4,127,714,982
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (3.6%)
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agencies (0.5%)
Federal Home Loan Mtge Corp Disc Nt
<S> <C> <C> <C>
02-09-98 5.39% $ 3,200,000 $ 3,195,704
Federal Natl Mtge Assn Disc Nts
02-17-98 5.40 5,000,000 4,987,297
02-24-98 5.45 10,000,000 9,963,800
02-27-98 5.46 5,000,000 4,979,600
-----------
Total 23,126,401
Commercial paper (3.1%)
ABB Treasury Center USA
02-26-98 5.51 5,400,000(e) 5,378,589
AIG Funding
02-02-98 5.62 6,500,000 6,497,971
Albertson's
02-27-98 5.50 10,000,000 9,958,900
Ameritech
02-03-98 5.73 6,000,000 5,997,150
Ameritech Capital Funding
02-05-98 5.57 9,800,000(e) 9,792,446
ANZ (Delaware)
02-05-98 5.54 11,000,000 10,991,567
Barclays U.S. Funding
02-02-98 5.58 3,000,000 2,999,073
02-03-98 5.54 12,200,000 12,194,382
Bell Atlantic Financial Services
02-23-98 5.49 7,700,000 7,673,091
Campbell Soup
02-23-98 5.82 7,000,000 6,971,510
Ciesco LP
02-05-98 5.54 2,300,000(e) 2,298,237
Commerzbank U.S. Finance
02-13-98 5.50 5,600,000 5,588,918
Delaware Funding
02-20-98 5.48 1,300,000(e) 1,296,057
Fleet Funding
03-13-98 5.53 9,000,000(e) 8,943,625
Morgan Stanley, Dean
Witter, Discover & Co
02-19-98 5.48 5,900,000 5,882,998
NBD Bank Canada
02-09-98 5.59 19,500,000 19,472,894
Paccar Financial
02-26-98 5.50 1,800,000 1,792,876
Toyota Motor Credit
02-26-98 5.50 8,200,000 8,167,605
-----------
Total 131,897,889
Total short-term securities
(Cost: $155,026,977) $155,024,290
Total investments in securities of unaffiliated issuers
(Cost: $2,830,645,244) $4,282,739,272
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities of affiliated issuer(f)
Common stock (1.3%)
Issuer Shares Value (a)
<S> <C> <C>
MasTec 1,800,000(b,c) $57,712,500
Total investments in securities of affiliated issuer
(Cost: $60,266,600) $57,712,500
Total investments in securities
(Cost: $2,890,911,844)(g) $4,340,451,772
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Security is partially or fully on loan. See Note 4 to the financial
statements.
(c) Non-income producing.
(d) Foreign security values are stated in U.S. dollars.
(e) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(f) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
period ended Jan. 31, 1998 are as follows:
Issuer Beginning Purchase Sales Ending Dividend
cost cost cost cost income
<S> <C> <C> <C> <C> <C>
MasTec $45,512,990 $14,753,610 $ -- $60,266,600 $ --
Risk Capital Holdings* 17,078,679 -- 17,078,679 -- --
Total $62,591,669 $14,753,610 $17,078,679 $60,266,600 $ --
*Issuer was not an affiliate for the entire period.
