AMERICAN
EXPRESS
Strategist Growth Fund, Inc.
2000 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) 27
Financial Statements (Growth Trends Portfolio) 33
Notes to Financial Statements (Growth Trends Portfolio) 36
Investments in Securities (Growth Trends Portfolio) 41
Financial Statements (Aggressive Growth Portfolio) 52
Notes to Financial Statements (Aggressive Growth Portfolio) 55
Investments in Securities (Aggressive Growth Portfolio) 60
<PAGE>
(picture of) Lisa A. Costa
Lisa A. Costa
Portfolio Manager
From the Portfolio Manager
Strategist Growth Fund
Strategist Growth Fund took good advantage of a stock-market surge to post a
strong gain for the first half of the fiscal year. For the six months -- August
1999 through January 2000 -- the Fund generated a total return of 20.11%. (A
portion of the return came in the form of a capital gain, which was paid to
shareholders in December and reduced the Fund's net asset value by the same
amount.)
The period got off to a shaky start, as the stock market struggled in the face
of higher interest rates, concerns that the robust economy might soon spawn a
run-up in the inflation rate, and uncertainty regarding the potential effect of
the Y2K computer bug. Although the Fund held up relatively well in the negative
environment, it lost about 2% through September.
MOOD SWINGS
The mood in the stock market changed quickly, though, as fresh reports of
still-tame inflation and healthy corporate profits arrived and excitement about
the impact of the burgeoning Internet began to build. By November, the market's
moderate advance had turned into a roaring rally that continued to gather
momentum through the end of December. Given the strength of the run-up, it
wasn't surprising that the period ended with the market retreating moderately in
January.
While stocks of virtually all stripes benefited from the late-1999 surge, it was
clearly the technology stocks that were the big winners, especially those
related to the growth of the Internet. The tech trend worked to the particular
advantage of the Fund, as about half of the portfolio's assets was concentrated
in that sector, a level that rose to more than 60% in December because of rising
prices among those stocks. Among the largest and most productive holdings for
the Fund were technology names such as Cisco Systems, Microsoft, EMC
Corporation, Texas Instruments, Yahoo and Tellabs.
Most of the rest of the portfolio was concentrated in the health care, financial
services, retailing and utilities sectors. While there were some strong
performers within these groups, on the whole their results were mixed.
Before closing, I want to note that credit for the Fund's excellent performance
during the past six months and, in fact, the past few years, belongs to Mitzi
Malevich, who managed the Fund during that time and whom I succeeded upon her
retirement in January 2000. While no two portfolio managers do their jobs in
identical fashion, I think it's important to point out that I intend to follow
the same investment strategy that Mitzi employed so successfully: hold a limited
number of stocks (an average of about 50 for this Fund in recent years)
representing large companies with strong growth prospects, keep trading to a
minimum, and keep the portfolio virtually fully invested (almost all the assets
in stocks, leaving very little in cash reserves) at all times. I look forward to
putting that approach to work for you in the years ahead.
Lisa A. Costa
<PAGE>
(picture of) Gordon M. Fines
Gordon M. Fines
Portfolio Manager
From the Portfolio Manager
Strategist Growth Trends Fund
A mid-period surge by the stock market set the stage for a double-digit gain by
Strategist Growth Trends during the first half of the fiscal year. For the six
months -- August 1999 through January 2000 -- the Fund generated a total return
of 17.36%. (A portion of the Fund's return came in the form of a capital gain,
which was distributed to shareholders in December 1999 and reduced the Fund's
net asset value by the same amount at that time.)
The stock market struggled early in the period, as concerns about higher
interest rates, potentially higher inflation and the possible impact of the Y2K
computer bug weighed on investors' minds. Thanks largely to the strength of its
technology-related holdings, the Fund fared better than the market as a whole,
but it was still down about one percent through September.
STOCKS GET BACK ON TRACK
But by mid-October, buoyed by fresh reports of still-low inflation, generally
healthy corporate profits and growing excitement regarding the Internet, stocks
were once again moving forward. Within weeks, the advance turned into a
remarkable rally that kept gathering momentum through December and into the
first few days of the new year. Illustrating the strength of the surge, the Fund
gained more than 10% in December. The Fund gave back some of its gain in
January, though, as inflation worries resurfaced, sending the market into
retreat.
Clearly driving the Fund's performance during the six months were technology and
telecommunications stocks, which made up nearly half of the portfolio at times.
The main areas of emphasis were semiconductors, software, networking and
wireless communications, with IBM, Cisco Systems, Microsoft and JDS Uniphase
among the largest and more productive holdings. Among other sectors, retailing,
highlighted by Wal-Mart, also made a good contribution.
I made only minor changes to the portfolio during the period. Late in 1999, I
reduced the technology exposure somewhat, given the rapid and substantial run-up
in stock prices in that sector. Concurrently, I added a small amount of
commodity-related stocks in the paper and chemical areas, which I believe could
benefit from the ongoing strength of the economy.
As the second half of the fiscal year begins, it's clear that investors are
keeping a close eye on inflation and the Federal Reserve Board. Should the Fed
decide in the months ahead to raise short-term interest rates substantially to
keep inflation at bay, I think stocks will find it difficult to maintain a
sustained advance. Still, assuming the economy and corporate profits remain
healthy, I think the longer-term outlook for the market continues to be
positive.
Gordon M. Fines
<PAGE>
(picture of) Keith Tufte
Keith Tufte
Portfolio Manager
(picture of) James M. Johnson, Jr.
James M. Johnson, Jr.
Portfolio Manager
From the Portfolio Managers
Strategist Special Growth Fund
The past six months was a volatile but overall productive period for the U.S.
stock market and Strategist Special Growth Fund. For the first half of the
fiscal year -- August 1999 through January 2000 -- the Fund generated a total
return of 7.70%. This compares with 6.00% for the Standard & Poor's 500 (an
unmanaged index of stocks commonly used to gauge the performance of the market
as a whole).
The stock market was in a moderate slump when the period began, as concerns
about higher interest rates, a potential run-up in inflation and the uncertainty
regarding the impact of the Y2K computer bug weighed on investors' minds. As a
result, both the market and the Fund lost ground through September.
THE MARKET TURNS AROUND
In early October, though, the mood began to brighten, thanks to fresh reports of
still-tame inflation and generally healthy corporate profits. Soon, with another
example of the remarkable resilience it has displayed in recent years, the
market was again on the advance. Over the next 10 weeks and with only the
briefest of interruptions, stocks continued to gather momentum, powering to an
all-time high by the end of 1999. Reflecting the positive environment, the Fund
gained about 17% from October through December. The period ended on a down note,
though, as renewed concern about inflation and interest rates drove the market
into retreat in January.
As was the case for the market as a whole, technology-related stocks were the
driving force behind the Fund's positive performance during the period. To the
Fund's benefit, we kept a substantial exposure to the tech sector (approaching
40% at times). Among the biggest winners were Intel, National Semiconductor,
America Online, 3Com, IBM, Cisco System and EMC.
Among other sectors, retailing, led by Wal-Mart and Home Depot, also made a
strong contribution. General Electric, in the conglomerate group, was another
good performer. Also to the Fund's benefit, it had only a small exposure to
building materials, industrial transportation and tobacco stocks, which were
weak. On the negative side were holdings in the telecommunications and financial
services sectors.
Looking at changes to the portfolio, we reduced the exposure to retailing and
financial services, and added to technology and "cyclical" stocks such as
chemicals, paper, basic metals and energy. The cyclical additions reflect our
view that the economy will remain robust and that interest rates are likely to
rise; in such an environment, those stocks should fare relatively well. We also
added a bit to the drug sector, which is experiencing improving fundamentals and
merger activity. However, as the second half of the fiscal year begins, the
largest area of investment is still technology, which continues to boast very
strong fundamentals.
