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Previous: GROWTH & INCOME TRUST, NSAR-A, 1997-05-30 |
Next: CHEVY CHASE MASTER CREDIT CARD TRUST II, 8-K, 1997-05-30 |
Strategist Growth and Income Fund, Inc.
1997 Semiannual Report
Strategist Balanced Fund
Strategist Equity Income Fund
Strategist Total Return Fund
Strategist Equity Fund
Table of contents
Financial statements (Strategist Growth and Income Fund, Inc.) 4
Notes to financial statements (Strategist Growth and Income Fund, Inc.) 12
Financial statements (Balanced Portfolio) 18
Notes to financial statements (Balanced Portfolio) 21
Investments in securities (Balanced Portfolio) 26
Financial statements (Equity Income Portfolio) 42
Notes to financial statements (Equity Income Portfolio) 45
Investments in securities (Equity Income Portfolio) 49
Financial statements (Total Return Portfolio) 58
Notes to financial statements (Total Return Portfolio) 61
Investments in securities (Total Return Portfolio) 67
Financial statements (Equity Portfolio) 91
Notes to financial statements (Equity Portfolio) 94
Investments in securities (Equity Portfolio) 99
<PAGE>
<TABLE>
<CAPTION>
Statements of assets and liabilities
Strategist Growth and Income Fund, Inc.
March 31, 1997 (Unaudited)
Strategist Strategist Equity
Balanced Fund Income Fund
Assets
<S> <C> <C> <C>
Investment in corresponding Portfolio (Note 1) $809,962 $716,971
Organizational costs (Note 1) 2,107 2,107
- ----- -----
Total assets 812,069 719,078
======= =======
Liabilities
Dividends payable to shareholders -- 411
Accrued distribution fee 21 19
Accrued transfer agency fee 7 5
Accrued administrative services fee 3 3
Other accrued expenses 65,521 43,348
------ ------
Total liabilities 65,552 43,786
------ ------
Net assets applicable to outstanding capital stock $746,517 $675,292
======== ========
Represented by
Capital stock -- authorized 3,000,000,000 shares
per Fund of $.01 par value: outstanding 51,513
and 70,103 shares 515 701
Additional paid-in capital 697,801 607,309
Undistributed net investment income 2,388 931
Accumulated net realized gain (Notes 1and 4) 11,071 26,206
Unrealized appreciation of investments and on
translation of assets and liabilities in foreign currencies 34,742 40,145
------ ------
Total -- representing net assets applicable to
outstanding capital stock $746,517 $675,292
======== ========
Net asset value per share of
outstanding capital stock $ 14.49 $ 9.63
========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statements of assets and liabilities
Strategist Growth and Income Fund, Inc.
March 31, 1997 (Unaudited)
<CAPTION>
Strategist Total Strategist
Return Fund Equity Fund
Assets
<S> <C> <C>
Investment in corresponding Portfolio (Note 1) $626,300 $648,296
Expense receivable from AEFC 9 --
Organizational costs (Note 1) 2,107 2,107
----- -----
Total assets 628,416 650,403
======= =======
Liabilities
Accrued distribution fee 17 18
Accrued transfer agency fee 2 4
Accrued administrative services fee 3 3
Other accrued expenses 28,541 25,552
------ ------
Total liabilities 28,563 25,577
------ ------
Net assets applicable to outstanding capital stock $599,853 $624,826
======== ========
Represented by
Capital stock -- authorized 3,000,000,000 shares
per Fund of $.01 par value: outstanding 46,991
and 26,116 shares 470 261
Additional paid-in capital 551,447 562,784
Undistributed net investment income 107 340
Accumulated net realized gain (loss) (Notes 1 and 4) 16,010 (11,617)
Unrealized appreciation of investments and on translation
of assets and on liabilities in foreign currencies 31,819 73,058
------ ------
Total -- representing net assets applicable to
outstanding capital stock $599,853 $624,826
======== ========
Net asset value per share of
outstanding capital stock $ 12.77 $ 23.93
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of operations
Strategist Growth and Income Fund, Inc.
Six months ended March 31, 1997 (Unaudited)
Strategist Strategist Equity
Balanced Fund Income Fund
Investment income
Income:
<S> <C> <C>
Dividends $ 7,413 $ 10,031
Interest 8,722 3,524
----- -----
Total income 16,135 13,555
====== ======
Expenses (Note 2):
Distribution fee 777 780
Transfer agency fee 156 143
Administrative services fees and expenses 124 125
Postage 4,614 2,912
Registration fees 20,396 9,264
Reports to shareholders 2,447 1,456
Audit fees 1,500 1,500
Other 11,546 9,536
------ -----
Total feeder expenses 41,560 25,716
Expenses allocated from corresponding Portfolio 1,677 1,675
----- -----
Total expenses 43,237 27,391
Less expenses reimbursed by AEFC (41,121) (23,853)
------- -------
Total net expenses 2,116 3,538
----- -----
Investment income-- net 14,019 10,017
====== ======
Realized and unrealized gain -- net
Net realized gain on security and
foreign currency transactions 17,895 35,859
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and liabilities
in foreign currencies 11,632 6,588
------ -----
Net gain on investments and foreign currencies 29,527 42,447
------ ------
Net increase in net assets resulting from operations $43,546 $52,464
======= =======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of operations
Strategist Growth and Income Fund, Inc.
Six months ended March 31, 1997 (Unaudited)
Strategist Total Strategist
Return Fund Equity Fund
Investment income
Income:
<S> <C> <C>
Dividends $ 3,486 $ 5,837
Interest 6,088 1,118
----- -----
Total income 9,574 6,955
===== =====
Expenses (Note 2):
Distribution fee 718 747
Transfer agency fee 77 97
Administrative services fees and expenses 115 120
Postage 978 98
Registration fees 778 102
Reports to shareholders 527 98
Audit fees 1,500 27
Other 4,701 399
----- ---
Total feeder expenses 9,394 1,688
Expenses allocated from corresponding Portfolio 1,475 1,495
----- -----
Total expenses 10,869 3,183
Less expenses reimbursed by AEFC (7,296) --
------ ------
Total net expenses 3,573 3,183
----- -----
Investment income-- net 6,001 3,772
===== =====
Realized and unrealized gain (loss) -- net
Net realized gain on security and
foreign currency transactions 31,410 17,312
Net realized loss on option contracts written (18) --
Net realized loss on financial futures contracts (337) --
---- ----
Net realized gain on investments and foreign currencies 31,055 17,312
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies (8,324) 19,156
------ ------
Net gain on investments and foreign currencies 22,731 36,468
------ ------
Net increase in net assets resulting from operations $28,732 $40,240
======= =======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist Growth and Income Fund, Inc.
