AMERICAN EXPRESS Financial Direct
Strategist Growth Fund, Inc.
1999 Semiannual Report
Strategist Growth Fund
Strategist Growth Trends Fund
Strategist Special Growth Fund
<PAGE>
Table of Contents
From the Portfolio Managers 2
Financial Statements (Strategist Growth Fund, Inc.) 8
Notes to Financial Statements (Strategist Growth Fund, Inc.) 13
Financial Statements (Growth Portfolio) 20
Notes to Financial Statements (Growth Portfolio) 23
Investments in Securities (Growth Portfolio) 28
Financial Statements (Growth Trends Portfolio) 34
Notes to Financial Statements (Growth Trends Portfolio) 37
Investments in Securities (Growth Trends Portfolio) 42
Financial Statements (Aggressive Growth Portfolio) 52
Notes to Financial Statements (Aggressive Growth Portfolio) 55
Investments in Securities (Aggressive Growth Portfolio) 59
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From the Portfolio Manager
Strategist Growth Fund
(picture of) Mitzi Malevich
Mitzi Malevich
Portfolio manager
Despite a severe setback at the outset of the period, Strategist Growth Fund
enjoyed a very productive six months. For the first half of the fiscal year --
August 1998 through January 1999 -- the Fund's total return was 16.39%. (A
portion of the return came in the form of a capital gain, which was paid to
shareholders in December 1998 and reduced the Fund's net asset value by a like
amount at that time.)
As the period began, the fallout from crumbling economies in Asia, Russia and
Latin America was taking a toll on U.S. stocks. The prevailing view was that
American companies' profits would suffer because of reduced business overseas,
and that technology-related companies were especially vulnerable. The result was
heavy stock-selling that, by the end of August, drove the Fund's value down by
nearly 20%.
But, in another display of the remarkable resilience it has shown in recent
years, the market eventually righted itself and began a tentative advance. Soon,
buoyed by three reductions in short-term interest rates by the Federal Reserve
Board during autumn, the recovery turned into a roaring rally. The Fund
responded in strong fashion, recording five straight months of healthy gains.
Tech leads the way
Leading the comeback were technology stocks, easily the largest exposure for the
Fund. Prominent performers included Microsoft, Cisco Systems, Worldcom, IBM and
Intel. Early in the period, I increased the technology exposure by adding to
several holdings that had experienced price declines. That additional buying,
along with subsequent substantial price run-ups on a number of stocks, pushed
the technology exposure to approximately 50% of total Fund assets by period-end.
Looking ahead, concerns about the strength of corporate earnings dominated the
investment environment as the new fiscal year began in February. While it's true
that earnings could present a periodic problem for the market in the months
ahead, I think the favorable factors of low inflation and a still-healthy
economy are likely to stay with us. As for the Fund, I continue to concentrate
investments in stocks of companies that impress me as having excellent long-term
profit potential.
Mitzi Malevich
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From the Portfolio Manager
Strategist Growth Trends Fund
(picture of) Gordon Fines
Gordon Fines
Portfolio manager
Growth stocks overcame a steep summer decline to move substantially higher
during the past six months. Strategist Growth Trends Fund took advantage of the
rebound to generate a 15.43% total return for the period -- August 1998 through
January 1999. (A portion of the return came in the form of a capital gain, which
was paid to shareholders last December and reduced the Fund's net asset by a
like amount.)
The U.S. stock market was in the throes of a sell-off when the period began last
August. Worried about worsening economic problems in Asia, Russia and Latin
America, investors had earlier concluded that American corporate profits were at
considerable risk. Most vulnerable, they reasoned, were technology companies,
whose stocks were hit especially hard during the decline. For the Fund, the
result was a loss of nearly 16% in August.
That was a deep hole to climb out of, but stocks wasted no time in doing it.
Supported in large part by three reductions in short-term interest rates by the
Federal Reserve Board, the market made up all of its lost ground by the end of
November, then followed that with two more months of strong gains.
Recovery led by large-caps
The large-capitalization growth stocks that have been the mainstays of the Fund
in recent years continued to prove their worth during the rebound. General
Electric, Cisco Systems, Microsoft, Pfizer, IBM and Wal-Mart -- all among the
Fund's largest holdings -- were particularly strong.
As for stock sectors, the emphasis remained on technology, health care,
financial services and business services. In the only change of note, during the
fall I did establish a modest position in utility stocks to provide some cushion
for the Fund in the event of additional market downturns. Should the investment
environment become more stable, I'll probably eliminate that position in order
to structure the Fund more aggressively.
Looking toward the second half of the fiscal year, the biggest question facing
the market is likely to revolve around how strong corporate earnings will be. I
think large-cap growth stocks continue to have an advantage in that regard and,
therefore, offer the best potential for gain. Only time will tell, of course,
and six months from now, I'll discuss how things turned out.
Gordon Fines
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From the Portfolio Manager
Strategist Special Growth Fund
(picture of) Keith Tufte
Keith Tufte
Portfolio manager
Strategist Special Growth Fund recovered from a bad start to finish the first
half of the fiscal year with a substantial gain. For the six months -- August
1998 through January 1999 -- the Fund's total return was 16.29%. (Part of the
return was in the form of a capital gain, which was paid to shareholders last
December and reduced the Fund's net asset value by the same amount at that
time.)
The stock market was in rapid retreat when the period began, as worries about a
possible slump in corporate profits fueled widespread stock-selling. Most of the
damage was done by the end of August, but by that time the Fund had lost more
than 15% of its value.
Investors' moods brightened last autumn, though, as three reductions in
short-term interest rates by the Federal Reserve restored some calm to the
financial markets. Stocks wasted little time in responding, as they began a
resolute advance that not only made up for the late-summer swoon but took the
market to an all-time high in early January. The Fund largely kept up with the
powerful pace of the market, gaining more than 30% from September through the
end of the period in January.
Large-caps lead again
As has been the case in recent years, large-capitalization growth stocks most
often led the way during the market's advances. That worked to the advantage of
the Fund, as it confines its investments to stocks of companies in the Standard
& Poor's 500, the most representative unmanaged index of large-cap stocks. Among
the Fund's biggest holdings for the period were: General Electric, Warner
Lambert, Coca-Cola, Bristol Myers Squibb, Intel, MCI Worldcom and U.S. West.
On a stock sector basis, the largest investment (about one-fourth of assets) was
in consumer non-cyclical stocks, which include the food, beverage and
pharmaceutical areas. The rest of the portfolio was largely made up of
technology (including computers, telecommunications), financial services
(insurance, brokerage), consumer cyclical (retailing, housing) and utilities
(electricity, telephone service), each of which accounted for roughly 15% to 20%
of assets.
As for the second half of the fiscal year, the investment environment is little
changed from several months ago: inflation remains low, economic growth is still
solid, and interest rates have yet to experience a meaningful increase. The
biggest question to be answered in the months ahead is how strong corporate
earnings will be. As always, the Fund's investments continue to be concentrated
in those companies that our securities analysts believe have the best earnings
prospects and, as a result, the best chance to outperform the stock market as a
whole.
Keith Tufte
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<CAPTION>
Financial Statements
Statements of assets and liabilities
Strategist Growth Fund, Inc.