Keith Tufte
James M. Johnson, Jr.
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statements of assets and liabilities
Strategist Growth Fund, Inc.
Strategist Strategist Strategist
Growth Growth Special
Jan. 31, 2000 (Unaudited) Fund Trends Fund Growth Fund
Assets
<S> <C> <C> <C> <C>
Investment in corresponding Portfolio (Note 1) $28,371,916 $28,692,393 $1,958,008
Expense receivable from AEFC -- -- 300
Other prepaid assets -- 5,947 --
----- ----- ------
Total assets 28,371,916 28,698,340 1,958,308
---------- ---------- ---------
Liabilities
Accrued transfer agency fee 113 105 38
Accrued administrative services fees 117 119 10
Other accrued expenses 9,760 4,218 10,796
----- ----- ------
Total liabilities 9,990 4,442 10,844
----- ----- ------
Net assets applicable to outstanding capital stock $28,361,926 $28,693,898 $1,947,464
=========== =========== ==========
Represented by
Capital stock-- $.01 par value (Note 1) $ 5,166 $ 7,828 $ 3,247
Additional paid-in capital 9,913,285 13,593,034 1,691,154
Undistributed (excess of distributions over)
net investment income (34,988) 5,603 (3,997)
Accumulated net realized gain (loss) (405,722) 803,673 171,836
Unrealized appreciation (depreciation) on investments 18,884,185 14,283,760 85,224
---------- ---------- ------
Total -- representing net assets applicable
to outstanding capital stock $28,361,926 $28,693,898 $1,947,464
=========== =========== ==========
Shares outstanding 516,577 782,767 324,691
------- ------- -------
Net asset value per share of outstanding capital stock $ 54.90 $ 36.66 $ 6.00
----------- ----------- ----------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of operations
Strategist Growth Fund, Inc.
Strategist Strategist Strategist
Growth Growth Special
Six months ended Jan. 31, 2000 (Unaudited) Fund Trends Fund Growth Fund
Investment income
Income:
<S> <C> <C> <C>
Dividends $ 53,255 $ 69,810 $ 7,998
Interest 31,848 77,845 2,296
------ ------ -----
Total income 85,103 147,655 10,294
------ ------- ------
Expenses (Note 2):
Expenses allocated from corresponding Portfolio 79,782 69,542 6,166
Distribution fee 10,313 10,547 788
Transfer agency fee 7,249 6,763 2,422
Administrative services fees and expenses 6,496 6,634 582
Compensation of board members 2,524 2,163 392
Printing and postage 2,347 492 2,508
Registration fees 6,784 -- 4,985
Audit fees 3,500 2,400 1,800
Other 1,096 54 2,391
----- -- -----
Total expenses 120,091 98,595 22,034
Less expenses reimbursed by AEFC -- -- (7,743)
------ ------ ------
Total net expenses 120,091 98,595 14,291
------- ------ ------
Investment income (loss)-- net (34,988) 49,060 (3,997)
------- ------ ------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (405,712) 1,366,842 237,981
Financial futures contracts -- -- 642
Foreign currency transactions -- 882 --
---- --- ----
Net realized gain (loss) on investments (405,712) 1,367,724 238,623
Net change in unrealized appreciation
(depreciation) on investments 5,218,238 2,894,027 (90,328)
--------- --------- -------
Net gain (loss) on investments 4,812,526 4,261,751 148,295
--------- --------- -------
Net increase (decrease) in net assets
resulting from operations $4,777,538 $4,310,811 $144,298
========== ========== ========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist Growth Fund, Inc.
Strategist Growth Fund
Jan. 31, 2000 July 31, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ (34,988) $ (51,937)
Net realized gain (loss) on investments (405,712) 875,930
Net change in unrealized appreciation (depreciation) on investments 5,218,238 3,403,629
--------- ---------
Net increase (decrease) in net assets resulting from operations 4,777,538 4,227,622
--------- ---------
Distributions to shareholders from:
Net realized gain (464,480) --
-------- --------
Capital share transactions (Note 3)
Proceeds from sales 229,678 1,131,850
Reinvestment of distributions at net asset value 463,901 --
Payments for redemptions (447,797) (3,710,896)
-------- ----------
Increase (decrease) in net assets from capital share transactions 245,782 (2,579,046)
------- ----------
Total increase (decrease) in net assets 4,558,840 1,648,576
Net assets at beginning of period 23,803,086 22,154,510
---------- ----------
Net assets at end of period $28,361,926 $23,803,086
=========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist Growth Fund, Inc.
Strategist Growth Trends Fund
Jan. 31, 2000 July 31, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ 49,060 $ 32,601
Net realized gain (loss) on investments 1,367,724 1,759,090
Net change in unrealized appreciation (depreciation) on investments 2,894,027 2,289,209
--------- ---------
Net increase (decrease) in net assets resulting from operations 4,310,811 4,080,900
--------- ---------
Distributions to shareholders from:
Net investment income (74,226) (50,515)
Net realized gain (2,320,011) (1,647,590)
---------- ----------
Total distributions (2,394,237) (1,698,105)
---------- ----------
Capital share transactions (Note 3)
Proceeds from sales 300,671 1,773,074
Reinvestment of distributions at net asset value 2,394,218 1,698,103
Payments for redemptions (318,882) (1,984,099)
-------- ----------
Increase (decrease) in net assets from capital share transactions 2,376,007 1,487,078
--------- ---------
Total increase (decrease) in net assets 4,292,581 3,869,873
Net assets at beginning of period 24,401,317 20,531,444
---------- ----------
Net assets at end of period $28,693,898 $24,401,317
=========== ===========
Undistributed net investment income $ 5,603 $ 30,769
----------- -----------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist Growth Fund, Inc.
Strategist Special Growth Fund
Jan. 31, 2000 July 31, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ (3,997) $ (3,595)
Net realized gain (loss) on investments 238,623 250,411
Net change in unrealized appreciation (depreciation) on investments (90,328) 18,422
------- ------
Net increase (decrease) in net assets resulting from operations 144,298 265,238
------- -------
Distributions to shareholders from:
Net investment income -- (6,389)
Net realized gain (312,022) (186,096)
-------- --------
Total distributions (312,022) (192,485)
-------- --------
Capital share transactions (Note 3)
Proceeds from sales 100,282 223,257
Reinvestment of distributions at net asset value 312,022 192,485
Payments for redemptions (139,616) (421,049)
-------- --------
Increase (decrease) in net assets from capital share transactions 272,688 (5,307)
------- ------
Total increase (decrease) in net assets 104,964 67,446
Net assets at beginning of period 1,842,500 1,775,054
--------- ---------
Net assets at end of period $1,947,464 $1,842,500
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Strategist Growth Fund, Inc.
(Unaudited as to Jan. 31, 2000)
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 three 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, 2000, the percentages of the corresponding Portfolio
owned by Growth Fund, Growth Trends Fund and Special Growth Fund were 0.32%,
0.10% and 0.22%, 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).
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 substantially 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, when available, 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, 2000, American Express Financial Corporation (AEFC) owned 1,999
shares of Growth Fund, 3,132 shares of Growth Trends Fund and 163,702 shares of
Special Growth Fund. As of Jan. 31, 2000, American Express Company (the parent
company of AEFC) owned 400,402 shares of Growth Fund and 618,723 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 has 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.
As of Oct. 1, 1999, American Express Financial Advisors Inc. is the Funds'
Distributor. Prior to Oct. 1, 1999, under a Plan and Agreement of Distribution,
each Fund paid American Express Service Corporation a distribution fee at an
annual rate of 0.25% of the Fund's average daily net assets for distribution
services.
AEFC has agreed to waive certain fees and to absorb certain other Fund expenses
through July 31, 2000. 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.