Strategist Balanced Fund
March 31, 1997 For the period from
Six months ended May 13, 1996* to
(Unaudited) Sept. 30, 1996
Operations and distributions
<S> <C> <C>
Investment income-- net $ 14,019 $ 4,697
Net gain (loss) on investments and foreign currencies 17,895 (7,479)
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies 11,632 23,110
------ ------
Net increase in net assets resulting from operations 43,546 20,328
------ ------
Distributions to shareholders from:
Net investment income (12,312) (3,398)
======= ======
Capital share transactions (Note 3)
Proceeds from sales 178,154 479,489
Reinvestment of distributions at net asset value 12,312 3,398
------ -----
Increase in net assets from capital share transactions 190,466 482,887
------- -------
Total increase in net assets 221,700 499,817
Net assets at beginning of period (Note 1) 524,817 25,000
------- ------
Net assets at end of period (including undistributed
net investment income of $2,388 and $681) $746,517 $524,817
======== ========
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist Growth and Income Fund, Inc.
Strategist Equity Income Fund
March 31, 1997 For the period from
Six months ended May 13, 1996* to
(Unaudited) Sept. 30, 1996
Operations and distributions
<S> <C> <C>
Investment income-- net $ 10,017 $ 4,206
Net gain (loss) on investments and foreign currencies 35,859 (9,676)
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies 6,588 33,557
----- ------
Net increase in net assets resulting from operations 52,464 28,087
------ ------
Distributions to shareholders from:
Net investment income (9,447) (3,953)
====== ======
Capital share transactions (Note 3)
Proceeds from sales 98,792 481,588
Reinvestment of distributions at net asset value 3,622 3,788
Payments for redemptions (3,649) (1,000)
------ ------
Increase in net assets from capital share transactions 98,765 484,376
------ -------
Total increase in net assets 141,782 508,510
Net assets at beginning of period (Note 1) 533,510 25,000
------- ------
Net assets at end of period (including undistributed
net investment income of $931 and $361) $675,292 $533,510
======== ========
* Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist Growth and Income Fund, Inc.
Strategist Total Return Fund
March 31, 1997 For the period from
Six months ended May 13, 1996* to
(Unaudited) Sept. 30, 1996
Operations and distributions
<S> <C> <C>
Investment income-- net $ 6,001 $ 1,139
Net gain (loss) on investments and foreign currencies 31,055 (16,662)
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies (8,324) 40,143
------ ------
Net increase in net assets resulting from operations 28,732 24,620
------ ------
Distributions to shareholders from:
Net investment income (5,664) (86)
====== ===
Capital share transactions (Note 3)
Proceeds from sales 45,800 479,101
Reinvestment of distributions at net asset value 5,664 86
Payments for redemptions (3,400) --
------
Increase in net assets from capital share transactions 48,064 479,187
------ -------
Total increase in net assets 71,132 503,721
Net assets at beginning of period (Note 1) 528,721 25,000
- ------- ------
Net assets at end of period (including undistributed
net investment income of $107 and $(230)) $599,853 $528,721
======== ========
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist Growth and Income Fund, Inc.
Strategist Equity Fund
March 31, 1997 For the period from
Six months ended May 13, 1996* to
(Unaudited) Sept. 30, 1996
Operations and distributions
<S> <C> <C>
Investment income-- net $ 3,772 $ 3,636
Net gain (loss) on investments and foreign currencies 17,312 (28,922)
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies 19,156 53,902
------ ------
Net increase in net assets resulting from operations 40,240 28,616
------ ------
Distributions to shareholders from:
Net investment income (4,759) (2,429)
====== ======
Capital share transactions (Note 3)
Proceeds from sales 50,470 480,500
Reinvestment of distributions at net asset value 4,759 2,429
----- -----
Increase in net assets from capital share transactions 55,229 482,929
------ -------
Total increase in net assets 90,710 509,116
Net assets at beginning of period (Note 1) 534,116 25,000
- ------- ------
Net assets at end of period (including undistributed
net investment income of $340 and $1,327) $624,826 $534,116
======== ========
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Strategist Growth and Income Fund, Inc.
(Unaudited as to March 31, 1997)
1. Summary of significant accounting policies
Strategist Balanced Fund (Balanced Fund), Strategist Equity Income Fund (Equity
Income Fund), Strategist Total Return Fund (Total Return Fund), and Strategist
Equity Fund (Equity Fund) are series of capital stock within Strategist Growth
and Income Fund, Inc. Each Fund is registered under the Investment Company Act
of 1940 (as amended) as a diversified, open-end management investment company.
On April 15, 1996, American Express Financial Corporation (AEFC) invested
$25,000 in each Fund; which represented 1,871 shares for Balanced Fund, 2,880
shares for Equity Income Fund, 2,103 shares for Total Return Fund and 1,150
shares for Equity Fund. Operations did not formally commence until May 13, 1996.
Investments in Portfolios
Each of the Funds seeks to achieve its investment objectives by investing all of
its net investable assets in a corresponding series of Growth and Income Trust
(the Trust).
Balanced Fund invests all of its assets in the Balanced Portfolio, an open-end
investment company that has the same objectives as the Fund. Balanced Portfolio
balances its investments between common stocks and senior securities (preferred
stocks and debt securities) issued by U.S. and foreign companies.
Equity Income Fund invests all of its assets in the Equity Income Portfolio, an
open-end investment company that has the same objectives as the Fund. Equity
Income Portfolio invests primarily in dividend-paying stocks.