(g) At Jan. 31, 1998, the cost of securities for federal income tax purposes was
approximately $2,890,912,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $1,506,357,000
Unrealized depreciation (56,817,000)
-----------
Net unrealized appreciation $1,449,540,000
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
Growth Trends Portfolio
Jan. 31, 1998
Assets (Unaudited)
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $10,066,650,897) $14,944,487,759
Cash in bank on demand deposit 20,895,546
Dividends and accrued interest receivable 11,011,868
Receivable for investment securities sold 30,140,482
Receivable from investment advisor 295,453
-------
Total assets 15,006,831,108
==============
Liabilities
Payable for investment securities purchased 135,657,850
Payable upon return of securities loaned (Note 4) 26,490,000
Accrued investment management services fee 210,262
Option contracts written, at value
(premium received $1,547,025) (Note 5) 1,465,312
Other accrued expenses 22,728
------
Total liabilities 163,846,152
-----------
Net assets $14,842,984,956
===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Growth Trends Portfolio
Six months ended Jan. 31, 1998
Investment income (Unaudited)
Income:
<S> <C>
Dividend $ 67,326,260
Interest 41,560,090
Less foreign taxes withheld (487,152)
--------
Total income 108,399,198
-----------
Expenses (Note 2):
Investment management services fee 34,824,337
Compensation of board members 28,010
Custodian fees 306,520
Audit fees 15,375
Other 58,595
------
Total expenses 35,232,837
----------
Investment income (loss) -- net 73,166,361
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) 884,860,115
Net change in unrealized appreciation
(depreciation) on investments (728,173,585)
------------
Net gain (loss) on investments 156,686,530
-----------
Net increase (decrease) in net assets resulting from operations $229,852,891
------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Growth Trends Portfolio
Six months ended Year ended
Jan. 31, 1998 July 31, 1997
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 73,166,361 $ 117,732,767
Net realized gain (loss) on investments 884,860,115 559,194,834
Net change in unrealized appreciation
(depreciation) on investments (728,173,585) 3,427,643,228
------------ -------------
Net increase (decrease) in net assets resulting
from operations 229,852,891 4,104,570,829
Net contributions (withdrawals) from partners 631,002,712 1,292,719,326
----------- -------------
Total increase (decrease) in net assets 860,855,603 5,397,290,155
Net assets at beginning of period 13,982,129,353 8,584,839,198
-------------- -------------
Net assets at end of period $14,842,984,956 $13,982,129,353
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Growth Trends Portfolio
(Unaudited as to Jan. 31, 1998)
1. Summary of significant accounting policies
Growth Trends Portfolio (the Portfolio) is a series of Growth Trust (the Trust)
and is registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. Growth Trends Portfolio
invests primarily in common stocks of 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.
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. Debt securities are generally traded in
the over-the-counter market and are valued at a price deemed best to reflect
fair value as quoted by dealers who make markets in these securities or by an
independent pricing service. Securities for which market quotations are not
readily available are valued at fair value according to methods selected in good
faith by the board. Short-term securities maturing in more than 60 days from the
valuation date are valued at the market price or approximate market value based
on current interest rates; those maturing in 60 days or less are valued at
amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy and
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The 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 and write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the 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 0.49% annually. The fees may be increased or decreased
by a performance adjustment based on a comparison of the performance of Class A
shares of IDS New Dimensions Fund to the Lipper Growth Fund Index. The maximum
adjustment is 0.12% of the Portfolio's average daily net assets on an annual
basis. The adjustment decreased the fee by $2,051,975 for the six months ended
Jan. 31, 1998.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
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 $3,357,164,429 and $2,565,360,443, respectively, for the
six months ended Jan. 31, 1998. For the same period, the portfolio turnover rate
was 19%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $835,690 for the
six months ended Jan. 31, 1998.
4. Lending of portfolio securities
At Jan. 31, 1998, securities valued at $25,964,842 were on loan to brokers. For
collateral, the Portfolio received $26,490,000 in cash. Income from securities
lending amounted to $355,559 for the six months ended Jan. 31, 1998. The risks
to the Portfolio of securities lending are that the borrower may not provide
additional collateral when required or return the securities when due.
5. Option contracts written
The number of contracts and premium amounts associated with option contracts
written is as follows:
Six months ended Jan. 31, 1998
Calls
Contracts Premium
Balance July 31, 1997 -- $ --
Opened 15,630 1,547,025
Balance Jan. 31, 1998 15,630 $1,547,025
See summary of significant accounting policies.