<PAGE>
<TABLE>
<CAPTION>
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Jan. 31, 2000
Growth Growth Special
Fund Trends Growth
Fund Fund
<S> <C> <C> <C>
Sold 4,629 8,493 15,286
Issued for reinvested distributions 8,381 64,051 49,606
Redeemed (8,742) (8,917) (21,794)
------ ------ -------
Net increase (decrease) 4,268 63,627 43,098
----- ------ ------
Year ended July 31, 1999
Growth Growth Special
Fund Trends Growth
Fund Fund
Sold 27,979 55,856 35,851
Issued for reinvested distributions -- 54,884 31,869
Redeemed (89,342) (62,630) (71,452)
------- ------- -------
Net increase (decrease) (61,363) 48,110 (3,732)
------- ------ ------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4. 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
2000b 1999 1998 1997 1996c
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $46.46 $38.62 $36.36 $23.15 $25.43
Income from investment operations:
Net investment income (loss) (.07) (.10) (.13) (.08) (.02)
Net gains (losses) (both realized and unrealized) 9.42 7.94 2.39 13.29 (2.26)
Total from investment operations 9.35 7.84 2.26 13.21 (2.28)
Less distributions:
Distributions from realized gains (.91) -- -- -- --
Net asset value, end of period $54.90 $46.46 $38.62 $36.36 $23.15
Ratios/supplemental data
Net assets, end of period (in millions) $28 $24 $22 $23 $23
Ratio of expenses to average daily net assetsd .92%e 1.03% .97% 1.01% 1.30%e
Ratio of net investment income (loss)
to average daily net assets (.27%)e (.23%) (.33%) (.20%) (.37%)e
---- ---- ---- ---- ----
Portfolio turnover rate
(excluding short-term securities) 6% 17% 28% 24% 5%
- -- -- -- -
Total return 20.11% 20.30% 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, 2000 (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>
<PAGE>
<TABLE>
<CAPTION>
Growth Trends Fund
Fiscal period ended July 31,
Per share income and capital changesa
2000b 1999 1998 1997 1996c
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $33.93 $30.60 $26.55 $18.52 $19.00
Income from investment operations:
Net investment income (loss) .07 .04 .13 .16 .01
Net gains (losses) (both realized and unrealized) 5.99 5.81 4.12 7.93 (.49)
Total from investment operations 6.06 5.85 4.25 8.09 (.48)
Less distributions:
Dividends from net investment income (.10) (.07) (.20) (.06) --
Distributions from realized gains (3.23) (2.45) -- -- --
Total distributions (3.33) (2.52) (.20) (.06) --
Net asset value, end of period $36.66 $33.93 $30.60 $26.55 $18.52
Ratios/supplemental data
Net assets, end of period (in millions) $29 $24 $21 $21 $25
Ratio of expenses to average daily net assetd .75%e .95% .90% 1.06% 1.30%e
Ratio of net investment income (loss)
to average daily net assets .37%e .15% .48% .58% .39%e
--- --- --- --- ---
Portfolio turnover rate
(excluding short-term securities) 16% 34% 38% 32% 7%
-- -- -- -- -
Total return 17.36% 19.92% 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, 2000 (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 1.10% and 1.76% for the periods ended 1997 and 1996,
respectively.
e Adjusted to an annual basis.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Special Growth Fund
Fiscal period ended July 31,
Per share income and capital changesa
2000b 1999 1998 1997c
<S> <C> <C> <C> <C>
Net asset value, beginning of period $6.54 $6.22 $6.90 $5.00
Income from investment operations:
Net investment income (loss) (.01) (.01) .02 .04
Net gains (losses) (both realized and unrealized) .56 1.13 .56 1.88
Total from investment operations .55 1.12 .58 1.92
Less distributions:
Dividends from net investment income -- (.03) (.02) (.01)
Distributions from realized gains (1.09) (.77) (1.24) (.01)
Total distributions (1.09) (.80) (1.26) (.02)
Net asset value, end of period $6.00 $6.54 $6.22 $6.90
Ratios/supplemental data
Net assets, end of period (in millions) $2 $2 $2 $1
Ratio of expenses to average daily net assetsd 1.47%e 1.39% 1.03% 1.36%e
Ratio of net investment income (loss)
to average daily net assets (.41%)e (.21%) .40% .26%e
Portfolio turnover rate
(excluding short-term securities) 72% 143% 148% 171%
Total return 7.70% 19.02% 10.98% 38.37%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Jan. 31, 2000 (Unaudited).
c Inception date was Aug. 19, 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 2.27%, 2.27%, 1.86% and 3.17% for the periods ended 2000,
1999, 1998 and 1997, respectively.
e Adjusted to an annual basis.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
Growth Portfolio
Jan. 31, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1):
Investment in securities of unaffiliated issuers
<S> <C> <C>
(identified cost $4,304,068,580) $8,880,440,006
Investment in securities of affiliated issuers
(identified cost $60,266,600) 83,137,500
----------
Total investments in securities (identified cost $4,364,335,180) 8,963,577,506
Cash in bank on demand deposit 579,419
Dividends and accrued interest receivable 905,500
Receivable for investment securities sold 24,417,470
U.S. government securities held as collateral (Note 4) 27,818,455
----------
Total assets 9,017,298,350
-------------
Liabilities
Payable for investment securities purchased 13,028,448
Payable upon return of securities loaned (Note 4) 27,818,455
Accrued investment management services fee 393,942
Other accrued expenses 110,165
-------
Total liabilities 41,351,010
----------
Net assets $8,975,947,340
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Growth Portfolio
Six months ended Jan. 31, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 16,080,080
Interest 9,653,224
---------
Total income 25,733,304
----------
Expenses (Note 2):
Investment management services fee 23,924,023
Compensation of board members 10,519
Custodian fees 230,650
Audit fees 13,500
Other 37,735
------
Total expenses 24,216,427
Earnings credits on cash balances (Note 2) (3,600)
------
Total net expenses 24,212,827
----------
Investment income (loss) -- net 1,520,477
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (156,008,939)
Net change in unrealized appreciation (depreciation) on investments 1,620,716,823
-------------
Net gain (loss) on investments 1,464,707,884
-------------
Net increase (decrease) in net assets resulting from operations $1,466,228,361
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Growth Portfolio
Jan. 31, 2000 July 31, 1999
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss) -- net $ 1,520,477 $ 15,869,412
Net realized gain (loss) on security transactions (156,008,939) 136,823,917
Net change in unrealized appreciation (depreciation) on investments 1,620,716,823 1,012,968,938
------------- -------------
Net increase (decrease) in net assets resulting from operations 1,466,228,361 1,165,662,267
Net contributions (withdrawals) from partners 537,570,486 500,388,589
----------- -----------
Total increase (decrease) in net assets 2,003,798,847 1,666,050,856
Net assets at beginning of period 6,972,148,493 5,306,097,637
------------- -------------
Net assets at end of period $8,975,947,340 $6,972,148,493
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Growth Portfolio
(Unaudited as to Jan. 31, 2000)
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 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. 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 an Investment Management Services
Agreement with AEFC to manage 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 AXP Growth Fund to the Lipper Growth Fund Index. The maximum
adjustment is 0.12% of the Portfolio's average daily net assets on an annual
basis. The adjustment increased the fee by $2,696,174 for the six months ended
Jan. 31, 2000.
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, 2000, the Portfolio's custodian fees were
reduced by $3,600 as a result of earnings credits from overnight cash balances.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
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 $858,528,056 and $471,902,924, respectively, for the six
months ended Jan. 31, 2000. For the same period, the portfolio turnover rate was
6%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $187,140 for the
six months ended Jan. 31, 2000.
4. LENDING OF PORTFOLIO SECURITIES
As of Jan. 31, 2000, securities valued at $29,465,625 were on loan to brokers.