Total Return Fund invests all of its assets in the Total Return Portfolio, an
open-end investment company that has the same objectives as the Fund. Total
Return Portfolio invests primarily in U.S. equity securities, U.S. and foreign
debt securities, foreign equity securities, and money market instruments.
Equity Fund invests all of its assets in the Equity Portfolio, an open-end
investment company that has the same objectives as the Fund. Equity Portfolio
invests primarily in common stocks and securities convertible into common
stocks.
Each Fund records daily its share of the corresponding Portfolio's income,
expenses and realized and unrealized gains and losses. The financial statements
of the Portfolios are included elsewhere in this report and should be read in
conjunction with the Funds' financial statements. Each Fund records its
investment in the corresponding Portfolio at value that is equal to the Fund's
proportionate ownership interest in the net assets of the Portfolio. As of March
31,1997, the percentages of the corresponding Portfolio owned by Balanced Fund,
Equity Income Fund, Total Return Fund and Equity Fund were 0.02%, 0.04%, 0.02%,
and 0.02%, respectively. Valuation of securities held by the Portfolios is
discussed in Note 1 of the Portfolios' "Notes to financial statements," which
are included elsewhere in this report.
Organizational costs
Each Fund incurred organizational expenses in connection with the start-up and
initial registration of the Fund. These costs will be amortized over 60 months
on a straight-line basis beginning with the commencement of operations. If any
or all of the shares held by AEFC representing initial capital of the Fund are
redeemed during the amortization period, the redemption proceeds will be reduced
by the pro rata portion of the unamortized organizational cost balance.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Federal taxes
Since each Fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to the shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) allocated from the
Portfolios may differ for financial statement and tax purposes primarily because
of the deferral of losses on certain futures contracts, the recognition of
certain foreign currency gains (losses) as ordinary income (loss) for tax
purposes, and losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Funds.
Dividends to shareholders
Dividends from net investment income, declared quarterly and paid at the end of
each calendar quarter for Balanced Fund, Total Return Fund and Equity Fund, and
declared daily and paid each calendar quarter for Equity Income Fund, are
reinvested in additional shares of the Funds at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last income
dividend of the calendar year.
Other
At March 31, 1997, AEFC owned 39,030 shares for Balanced Fund, 59,541 shares for
Equity Income Fund, 43,334 shares for Total Return Fund and 23,788 shares for
Equity Fund.
2. Expenses and sales charges
In addition to the expenses allocated from the Portfolio, each Fund accrues its
own expenses as follows:
Each Fund entered into agreements with AEFC for providing administrative
services and transfer agent services.
Under its Administrative Services Agreement, each Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.04% to 0.02% annually. Under
this agreement, each Fund also pays taxes, audit and certain legal fees,
registration fees for shares, office expenses, consultants' fees, compensation
of board members, corporate filing fees, organizational expenses, and any other
expenses properly payable by the Funds approved by the board.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts
and records. Each Fund pays AEFC an annual fee per shareholder account of $20.
Under a Plan and Agreement of Distribution, each Fund pays American Express
Service Corporation (the Distributor) a distribution fee at an annual rate of
0.25% of the Fund's average daily net assets for distribution related services.
AEFC and the Distributor have agreed to waive certain fees and to absorb certain
other of Fund expenses until Sept. 30, 1997. Under this agreement, each Fund's
total expenses will not exceed 1.25% (1.30% for Total Return Fund) of each of
the Fund's average daily net assets.
3. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended March 31, 1997
Equity Total
Balanced Income Return Equity
Fund Fund Fund Fund
Sold 12,144 10,278 3,546 2,074
Issued for reinvested
distributions 843 374 439 197
Redeemed (137) (387) (253) --
---- ---- ---- ----
Net increase 12,850 10,265 3,732 2,271
====== ====== ===== =====
Period ended Sept. 30, 1996*
Equity Total
Balanced Income Return Equity
Fund Fund Fund Fund
Sold 36,541 56,644 41,149 22,586
Issued for reinvested
distributions 251 427 7 109
Redeemed -- (113) -- --
---- ---- ---- ----
Net increase 36,792 56,958 41,156 22,695
====== ====== ====== ======
*Inception date was May 13, 1996.
4. Capital loss carryover
For federal income tax purposes, capital loss carryovers were $6,824 for
Balanced Fund, $9,584 for Equity Income Fund, $15,381 for Total Return Fund and
$28,844 for Equity Fund at Sept. 30, 1996. These capital loss carryovers will
expire in 2004 if not offset by subsequent capital gains. It is unlikely the
board will authorize a distribution of any net realized capital gains for a fund
until the respective capital loss carryover has been offset or expires.
<PAGE>
<TABLE>
<CAPTION>
5. Financial highlights
The tables below show certain important information for evaluating each Fund's
results.
Fiscal period ended Sept. 30,
Per share income and capital changes*
Balanced Fund Equity Income Fund
<S> <C> <C> <C> <C>
1997*** 1996** 1997*** 1996**
Net asset value, beginning of period $13.57 $13.36 $8.92 $8.68
Income from investment operations:
Net investment income .30 .18 .15 .13
Net gains (both realized and unrealized) .89 .17 .70 .23
Total from investment operations 1.19 .35 .85 .36
Dividends from net investment income (.27) (.14) (.14) (.12)
Net asset value, end of period $14.49 $13.57 $9.63 $8.92
Ratios/supplemental data:
Net assets, end of period (in thousands) $747 $525 $675 $534
Ratio of expenses to average
daily net assets++ .68%+ 1.25%+ 1.13%+ 1.25%+
Ratio of net income to average
daily net assets 4.51%+ 3.91%+ 3.21%+ 3.51%+
Total return 8.8% 2.6% 8.6% 4.1%
Portfolio turnover rate (excluding short-term
securities) for the underlying Portfolio 26% 14% 50% 17%
Average brokerage commission rate
for the underlying Portfolio# $.0491 $.0483 $.0547 $.0324
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Inception date was May 13, 1996.
*** Six months ended March 31, 1997 (Unaudited).
+ Adjusted to an annual basis.