Strategist Strategist Strategist
Growth Growth Special
Jan. 31, 1999 (Unaudited) Fund Trends Fund Growth Fund
Assets
<S> <C> <C> <C>
Investment in corresponding Portfolio (Note 1) $24,866,785 $23,891,416 $1,765,512
Organizational costs (Note 1) -- 1,311 --
Expense receivable from AEFC -- -- 172
----- ------ ---
Total assets 24,866,785 23,892,727 1,765,684
---------- ---------- ---------
Liabilities
Accrued distribution fee 164 159 12
Accrued transfer agency fee 40 33 10
Accrued administrative services fees 33 32 3
Other accrued expenses 4,947 32,756 15,301
----- ------ ------
Total liabilities 5,184 32,980 15,326
===== ====== ======
Net assets applicable to outstanding capital stock $24,861,601 $23,859,747 $1,750,358
=========== =========== ==========
Represented by
Capital stock-- $.01 par value (Note 1) $ 5,531 $ 7,305 $ 2,739
Additional paid-in capital 11,536,365 11,596,087 1,368,186
Undistributed (excess of distributions over)
net investment income (20,860) 19,914 (1,281)
Accumulated net realized gain (loss) (Note 4) (574,278) 220,708 19,705
Unrealized appreciation (depreciation) on investments 13,914,843 12,015,733 361,009
---------- ---------- -------
Total -- representing net assets applicable
to outstanding capital stock $24,861,601 $23,859,747 $1,750,358
=========== =========== ==========
Shares outstanding 553,075 730,513 273,852
------- ------- -------
Net asset value per share of outstanding capital stock $ 44.95 $ 32.66 $ 6.39
----------- ----------- ----------
See accompanying notes to financial statements.
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<CAPTION>
Statements of operations
Strategist Growth Fund, Inc.
Strategist Strategist Strategist
Growth Growth Special
Six months ended Jan. 31, 1999 (Unaudited) Fund Trends Fund Growth Fund
Investment income
Income:
<S> <C> <C> <C>
Dividends $ 50,617 $ 80,920 $ 9,302
Interest 33,875 39,955 689
Less foreign taxes withheld -- (480) (65)
---- ---- ---
Total income 84,492 120,395 9,926
------ ------- -----
Expenses (Note 2):
Expenses allocated from corresponding Portfolio 51,572 52,644 5,253
Distribution fee 25,479 25,005 2,005
Transfer agency fee 7,402 5,938 1,871
Administrative services fees and expenses 5,096 5,001 481
Compensation of board members 1,844 1,480 286
Registration fees 7,330 2,486 6,756
Audit fees 3,400 3,650 1,750
Other 3,229 1,289 59
----- ----- --
Total expenses 105,352 97,493 18,461
Less expenses reimbursed by AEFC -- -- (7,266)
---- ---- ------
Total net expenses 105,352 97,493 11,195
------- ------ ------
Investment income (loss)-- net (20,860) 22,902 (1,269)
------- ------ ------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (162,818) 222,960 15,338
Financial futures contracts -- -- 5,798
Options contracts written -- 878 --
---- --- ----
Net realized gain (loss) on investments (162,818) 223,838 21,136
Net change in unrealized appreciation
(depreciation) on investments 3,652,525 2,915,209 203,879
--------- --------- -------
Net gain (loss) on investments 3,489,707 3,139,047 225,015
--------- --------- -------
Net increase (decrease) in net assets
resulting from operations $3,468,847 $3,161,949 $223,746
========== ========== ========
See accompanying notes to financial statements.
</TABLE>
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<CAPTION>
Statements of changes in net assets
Strategist Growth Fund, Inc.
Strategist Growth Fund
Jan. 31, 1999 July 31,1998
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ (20,860) $ (72,901)
Net realized gain (loss) on investments (162,818) 1,818,914
Net change in unrealized appreciation (depreciation) on investments 3,652,525 (468,341)
--------- --------
Net increase (decrease) in net assets resulting from operations 3,468,847 1,277,672
--------- ---------
Capital share transactions (Note 3)
Proceeds from sales 584,026 2,454,144
Payments for redemptions (1,345,782) (4,957,889)
---------- ----------
Increase (decrease) in net assets from capital share transactions (761,756) (2,503,745)
-------- ----------
Total increase (decrease) in net assets 2,707,091 (1,226,073)
Net assets at beginning of period 22,154,510 23,380,583
---------- ----------
Net assets at end of period $24,861,601 $22,154,510
=========== ===========
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist Growth Fund, Inc.
Strategist Growth Trends Fund
Jan. 31, 1999 July 31,1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 22,902 $ 99,554
Net realized gain (loss) on investments 223,838 2,441,536
Net change in unrealized appreciation (depreciation) on investments 2,915,209 573,711
--------- -------
Net increase (decrease) in net assets resulting from operations 3,161,949 3,114,801
--------- ---------
Distributions to shareholders from:
Net investment income (50,099) (163,018)
Net realized gain (1,647,590) --
----------
Total distributions (1,697,689) (163,018)
---------- --------
Capital share transactions (Note 3)
Proceeds from sales 775,082 1,896,510
Reinvestment of distributions at net asset value 1,697,686 163,018
Payments for redemptions (608,725) (5,106,205)
-------- ----------
Increase (decrease) in net assets from capital share transactions 1,864,043 (3,046,677)
--------- ----------
Total increase (decrease) in net assets 3,328,303 (94,894)
Net assets at beginning of period 20,531,444 20,626,338
---------- ----------
Net assets at end of period $23,859,747 $20,531,444
=========== ===========
Undistributed net investment income $ 19,914 $ 47,111
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist Growth Fund, Inc.
Strategist Special Growth Fund
Jan. 31, 1999 July 31,1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ (1,269) $ 6,141
Net realized gain (loss) on investments 21,136 345,315
Net change in unrealized appreciation (depreciation) on investments 203,879 (176,649)
------- --------
Net increase (decrease) in net assets resulting from operations 223,746 174,807
------- -------
Distributions to shareholders from:
Net investment income (6,251) (4,833)
Net realized gain (186,096) (265,849)
-------- --------
Total distributions (192,347) (270,682)
-------- --------
Capital share transactions (Note 3)
Proceeds from sales 101,035 478,737
Reinvestment of distributions at net asset value 192,347 270,682
Payments for redemptions (349,477) (152,108)
-------- --------
Increase (decrease) in net assets from capital share transactions (56,095) 597,311
------- -------
Total increase (decrease) in net assets (24,696) 501,436
Net assets at beginning of period 1,775,054 1,273,618
--------- ---------
Net assets at end of period $1,750,358 $1,775,054
========== ==========
Undistributed (excess of distributions over) net investment income $ (1,281) $ 6,239
See accompanying notes to financial statements.
</TABLE>
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Notes to Financial Statements
Strategist Growth Fund, Inc.
(Unaudited as to Jan. 31, 1999)
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.