For collateral, the Portfolio received U.S. government securities valued at
$27,818,455. Income from securities lending amounted to $142,598 for the six
months ended Jan. 31, 2000. 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, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (94.9%)
Issuer Shares Value(a)
Airlines (0.8%)
<S> <C> <C>
Southwest Airlines 4,500,000 $71,718,750
Automotive & related (0.4%)
Gentex 1,335,000(b) 40,050,000
Banks and savings & loans (2.3%)
Bank of America 2,157,920 104,524,250
FleetBoston Financial 3,161,000 99,373,938
Total 203,898,188
Beverages & tobacco (2.1%)
Coca-Cola 3,281,700 188,492,644
Chemicals (0.6%)
Monsanto 1,600,000 56,500,000
Communications equipment & services (7.9%)
Andrew Corp 1,100,000(b) 25,300,000
MasTec 1,800,000(b,d) 83,137,500
Nokia Oyj ADR Cl A 1,420,000(c) 259,860,000
Tellabs 6,200,000(b) 334,800,000
Total 703,097,500
Computer software (4.6%)
Microsoft 4,200,000(b) 411,075,000
Computers & office equipment (25.6%)
America Online 2,000,000(b) 113,875,000
Cisco Systems 5,700,000(b) 624,149,999
EMC 5,200,000(b) 553,800,000
Hewlett-Packard 1,000,000 108,250,000
Intl Business Machines 2,600,000 291,687,500
Keane 2,800,000(b) 75,600,000
Lexmark Intl Group Cl A 1,200,000(b) 113,100,000
Solectron 925,000(b) 67,178,125
Yahoo! 1,100,000(b) 354,268,750
Total 2,301,909,374
Electronics (20.1%)
Applied Materials 3,000,000(b) 411,750,000
ASM Lithography Holding 500,000(b) 61,468,750
Broadcom Cl A 600,000(b) 173,587,500
Intel 2,500,000 247,343,750
Maxim Integrated Products 4,800,000(b) 240,600,000
STMicroelectronics 1,000,000(c,f) 168,375,000
Texas Instruments 4,600,000 496,225,000
Total 1,799,350,000
Energy (1.1%)
Anadarko Petroleum 3,000,000 98,437,500
Energy equipment & services (2.5%)
Halliburton 1,800,000 64,800,000
Schlumberger 2,400,000 146,550,000
Transocean Sedco Forex 464,640 14,781,360
Total 226,131,360
Financial services (5.5%)
Citigroup 5,550,000 318,778,125
Merrill Lynch & Co 2,000,000 173,500,000
Total 492,278,125
Furniture & appliances (0.5%)
Ethan Allen Interiors 1,921,000 48,025,000
Health care (7.1%)
Bausch & Lomb 1,000,000 62,000,000
Johnson & Johnson 700,000 60,243,750
Medtronic 1,600,000 73,200,000
Mylan Laboratories 2,880,800 76,701,300
Pfizer 5,350,000 194,606,250
Warner-Lambert 1,800,000 170,887,500
Total 637,638,800
Household products (0.4%)
ServiceMaster 2,650,000 37,928,125
Industrial equipment & services (0.6%)
Deere & Co 1,200,000 52,425,000
Leisure time & entertainment (0.9%)
Harley-Davidson 1,200,000 84,225,000
Multi-industry conglomerates (2.0%)
Apollo Group Cl A 491,300(b) 10,624,363
Tyco Intl 4,000,000(c) 171,000,000
Total 181,624,363
Restaurants & lodging (0.9%)
Marriott Intl Cl A 2,600,000 80,762,500
Retail (3.9%)
Home Depot 4,400,000 249,150,000
Tandy 2,000,000 97,750,000
Total 346,900,000
Utilities -- telephone (5.1%)
AT&T 3,600,000 189,900,000
MCI WorldCom 5,850,000(b) 268,734,375
Total 458,634,375
Total common stocks
(Cost: $3,892,489,507) $8,521,101,604
Bond (1.6%)
Coupon Principal Value(a)
rate amount
U.S. government obligations
Resolution Funding Corp
Zero Coupon
07-15-20 5.93% $400,000,000(g) $100,262,040
10-15-20 6.03 185,000,000(g) 45,593,620
Total bond
(Cost: $175,127,997) $145,855,660
Short-term securities (3.3%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (2.5%)
Federal Home Loan Bank Disc Nts
03-24-00 5.64% $20,800,000 $20,628,821
04-26-00 5.84 25,000,000 24,646,445
Federal Home Loan Mtge Corp Disc Nts
02-08-00 5.61 13,700,000 13,681,519
02-15-00 5.65 18,700,000 18,651,690
02-17-00 5.63 3,000,000 2,990,929
02-29-00 5.60 17,000,000 16,923,721
03-09-00 5.73 700,000 695,667
03-21-00 5.66 30,000,000 29,765,832
Federal Natl Mtge Assn Disc Nts
03-02-00 5.63 10,000,000 9,949,674
03-02-00 5.64 2,100,000 2,089,432
03-16-00 5.81 3,500,000 3,474,298
03-30-00 5.76 14,500,000 14,357,011
04-20-00 5.82 50,000,000 49,342,221
04-27-00 5.91 20,000,000 19,718,217
Total 226,915,477
Commercial paper (0.8%)
Bell Atlantic Network Funding
03-07-00 5.74 3,600,000 3,579,444
03-16-00 5.82 9,500,000 9,431,363
CAFCO
04-03-00 5.84 6,400,000(e) 6,333,696
Cargill
02-01-00 5.83 10,500,000(e) 10,498,300
Corporate Receivables
02-07-00 5.88 5,000,000(e) 4,994,098
GTE Funding
02-22-00 6.00 5,000,000 4,980,750
02-29-00 5.70 6,300,000 6,271,225
Natl Australia Finance (Delaware)
02-02-00 5.95 5,000,000(e) 4,998,347
Preferred Receivables
03-08-00 5.77 3,400,000(e) 3,379,942
Procter & Gamble
03-02-00 5.71 9,100,000 9,055,490
SBC Communications
02-28-00 5.73 2,900,000(e) 2,887,143
Sheffield Receivables
02-09-00 5.94 3,300,000(e) 3,294,967
Total 69,704,765
Total short-term securities
(Cost: $296,717,676) $296,620,242
Total investments in securities
(Cost: $4,364,335,180)(h) $8,963,577,506
</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, 2000, the
value of foreign securities represented 6.68% of net assets.
(d) 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, 2000 are as follows:
Issuer Beginning Purchase Sales Ending Dividend Value(a)
cost cost cost cost income
MasTec $60,266,600 $-- $-- $60,266,600 $-- $83,137,500
(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) Security is partially or fully on loan. See Note 4 to the financial
statements.
(g) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(h) At Jan. 31, 2000, the cost of securities for federal income tax purposes was
approximately $4,364,335,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $4,846,561,000
Unrealized depreciation (247,318,000)
------------
Net unrealized appreciation $4,599,243,000
<PAGE>
Financial Statements
Statement of assets and liabilities
Growth Trends Portfolio
Jan. 31, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $16,421,093,529) $28,074,942,827
Dividends and accrued interest receivable 7,034,600
Receivable for investment securities sold 147,032,128
U.S. government securities held as collateral (Note 4) 44,366,529
Other prepaid assets 157,220
-------
Total assets 28,273,533,304
Liabilities
Disbursements in excess of cash on demand deposit 13,425,425
Payable for investment securities purchased 58,937,098
Unrealized depreciation on foreign currency
contracts held, at value (Notes 1 and 5) 602,720
Payable upon return of securities loaned (Note 4) 146,984,629
Accrued investment management services fee 1,169,826
Other accrued expenses 30,461
------
Total liabilities 221,150,159
-----------
Net assets $28,052,383,145
===============
See accompanying notes to financial statements.