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
Growth Trends Portfolio
Jan. 31, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (91.1%)
Issuer Shares Value (a)
Aerospace & defense (1.4%)
<S> <C> <C>
Boeing 1,000,000 $ 47,562,500
United Technologies 2,000,000 163,250,000
------------
Total 210,812,500
Airlines (1.7%)
AMR 2,000,000(b) 252,500,000
Banks and savings & loans (6.9%)
BankAmerica 1,300,000 92,381,250
Citicorp 2,000,000 238,000,000
Norwest 11,000,000 401,500,000
State Street 3,900,000 218,400,000
Wachovia 1,000,000 77,750,000
------------
Total 1,028,031,250
Beverages & tobacco (1.3%)
Coca-Cola 2,500,000 161,875,000
Fortune Brands 955,200 36,536,400
------------
Total 198,411,400
Building materials & construction (1.2%)
Tyco Intl 4,000,000 177,500,000
Chemicals (2.1%)
Air Products & Chemicals 800,000 64,050,000
Monsanto 2,000,000 94,875,000
USA Waste Services 4,000,000(b) 147,000,000
------------
Total 305,925,000
Communications equipment & services (1.9%)
ADC Telecommunications 2,000,000(b) 38,000,000
Lucent Technologies 1,100,000 97,350,000
Motorola 500,000 29,718,750
Tellabs 2,200,000(b) 112,612,500
-----------
Total 277,681,250
Computers & office equipment (11.8%)
Automatic Data Processing 525,400 31,425,488
BMC Software 1,000,000(b) 67,750,000
Cisco Systems 5,500,000(b) 346,843,749
Compaq Computer 10,000,000 300,625,000
Computer Associates Intl 3,500,000 186,156,250
Computer Sciences 500,000(b) 42,437,500
Hewlett-Packard 3,400,000 204,000,000
Intl Business Machines 2,000,000 197,375,000
Microsoft 1,700,000(b) 253,618,750
Oracle 700,000(b) 16,275,000
PeopleSoft 1,000,000(b) 35,000,000
Xerox 1,000,000 80,375,000
-----------
Total 1,761,881,737
Electronics (2.8%)
AMP 864,950 34,598,000
Applied Materials 1,000,000(b) 32,812,500
Intel 3,800,000 307,800,000
Texas Instruments 800,000 43,700,000
-----------
Total 418,910,500
Energy (1.8%)
Exxon 2,300,000 136,418,750
Mobil 2,000,000 136,250,000
-----------
Total 272,668,750
Energy equipment & services (0.5%)
Baker Hughes 2,000,000 77,125,000
Financial services (5.1%)
Associates First Capital Cl A 1,000,000 68,000,000
Fannie Mae 334,900 20,680,075
MBNA 5,000,000 155,312,500
Morgan Stanley, Dean
Witter, Discover & Co 3,000,000 175,125,000
Paychex 800,000 38,250,000
Travelers Group 6,000,000 297,000,000
-----------
Total 754,367,575
Food (2.1%)
ConAgra 8,600,000 271,975,000
General Mills 500,000 37,218,750
-----------
Total 309,193,750
Health care (9.0%)
Bristol-Myers Squibb 1,900,000 189,406,250
Genentech 26,500(b) 1,722,500
Johnson & Johnson 3,000,000 200,812,500
Lilly (Eli) 1,600,000 108,000,000
Medtronic 3,500,000 178,718,750
Merck & Co 2,000,000 234,500,000
Pfizer 5,200,000 426,075,000
-----------
Total 1,339,235,000
Health care services (3.3%)
Cardinal Health 1,700,000 131,643,750
HBO & Co 2,800,000 146,475,000
HEALTHSOUTH Rehabilitation 2,700,000(b) 60,581,250
Service Corp Intl 2,000,000 78,000,000
United Healthcare 1,400,000 71,750,000
-----------
Total 488,450,000
Household products (2.3%)
Gillette 1,800,000 177,750,000
Procter & Gamble 2,000,000 156,750,000
-----------
Total 334,500,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Industrial equipment & services (2.7%)
<S> <C> <C>
Deere & Co 5,900,000 311,225,000
Illinois Tool Works 1,500,000 83,531,250
-----------
Total 394,756,250
Insurance (1.7%)
American Intl Group 1,500,000 165,468,750
SunAmerica 215,700 8,668,444
UNUM 1,500,000 72,937,500
-----------
Total 247,074,694
Leisure time & entertainment (1.6%)
Marriot Intl 3,000,000 207,375,000
Mirage Resorts 1,600,000(b) 36,900,000