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 and 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 the value
that is equal to the Fund's proportionate ownership interest in the Portfolio's
net assets. As of Jan. 31, 1999, the percentages of the corresponding Portfolio
owned by Growth Fund, Growth Trends Fund and Special Growth Fund were 0.39%,
0.11% and 0.28%, respectively. Valuation of securities held by the Portfolios is
discussed in Note 1 of the Portfolios' "Notes to financial statements" (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
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Federal taxes
Each Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute all of its
taxable income to the shareholders. No provision for income or excise taxes is
thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the 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
As of Jan. 31, 1999, AEFC owned 1,966 shares of Growth Fund, 2,876 shares of
Growth Trends Fund and 139,449 shares of Special Growth Fund. As of Jan. 31,
1999, American Express Company (the parent company of AEFC) owned 433,253 shares
of Growth Fund and 591,139 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 an agreement with AEFC to provide 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 Service
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 services.
AEFC and the Distributor have agreed to waive certain fees and to absorb certain
other Fund expenses through Dec. 31, 1999. 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.
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<CAPTION>
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Jan. 31, 1999
Growth Growth Special
Fund Trends Growth
Fund Fund
<S> <C> <C> <C>
Sold 16,023 25,699 17,111
Issued for reinvested distributions -- 54,870 31,845
Redeemed (36,620) (21,086) (60,429)
Net increase (decrease) (20,597) 59,483 (11,473)
Year ended July 31, 1998
Growth Growth Special
Fund Trends Growth
Fund Fund
Sold 66,005 67,843 76,487
Issued for reinvested distributions -- 6,304 49,575
Redeemed (135,415) (179,885) (25,361)
Net increase (decrease) (69,410) (105,738) 100,701
4. CAPITAL LOSS CARRYOVER
For federal income tax purposes, Growth Fund had a capital loss carryover at
July 31, 1998 of $411,460 that will expire in 2004 through 2005 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.
</TABLE>
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<CAPTION>
5. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating
each Fund's results.
Growth Fund
Fiscal period ended July 31,
Per share income and capital changesa
1999b 1998 1997 1996c
<S> <C> <C> <C> <C>
Net asset value, beginning of period $38.62 $36.36 $23.15 $25.43
Income from investment operations:
Net investment income (loss) (.04) (.13) (.08) (.02)
Net gains (losses) (both realized and unrealized) 6.37 2.39 13.29 (2.26)
Total from investment operations 6.33 2.26 13.21 (2.28)
Net asset value, end of period $44.95 $38.62 $36.36 $23.15
Net assets, end of period (in millions) $25 $22 $23 $23
Ratio of expenses to average daily net assetsd 1.03%e .97% 1.01% 1.30%e
Ratio of net investment income (loss)
to average daily net assets (.20%)e (.33%) (.20%) (.37%)e
Portfolio turnover rate
(excluding short-term securities) 11% 28% 24% 5%
Total return 16.39% 6.22% 57.06% (8.97%)
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Jan. 31, 1999 (Unaudited).
c Inception date was May 13, 1996.
d 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 the periods ended 1997 and 1996,
respectively.
e Adjusted to an annual basis.
</TABLE>
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<CAPTION>
Growth Trends Fund
Fiscal period ended July 31,
Per share income and capital changesa
1999b 1998 1997 1996c
<S> <C> <C> <C> <C>
Net asset value, beginning of period $30.60 $26.55 $18.52 $19.00
Income from investment operations:
Net investment income (loss) .03 .13 .16 .01
Net gains (losses) (both realized and unrealized) 4.55 4.12 7.93 (.49)
Total from investment operations 4.58 4.25 8.09 (.48)
Less distributions:
Dividends from net investment income (.07) (.20) (.06) --
Distributions from realized gains (2.45) -- -- --
Total distributions (2.52) (.20) (.06) --
Net asset value, end of period $32.66 $30.60 $26.55 $18.52
Ratios/supplemental data
Net assets, end of period (in millions) $24 $21 $21 $25
Ratio of expenses to average daily net assetse .97%d .90% 1.60% 1.30%d
Ratio of net investment income (loss)
to average daily net assets .23%d .48% .58% .39%d
Portfolio turnover rate
(excluding short-term securities) 17% 38% 32% 7%
Total return 15.43% 16.17% 43.74% (2.53%)
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Jan. 31, 1999 (Unaudited).
c Inception date was May 13, 1996.
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 the periods ended 1997 and 1996,
respectively.
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<CAPTION>
Special Growth Fund
Fiscal period ended July 31,
Per share income and capital changesa
1999c 1998 1997b
<S> <C> <C> <C>
Net asset value, beginning of period $6.22 $6.90 $5.00
Income from investment operations:
Net investment income (loss) -- .02 .04
Net gains (losses) (both realized and unrealized) .97 .56 1.88
Total from investment operations .97 .58 1.92
Less distributions:
Distributions from net investment income (.03) (.02) (.01)
Distributions from realized gains (.77) (1.24) (.01)
Total distributions (.80) (1.26) (.02)
Net asset value, end of period $6.39 $6.22 $6.90
Ratios/supplemental data
Net assets, end of period (in millions) $2 $2 $1
Ratio of expenses to average daily net assetsd 1.40%e 1.03% 1.36%e
Ratio of net investment income (loss)
to average daily net assets (.16%)e .40% .26%e
Portfolio turnover rate
(excluding short-term securities) 56% 148% 171%
Total return 16.29% 10.98% 38.37%
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, 1999 (Unaudited).
d The Advisor and Distributor voluntarily limited total operating
expenses. Without this agreement, the ratio of expenses to average daily net
assets would have been 2.30%, 1.86% and 3.17% for the periods ended 1999,
1998 and 1997, respectively.
e Adjusted to an annual basis.
</TABLE>
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Finanacial Statements
Statement of assets and liabilities
Growth Portfolio
Jan. 31, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1):
Investment in securities of unaffiliated issuers
(identified cost $3,497,524,535) $6,466,470,830
Investment in securities of affiliated issuers
(identified cost $60,266,600) 53,775,000
----------
Total investments in securities (identified cost $3,557,791,135) 6,520,245,830
Dividends and accrued interest receivable 1,822,000
Receivable for investment securities sold 12,576,743
----------
Total assets 6,534,644,573
-------------
Liabilities
Disbursements in excess of cash on demand deposit 20,529,962
Payable upon return of securities loaned (Note 4) 104,100,000
Accrued investment management services fee 236,096
Other accrued expenses 70,528
------
Total liabilities 124,936,586
-----------
Net assets $6,409,707,987
==============
See accompanying notes to financial statements.
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<CAPTION>
Statement of operations
Growth Portfolio
Six months ended Jan. 31, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividend $ 12,718,638
Interest 8,501,074
---------
Total income 21,219,712
----------
Expenses (Note 2):
Investment management services fee 12,752,323
Compensation of board members 10,686
Custodian fees 179,314
Audit fees 13,125
Other 35,917
------
Total expenses 12,991,365
Earnings credits on cash balances (Note 2) (6,119)
------
Total net expenses 12,985,246
----------
Investment income (loss) -- net 8,234,466
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) (74,639,617)
Net change in unrealized appreciation (depreciation) on investments 996,898,130
-----------
Net gain (loss) on investments 922,258,513
-----------
Net increase (decrease) in net assets resulting from operations $930,492,979
============
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
Growth Portfolio
Jan. 31, 1999 July 31, 1998
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 8,234,466 $ 5,304,359
Net realized gain (loss) on investments (74,639,617) 330,872,649
Net change in unrealized appreciation (depreciation) on investments 996,898,130 6,947,483
----------- ---------
Net increase (decrease) in net assets resulting from operations 930,492,979 343,124,491
Net contributions (withdrawals) from partners 173,117,371 831,889,423
----------- -----------
Total increase (decrease) in net assets 1,103,610,350 1,175,013,914
Net assets at beginning of period 5,306,097,637 4,131,083,723
------------- -------------
Net assets at end of period $6,409,707,987 $5,306,097,637
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Growth Portfolio
(Unaudited as to Jan. 31, 1999)
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.