<PAGE>
Statement of operations
Growth Trends Portfolio
Six months ended Jan. 31, 2000 (Unaudited)
Investment income
Income:
Dividends $ 67,276,585
Interest 74,897,735
----------
Total income 142,174,320
Expenses (Note 2):
Investment management services fee 66,450,613
Compensation of board members 27,248
Custodian fees 497,617
Audit fees 16,125
Other 108,330
-------
Total expenses 67,099,933
Earnings credits on cash balances (Note 2) (3,414)
- ------
Total net expenses 67,096,519
----------
Investment income (loss) -- net 75,077,801
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 1,246,489,186
Foreign currency transactions 514,641
-------
Net realized gain (loss) on investments 1,247,003,827
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and liabilities
in foreign currencies 2,872,085,268
-------------
Net gain (loss) on investments and foreign currencies 4,119,089,095
-------------
Net increase (decrease) in net assets resulting from operations $4,194,166,896
==============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Growth Trends Portfolio
Jan. 31, 2000 July 31, 1999
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 75,077,801 $ 113,693,386
Net realized gain (loss) on investments 1,247,003,827 1,170,021,836
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies
2,872,085,268 2,460,250,976
------------- -------------
Net increase (decrease) in net assets resulting from operations 4,194,166,896 3,743,966,198
Net contributions (withdrawals) from partners 680,431,082 1,762,819,530
----------- -------------
Total increase (decrease) in net assets 4,874,597,978 5,506,785,728
Net assets at beginning of period 23,177,785,167 17,670,999,439
-------------- --------------
Net assets at end of period $28,052,383,145 $23,177,785,167
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Growth Trends Portfolio
(Unaudited as to Jan. 31, 2000)
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. 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 an Investment Management Services
Agreement with AEFC to manage 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 fee is adjusted upward or downward
by a performance incentive adjustment based on a comparison of the performance
of Class A shares of AXP New Dimensions Fund to the Lipper Growth Fund Index.
The maximum adjustment is 0.12% of the Portfolio's average daily net assets
after deducting 1% from the performance difference. If the performance
difference is less than 1%, the adjustment will be zero. The adjustment
increased the fee by $1,675,103 for the six months ended Jan. 31, 2000.
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, 2000, the Portfolio's custodian fees were
reduced by $3,414 as a result of earnings credits from overnight cash balances.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
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 $3,862,756,502 and $3,736,668,165 respectively, for the
six months ended Jan. 31, 2000. For the same year, the portfolio turnover rate
was 16%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $813,421 for the
six months ended Jan. 31, 2000.
4. LENDING OF PORTFOLIO SECURITIES
As of Jan. 31, 2000, securities valued at $147,925,900 were on loan to brokers.
For collateral, the Portfolio received $102,618,100 in cash and U.S. government
securities valued at $44,366,529. Income from securities lending amounted to
$246,398 for the six months ended Jan. 31, 2000. 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. FOREIGN CURRENCY CONTRACTS
As of Jan. 31, 2000, the Portfolio has foreign currency exchange contracts that
obligate it to deliver currencies at specified future dates. The unrealized
appreciation and/or depreciation on these contracts is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
Feb. 29, 2000 22,029,212 21,956,755 $-- $602,720
U.S. Dollar European Monetary Unit
Total $-- $602,720
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
Growth Trends Portfolio
Jan. 31, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (89.5%)
Issuer Shares Value(a)
Aerospace & defense (0.7%)
<S> <C> <C>
Honeywell Intl 3,100,000 $148,800,000
United Technologies 1,000,000 52,937,500
Total 201,737,500
Airlines (1.1%)
AMR 2,000,000(b) 107,625,000
Southwest Airlines 12,000,000 191,250,000
Total 298,875,000
Banks and savings & loans (2.4%)
State Street 2,500,000 200,468,750
Wells Fargo 11,500,000 460,000,000
Total 660,468,750
Beverages & tobacco (0.4%)
Coca-Cola
2,000,000 114,875,000
Communications equipment & services (4.6%)
Lucent Technologies 6,000,000 331,500,000
Motorola 4,200,000 574,350,000
Nokia Oyj ADR Cl A 1,000,000(c) 183,000,000
Tellabs 3,600,000(b) 194,400,000
Total 1,283,250,000
Computers & office equipment (19.7%)
America Online 6,600,000(b) 375,787,500
Automatic Data Processing 2,885,000 136,857,188
BMC Software 2,800,000(b,e) 106,050,000
Cisco Systems 14,000,000(b) 1,532,999,999
EMC 6,000,000(b) 639,000,000
Hewlett-Packard 1,500,000 162,375,000
Intl Business Machines 5,000,000 $560,937,500
Microsoft 8,000,000(b) 783,000,000
Novell 8,000,000(b) 267,000,000
Oracle 3,300,000(b) 164,845,313
Solectron 6,287,200(b) 456,607,900
Sun Microsystems 2,000,000(b) 157,125,000
Yahoo! 700,000(b) 225,443,750
Total 5,568,029,150
Electronics (13.7%)
Agilent Technologies 1,100,000(b) 72,806,250
Applied Materials 2,000,000(b) 274,500,000
Corning 3,700,000 570,725,000
Intel 7,000,000 692,562,500
JDS Uniphase 6,000,000(b) 1,223,625,000
Teradyne 3,600,000(b) 233,100,000
Texas Instruments 7,200,000 776,700,000
Total 3,844,018,750
Energy (3.3%)
Chevron 1,000,000 83,562,500
Exxon Mobil 10,000,000 835,000,000
Total 918,562,500
Energy equipment & services (0.4%)
Halliburton 3,500,000 126,000,000
Financial services (5.5%)
Citigroup 11,600,000 666,275,000
Kansas City Southern Inds 2,000,000 138,375,000
MBNA 10,000,000 252,500,000
Morgan Stanley, Dean Witter, Discover & Co 7,200,000 477,000,000
Schwab (Charles) 250,000 9,015,625
Total 1,543,165,625
Health care (5.4%)
Bristol-Myers Squibb 7,300,000 481,800,000
Johnson & Johnson 1,000,000 86,062,500
Medtronic 7,200,000 329,400,000
Pfizer 6,200,000 225,525,000
Schering-Plough 4,300,000 189,200,000
Warner-Lambert 2,200,000 208,862,500
Total 1,520,850,000
Health care services (1.0%)
Cardinal Health 5,600,000 267,750,000
Household products (0.8%)
Colgate-Palmolive 4,016,000 237,948,000
Industrial equipment & services (0.5%)
Illinois Tool Works 2,400,000 140,400,000
Insurance (1.4%)
American Intl Group 3,800,000 395,675,000
Leisure time & entertainment (1.7%)
Time Warner 6,000,000 479,625,000