-----------
Total 244,275,000
Media (2.3%)
CBS 4,600,000 137,712,500
Clear Channel Communications 600,000(b) 46,200,000
Gannett 2,600,000 157,300,000
-----------
Total 341,212,500
Metals (0.6%)
Aluminum Co of America 1,100,000 84,012,500
Multi-industry conglomerates (6.6%)
AccuStaff 2,400,000(b) 61,800,000
Emerson Electric 3,700,000 223,850,000
General Electric 7,600,000 589,000,000
Minnesota Mining & Mfg 1,200,000 100,200,000
-----------
Total 974,850,000
Restaurants & lodging (0.5%)
Promus Hotel 1,700,000(b) 76,818,750
Retail (5.4%)
Cendant 3,800,000 128,725,000
CVS 1,800,000 118,012,500
Dayton Hudson 1,500,000 107,906,250
Kroger 1,200,000(b) 46,950,000
Safeway 3,800,000 252,462,500
Wal-Mart Stores 3,800,000 151,525,000
-------------
Total 805,581,250
Transportation (0.4%)
CNF Transportation 1,200,000 54,825,000
Utilities -- electric (0.9%)
CMS Energy 3,000,000 127,687,500
Utilities -- gas (0.9%)
El Paso Natural Gas 2,200,000 140,662,500
Utilities -- telephone (5.0%)
AirTouch Communications 2,000,000(b) 87,750,000
Ameritech 1,000,000 42,937,500
AT&T 1,400,000 87,675,000
BellSouth 4,600,000 278,587,500
Cincinnati Bell 1,900,000 68,162,500
US WEST Communications Group 2,000,000 96,250,000
WorldCom 2,200,000(b,e) 78,787,500
-------------
Total 740,150,000
Foreign (7.3%)(c)
ACE 2,300,000 214,043,750
Elan ADR 1,450,000(b,e) 75,309,375
Northern Telecom 2,500,000 112,812,500
Royal Dutch Petroleum 4,000,000 205,000,000
Schlumberger 2,600,000 191,587,500
SmithKline Beecham ADR 4,600,000 290,087,500
-------------
Total 1,088,840,625
Total common stocks
(Cost: $8,649,514,794) $13,527,940,281
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (9.6%)
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agency (0.1%)
Federal Home Loan Mtge Corp Disc Nt
<S> <C> <C> <C>
02-09-98 5.39% $10,000,000 $ 9,986,575
Banker's acceptance (0.1%)
First Bank Natl
02-05-98 5.55 10,000,000 9,992,319
Certificate of deposit (0.1%)
US Bank Minneapolis
04-28-98 5.54 15,000,000 14,794,667
Commercial paper (9.1%)
Abbott Laboratories
02-13-98 5.51 2,500,000 2,495,035
Alabama Power
02-12-98 5.48 22,470,000 22,429,030
American General
02-19-98 5.50 7,200,000 7,179,214
03-13-98 5.50 6,300,000 6,260,824
American General Finance
03-11-98 5.53 11,500,000 11,431,479
Ameritech Capital Funding
02-03-98 5.73 16,700,000 16,692,068
Associates Corp North America
02-18-98 5.49 10,000,000 9,972,650
03-03-98 5.50 12,000,000 11,943,477
03-12-98 5.54 20,000,000 19,877,555
Avco Financial Services
03-02-98 5.52 5,000,000 4,977,083
Barclays U.S. Funding
02-11-98 5.50 14,300,000 14,276,055
BBV Finance (Delaware)
04-08-98 5.49 8,200,000 8,113,262
Bell Atlantic Financial Services
02-10-98 5.47 16,400,000 16,375,172
02-25-98 5.49 12,400,000 12,352,897
Beneficial
03-02-98 5.49 15,000,000 14,931,750
03-04-98 5.50 15,000,000 14,927,067
03-05-98 5.50 19,000,000 18,904,731
03-06-98 5.51 15,000,000 14,922,367
03-11-98 5.51 15,000,000 14,910,950
03-26-98 5.55 10,000,000 9,917,350
BHP Finance
02-24-98 5.84 7,500,000 7,465,165
02-25-98 5.49 16,000,000 15,939,222
03-18-98 5.61 14,500,000 14,393,782
BOC Group
02-17-98 5.81 5,100,000 5,085,676
03-16-98 5.50 30,000,000 29,799,800
03-23-98 5.51 10,000,000 9,922,508
CAFCO
02-03-98 5.91 7,700,000(d) 7,696,233
02-24-98 5.85 600,000(d) 599,733
03-19-98 5.50 11,000,000(d) 10,921,588
03-23-98 5.52 18,100,000(d) 17,929,662
04-01-98 5.49 8,000,000(d) 7,924,089
Ciesco LP
02-25-98 5.48 10,200,000 10,161,396
03-12-98 5.50 17,900,000(d) 17,791,407
CIT Group Holdings
02-05-98 5.88 7,800,000 7,793,663
Colgate-Palmolive