The Portfolios' significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions,
if any, may arise from sales of foreign currency, closed forward contracts,
exchange gains or losses realized between the trade date and settlement date on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete it contract obligations.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.6% 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 decreased the fee by $1,453,710 for the six months ended
Jan. 31, 1999.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
During the six months ended Jan. 31, 1999, the Portfolio's custodian fees were
reduced by $6,119 as a result of earnings credits from overnight cash balances.
According to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $703,399,643 and $535,373,391, respectively, for the six
months ended Jan. 31, 1999. For the same period, the portfolio turnover rate was
11%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $135,000 for the
six months ended Jan. 31, 1999.
4. LENDING OF PORTFOLIO SECURITIES
As of Jan. 31, 1999, securities valued at $98,339,800 were on loan to brokers.
For collateral, the Portfolio received $104,100,000 in cash. Income from
securities lending amounted to $88,951 for the six months ended Jan. 31, 1999.
The risks to the Portfolio of securities lending are that the borrower may not
provide additional collateral when required or return the securities when due.
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
Growth Portfolio
Jan. 31, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (95.1%)
Issuer Shares Value(a)
Automotive & related (0.4%)
<S> <C> <C>
Gentex 1,000,000(b) $22,875,000
Banks and savings & loans (4.6%)
BankAmerica 1,357,920 90,810,900
BankBoston 1,200,000 44,325,000
Washington Mutual 3,750,000 157,500,000
Total 292,635,900
Beverages & tobacco (2.4%)
Coca-Cola 2,381,700 155,852,494
Chemicals (3.2%)
Monsanto 800,000 38,050,000
Waste Management 3,375,000 168,539,063
Total 206,589,063
Communications equipment & services (6.7%)
Andrew Corp 2,200,000(b) 39,875,000
Ericsson (LM) ADR Cl B 2,800,000(c) 78,050,000
MasTec 1,800,000(b,g) 53,775,000
Tellabs 3,100,000(b) 265,825,000
Total 437,525,000
Computers & office equipment (29.6%)
America Online 400,000(b) 70,275,000
Cisco Systems 3,100,000(b) 345,843,750
Compaq Computer 2,700,000 128,587,500
EMC 2,600,000(b) 283,075,000
Hewlett-Packard 1,800,000 141,075,000
Intl Business Machines 1,300,000 238,225,000
Keane 1,800,000(b) 58,050,000
Microsoft 2,100,000(b) 367,499,999
Network Associates 2,000,000(b) 104,750,000
Solectron 462,500(b) 41,191,406
Yahoo! 350,000(b,d) 123,987,500
Total 1,902,560,155
Electronics (13.8%)
Applied Materials 3,000,000(b) 189,562,500
Broadcom Cl A 100,000 13,312,500
Intel 2,000,000 281,875,000
Maxim Integrated Products 2,400,000(b) 123,450,000
STMicroelectronics 500,000 52,250,000
Texas Instruments 2,300,000 227,412,500
Total 887,862,500
Energy (1.3%)
Anadarko Petroleum 3,000,000 81,187,500
Energy equipment & services (2.2%)
Halliburton 1,500,000 44,531,250
Schlumberger 2,000,000(c) 95,250,000
Total 139,781,250
Financial services (6.6%)
Citigroup 2,500,000 140,156,250
Merrill Lynch & Co 1,600,000 121,600,000
Providian Financial 1,595,325 160,828,702
Total 422,584,952
Furniture & appliances (0.8%)
Ethan Allen Interiors 1,014,000 48,418,500
Health care (7.5%)
Boston Scientific 2,000,000(b) 48,875,000
Gensia Sicor 161(b) 855
Johnson & Johnson 700,000 59,500,000
Medtronic 500,000 39,843,750
Pfizer 1,600,000 205,800,000
Warner-Lambert 1,800,000 129,937,500
Total 483,957,105
Health care services (1.0%)
HEALTHSOUTH Rehabilitation 4,800,000(b) 65,100,000
Household products (0.8%)
ServiceMaster 2,650,000 50,515,624
Industrial equipment & services (0.6%)
Deere & Co 1,200,000 39,075,000
Insurance (0.7%)
Provident Companies 1,000,000 42,875,000
Leisure time & entertainment (1.1%)
Harley-Davidson 1,000,000 52,000,000
Mattel 900,000 20,418,750
Total 72,418,750
Multi-industry conglomerates (3.2%)
Apollo Group Cl A 1,800,000(b) 49,275,000
Tyco Intl 2,000,000(c) 154,125,000
Total 203,400,000
Restaurants & lodging (1.3%)
Marriott Intl Cl A 2,400,000 84,300,000
Retail (2.3%)
Home Depot 2,400,000 144,900,000
Utilities -- telephone (4.9%)
MCI WorldCom 3,900,000(b) 311,025,000
Total common stocks
(Cost: $3,139,690,618) $6,095,438,793
See accompanying notes to investment in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Bonds (2.7%)
Issuer Coupon Principal Value(a)
rate amount
Resolution Funding Corp
Zero Coupon
<S> <C> <C> <C>
07-15-20 5.95% $400,000,000(f) $118,000,000
10-15-20 6.03 185,000,000(f) 53,804,383
Total bonds
(Cost: $165,090,786) $171,804,383
Short-term securities (3.9%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (2.2%)
Federal Home Loan Bank Disc Nt
02-24-99 4.74% 16,600,000 16,545,473
Federal Home Loan Mtge Corp Disc Nts
02-02-99 5.05 3,600,000 3,598,491
02-09-99 5.07 3,400,000 3,395,249
02-11-99 4.79 10,500,000 10,483,305
02-12-99 4.81 1,900,000 1,896,714
02-17-99 5.06 15,200,000 15,161,848
03-02-99 4.79 14,800,000 14,739,336
03-11-99 4.74 29,000,000 28,847,912
03-16-99 4.75 23,300,000 23,162,384
03-22-99 4.75 26,700,000 26,521,467
Total 144,352,179
Commercial paper (1.2%)
CXC
03-04-99 4.90 4,100,000(e) 4,081,697
Delaware Funding
02-23-99 4.91 7,600,000(e) 7,575,274
Fleet Funding
02-02-99 4.93 9,200,000(e) 9,196,228
General Electric Capital
02-01-99 4.81 16,100,000 16,095,698
GTE Funding
02-09-99 5.29 3,700,000 3,694,604
02-25-99 4.86 4,000,000 3,985,989
Preferred Receivables
02-03-99 5.45 1,000,000(e) 999,397
Rohm & Haas
02-01-99 4.82 33,900,000(e) 33,890,922
Total 79,519,809
Letter of credit (0.5%)
Bank of America-
AES Hawaii
02-05-99 5.22 16,400,000 16,385,814
02-25-99 5.24 12,800,000 12,744,852
Total 29,130,666
Total short-term securities
(Cost: $253,009,731) $253,002,654
Total investments in securities
(Cost: $3,557,791,135)(h) $6,520,245,830
See accompanying notes to investment in securities.