Media (5.3%)
CBS 9,400,000(b) 548,137,500
Clear Channel Communications 2,000,000(b) 172,750,000
Comcast Special Cl A 6,000,000 276,000,000
Gannett 6,900,000 479,550,000
Total 1,476,437,500
Multi-industry conglomerates (4.6%)
General Electric 7,500,000 1,000,312,500
Tyco Intl 7,000,000(c) 299,250,000
Total 1,299,562,500
Paper & packaging (0.5%)
Intl Paper 3,000,000 142,875,000
Restaurants & lodging (0.6%)
Marriott Intl Cl A 5,000,000 155,312,500
Retail (9.5%)
Costco Wholesale 9,000,000(b) 440,437,500
Home Depot 9,000,000 509,625,000
Safeway 8,000,000(b) 305,500,000
Target 6,200,000(b) 409,587,500
Wal-Mart Stores 18,200,000 996,450,000
Total 2,661,600,000
Transportation (0.2%)
United Parcel Service 728,800 43,363,600
Utilities -- gas (1.7%)
El Paso Energy 5,300,000 170,925,000
Enron 4,610,000 310,886,875
Total 481,811,875
Utilities -- telephone (4.5%)
AT&T 2,500,000 131,875,000
Bell Atlantic 2,600,000 161,037,500
BellSouth 3,400,000 160,012,500
Equant 600,000 61,185,774
MCI WorldCom 9,000,000(b) 413,437,500
U S WEST Communications Group 2,300,000 152,950,000
Vodafone AirTouch ADR 3,000,000(c,e) 168,000,000
Total 1,248,498,274
Total common stocks
(Cost: $13,456,149,384) $25,110,691,524
Short-term securities (10.6%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U. S. government agencies (0.9%)
Federal Home Loan Bank Disc Nts
03-08-00 5.64% $9,100,000 $9,046,034
04-14-00 5.76 20,100,000 19,855,405
Federal Home Loan Mtge Corp Disc Nts
02-08-00 5.61 19,500,000 19,473,695
02-11-00 5.57 18,800,000 18,763,810
02-17-00 5.63 10,000,000 9,969,762
03-07-00 5.63 4,800,000 4,772,400
03-21-00 5.85 11,000,000 10,911,389
03-29-00 5.73 50,000,000 49,523,111
Federal Natl Mtge Assn Disc Nts
02-24-00 5.59 18,900,000 18,818,016
02-24-00 5.60 20,400,000 20,311,510
02-24-00 5.65 3,700,000 3,683,950
03-02-00 5.63 14,600,000 14,526,524
03-02-00 5.64 21,500,000 21,391,800
03-02-00 5.67 14,200,000 14,128,537
03-09-00 5.85 11,000,000 10,931,904
Total
246,107,847
Commercial paper (9.5%)
Abbey Natl North America
03-16-00 5.98 20,400,000 20,250,192
04-10-00 5.90 15,400,000 15,222,729
AEGON Funding Corp
04-24-00 5.95 10,500,000(d) 10,356,185
Alcoa
02-17-00 5.65 26,300,000 26,230,078
02-18-00 5.94 20,000,000 19,934,934
04-25-00 5.96 20,000,000 19,722,333
American General Finance
02-03-00 5.96 10,000,000 9,995,033
02-18-00 6.02 5,000,000 4,985,000
ANZ (Delaware)
02-22-00 5.85 10,000,000 9,961,500
03-09-00 5.76 28,100,000 27,930,037
04-18-00 5.90 5,000,000 4,933,733
Associates Corp North America
02-11-00 6.03 7,600,000 7,586,020
AT&T
02-07-00 6.06 4,000,000 3,995,294
02-11-00 5.93 20,000,000 19,962,635
03-06-00 5.73 16,400,000 16,309,116
03-17-00 5.79 30,300,000 30,068,880
03-24-00 5.75 23,600,000 23,391,156
Bank One Canada
02-08-00 5.94 13,900,000 13,881,250
02-15-00 5.72 28,000,000 27,933,382
Barclays U.S. Funding
02-09-00 5.63 25,700,000 25,663,891
02-14-00 5.63 46,200,000 46,099,026
02-15-00 5.63 9,600,000 9,577,520
02-29-00 5.70 30,000,000 29,862,974
Bayer
03-22-00 5.74 31,600,000(d) 31,339,456
Bear Stearns
02-15-00 5.99 5,000,000 4,987,083
02-28-00 5.99 5,000,000 4,976,666
04-18-00 5.89 8,500,000 8,390,973
Bell Atlantic Finance Services
03-01-00 5.72 24,700,000 24,582,879
03-13-00 5.75 25,600,000 25,429,461
Bell Atlantic Network Funding
02-28-00 5.64 16,400,000 16,328,313
02-29-00 5.70 17,000,000 16,922,353
03-06-00 5.83 10,200,000 10,142,483
03-08-00 5.73 22,200,000 22,069,944
03-13-00 5.77 9,600,000 9,535,824
03-16-00 5.82 25,500,000 25,315,763
BellSouth Capital Funding
02-08-00 5.81 26,900,000(d) 26,863,713
02-23-00 6.06 21,400,000 21,312,452
BMW US Capital
02-14-00 6.01 19,100,000 19,055,432
02-16-00 6.08 24,200,000 24,134,819
CAFCO
02-02-00 6.02 27,100,000(d) 27,090,922
02-03-00 6.00 25,000,000(d) 24,987,231
03-17-00 5.79 30,000,000(d) 29,779,583
03-28-00 5.85 18,000,000(d) 17,834,700
04-03-00 5.84 23,600,000(d) 23,355,504
Ciesco LP
02-01-00 6.00 25,200,000(d) 25,195,800
02-14-00 6.06 11,700,000(d) 11,671,789
02-16-00 6.19 30,000,000 29,917,732
04-19-00 5.93 24,100,000 23,790,616
CIT Group Holdings
03-03-00 5.66 27,800,000 27,660,875
Coca-Cola
02-07-00 6.03 5,300,000 5,293,796
Corporate Receivables
02-01-00 6.00 30,000,000(d) 29,994,999
02-07-00 5.88 14,400,000(d) 14,383,003
02-23-00 6.13 14,200,000(d) 14,141,908
03-14-00 5.81 5,000,000(d) 4,965,540
04-04-00 5.89 28,000,000(d) 27,709,795
CXC
02-04-00 6.00 20,000,000(d) 19,986,160
03-14-00 5.81 5,000,000(d) 4,965,540
03-21-00 5.80 22,900,000(d) 22,717,118
03-22-00 5.80 24,700,000(d) 24,498,798
04-17-00 5.93 20,000,000(d) 19,746,756
Daimler/Chrysler
02-02-00 5.97 18,400,000 18,393,836
Delaware Funding
02-18-00 5.72 26,100,000(d) 26,025,614
03-08-00 5.76 25,700,000(d) 25,548,647
03-15-00 5.79 26,500,000(d) 26,313,763
03-20-00 5.83 28,000,000(d) 27,779,715
03-24-00 5.80 24,900,000 24,689,214
Deutsche Bank Financial
02-07-00 5.82 1,700,000 1,697,993
03-24-00 5.80 7,000,000 6,938,055
04-06-00 5.87 9,300,000 9,199,064
Dresdner US Finance
03-14-00 5.78 15,100,000 14,996,382
03-20-00 5.77 1,200,000 1,190,527
Duke Energy
02-25-00 6.08 4,300,000 4,281,934
Electronic Data Systems
02-28-00 5.91 34,000,000(d) 33,841,330
Emerson Electric
02-16-00 6.02 9,800,000 9,772,560
Falcon Asset
02-04-00 5.88 11,900,000(d) 11,891,765
03-09-00 5.79 25,900,000(d) 25,742,800
03-10-00 5.81 15,300,000(d) 15,204,362
03-13-00 5.99 22,000,000(d) 21,851,133
03-27-00 5.82 17,900,000(d) 17,739,337
Fleet Funding
02-10-00 5.86 20,000,000(d) 19,965,554
02-10-00 5.96 24,755,000(d) 24,712,363
03-14-00 5.79 23,800,000(d) 23,636,540
03-16-00 5.79 21,300,000(d) 21,146,906
03-21-00 5.80 26,958,000(d) 26,740,837
GMAC
02-25-00 5.67 37,500,000 37,352,860
02-25-00 5.67 9,600,000 9,562,332
02-28-00 5.66 7,500,000 7,467,099
Goldman Sachs Group
02-03-00 5.96 23,300,000 23,288,099
02-10-00 5.99 20,000,000 19,966,232
GTE Funding
02-15-00 6.02 18,200,000 18,152,981
02-22-00 6.00 9,050,000 9,015,158
02-24-00 6.01 17,500,000 17,424,089
Heinz (HJ)
02-23-00 5.65 21,000,000 20,924,464
02-28-00 5.65 17,600,000 17,522,931
Intl Lease Finance
02-11-00 5.81 7,100,000 7,086,333
Merrill Lynch
02-11-00 5.94 20,900,000 20,859,768
03-01-00 5.73 15,600,000 15,525,900
Morgan Stanley, Dean Witter, Discover & Co
03-23-00 5.76 25,300,000 25,083,823
03-27-00 5.76 28,400,000 28,142,883
03-28-00 5.78 16,200,000 16,050,717
Natl Australia Finance (Delaware)
02-01-00 5.94 5,000,000 4,999,175
02-02-00 5.95 20,000,000(d) 19,993,389
02-04-00 5.94 10,000,000 9,993,400
02-09-00 6.01 19,600,000 19,570,599
Natl Rural Utilities
03-13-00 5.80 8,400,000 8,343,160