++ The Advisor and Distributor voluntarily limited total operating expenses
to 1.25% of average daily net assets. Without this agreement, the ratio of
expenses to average daily net assets would have been 34.04% and 14.58% for
Balanced Fund for periods 1996 and 1997 respectively, 24.26% and 8.77% for
Equity Income Fund for the periods 1996 and 1997 respectively.
# The rate is calculated by dividing the total brokerage commissions paid on
applicable purchases and sales of portfolio securities for the period by
the total number of related shares purchased and sold.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial highlights (continued)
Fiscal period ended Sept. 30,
Per share income and capital changes*
Total Return Fund Equity Fund
1997*** 1996** 1997*** 1996**
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.22 $11.89 $22.40 $21.73
Income from investment operations:
Net investment income .13 .06 .15 .21
Net gains (both realized and unrealized) .55 .31 1.56 .62
Total from investment operations .68 .37 1.71 .83
Dividends from net investment income (.13) (.04) (.19) (.16)
Net asset value, end of period $12.77 $12.22 $23.92 $22.40
Ratios/supplemental data:
Net assets, end of period (in thousands) $600 $529 $625 $534
Ratio of expenses to average
daily net assets++ 1.24%+ 1.30%+ 1.06%+ 1.25%+
Ratio of net income to average
daily net assets 2.09%+ .96%+ 1.26%+ 3.06%+
Total return 5.4% 3.2% 7.6% 3.8%
Portfolio turnover rate (excluding short-term
securities) for the underlying Portfolio 47% 35% 37% 21%
Average brokerage commission rate
for the underlying Portfolio# $.0330 $.0384 $.0351 $.0488
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Inception date was May 13, 1996.
*** Six months ended March 31, 1997 (Unaudited).
+ Adjusted to an annual basis.
++ The Advisor and Distributor voluntarily limited total operating expenses
to 1.30% for Strategist Total Return and 1.25% for Strategist Equity of
average daily net assets. Without this agreement, the ratio of expenses to
average daily net assets would have been 31.60% and 3.78% for Total Return
Fund for periods 1996 and 1997 respectively, and 34.21% for Equity Fund
for the period ended 1996.
# The rate is calculated by dividing the total brokerage commissions paid on
applicable purchases and sales of portfolio securities for the period by
the total number of related shares purchased and sold.
</TABLE>
<PAGE>
Financial statements
Statement of assets and liabilities
Balanced Portfolio
March 31, 1997 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $3,901,878,635) $4,302,929,492
Dividends and accrued interest receivable 34,423,102
U.S. government securities held as collateral (Note 5) 127,048,303
Receivable for investment securities sold 18,095,459
----------
Total assets 4,482,496,356
-------------
Liabilities
Disbursements in excess of cash on demand deposit 8,336,198
Payable for investment securities purchased 43,662,699
Payable upon return of securities loaned (Note 5) 168,573,353
Unrealized depreciation on foreign currency contracts held,
at value (Notes 1 and 4) 930,300
Accrued investment management services fee 214,903
Other accrued expenses 88,805
------
Total liabilities 221,806,258
-----------
Net assets $4,260,690,098
==============
See accompanying notes to financial statements.
<PAGE>
Statement of operations
Balanced Portfolio
Six months ended March 31, 1997 (Unaudited)
Investment income
Income:
Dividends (net of foreign taxes withheld of $170,851) $ 46,032,701
Interest 54,661,497
----------
Total income 100,694,198
-----------
Expenses (Note 2):
Investment management services fee 10,344,820
Compensation of board members 8,196
Custodian fees 97,286
Audit fees 14,250
Administrative services fees and expenses 12,809
------
Total expenses 10,477,361
Earnings credits on cash balances (Note 2) (1,318)
- ------
Total net expenses 10,476,043
----------
Investment income -- net 90,218,155
----------
Realized and unrealized gain -- net
Netrealized gain on security and foreign currency
transactions (including loss of $4,281,394 from foreign
currency transactions) (Note 3) 195,637,932
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies 41,436,955
----------
Net gain on investments and foreign currencies 237,074,887
-----------
Net increase in net assets resulting from operations $327,293,042
============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Balanced Portfolio
<S> <C> <C>
Six months ended For the period from
March 31, 1997 May 13, 1996* to
(Unaudited) Sept. 30, 1996
Operations
Investment income-- net $ 90,218,155 $ 69,251,201
Net realized gain on investments and
foreign currencies 195,637,932 58,304,995
Net change in unrealized appreciation or
depreciation of investments and on
translation of assets and liabilities in
foreign currencies 41,436,955 26,384,443
---------- ----------
Net increase in net assets resulting
from operations 327,293,042 153,940,639
Net contributions (withdrawals) (84,695,716) 3,864,127,133
----------- -------------
Total increase in net assets 242,597,326 4,018,067,772
Net assets at beginning of period (Note 1) 4,018,092,772 25,000
------------- ------
Net assets at end of period $4,260,690,098 $4,018,092,772
============== ==============
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
Notes to financial statements
Balanced Portfolio
(Unaudited as to March 31, 1997)
1. Summary of significant accounting policies
Balanced Portfolio (the Portfolio) is a series of Growth and Income Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. Balanced Portfolio
seeks to provide a balance of growth of capital and current income by investing
in common stocks and senior securities (preferred stocks and debt securities)
issued by U.S. and foreign companies. The Portfolio also may invest in
derivative instruments and money market instruments. The Declaration of Trust
permits the Trustees to issue non-transferable interests in the Portfolio. On
April 15, 1996, American Express Financial Corporation (AEFC) contributed
$25,000 to the Portfolio. Operations did not formally commence until May 13,
1996, at which time an existing fund transferred its assets to the Portfolio in
return for an ownership percentage of the Portfolio.
Significant accounting polices followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price; securities for which market quotations
are not readily available, including illiquid securities, are valued at fair
value according to methods selected in good faith by the board. Determination of
fair value involves, among other things, reference to market indexes, matrixes
and data from independent brokers. Short-term securities maturing in more than
60 days from the valuation date are valued at the market price or approximate
market value based on current interest rates; those maturing in 60 days or less
are valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy or
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The Portfolio also may buy or sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Portfolio may incur a
loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolio pays a premium whether or not
the option is exercised. The Portfolio also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete the obligations of the contract.