02-24-98 5.82 10,000,000(d) 9,957,184
Commercial Credit
03-13-98 5.51 10,000,000 9,933,101
03-18-98 5.51 21,100,000 20,952,523
Commerzbank U.S. Finance
02-13-98 5.50 5,500,000 5,489,116
02-18-98 5.48 8,500,000 8,476,795
02-20-98 5.49 17,100,000 17,048,035
Daimler-Benz
02-11-98 5.82 15,000,000 14,968,611
02-11-98 5.56 2,900,000 2,895,082
02-24-98 5.49 9,500,000 9,465,357
03-19-98 5.77 2,600,000 2,580,535
Delaware Funding
02-10-98 5.50 5,949,000(d) 5,939,944
02-11-98 5.50 22,819,000(d) 22,780,791
02-18-98 5.50 19,428,000(d) 19,374,767
02-20-98 5.48 15,924,000(d) 15,875,697
Deutsche Bank Financial
02-02-98 5.54 14,100,000 14,095,672
02-17-98 5.48 17,500,000 17,454,920
02-18-98 5.49 10,000,000 9,972,675
Fleet Funding
02-26-98 5.49 10,600,000(d) 10,558,201
03-10-98 5.51 6,400,000(d) 6,362,980
Ford Motor Credit
02-23-98 5.50 15,000,000 14,947,483
02-26-98 5.48 25,000,000 24,901,596
03-06-98 5.52 7,500,000 7,461,113
04-02-98 5.51 10,000,000 9,874,347
Gannett
02-24-98 5.48 9,600,000(d) 9,565,120
02-26-98 5.48 17,400,000(d) 17,331,512
Gateway Fuel
02-26-98 5.50 5,630,000 5,607,718
03-05-98 5.51 6,955,000 6,920,063
03-10-98 5.50 6,680,000 6,641,430
Goldman Sachs Group
02-04-98 5.77 10,000,000 9,991,626
04-06-98 5.53 20,700,000 20,426,864
05-12-98 5.52 10,000,000 9,841,900
05-13-98 5.52 10,000,000 9,840,350
05-14-98 5.50 20,000,000 19,645,344
Harris Trust
02-04-98 5.55 14,900,000 14,900,000
03-05-98 5.50 15,000,000 15,000,000
Heinz (HJ)
02-06-98 5.82 4,700,000 4,695,472
02-17-98 5.80 25,000,000 24,918,236
03-17-98 5.50 13,500,000 13,407,863
Household Finance
02-27-98 5.48 25,000,000 24,897,811
03-10-98 5.53 20,000,000 19,883,889
03-11-98 5.51 15,800,000 15,706,201
03-12-98 5.51 20,000,000 19,878,222
Intl Lease Finance
03-03-98 5.50 9,800,000 9,753,839
Merrill Lynch
03-16-98 5.52 11,800,000 11,720,966
03-17-98 5.50 16,200,000 16,089,435
Metlife Funding
02-05-98 5.80 13,105,000 13,094,534
02-18-98 5.83 9,874,000 9,839,395
Morgan Stanley, Dean
Witter, Discover & Co
03-02-98 5.50 10,000,000 9,954,417
03-05-98 5.50 18,800,000 18,705,734
03-06-98 5.50 18,700,000 18,603,394
Natl Australia Funding (Delaware)
04-15-98 5.50 35,000,000 34,556,517
04-21-98 5.52 3,160,000 3,120,184
NBD Bank Canada
02-09-98 5.58 14,100,000 14,080,401
New Center Asset Trust
02-19-98 5.50 14,600,000 14,557,851
03-04-98 5.50 25,000,000 24,878,443
03-11-98 5.53 10,000,000 9,940,417
04-13-98 5.50 20,500,000 20,230,989
Novartis Finance
02-03-98 5.47 8,305,000(d) 8,301,221
03-09-98 5.52 15,000,000 14,915,363
Pacific Life Insurance
02-20-98 5.48 10,700,000 10,667,543
02-26-98 5.50 15,264,000 15,203,588
Reed Elsevier
03-06-98 5.53 12,100,000(d) 12,037,147
Societe Generale North America
03-16-98 5.48 15,400,000 15,288,421
03-17-98 5.50 15,000,000 14,890,081
03-23-98 5.49 15,900,000 15,760,680
Toyota Motor Credit
02-26-98 5.50 20,900,000 20,817,433
UBS Finance (Delaware)
02-02-98 5.63 20,400,000 20,393,619
Xerox Credit
02-24-98 5.82 9,200,000 9,158,848
-------------
Total 1,353,340,546
Letters of credit (0.2%)
Bank of America-
AES Barbers Point
03-20-98 5.50 10,000,000 9,925,016
First Bank-
Midwest
02-26-98 5.66 10,000,000 9,959,410
First Chicago-
Commed Fuel
03-11-98 5.51 8,600,000 8,548,945
-------------
Total 28,433,371
Total short-term securities
(Cost: $1,417,136,103) $ 1,416,547,478
Total investment in securities
(Cost: $10,066,650,897)(g) $14,944,487,759
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) 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) Security is partially or fully on loan. See Note 4 to the financial
statements.