03-23-00 6.01 10,300,000 10,211,991
03-29-00 6.06 3,700,000 3,664,710
Northern States Power
02-09-00 5.87 8,400,000 8,387,190
Pacific Gas & Electric
02-10-00 5.92 20,750,000 20,714,262
02-24-00 5.77 7,600,000 7,570,867
Pfizer
02-02-00 6.00 5,000,000(d) 4,998,333
02-11-00 6.11 23,800,000(d) 23,755,638
Preferred Receivables
02-22-00 5.70 26,000,000(d) 25,909,750
03-03-00 5.77 27,800,000(d) 27,658,157
03-08-00 5.77 23,600,000(d) 23,460,773
03-10-00 5.79 22,600,000(d) 22,459,220
03-15-00 5.79 26,400,000(d) 26,213,496
Procter & Gamble
03-02-00 5.71 15,800,000 15,722,720
03-15-00 5.77 16,100,000 15,987,246
Salomon Smith Barney
02-18-00 5.94 14,300,000 14,253,477
02-22-00 5.97 5,000,000 4,980,750
SBC Communications
02-28-00 5.73 13,200,000(d) 13,141,480
SBC Communications Capital
02-08-00 5.84 10,000,000 9,987,044
Sheffield Receivables
02-04-00 6.01 16,100,000(d) 16,088,896
02-07-00 5.97 25,000,000(d) 24,970,492
02-09-00 5.94 23,700,000(d) 23,663,856
02-22-00 5.75 28,400,000(d) 28,300,550
03-22-00 5.85 24,500,000(d) 24,298,692
Societe Generale North America
04-14-00 5.87 22,500,000 22,226,200
Sysco
02-07-00 5.86 16,900,000(d) 16,880,052
Toyota Motor Credit
02-07-00 6.05 10,000,000 9,988,255
UBS Finance (Delaware)
02-08-00 5.66 22,600,000 22,571,622
03-10-00 5.76 15,100,000 15,002,517
Variable Funding Capital
02-17-00 5.72 2,600,000(d) 22,539,167
03-07-00 5.78 23,900,000(d) 23,762,575
03-07-00 5.80 11,800,000(d) 11,731,913
03-16-00 5.79 11,900,000(d) 11,812,612
04-06-00 5.90 25,000,000(d) 24,728,667
04-07-00 5.92 22,100,000(d) 21,856,507
Windmill Funding
02-03-00 5.98 17,200,000(d) 17,191,215
02-14-00 5.71 15,500,000(d) 15,465,640
02-25-00 5.72 25,000,000(d) 24,901,040
03-06-00 5.79 25,000,000(d) 24,860,000
03-10-00 5.80 19,900,000(d) 19,771,529
03-20-00 6.15 25,000,000 24,802,639
Total 2,657,483,708
Letters of credit (0.2%)
Bank of America-
AES Hawaii
02-25-00 5.67 30,000,000 29,882,289
03-24-00 5.79 16,100,000 15,957,526
04-13-00 5.89 15,000,000 14,819,933
Total 60,659,748
Total short-term securities
(Cost: $2,964,944,145) $2,964,251,303
Total investments in securities
(Cost: $16,421,093,529)(f) $28,074,942,827
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, 2000, the
value of foreign securities represented 2.32% 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, 2000, the cost of securities for federal income tax purposes was
approximately $16,421,094,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $11,825,546,000
Unrealized depreciation (171,697,000)
------------
Net unrealized appreciation $11,653,849,000
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
Aggressive Growth Portfolio
Jan. 31, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost $872,108,680) $908,158,746
Cash in bank on demand deposit 78,673
Dividends and accrued interest receivable 577,251
Receivable for investment securities sold 1,837,934
---------
Total assets 910,652,604
-----------
Liabilities
Payable for investment securities purchased 15,903,026
Accrued investment management services fee 45,459
Other accrued expenses 10,848
------
Total liabilities 15,959,333
----------
Net assets $894,693,271
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Aggressive Growth Portfolio
Six months ended Jan. 31, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 3,416,114
Interest 991,283
-------
Total income 4,407,397
---------
Expenses (Note 2):
Investment management services fee 2,602,413
Compensation of board members 4,118
Custodian fees 28,371
Audit fees 8,250
Other 6,391
-----
Total expenses 2,649,543
Earnings credits on cash balances (Note 2) (2,152)
- ------
Total net expenses 2,647,391
---------
Investment income (loss) -- net 1,760,006
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 89,972,389
Financial future contracts 293,620
-------
Net realized gain (loss) on investments 90,266,009
Net change in unrealized appreciation (depreciation) on investments (26,378,376)
-----------
Net gain (loss) on investments 63,887,633
----------
Net increase (decrease) in net assets resulting from operations $ 65,647,639
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Aggressive Growth Portfolio
Jan. 31, 2000 July 31, 1999
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 1,760,006 $ 3,142,262
Net realized gain (loss) on investments 90,266,009 86,175,979
Net change in unrealized appreciation (depreciation) on investments (26,378,376) 18,690,185
----------- ----------
Net increase (decrease) in net assets resulting from operations 65,647,639 108,008,426
Net contributions (withdrawals) from partners 69,947,062 127,976,287
---------- -----------
Total increase (decrease) in net assets 135,594,701 235,984,713
Net assets at beginning of period 759,098,570 523,113,857
----------- -----------
Net assets at end of period $894,693,271 $759,098,570
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Aggressive Growth Portfolio
(Unaudited as to Jan. 31, 2000)
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 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. 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 an Investment Management Services
Agreement with AEFC to manage 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. Effective with the new Investment
Management Services Agreement, the fee will be adjusted upward or downward by a
performance incentive adjustment based on a comparison of the performance of
Class A shares of AXP Research Opportunities Fund to the Lipper Growth Fund
Index. The maximum adjustment is 0.12% of the Portfolio's average daily net
assets after deducting 1% from the performance difference. If the performance
difference is less than 1% the adjustment will be zero.
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, 2000, the Portfolio's custodian fees were
reduced by $2,152 as a result of earnings credits from overnight cash balances.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
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 $618,077,097 and $568,741,085 respectively, for the six
months ended Jan. 31, 2000. For the same period, the portfolio turnover rate was
72%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $45,930 for the
six months ended Jan. 31, 2000.
4. STOCK INDEX FUTURES CONTRACTS
As of Jan. 31, 2000, investments in securities included securities valued at
$8,169,063 that were pledged as collateral to cover initial margin deposits on
79 open purchase contracts. The market value of the open purchase contracts as
of Jan. 31, 2000 was $27,669,750 with a net unrealized loss of $795,787.