Illiquid securities
Investments in securities include issues that are illiquid. The Portfolio
currently limits investments in illiquid securities to 10% of the net assets, at
market value, at the time of purchase. The aggregate value of such securities at
March 31, 1997 was $4,442,054 representing 0.10% of the net assets. Pursuant to
guidelines adopted by the board, certain unregistered securities are determined
to be liquid and are not included within the 10% limitation specified above.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.53% to 0.43% 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 Mutual Fund to the Lipper Balanced Fund Index. The maximum
adjustment is 0.08% of the Portfolio's average daily net assets on an annual
basis. The adjustment decreased the fee by $18,925 for the six months ended
March 31, 1997.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees to be paid to an affiliate of
AEFC, audit and certain legal fees, fidelity bond premiums, registration fees
for units, office expenses, consultants' fees, compensation of trustees,
corporate filing fees, expenses incurred in connection with lending securities
of the Portfolio, and any other expenses properly payable by the Trust or
Portfolio, approved by the board.
During the six months ended March 31, 1997, the Portfolio's custodian fees were
reduced by $1,318 as a result of earnings credits from overnight cash balances.
Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $1,011,785,609 and $1,068,804,639, respectively, for the
six months ended March 31, 1997. For the same period, the portfolio turnover
rate was 26%. Realized gains and losses are determined on an identified cost
basis.
Brokerage commissions paid to brokers affiliated with AEFC were $13,239 during
this period.
4. Foreign currency contracts
At March 31, 1997, the Portfolio had entered into a foreign currency exchange
contract that obligates the Portfolio to deliver currency at a specified future
date. The unrealized appreciation and/or depreciation (see Summary of
significant accounting policies) on this contract is included in the
accompanying financial statements. The terms of the open contract are as
follows:
Currency to Currency to Unrealized Unrealized
Exchange date be delivered be received appreciation depreciation
May 27, 1997 30,000,000 48,390,000 $ -- $930,300
British Pound U.S. Dollar
5. Lending of portfolio securities
At March 31, 1997, securities valued at $162,773,006 were on loan to brokers.
For collateral, the Portfolio received $41,525,050 in cash and U.S. government
securities valued at $127,048,303. Income from securities lending amounted to
$192,836 for the six months ended March 31, 1997. The risks to the Portfolio of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
Balanced Portfolio
March 31, 1997 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (60.0%)
Issuer Shares Value (a)
Aerospace & defense (0.7%)
<S> <C> <C>
Rockwell Intl 450,000 $ 29,193,750
Automotive & related (1.6%)
Ford Motor 1,100,000 34,512,500
Genuine Parts 700,000 32,637,500
-----------
Total 67,150,000
Banks and savings & loans (5.6%)
Banc One 725,000(c) 28,818,750
Barnett Banks 527,850(c) 24,545,025
First Union 450,000 36,506,250
Mellon Bank 325,000 23,643,750
Morgan (JP) 350,000 34,387,500
Natl City 700,000 32,637,500
NationsBank 540,000 29,902,500
Norwest 650,000 30,062,500
-----------
Total 240,503,775
Beverages & tobacco (2.3%)
Anheuser-Busch 875,000 36,859,375
Philip Morris 300,000 34,237,500
UST 1,000,000 27,875,000
-----------
Total 98,971,875
Building materials (0.7%)
Weyerhaueser 650,000 29,006,250
Chemicals (3.4%)
ARCO Chemical 575,000 25,012,500
Dow Chemical 500,000 40,000,000
Lubrizol 850,000 27,625,000
Lyondell Petrochemical 800,000(c) 18,300,000
Nalco Chemical 875,000 32,703,125
-----------
Total 143,640,625
Computers & office equipment (0.9%)
Xerox 675,000 38,390,625
Electronics (0.7%)
AMP 900,000 30,937,500
Energy (4.9%)
Amoco 450,000 38,981,250
Atlantic Richfield 250,000 33,750,000
Chevron 550,000 38,293,750
Exxon 275,000 29,631,250
Mobil 300,000 39,187,500
Ultramar 925,000 29,368,750
-----------
Total 209,212,500
Food (1.1%)
General Mills 250,000 15,531,250
Heinz (HJ) 825,000 32,587,500
-----------
Total 48,118,750
Health care (3.1%)
American Home Products 625,000 37,500,000
Baxter Intl 900,000 38,812,500
Bristol-Myers Squibb 480,000 28,320,000
Schering-Plough 375,000 27,281,250
-----------
Total 131,913,750
Insurance (3.9%)
Lincoln Natl 625,000 33,437,500
Marsh & McLennan 300,000 33,975,000
SAFECO 925,000 37,000,000
St. Paul Companies 575,000 37,303,125
Transamerica 250,000 22,375,000
-----------
Total 164,090,625
Media (3.1%)
Dun & Bradstreet 1,150,000 29,181,250
Gannett 500,000 42,937,500
Knight-Ridder 700,000 27,912,500
McGraw-Hill 650,000 33,231,250
-----------