(f) At Jan. 31, 1998, securities valued at $46,987,688 were held to cover open
call options written as follows:
Issuer Shares Exercise Expiration Value(a)
price date
Compaq Computer 1,563,000 $35 April 1998 $1,465,312
(g) At Jan. 31, 1998, the cost of securities for federal income tax purposes was
approximately $10,066,651,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $4,958,979,000
Unrealized depreciation (81,142,000)
-----------
Net unrealized appreciation $4,877,837,000
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
Aggressive Growth Portfolio
Jan. 31, 1998
Assets (Unaudited)
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $388,326,811) $402,631,406
Cash in bank on demand deposit 1,195,532
Dividends and accrued interest receivable 343,615
Receivable for investment securities sold 8,460,306
---------
Total assets 412,630,859
===========
Liabilities
Payable for investment securities purchased 5,401,303
Accrued investment management services fee 7,095
Option contracts written, at value
(premium received $354,863) (Note 5) 411,563
Other accrued expenses 27,735
------
Total liabilities 5,847,696
---------
Net assets $406,783,163
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Aggressive Growth Portfolio
Six months ended Jan. 31, 1998
Investment income (Unaudited)
Income:
<S> <C>
Dividends $ 2,079,948
Interest 279,412
Less foreign taxes withheld (1,311)
------
Total income 2,358,049
---------
Expenses (Note 2):
Investment management services fee 1,134,324
Compensation of board members 3,767
Custodian fees 23,410
Audit fees 6,375
Other 1,181
-----
Total expenses 1,169,057
Earnings credits on cash balances (Note 2) (7,190)
------
Total net expenses 1,161,867
---------
Investment income (loss) -- net 1,196,182
---------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) 19,277,609
Financial futures contracts 522,948
-------
Net realized gain (loss) on investments 19,800,557
Net change in unrealized appreciation
(depreciation) on investments (20,502,597)
-----------
Net gain (loss) on investments (702,040)
--------
Net increase (decrease) in net assets resulting from operations $ 494,142
---------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Aggressive Growth Portfolio
Six months ended For the period
Jan. 31, 1998 from Aug. 19, 1996*
(Unaudited) to July 31, 1997
Operations
<S> <C> <C>
Investment income (loss)-- net $ 1,196,182 $ 1,393,497
Net realized gain (loss) on investments 19,800,557 19,764,774
Net change in unrealized appreciation
(depreciation) on investments (20,502,597) 34,895,804
----------- ----------
Net increase (decrease) in net assets
resulting from operations 494,142 56,054,075
Net contributions (withdrawals) from partners 103,852,690 246,378,256
----------- -----------
Total increase (decrease) in net assets 104,346,832 302,432,331
Net assets at beginning of period (Note 1) 302,436,331 4,000
----------- -----
Net assets at end of period $406,783,163 $302,436,331
============ ============
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Aggressive Growth Portfolio
(Unaudited as to Jan. 31, 1998)
1. Summary of significant accounting policies
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 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. Debt securities are generally traded in
the over-the-counter market and are valued at a price deemed best to reflect
fair value as quoted by dealers who make markets in these securities or by an
independent pricing service. Securities for which market quotations are not
readily available are valued at fair value according to methods selected in good
faith by the board. Short-term securities maturing in more than 60 days from the
valuation date are valued at the market price or approximate market value based
on current interest rates; those maturing in 60 days or less are valued at
amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy and
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The 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 and write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the 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 0.65% to 0.5% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
During the six months ended Jan. 31, 1998, the Portfolio's custodian fees were
reduced by $7,190 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 $390,372,816 and $289,442,848, respectively, for the six
months ended Jan. 31, 1998. For the same period, the portfolio turnover rate was
85%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $63,261 for the
six months ended Jan. 31, 1998.