</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. As of Jan. 31, 1999, the
value of foreign securities represented 5.11% of net assets.
(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
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(f) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(g) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
six months ended Jan. 31, 1999 are as follows:
Issuer Beginning Purchase Sales Ending Dividend Value(a)
cost cost cost cost income
MasTec $60,266,600 $-- $-- $60,266,600 $-- $53,775,000
(h) At Jan. 31, 1999, the cost of securities for federal income tax purpose was
approximately $3,557,791,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $3,087,513,000
Unrealized depreciation (125,058,000)
------------
Net unrealized appreciation $2,962,455,000
<PAGE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
Growth Trends Portfolio
Jan. 31, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $12,189,236,528) $21,274,849,334
Cash in bank on demand deposit 11,735,317
Dividends and accrued interest receivable 12,078,112
Receivable for investment securities sold 101,942,665
U.S. government securities held as collateral (Note 4) 115,757,087
-----------
Total assets 21,516,362,515
--------------
Liabilities
Payable for investment securities purchased 105,860,482
Payable upon return of securities loaned (Note 4) 283,354,587
Accrued investment management services fee 286,582
Other accrued expenses 9,977
-----
Total liabilities 389,511,628
-----------
Net assets $21,126,850,887
===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Growth Trends Portfolio
Six months ended Jan. 31, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividend $ 70,865,528
Interest 34,988,486
Less foreign taxes withheld (416,661)
--------
Total income 105,437,353
-----------
Expenses (Note 2):
Investment management services fee 45,518,278
Compensation of board members 25,852
Custodian fees 463,487
Audit fees 15,625
Other 103,045
-------
Total expenses 46,126,287
Earnings credits on cash balances (Note 2) (4,852)
------
Total net expenses 46,121,435
----------
Investment income (loss) -- net 59,315,918
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 36,671,780
Options contracts written (Note 5) 583,819
-------
Net realized gain (loss) on investments 37,255,599
Net change in unrealized appreciation (depreciation) on investments 2,764,148,052
-------------
Net gain (loss) on investments 2,801,403,651
-------------
Net increase (decrease) in net assets resulting from operations $2,860,719,569
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Growth Trends Portfolio
Jan. 31, 1999 July 31, 1998
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 59,315,918 $ 132,492,409
Net realized gain (loss) on investments 37,255,599 1,599,514,857
Net change in unrealized appreciation (depreciation) on investments 2,764,148,052 715,372,594
------------- -----------
Net increase (decrease) in net assets resulting from operations 2,860,719,569 2,447,379,860
Net contributions (withdrawals) from partners 595,131,879 1,241,490,226
----------- -------------
Total increase (decrease) in net assets 3,455,851,448 3,688,870,086
Net assets at beginning of period 17,670,999,439 13,982,129,353
-------------- --------------
Net assets at end of period $21,126,850,887 $17,670,999,439
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Growth Trends Portfolio
(Unaudited as to Jan. 31, 1999)
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 U.S. and foreign 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.
The Portfolio's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions,
if any, may arise from sales of foreign currency, closed forward contracts,
exchange gains or losses realized between the trade date and settlement date on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete its contract obligations.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.6% 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 increased the fee by $427,706 for the six months ended
Jan. 31, 1999.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
During the six months ended Jan. 31, 1999, the Portfolio's custodian fees were
reduced by $4,852 as a result of earnings credits from overnight cash balances.
According to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $3,137,241,323 and $2,897,019,657, respectively, for the
six months ended Jan. 31, 1999. For the same year, 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 $1,316,197 for
the six months ended Jan. 31, 1999.
4. LENDING OF PORTFOLIO SECURITIES
At Jan. 31, 1999, securities valued at $290,337,350 were on loan to brokers. For
collateral, the Portfolio received $167,597,500 in cash and U.S. government
securities valued at $115,757,087. Income from securities lending amounted to
$393,712 for the six months ended Jan. 31, 1999. The risks to the Portfolio of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.
5. OPTIONS CONTRACTS WRITTEN
The number of contracts and premium amounts associated with options contracts
written is as follows:
Six months ended Jan. 31, 1999
Calls
Contracts Premium
Balance July 31, 1998 -- $ --
Opened 2,925 583,819
Expired (2,925) (583,819)
Balance Jan. 31, 1999 -- $ --
See "Summary of significant accounting policies."
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
Growth Trends Portfolio
Jan. 31, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (93.4%)
Issuer Shares Value(a)
Aerospace & defense (0.6%)
<S> <C> <C>
United Technologies 1,000,000 $119,437,500
Airlines (1.5%)
AMR 2,000,000(b) 117,500,000
Southwest Airlines 7,700,000 206,937,500
Total 324,437,500
Automotive & related (0.8%)
Ford Motor 2,600,000 159,737,500
Banks and savings & loans (4.1%)
BankAmerica 2,000,000 133,750,000
State Street 4,000,000 286,000,000
Wachovia 1,000,000 88,625,000
Wells Fargo 10,000,000 349,375,000
Total 857,750,000
Beverages & tobacco (0.9%)
Coca-Cola 3,000,000 196,312,500
Chemicals (1.5%)
Waste Management 6,400,000 319,600,000
Communications equipment & services (2.2%)
Lucent Technologies 2,700,000 303,918,750
Tellabs 1,800,000(b) 154,350,000
Total 458,268,750
Computers & office equipment (19.9%)
America Online 3,000,000(b) 527,062,500
BMC Software 3,000,000(b,e) 140,062,500
Cisco Systems 8,000,000(b) 892,499,999
Compaq Computer 8,500,000 404,812,500
Compuware 1,600,000(b) 106,000,000
EMC 3,000,000(b) 326,625,000
Hewlett-Packard 2,500,000 195,937,500
Intl Business Machines 3,600,000 659,700,000
Microsoft 3,600,000(b) 630,000,000