Total 133,262,500
Metals (0.4%)
Reynolds Metals 246,000 15,252,000
Multi-industry conglomerates (1.3%)
Emerson Electric 850,000 38,250,000
General Electric 175,000 17,368,750
-----------
Total 55,618,750
Paper & packaging (1.5%)
Kimberly-Clark 225,000 22,359,375
Union Camp 600,000 28,275,000
Unisource Worldwide 750,000 11,531,250
-----------
Total 62,165,625
Real estate investment trust (3.6%)
AMLI 425,000 9,775,000
CBL & Associates 500,000 12,250,000
Developers Diversified Realty 303,100 11,442,025
Gables Residential 475,000 12,112,500
Liberty Property Trust 500,000 12,250,000
LTC Properties 532,700 8,856,138
Meditrust 500,000 18,625,000
Merry Land & Investment 550,000 11,275,000
Nationwide Health Properties 550,000 11,756,250
Omega Healthcare Investors 300,000 9,375,000
Simon Properties 675,000 20,418,750
United Dominion Realty Trust 1,050,000 15,356,250
-----------
Total 153,491,913
Retail (2.9%)
Jostens 750,000 16,968,750
Limited 1,900,000 34,912,500
May Department Stores 800,000 36,400,000
Penney (JC) 775,000 36,909,375
-----------
Total 125,190,625
Transporation (1.2%)
GATX 400,000 19,550,000
Union Pacific 525,000 29,793,750
-----------
Total 49,343,750
Utilities -- electric (4.0%)
Dominion Resources 500,000 18,187,500
DTE Energy 675,000 18,140,625
Entergy 1,000,000 24,500,000
General Public 825,000 26,503,125
Northern States Power 550,000 26,056,250
PECO Energy 950,000 19,356,250
Southern 1,050,000 22,181,250
Unicom 87,700 1,710,150
Union Electric 375,000 13,828,125
-----------
Total 170,463,275
Utilities -- telephone (4.5%)
AT&T 1,050,000 36,487,500
Bell Atlantic 600,000 36,525,000
BellSouth 950,000(c) 40,137,500
GTE 850,000 39,631,250
SBC Communications 750,000 39,468,750
-----------
Total 192,250,000
Foreign (8.6%) (h)
Anglian Water 1,550,000 16,294,851
B.A.T. Inds 4,250,000(b) 36,253,966
BTR 7,000,000 30,691,143
Grand Metropolitan ADR 1,500,000 12,116,874
Imperial Chemical Inds 2,500,000 28,646,990
KPN ADR 850,000 30,812,500
National Westminster Bank ADR 2,150,000 24,282,693
Repsol ADR 400,000 16,300,000
Royal Dutch Petroleum 225,000 39,375,000
Severn Trent Water 1,238,015 14,053,770
SmithKline Beecham ADR 550,000 38,500,000
Tele Danmark ADR 1,050,000(c) 27,431,250
Thames Water 1,823,893 19,909,399
Tomkins 7,194,444 32,253,851
-----------
Total 366,922,287
Total common stocks
(Cost: $2,159,078,710) $2,555,090,750
Preferred stocks (--%)
Issuer Shares Value (a)
Virginia-American Water
5.05% Cm 2,200(i) $197,124
Western Resources
4.25% Cm 10,000(i) 586,250
Total preferred stocks
(Cost: $1,220,000) $783,374
Bonds (31.4%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
U.S. government obligations (10.0%)
U.S. Treasury 5.875% 2004 $25,000,000(c) $ 23,666,000
6.00 1997 20,000,000 20,016,200
6.25 2000 30,000,000 29,645,400
6.375 1997 40,000,000(c) 40,094,400
6.625 2001 25,000,000 24,899,500
6.75 2000 15,000,000 15,052,350
6.875 2000 20,000,000 20,147,400
7.125 1999 62,650,000(c) 63,510,185
7.50 2001 50,000,000(c) 51,462,000
10.375 2012 40,000,000 49,650,400
Govt Trust Certs
Israel 9.25 2001 9,298,587 9,772,536
Overseas Private
Investment 6.99 2009 17,500,000 17,193,750
Resolution
Funding Corp 8.125 2019 55,000,000 59,656,300
-----------
Total 424,766,421
Mortgage-backed securities (8.6%)
Collateralized Mtge
Obligation Trust 9.95 2014 4,663,169 4,974,367
Federal Home
Loan Mtge Corp 5.50 2009 5,110,080 4,731,627
6.50 2007-11 43,844,153 42,317,376
6.75 2008 2,335,977 2,289,631
7.00 2003 6,386,651 6,334,792
8.00 2024 8,237,420 8,306,449
8.50 2026 12,503,200 12,823,532
Collateralized
Mtge Obligation 7.50 2003 7,800,000 7,840,170
8.50 2022 7,000,000 7,271,810
Inverse Floater 4.00 1997 4,580,093(e) 4,514,048
Trust Series Z 6.50 2023 21,354,283(f) 17,500,939
8.25 2024 6,354,985(f) 6,131,226
Federal Natl
Mtge Assn 5.50 2009 7,489,607 6,921,745
6.50 2023-24 30,859,329 28,915,974
7.00 2011 24,280,178 23,878,099
7.40 2004 33,750,000(c) 34,444,238
7.50 2002-25 26,496,444 26,085,616
8.50 2025-26 13,575,476 13,910,271
9.00 2024 7,694,090 8,114,879
Collateralized
Mtge Obligation 4.50 2007 11,900,000 10,107,384
5.00 2024 6,696,552 5,897,318
Trust Series Z 6.00 2024 7,215,984(f) 5,091,526
6.50 2023 17,733,524(f) 14,281,578
7.00 2016-22 38,750,146(f) 34,689,352
7.50 2014 8,665,606(f) 8,214,423
8.00 2006-20 20,932,796(f) 20,818,453
-----------
Total 366,406,823
Aerospace & defense (0.2%)
United Technologies 8.875 2019 9,500,000 10,575,780
Automotive & related (0.3%)
Ford Motor Credit
Medium-term Nts 6.55 2001 13,000,000 12,763,920
Banks and savings & loans (1.2%)
Bank of America 7.70 2026 10,000,000(g) 9,318,800
First Bank System 6.875 2007 5,750,000 5,496,482
Morgan (JP) 4.00 2012 14,325,000(k) 13,976,186
Mellon Capital I 7.72 2026 3,850,000 3,604,408
Union Planters 8.20 2026 10,000,000(g) 9,570,900
US Capital Trust A 8.41 2027 10,000,000(g) 9,883,900