4. Stock index futures contracts
Investments in securities at Jan. 31, 1998, included securities valued at
$1,560,938 that were pledged as collateral to cover initial margin deposits on
53 open purchase contracts. The market value of the open purchase contracts at
Jan. 31, 1998 was $13,088,350 with a net unrealized gain of $145,312.
5. Option contracts written
The number of contracts and premium amounts associated with the option contracts
written is as follows:
Six months ended Jan. 31, 1998
Puts Calls
Contracts Premium Contracts Premium
Balance July 31, 1997 -- $ -- -- $ --
Opened 550 96,847 1,450 258,016
Balance Jan. 31, 1998 550 $96,847 1,450 $258,016
See summary of significant accounting policies.
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
Aggressive Growth Portfolio
Jan. 31, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (95.5%)
Issuer Shares Value (a)
Aerospace & defense (5.2%)
<S> <C> <C>
AlliedSignal 60,000 $ 2,336,250
Goodrich (BF) 21,000 880,688
Lockheed Martin 32,000 3,330,000
Raytheon Cl B 61,800 3,221,325
Rockwell Intl 201,300 11,247,637
-----------
Total 21,015,900
Airlines (0.5%)
AMR 15,300(b) 1,931,625
Automotive & related (2.8%)
Ford Motor 168,700 8,603,700
TRW 51,700 2,630,238
-----------
Total 11,233,938
Banks and savings & loans (11.7%)
BankAmerica 161,100 11,448,168
First Chicago NBD 90,900 6,783,413
First Union 206,800(f) 9,939,325
Wachovia 119,900 9,322,225
Washington Mutual 157,000 10,087,249
-----------
Total 47,580,380
Beverages & tobacco (6.4%)
Coca-Cola 219,800 14,232,050
Fortune Brands 130,000 4,972,500
Philip Morris 165,000 6,847,500
-----------
Total 26,052,050
Building materials & construction (0.8%)
Tyco Intl 70,050 3,108,469
Chemicals (1.8%)
Air Products & Chemicals 92,100(f) 7,373,756
Communications equipment & services (2.1%)
Tellabs 166,050(b) 8,499,684
Computers & office equipment (6.0%)
Automatic Data Processing 83,200 4,976,400
Compaq Computer 208,700 6,274,043
Computer Associates Intl 91,150 4,848,041
Computer Sciences 51,900(b) 4,405,013
Hewlett-Packard 63,700 3,822,000
-----------
Total 24,325,497
Electronics (3.3%)
Applied Materials 102,600(b) 3,366,563
Intel 79,600 6,447,600
KLA-Tencor 94,200(b) 3,532,500
-----------
Total 13,346,663
Energy (4.9%)
Amoco 166,000 13,508,250
Unocal 182,350 6,268,281
-----------
Total 19,776,531
Energy equipment & services (0.6%)
Baker Hughes 60,000 2,313,750
Financial services (4.3%)
H&R Block 200,000(f) 8,775,000
MBNA 148,700 4,618,994
Travelers Group 85,000 4,207,500
-----------
Total 17,601,494
Food (3.0%)
Bestfoods 28,200 2,749,500
ConAgra 99,100 3,134,038
General Mills 40,000 2,977,500
Sara Lee 60,000 3,273,750
-----------
Total 12,134,788
Furniture & appliances (0.3%)
Maytag 35,000 1,345,313
Health care (13.9%)
ALZA 171,800(b,f) 6,120,375
American Home Products 86,700 8,274,430
Amgen 92,300(b) 4,615,000
Baxter Intl 25,000 1,392,188
Boston Scientific 33,500(b) 1,700,125
Bristol-Myers Squibb 79,200 7,895,250
Guidant 25,000 1,606,250
Johnson & Johnson 121,700 8,146,293
Merck & Co 50,000 5,862,500
Pfizer 61,700 5,055,544
Schering-Plough 81,200 5,876,850
-----------
Total 56,544,805
Health care services (3.5%)
HBO & Co 98,800 5,168,475
Service Corp Intl 140,000 5,460,000
Tenet Healthcare 53,000(b) 1,828,500
United Healthcare 33,000 1,691,250
-----------
Total 14,148,225