Network Associates 2,000,000(b,e) 104,750,000
Novell 5,000,000 101,875,000
Xerox 1,000,000 124,000,000
Total 4,213,324,999
Electronics (5.0%)
Applied Materials 1,700,000(b) 107,418,750
Intel 3,500,000 493,281,250
Teradyne 300,000(b) 19,762,500
Texas Instruments 3,250,000 321,343,750
Uniphase 1,300,000(b,e) 118,462,500
Total 1,060,268,750
Energy (1.9%)
Exxon 2,300,000 162,006,250
Mobil 2,000,000 175,375,000
Royal Dutch Petroleum 1,500,000(c) 60,093,750
Total 397,475,000
Energy equipment & services (0.1%)
Schlumberger 300,000(c) 14,287,500
Financial services (6.1%)
Associates First Capital Cl A 3,000,000 121,687,500
Citigroup 5,800,000 325,162,500
Fannie Mae 3,400,000 247,775,000
MBNA 7,500,000 209,531,250
Morgan Stanley, Dean Witter, Discover & Co 3,000,000 260,437,500
Paychex 2,400,000 116,850,000
Schwab (Charles) 200,000 14,062,500
Total 1,295,506,250
Health care (11.2%)
ALZA 1,000,000(b) 50,562,500
Boston Scientific 2,000,000(b) 48,875,000
Bristol-Myers Squibb 3,400,000 435,837,500
Elan ADR 2,500,000(b,c,e) 168,750,000
Johnson & Johnson 1,000,000 85,000,000
Medtronic 2,900,000 231,093,750
Merck & Co 2,000,000 293,500,000
Pfizer 4,500,000 578,812,500
Schering-Plough 4,800,000 261,600,000
Warner-Lambert 2,900,000 209,343,750
Total 2,363,375,000
Health care services (2.9%)
Cardinal Health 4,000,000 295,750,000
HEALTHSOUTH Rehabilitation 200,000(b) 2,712,500
IMS Health 3,000,000 109,875,000
McKesson HBOC 2,400,000 180,300,000
Service Corp Intl 1,290,100 20,480,338
Total 609,117,838
Household products (1.1%)
Gillette 2,400,000 141,000,000
Procter & Gamble 1,100,000 99,962,500
Total 240,962,500
Industrial equipment & services (0.5%)
Illinois Tool Works 1,700,000 102,531,250
Insurance (1.5%)
ACE 4,000,000(c) 112,000,000
American Intl Group 2,000,000 205,875,000
Total 317,875,000
Media (5.5%)
CBS 6,000,000 204,000,000
Clear Channel Communications 2,000,000(b) 123,750,000
Comcast Special Cl A 700,000 47,589,063
Gannett 4,200,000 276,412,500
New York Times Cl A 2,000,000 68,625,000
Time Warner 7,200,000 450,000,000
Total 1,170,376,563
Multi-industry conglomerates (4.9%)
General Electric 7,000,000 734,125,000
Tyco Intl 4,000,000(c) 308,250,000
Total 1,042,375,000
Restaurants & lodging (1.0%)
Marriott Intl Cl A 6,000,000 210,750,000
Retail (12.5%)
Costco Companies 3,000,000(b) 248,625,000
CVS 4,500,000 246,375,000
Dayton Hudson 6,100,000 388,875,000
Home Depot 5,600,000 338,100,000
Kroger 2,500,000(b,e) 158,750,000
Safeway 9,000,000(b) 505,125,000
TJX Companies 1,000,000 29,562,500
Wal-Mart Stores 8,400,000 722,400,000
Total 2,637,812,500
Transportation (--%)
Kansas City Southern Inds 152,700 7,253,250
Utilities -- electric (1.1%)
CMS Energy 3,400,000 145,562,500
Duke Energy 1,270,000 78,501,875
Total 224,064,375
Utilities -- gas (0.5%)
El Paso Energy 3,500,000 115,500,000
Utilities -- telephone (6.1%)
AirTouch Communications 2,000,000(b) 193,125,000
BellSouth 10,000,000 446,250,000
MCI WorldCom 4,700,000(b) 374,825,000
U S WEST Communications Group 4,300,000 265,256,250
Total 1,279,456,250
Total common stocks
(Cost: $10,651,921,191) $19,737,855,775
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (7.3%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (0.8%)
Federal Home Loan Bank Disc Nt
<S> <C> <C> <C>
03-19-99 4.75% $12,000,000 $11,924,480
Federal Home Loan Mtge Corp Disc Nts
02-08-99 4.82 29,100,000 29,065,080
02-10-99 5.04 30,200,000 30,153,769
02-12-99 5.07 13,800,000 13,774,884
02-16-99 5.07 35,400,000 35,293,698
03-11-99 4.79 20,800,000 20,689,991
03-19-99 4.75 13,000,000 12,918,187
03-22-99 4.74 22,100,000 21,952,538
Total 175,772,627
Certificates of deposit (0.1%)
Harris Trust
02-22-99 5.15 16,300,000 16,300,000
U.S. Bank Minneapolis
08-09-99 4.89 13,700,000 13,700,000
Total 30,000,000
Commercial paper (5.9%)
ABB Treasury Center USA
02-18-99 5.14 27,200,000(d) 27,090,053
Alcoa Aluminum Co of America
03-03-99 5.19 5,000,000 4,966,060
American General Finance
04-26-99 5.14 5,000,000 4,940,550
05-07-99 4.89 9,400,000 9,274,614
ANZ (Delaware)
02-11-99 4.87 21,900,000 21,864,594
04-12-99 4.91 10,000,000 9,878,500
Avco Financial Services
02-16-99 5.29 4,400,000 4,389,092
03-26-99 5.13 15,200,000 15,082,307
BBV Finance (Delaware)
04-14-99 4.87 20,000,000 19,795,000
Bear Stearns
04-15-99 4.87 11,200,000 11,083,669
04-23-99 4.85 4,400,000 4,349,488
05-26-99 4.86 7,100,000 6,986,933
BMW US Capital
03-01-99 4.84 6,100,000 6,075,498
03-05-99 4.84 4,400,000 4,379,991
CAFCO
02-19-99 5.42 8,000,000(d) 7,973,756
05-10-99 4.85 7,600,000(d) 7,495,521
Cargill Global
03-05-99 4.92 12,000,000(d) 11,944,580
Ciesco LP
02-24-99 4.88 20,900,000 20,829,607
03-19-99 4.88 8,400,000(d) 8,337,848
04-12-99 4.85 14,500,000 14,355,338
CIT Group Holdings
02-23-99 4.87 22,500,000 22,427,250
03-01-99 4.89 20,000,000 19,919,000
Consolidated Natural Gas
02-08-99 5.21 22,455,000 22,425,977
02-09-99 5.26 15,447,000 15,424,602
Corporate Receivables
02-01-99 5.42 10,000,000(d) 9,997,014
03-12-99 5.18 15,000,000(d) 14,911,003
CXC
03-04-99 4.91 11,500,000(d) 11,448,557
03-19-99 4.91 13,000,000(d) 12,912,357
Daimler-Benz
03-18-99 5.25 18,800,000 18,677,904
Delaware Funding
02-18-99 5.26 10,000,000(d) 9,954,134
02-22-99 4.87 15,400,000(d) 15,352,281
02-25-99 4.88 5,768,000(d) 5,747,796
02-26-99 5.26 10,000,000(d) 9,954,476
04-22-99 4.85 3,600,000(d) 3,559,164
Duke Energy
02-09-99 5.25 18,200,000 18,173,610
Exxon Asset Management
02-01-99 4.82 20,800,000(d) 20,794,430
Falcon Asset
02-22-99 4.89 5,800,000(d) 5,781,954
03-09-99 4.87 8,100,000(d) 8,058,618
03-11-99 4.92 10,000,000(d) 9,945,667
Fleet Funding
02-02-99 4.93 2,900,000(d) 2,898,811
02-24-99 4.88 18,016,000(d) 17,955,321
02-24-99 4.93 8,400,000(d) 8,371,417
02-25-99 4.87 2,700,000(d) 2,690,542
Ford Motor Credit
04-07-99 4.84 30,000,000 29,721,200
Gateway Fuel
02-12-99 4.87 6,254,000 6,243,024
GMAC
02-02-99 5.11 15,000,000 14,991,200
02-23-99 4.88 20,800,000 20,732,608
03-02-99 4.85 30,000,000 29,875,224
03-02-99 4.86 18,100,000 18,024,563
03-10-99 4.85 30,000,000 29,843,350
Goldman Sachs Group
02-24-99 4.85 6,400,000 6,378,533
GTE Funding
02-04-99 5.28 2,000,000 1,998,542
02-08-99 5.21 5,200,000 5,193,279
02-09-99 5.29 2,800,000 2,795,917
02-10-99 5.23 29,000,000 28,954,010
02-18-99 4.83 7,700,000 7,680,412
Heinz (HJ)
02-26-99 5.24 13,700,000 13,646,570
Household Finance
02-01-99 5.18 2,300,000 2,299,250
03-03-99 4.85 30,000,000 29,871,200
03-09-99 4.84 22,300,000 22,186,543
Intl Lease Finance
02-19-99 5.19 10,000,000 9,968,513
Morgan Stanley, Dean Witter, Discover & Co
02-01-99 4.85 26,200,000 26,192,941
02-08-99 5.17 16,000,000 15,975,059