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
Aggressive Growth Portfolio
Jan. 31, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (96.6%)
Issuer Shares Value(a)
Aerospace & defense (1.2%)
<S> <C> <C>
Goodrich (BF) 157,900 $3,947,500
Honeywell Intl 136,250 6,540,000
Total 10,487,500
Airlines (2.5%)
AMR 187,860(b) 10,109,216
Southwest Airlines 747,950 11,920,453
Total
22,029,669
Automotive & related (1.0%)
Delphi Automotive Systems 289,796 5,017,093
Ford Motor 80,550 4,007,363
Total
9,024,456
Banks and savings & loans (3.3%)
Bank of New York 223,710 9,088,219
SLM Holding 85,600 3,333,050
Wachovia 92,480 5,924,500
Wells Fargo 278,250 11,130,000
Total
29,475,769
Beverages & tobacco (2.4%)
Coca-Cola 381,550 21,915,278
Building materials & construction (0.5%)
Weyerhaeuser 72,410 4,154,524
Chemicals (0.5%)
Du Pont (EI) de Nemours 79,700 4,702,300
Communications equipment & services (5.8%)
Lucent Technologies 423,565 23,401,966
Motorola 132,410 18,107,068
Tellabs 186,570(b) 10,074,780
Total
51,583,814
Computers & office equipment (23.1%)
3Com 332,990(b,e) 16,899,242
Automatic Data Processing 202,200 9,591,863
BMC Software 176,050(b) 6,667,894
Citrix Systems 27,300(b) 3,746,925
Compaq Computer 478,500 13,098,938
Computer Sciences 118,480(b) 10,885,350
Electronic Data Systems 132,990 8,993,449
First Data 215,080 10,552,363
Hewlett-Packard 193,620 20,959,364
Lexmark Intl Group Cl A 151,550(b) 14,283,587
Microsoft 508,750(b) 49,793,905
Novell 210,900(b) 7,038,788
Oracle 342,000(b) 17,083,968
Parametric Technology 308,800(b) 6,619,900
Solectron 57,220(b) 4,155,603
Unisys 233,100(b) 7,430,063
Total
207,801,202
Electronics (7.5%)
Applied Materials 49,100(b) 6,738,975
Corning 39,150 6,038,888
Intel 276,810 27,386,888
KLA-Tencor 72,920(b) 4,274,935
LSI Logic 52,150(b) 4,263,263
Natl Semiconductor 87,290(b) 4,582,725
Teradyne 55,800(b) 3,613,050
Texas Instruments 93,090 10,042,083
Total 66,940,807
Energy (3.9%)
Chevron 157,550 13,165,271
Conoco Cl B 448,640 10,571,080
Texaco 215,260 11,381,873
Total
35,118,224
Energy equipment & services (0.7%)
Halliburton 164,700 5,929,200
Financial services (2.2%)
Capital One Financial 100,680 4,127,880
Kansas City Southern Inds 58,730 4,063,382
MBNA 252,580 6,377,645
Providian Financial 65,210 5,502,094
Total 20,071,001
Food (1.5%)
Bestfoods 68,530 2,981,055
General Mills 96,820(e) 3,019,574
Sara Lee 184,990 3,410,753
SUPERVALU 237,380 4,272,840
Total
13,684,222
Health care (11.7%)
Amgen 196,880(b) 12,538,795
Baxter Intl 96,440 6,160,105
Biomet 32,800 1,305,850
Boston Scientific 233,900(b) 4,853,425
Bristol-Myers Squibb 267,230 17,637,180
Guidant 112,970(b) 5,945,046
Medtronic 207,040 9,472,080
Pfizer 523,500 19,042,312
Schering-Plough 280,920 12,360,480
Warner-Lambert 158,320 15,030,505
Total 104,345,778
Health care services (0.4%)
Cardinal Health
68,280 3,264,638
Household products (2.7%)
Colgate-Palmolive 203,300 12,045,525
Kimberly-Clark 189,800 11,755,738
Total 23,801,263
Industrial equipment & services (0.3%)
Parker-Hannifin 61,580 2,663,335
Leisure time & entertainment (1.0%)
Disney (Walt) 30,090 1,092,643
Viacom Cl B 136,970(b) 7,584,714
Total 8,677,357
Media (3.1%)
CBS 154,840(b) 9,029,108
Comcast Special Cl A 192,710 8,864,660
MediaOne Group 127,890(b) 10,167,255
Total 28,061,023
Metals (0.3%)
Nucor
51,310 2,552,673
Multi-industry conglomerates (3.1%)
Danaher 92,620 3,994,238
General Electric 56,310 7,510,346
Grainger (WW) 91,460 4,384,364
Tyco Intl 268,600(c) 11,482,650
Total 27,371,598
Paper & packaging (0.9%)
Fort James 142,300 3,806,525
Intl Paper 92,990 4,428,649
Total 8,235,174
Restaurants & lodging (0.2%)
Wendy's Intl 101,940 1,917,746
Retail (5.9%)
Bed Bath & Beyond 55,400(b) 1,506,188
Best Buy 92,000(b) 4,393,000
Circuit City Stores-Circuit City Group 107,930 4,155,305
Costco Wholesale 128,680(b) 6,297,278
CVS 147,200 5,142,800
Home Depot 35 1,982
Kroger 297,050(b) 5,161,244
Safeway 162,390(b) 6,201,268
Target 242,070(b) 15,991,748
TJX Companies 241,820 3,944,689
Total 52,795,502
Transportation (0.7%)
Burlington Northern Santa Fe 178,640 4,298,525
Union Pacific 39,000 1,560,000
Total 5,858,525
Utilities -- electric (0.3%)
CMS Energy 92,800 2,784,000
Utilities -- telephone (9.9%)
AT&T 420,885 22,201,683
Bell Atlantic 268,740 16,645,084
MCI WorldCom 403,032(b) 18,514,305
SBC Communications 457,314 19,721,666
U S WEST Communications Group 174,250 11,587,625
Total 88,670,363
Total common stocks
(Cost: $827,848,320) $863,916,941
Short-term securities (4.9%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (4.2%)
Federal Home Loan Bank Disc Nts
02-16-00 5.55% $1,100,000 $1,096,920
03-08-00 5.79 1,600,000 1,590,511
Federal Home Loan Mtge Corp Disc Nts
02-01-00 5.53 1,300,000 1,299,783
02-23-00 5.62 1,400,000 1,394,273
03-29-00 5.78 4,400,000 4,358,034
04-04-00 5.76 5,100,000 5,046,325
Federal Natl Mtge Assn Disc Nts
03-01-00 5.63 4,800,000 4,777,580
03-02-00 5.63 1,900,000 1,890,438
03-02-00 5.83 1,300,000 1,293,458
03-23-00 5.73 4,200,000 4,164,113
04-13-00 5.78 6,200,000 6,125,573
04-20-00 5.83 5,000,000 4,934,222
Total 37,971,230
Commercial paper (0.7%)
Abbey Natl North America
02-16-00 5.68 2,600,000 2,593,448
Falcon Assets
03-10-00 5.81 1,500,000(d) 1,490,624
Ford Motor Credit
03-03-00 5.56 600,000 596,833
Windmill Funding
03-10-00 5.80 1,600,000(d) 1,589,670
Total 6,270,575
Total short-term securities
(Cost: $44,260,360) $44,241,805
Total investments in securities
(Cost: $872,108,680)(f) $908,158,746
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, 2000, the
value of foreign securities represented 1.28% 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) 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 2000 79
(f) At Jan. 31, 2000, the cost of securities for federal income tax purposes was
approximately $872,109,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $78,546,000
Unrealized depreciation (42,496,000)
-----------
Net unrealized appreciation $36,050,000
<PAGE>
Distributed by American Express Financial Advisors Inc. Member NASD.
American Express Company is separate from American Express Financial Advisors
Inc. and is not a broker-dealer.
S-6119 E (3/00)