-----------
Total 51,850,676
Beverages & tobacco (0.1%)
Coca-Cola 7.375 2093 3,000,000 2,869,260
Building materials (0.1%)
Owens-Corning
Fiberglas 9.375 2012 3,500,000 3,757,530
Commercial finance (0.4%)
Premium Auto Asset-
Backed Obligation 6.45 1998 4,089,724 4,099,908
Salomon Brothers 6.75 2006 7,000,000 6,575,730
Standard Credit
Card Trust 5.95 2004 8,550,000 8,014,941
-----------
Total 18,690,579
Computers & office equipment (0.1%)
IBM 6.375 2000 5,100,000 5,033,598
Electronics (0.1%)
Harris 10.375 2018 4,000,000 4,381,520
Energy (0.2%)
Occidental Petroleum
Medium-term Nts 6.25 2000 6,500,000 6,360,575
Financial services (0.8%)
Associates 6.00 2000 6,000,000 5,863,980
Avco Financial 7.25 1999 6,500,000 6,579,040
Corporate Property
Investors 7.18 2013 1,500,000(g) 1,387,500
Intl Lease Finance
Medium-term Nts 5.99 1998 5,000,000 4,989,000
Nationwide Trust
Credit Sensitive Nts 9.875 2025 10,500,000(g) 11,205,180
Property Trust
America REIT 7.50 2014 5,000,000 4,665,250
-----------
Total 34,689,950
Health care (0.3%)
Kaiser Foundation 9.55 2005 6,000,000 6,747,900
Lilly (Eli) 6.77 2036 5,000,000 4,389,250
-----------
Total 11,137,150
Household products (0.1%)
Proctor & Gamble 8.00 2024 3,000,000 3,176,730
Insurance (0.7%)
American United Life 7.75 2026 4,000,000(i) 3,658,680
Equitable IBM 7.33 2009 5,500,000(g) 5,439,844
New York Life 7.50 2023 11,500,000(g) 10,619,330
Principal Mutual 8.00 2044 7,150,000(g) 6,839,762
SunAmerica 8.125 2023 5,150,000 5,157,776
-----------
Total 31,715,392
Paper & packaging (0.7%)
Crown Cork & Seal 8.00 2023 6,000,000 5,705,160
Federal Paper Board 10.00 2011 7,000,000 8,339,380
Intl Paper 5.125 2012 13,400,000 10,274,584
Pope & Talbot 8.375 2013 4,500,000 3,880,395
-----------
Total 28,199,519
Retail (0.3%)
Wal-Mart 7.00 2006 14,566,985(g) 14,394,512
Transportation (0.2%)
Burlington Northern 7.00 2025 10,200,000 8,954,886
Utilities -- electric (1.3%)
Arizona Public Service
Sale Lease-Backed
Obligation 8.00 2015 5,400,000 5,394,384
Commonwealth
Edison 6.50 1997 10,000,000 10,002,200
Pacific Gas &
Electric 8.25 2022 4,600,000 4,599,448
Public Service
Electric & Gas 6.75 2016 13,000,000 11,915,280
Texas Utilities
Electric 8.175 2037 10,000,000(k) 9,694,200
Wisconsin Electric
Power 1st Mtge 6.875 2095 8,000,000 7,077,840
7.75 2023 5,500,000 5,343,965
-----------
Total 54,027,317
Utilities -- telephone (1.9%)
Bell Telephone
Pennsylvania 7.375 2033 5,000,000 4,621,350
BellSouth
Telecommunications 6.50 2005 9,000,000 8,570,880
7.00 2095 10,000,000 9,125,500
GTE 8.75 2021 5,000,000 5,451,500
9.375 2000 4,600,000 4,926,830
Illinois Bell Telephone
1st Mtge 4.375 2003 4,600,000 3,982,312
New York Telephone 4.875 2006 13,000,000 10,934,690
Pacific Bell
Telephone 6.625 2034 6,100,000 5,162,674
7.375 2043 7,500,000 6,911,325
360 Communications 7.60 2009 4,500,000 4,403,340
U S WEST 6.625 2005 7,000,000 6,701,240
Worldcom 7.75 2007 10,000,000 9,904,300
-----------
Total 80,695,941
Miscellaneous (0.2%)
Marshall & Ilsley 7.65 2026 10,000,000(g) 9,264,700
Municipal bonds (0.4%)
Los Angeles County Pension Obligation
Taxable Revenue Bonds Series 1994C
Zero Coupon
(MBIA Insured) 7.05 2008 9,440,000(d,l) 4,152,184
Los Angeles County Pension Obligation
Taxable Revenue Bonds Series 1995D
(MBIA Insured) 6.97 2008 10,500,000(l) 10,095,645
Yale University 7.375 2096 4,000,000 3,806,360
-----------
Total 18,054,189
Foreign (3.2%)(h)
ABN Amro Bank
(U.S. Dollar) 7.125 2093 7,000,000 6,273,610
Asian Development Bank
(U.S. Dollar) 9.125 2000 17,700,000 18,875,811
Canadian Natl Railway
(U.S. Dollar) 7.625 2023 6,000,000 5,691,540
China Light & Power
(U.S. Dollar) 7.50 2006 7,000,000 6,923,140
Dao Heng Bank
(U.S. Dollar) 7.75 2007 7,750,000(g) 7,565,938
Govt of Poland PDI Euro
(U.S. Dollar) 4.00 2014 10,000,000(k) 7,950,000
Grand Metropolitan
(U.S. Dollar) 6.50 2000 20,000,000(g) 23,750,000
Interamer Development Bank Euro
(U.S. Dollar) 9.50 2000 5,000,000 5,368,750
Israel Electric
(Israel Dollar) 7.25 2006 10,000,000(g) 9,625,000
KFW Intl Finance
(U.S. Dollar) 8.00 2010 6,750,000 7,109,572
Petronas
(U.S. Dollar) 7.75 2015 10,000,000(g) 9,979,100
Ras Laffan Liquefied Natural Gas
(U.S. Dollar) 8.29 2014 10,000,000(g) 10,048,100
Republic of Poland
(U.S. Dollar) 7.75 2000 5,000,000(g) 5,063,799
Republic of Slovenia
(U.S. Dollar) 7.00 2001 7,200,000(g) 7,206,984
State of Israel
(U.S. Dollar) 6.375 2005 7,300,000 6,737,170
-----------
Total 138,168,514
Total bonds
(Cost: $1,334,333,251) $1,339,935,482
Short-term securities (9.6%)
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agency (0.1%)
Federal Natl Mtge Assn Disc Nts
04-09-97 5.24% $ 1,460,000 $ 1,458,306
04-11-97 5.22 2,900,000 2,895,811
-----------
Total 4,354,117
Commercial paper (9.2%)
Alabama Power
04-07-97 5.31 4,620,000 4,615,927
American General Capital