Natl Rural Utilities
03-29-99 5.16 13,000,000 12,895,449
NBD Bank Canada
02-16-99 4.88 12,500,000 12,471,313
03-01-99 4.85 21,200,000 21,114,670
03-02-99 5.19 13,200,000 13,139,598
New Center Asset Trust
02-10-99 5.12 2,400,000 2,395,637
02-10-99 5.19 10,000,000 9,984,264
02-16-99 5.30 4,100,000 4,088,601
02-19-99 5.13 7,700,000 7,674,745
06-04-99 4.93 7,400,000 7,251,762
Preferred Receivables
02-23-99 5.26 8,600,000(d) 8,558,315
04-26-99 4.86 12,400,000(d) 12,252,564
Reed Elsevier
03-09-99 4.90 23,500,000(d) 23,372,969
03-16-99 4.89 9,800,000(d) 9,737,729
Salomon Smith Barney
05-06-99 4.86 7,500,000 7,400,979
Sheffield Receivables
02-05-99 5.21 10,000,000(d) 9,989,146
03-04-99 4.88 19,000,000(d) 18,915,355
03-16-99 4.89 11,900,000(d) 11,827,708
03-17-99 4.94 18,500,000(d) 18,379,884
Societe Generale North America
04-21-99 4.85 20,000,000 19,775,867
04-28-99 4.85 7,200,000 7,112,424
Toyota Motor Credit
02-04-99 5.18 14,200,000 14,187,201
USAA Capital
02-02-99 5.41 8,900,000 8,896,002
U.S. Bank Minneapolis
08-09-99 4.89 13,700,000 13,700,000
Variable Funding Capital
02-01-99 4.81 40,000,000(d) 39,989,310
02-17-99 4.92 18,542,000(d) 18,496,572
03-01-99 4.87 13,500,000(d) 13,445,437
03-15-99 4.90 5,000,000(d) 4,969,176
04-20-99 4.88 3,200,000(d) 3,164,576
Westpac Capital
04-08-99 4.88 15,800,000 15,617,679
06-10-99 4.92 19,840,000 19,483,541
Windmill Funding
02-08-99 5.34 15,300,000(d) 15,279,728
03-17-99 4.89 14,900,000(d) 14,804,245
Total 1,237,719,268
Letters of credit (0.5%)
Bank of America-
AES Hawaii
02-04-99 4.86 12,826,000(d) 12,817,360
02-04-99 5.28 14,600,000 14,589,354
02-04-99 5.35 10,279,000 10,271,405
02-05-99 5.22 20,900,000 20,881,920
02-22-99 5.22 8,700,000(d) 8,666,831
Chase Manhattan Bank-
Somerset Railroad
02-18-99 4.87 5,800,000 5,785,123
First Chicago-
Commed Fuel
02-17-99 5.25 6,000,000 5,981,446
04-15-99 4.86 8,600,000 8,510,675
U.S. Bank Minneapolis-
Midwest Capital
02-02-99 4.91 6,000,000 5,997,550
Total 93,501,664
Total short-term securities
(Cost: $1,537,315,337) $1,536,993,559
Total investments in securities
(Cost: $12,189,236,528)(f) $21,274,849,334
See accompanying notes to investments in securities.
</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. As of Jan. 31, 1999, the
value of foreign securities represented 3.14% of net assets.
(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, 1999, the cost of securities for federal income tax purpose was
approximately $12,189,237,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $9,158,897,000
Unrealized depreciation (73,285,000)
-----------
Net unrealized appreciation $9,085,612,000
<PAGE>
Financial Statements
Statement of assets and liabilities
Aggressive Growth Portfolio
Jan. 31, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $508,248,308) $633,030,092
Cash in bank on demand deposit 711,530
Dividends and accrued interest receivable 573,114
Receivable for investment securities sold 7,438,864
---------
Total assets 641,753,600
-----------
Liabilities
Payable for investment securities purchased 3,947,156
Accrued investment management services fee 10,657
Other accrued expenses 10,887
------
Total liabilities 3,968,700
---------
Net assets $637,784,900
============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Aggressive Growth Portfolio
Six months ended Jan. 31, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 3,007,773
Interest 225,196
Less foreign taxes withheld (19,088)
-------
Total income 3,213,881
---------
Expenses (Note 2):
Investment management services fee 1,673,343
Compensation of board members 4,197
Custodian fees 33,620
Audit fees 7,500
Other 3,571
-----
Total expenses 1,722,231
Earnings credits on cash balances (Note 2) (8,904)
------
Total net expenses 1,713,327
---------
Investment income (loss) -- net 1,500,554
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 5,186,669
Financial futures contracts 1,810,607
---------
Net realized gain (loss) on investments 6,997,276
Net change in unrealized appreciation (depreciation) on investments 82,119,769
----------
Net gain (loss) on investments 89,117,045
----------
Net increase (decrease) in net assets resulting from operations $90,617,599
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Aggressive Growth Portfolio
Jan. 31, 1999 July 31, 1998
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 1,500,554 $ 3,194,481
Net realized gain (loss) on investments 6,997,276 38,876,071
Net change in unrealized appreciation (depreciation) on investments 82,119,769 8,046,666
---------- ---------
Net increase (decrease) in net assets resulting from operations 90,617,599 50,117,218
---------- ----------
Net contributions (withdrawals) from partners 24,053,444 170,560,308
---------- -----------
Total increase (decrease) in net assets 114,671,043 220,677,526
Net assets at beginning of period 523,113,857 302,436,331
----------- -----------
Net assets at end of period $637,784,900 $523,113,857
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Aggressive Growth Portfolio
(Unaudited as to Jan. 31, 1999)
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.
The Portfolio's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers who make markets in these securities or by independent
pricing service. Securities for which market quotations are not readily
available are valued at fair value according to methods selected in good faith
by the board. Short-term securities maturing in more than 60 days from the
valuation date are valued at the market price or approximate market value based
on current interest rates; those maturing in 60 days or less are valued at
amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions,
if any, may arise from sales of foreign currency, closed forward contracts,
exchange gains or losses realized between the trade date and settlement date on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete its contract obligations.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.65% 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.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
During the six months ended Jan. 31, 1999, the Portfolio's custodian fees were
reduced by $8,904 as a result of earnings credits from overnight cash balances.
According to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $312,571,664 and $294,073,427, respectively, for the six
months ended Jan. 31, 1999. For the same period, the portfolio turnover rate was
56%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $13,941 for the
six months ended Jan. 31, 1999.