Household products (3.6%)
Colgate-Palmolive 69,500 5,090,875
Gillette 49,900 4,927,625
Proctor & Gamble 60,000 4,702,500
-----------
Total 14,721,000
Insurance (5.4%)
SunAmerica 110,000 4,420,625
UNUM 365,700 17,782,163
-----------
Total 22,202,788
Media (1.5%)
CBS 102,700 3,074,581
Clear Channel Communications 38,000(b) 2,926,000
-----------
Total 6,000,581
Metals (0.8%)
Aluminum Co of America 24,300 1,855,913
Reynolds Metals 26,400 1,664,850
-----------
Total 3,520,763
Multi-industry conglomerates (1.0%)
Minnesota Mining & Mfg 50,000 4,175,000
Paper & packaging (0.6%)
Tenneco 61,000 2,474,313
Retail (4.7%)
Dayton Hudson 51,600 3,711,975
Jostens 70,000 1,579,375
Kroger 59,600(b) 2,331,850
Rite Aid 35,000(e) 2,185,313
Toys "R" Us 125,000(b) 3,351,563
Wal-Mart Stores 148,800(f) 5,933,399
-----------
Total 19,093,475
Utilities -- gas (0.8%)
Enron 78,100 3,236,269
Utilities -- telephone (2.1%)
Airtouch Communications 196,500(b,f) 8,621,438
Foreign (3.9%)(c)
Royal Dutch Petroleum 271,000 13,888,749
Schlumberger 30,000 2,210,625
-----------
Total 16,099,374
Total common stocks
(Cost: $374,173,274) $388,477,869
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (3.5%)
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agencies (2.1%)
Federal Home Loan Mtge Corp Disc Nts
<S> <C> <C> <C>
02-09-98 5.39% $ 900,000 $ 898,792
02-20-98 5.51 800,000 797,569
Federal Natl Mtge Assn Disc Nt
02-27-98 5.43 7,000,000 6,971,597
-----------
Total 8,667,958
Commercial paper (1.4%)
Bell Atlantic Financing
02-12-98 5.48 1,100,000 1,097,998
Delaware Funding
02-06-98 5.48 1,400,000(d) 1,398,724
Pacific Life Insurance
02-26-98 5.50 2,400,000 2,390,501
Xerox Credit
02-18-98 5.51 600,000 598,356
-----------
Total 5,485,579
Total short-term securities
(Cost: $14,153,537) $ 14,153,537
Total investments in securities
(Cost: $388,326,811)(g) $402,631,406
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) 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) Security is partially pledged as initial margin deposit on the following
open stock index futures purchase contracts (see Note 4 to the financial
statements):
Type of security Notional amount
Standard & Poor's 500 Stock Index, March 1998 $13,250,000
(f) At Jan. 31, 1998, securities valued at $4,900,000 were held to cover open
call options written as follows:
Issuer Shares Exercise Expiration Value(a)
price date
Airtouch Communications 25,000 $45 Feb. 1998 $ 28,125
ALZA 25,000 35 Feb. 1998 31,250
H&R Block 25,000 40 Feb. 1998 104,687
H&R Block 25,000 40 April 1998 126,564
Wal-Mart Stores 25,000 40 Feb. 1998 50,000
------ -- ---- ------
Total $ 340,626
At Jan. 31, 1998, cash or short-term securities were designated to cover open
put options written as follows:
Issuer Shares Exercise Expiration Value(a)
price date
Air Products & Chemicals 30,000 $50 Feb. 1998 $60,000
First Union 25,000 75 Feb. 1998 10,937
Total $70,937
(g) At Jan. 31,1998, the cost of securities for federal income tax purposes was
approximately $388,327,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $25,265,000
Unrealized depreciation (10,961,000)
-----------
Net unrealized appreciation $14,304,000
See accompanying notes to investments in securities.
<PAGE>
American Express Service Corporation, Distributor
Printed on recycled paper with a
minimum of 10% post-consumer waste
S-6119 C (3/98)