4. STOCK INDEX FUTURES CONTRACTS
Investments in securities at Jan. 31, 1999, included securities valued at
$2,875,000 that were pledged as collateral to cover initial margin deposits on
27 open purchase contracts. The market value of the open purchase contracts at
Jan. 31, 1999, was $8,650,125 with a net unrealized gain of $280,455.
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
Aggressive Growth Portfolio
Jan. 31, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (97.9%)
Issuer Shares Value(a)
Aerospace & defense (0.3%)
<S> <C> <C>
AlliedSignal 4,700 $183,300
Goodrich (BF) 14,000 476,000
Rockwell Intl 27,800 1,207,563
Total 1,866,863
Airlines (0.4%)
Southwest Airlines 97,900 2,631,063
Automotive & related (2.8%)
Dana 72,900 2,998,013
Danaher 32,900 1,760,150
Ford Motor 104,100 6,395,644
General Motors 73,900 6,632,524
Total 17,786,331
Banks and savings & loans (7.2%)
Bank One 153,112 8,019,241
BankAmerica 123,151 8,235,723
State Street 123,100 8,801,650
Wachovia 70,200 6,221,475
Washington Mutual 186,700 7,841,400
Wells Fargo 200,000 6,987,500
Total 46,106,989
Beverages & tobacco (1.8%)
Coca-Cola 171,400 11,215,988
Chemicals (0.5%)
Waste Management 63,248 3,158,447
Communications equipment & services (2.8%)
Lucent Technologies 91,900 10,344,493
Tellabs 88,450(b) 7,584,588
Total 17,929,081
Computers & office equipment (16.5%)
3Com 149,300(b) 7,017,100
America Online 39,400(b) 6,922,088
Cisco Systems 125,200(b) 13,967,624
Compaq Computer 265,000 12,620,625
Computer Sciences 19,600 1,343,825
Electronic Data Systems 116,800 6,124,700
EMC 124,200(b) 13,522,275
First Data 248,700 9,528,319
Gateway 2000 26,100(b) 2,016,225
Intl Business Machines 91,200 16,712,399
Novell 244,200 4,975,575
Parametric Technology 92,500(b) 1,208,281
Unisys 131,900 4,369,188
Xerox 33,200 4,116,800
Total 104,445,024
Electronics (3.8%)
Applied Materials 26,700(b) 1,687,106
Intel 155,700 21,943,969
LSI Logic 20,800(b) 579,800
Total 24,210,875
Energy (3.5%)
Anadarko Petroleum 49,000 1,326,063
Chevron 63,200 4,724,200
Mobil 69,500 6,094,281
Royal Dutch Petroleum 155,000(c) 6,209,687
Texaco 87,500 4,145,313
Total 22,499,544
Financial services (3.6%)
Associates First Capital Cl A 153,626 6,231,455
Household Intl 178,100 7,825,269
MBNA 240,700 6,724,556
Providian Financial 21,200 2,137,225
Total 22,918,505
Food (2.5%)
Bestfoods 82,400 4,145,750
General Mills 55,000 4,616,563
Sara Lee 150,000 3,825,000
Sysco 111,600 3,041,100
Total 15,628,413
Health care (15.4%)
ALZA 35,700(b) 1,805,081
American Home Products 29,300 1,719,544
Amgen 94,400(b) 12,065,499
Baxter Intl 96,200 6,824,188
Boston Scientific 86,200(b) 2,106,513
Bristol-Myers Squibb 144,100 18,471,818
Guidant 118,200 6,966,413
Medtronic 83,000 6,614,063
Pfizer 123,300 15,859,462
Schering-Plough 190,700 10,393,150
Warner-Lambert 216,600 15,635,812
Total 98,461,543
Health care services (0.4%)
Tenet Healthcare 53,000(b) 1,099,750
United Healthcare 33,000 1,476,750
Total 2,576,500
Household products (1.3%)
Procter & Gamble 87,900 7,987,913
Industrial equipment & services (0.2%)
Browning-Ferris Inds 42,400 1,166,000
Insurance (2.6%)
American General 108,850 7,762,366
Lincoln Natl 107,350 8,943,597
Total 16,705,963
Leisure time & entertainment (1.3%)
Disney (Walt) 247,000 8,151,000
Media (0.7%)
Tele-Communications Cl A 67,600 4,634,825
Multi-industry conglomerates (4.6%)
General Electric 186,300 19,538,213
Tyco Intl 130,950(c) 10,091,334
Total 29,629,547
Paper & packaging (0.6%)
Intl Paper 68,000 2,690,250
Owens-Illinois 40,400(b) 1,181,700
Total 3,871,950
Restaurants & lodging (0.6%)
Wendy's Intl 170,100 4,050,506
Retail (13.1%)
Albertson's 77,700 4,739,700
American Stores 86,400 3,132,000
Circuit City Stores 72,000 3,978,000
Costco Companies 92,000(b) 7,624,500
CVS 129,300 7,079,175
Dayton Hudson 123,500 7,873,124
Home Depot 135,900 8,204,962
Kroger 77,900(b) 4,946,650
Meyer (Fred) 63,200(b) 3,950,000
Rite Aid 56,500 2,775,563
Safeway 108,100(b) 6,067,113
TJX Companies 130,700 3,863,819
Wal-Mart Stores 178,200 15,325,199
Walgreen 67,200(d) 4,200,000
Total 83,759,805
Transportation (0.7%)
Burlington Northern Santa Fe 137,500 4,760,938
Utilities -- gas (0.5%)
Enron 49,000 3,234,000
Utilities -- telephone (10.2%)
Ameritech 269,800 17,570,725
AT&T 172,600 15,663,450
MCI WorldCom 243,685(b) 19,433,879
U S WEST Communications Group 199,500 12,306,656
Total 64,974,710
Total common stocks
(Cost: $499,580,539) $624,362,323
See accompanying notes to investment in securities
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (1.4%)
Issuer
Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies
Federal Home Loan Bank Disc Nt
<S> <C> <C> <C>
03-19-99 4.75% $1,700,000 $1,689,302
Federal Home Loan Mtge Corp Disc Nts
02-02-99 5.05 1,500,000 1,499,371
02-10-99 5.04 700,000 698,928
02-12-99 5.06 500,000 499,092
02-16-99 5.07 700,000 698,337
03-08-99 4.80 700,000 696,568
03-08-99 4.81 1,500,000 1,492,631
03-12-99 4.81 500,000 497,278
03-17-99 4.74 400,000 397,593
Federal Natl Mtge Assn Disc Nt
02-19-99 4.81 500,000 498,669
Total short-term securities
(Cost: $8,667,769) $8,667,769
Total investments in securities
(Cost: $508,248,308)(e) $633,030,092
See accompanying notes to investment in securities.
</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. As of Jan. 31, 1999, the
value of foreign securities represented 2.55% of net assets.
(d) 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 Contracts
S&P 500 Index, March 1999 27
(e) At Jan. 31, 1999, the cost of securities for federal income tax purpose was
approximately $508,248,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $138,614,000
Unrealized depreciation (13,832,000)
-----------
Net unrealized appreciation $124,782,000
<PAGE>
American Express Service Corporation, Distributor
S-6119 D (3/99)