04-29-97 5.54 8,500,000 8,463,507
ANZ (Delaware)
05-01-97 5.41 6,700,000 6,668,418
Avco Financial Services
04-17-97 5.31 3,000,000 2,992,596
Barclays U.S. Funding
05-08-97 5.36 15,000,000 14,910,440
05-14-97 5.37 7,500,000 7,449,023
BBV Finance (Delaware)
04-17-97 5.41 12,400,000 12,367,483
08-04-97 5.52 8,000,000 7,835,080
Beneficial
04-15-97 5.30 12,200,000 12,174,854
BHP Finance
04-08-97 5.30 8,400,000 8,389,562
BOC Group
04-01-97 5.28 3,200,000 3,200,000
Chevron Transport
04-28-97 5.39 10,500,000(j) 9,959,800
Ciesco LP
04-03-97 5.36 5,000,000(j) 4,997,436
05-05-97 5.37 7,700,000(j) 7,661,239
05-12-97 5.32 11,000,000 10,926,670
Commercial Credit
04-24-97 5.35 3,400,000 3,388,466
Dean Witter, Discover & Co
04-25-97 5.38 10,000,000 9,958,537
05-12-97 5.39 10,700,000 10,634,804
Deutsche Bank Financial
05-27-97 5.33 8,700,000 8,618,493
First Chicago NBD
04-14-97 5.34 8,000,000 7,981,366
Fleet Funding
04-07-97 5.29 8,500,000(j) 8,492,548
Gannett
04-16-97 5.33 5,100,000(j) 5,088,737
04-22-97 5.32 12,500,000(j) 12,461,427
05-19-97 5.40 2,500,000 2,480,134
Household Finance
04-16-97 5.34 8,000,000 7,982,267
04-23-97 5.33 9,700,000 9,668,583
Kredietbank North America Finance
04-11-97 5.28 1,300,000 1,298,104
04-18-97 5.30 8,900,000 8,877,893
05-06-97 5.42 10,200,000 10,140,607
Merrill Lynch
05-13-97 5.54 2,200,000 2,185,883
Metlife Funding
05-20-97 5.32 7,800,000 7,738,476
Mobil Australia Finance (Delaware)
04-02-97 5.37 3,000,000(j) 2,999,397
04-30-97 5.35 8,500,000(j) 8,463,641
Morgan Stanley Group
04-18-97 5.39 8,800,000 8,773,617
05-14-97 5.33 8,600,000 8,540,710
05-15-97 5.40 12,000,000 11,918,601
05-19-97 5.38 9,200,000 9,128,384
NationsBank
04-14-97 5.32 8,500,000 8,500,000
New Center
05-07-97 5.58 15,000,000 14,916,750
Paccar Financial
04-28-97 5.58 8,500,000 8,464,555
Pitney Bowes
05-09-97 5.37 10,700,000 10,635,064
Reed Elsevier
04-28-97 5.57 9,200,000(j) 9,161,705
SAFECO Credit
05-01-97 5.38 3,700,000 3,682,217
05-15-97 5.39 2,300,000 2,284,385
Siemens
04-14-97 5.41 6,400,000 6,386,420
05-16-97 5.40 4,900,000 4,867,170
Toyota Motor Credit
05-13-97 5.58 1,600,000 1,589,640
Transamerica Finance
04-18-97 5.39 3,400,000 3,390,763
Unilever Capital
04-07-97 5.34 2,900,000(j) 2,896,993
USAA Capital
05-05-97 5.59 11,100,000 11,041,713
05-27-97 5.43 5,000,000 4,953,979
08-29-97 5.40 7,000,000 6,827,063
-----------
Total 389,031,127
Letter of credit (0.3%)
Student Loan Marketing Assn
05-02-97 5.53 13,800,000 13,734,642
Total short-term securities
(Cost: $407,246,674) $ 407,119,886
Total investments in securities
(Cost: $3,901,878,635)(m) $4,302,929,492
</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) Security is partially or fully on loan. See Note 5 to the financial
statements.
(d) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
( e) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a decline
(increase) in the LIBOR (London InterBank Offering Rate) Index. Interest rate
disclosed is the rate in effect on March 31, 1997. Inverse floaters in the
aggregate represent 0.1% of the Portfolio's net assets as of March 31, 1997.
(f) This security is a collateralized mortgage obligation that pays no interest
or principal during its initial accrual period until payment of previous series
within the trust have been paid off. Interest is accrued at an effective yield;
similar to a zero coupon bond.
(g) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(h) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(i) Identifies issues considered to be illiquid (see Note 1 to the financial
statements). Information concerning such security holdings at March 31, 1997, is
as follows:
Acquisition
Security date Cost
American United Life* 02-13-96 $4,000,000
7.75% 2026
Virginia-American Water 07-13-56 220,000
5.05% Cm
Western Resources 09-08-50 1,000,000
4.25% Cm
*Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended.
(j) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(k) Interest rate varies to reflect current market conditions, rate shown is the
effective rate on March 31, 1997.
(l) The following abbreviation is used in portfolio descriptions to identify the
insurer of the issue:
MBIA -- Municipal Bond Investors Assurance
(m)At March 31, 1997, the cost of securities for federal income tax purposes was
approximately $3,897,192,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $478,574,000
Unrealized depreciation (72,837,000)
-----------
Net unrealized appreciation $405,737,000
============
See accompanying notes to investments in securities.
<PAGE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
Equity Income Portfolio
March 31, 1997 (Unaudited)
<S> <C>
Assets
Investments in securities, at value (Note 1)
(identified cost $1,584,385,573) $1,727,136,276
Cash in bank on demand deposit 1,994,297
Dividends and accrued interest receivable 8,353,442
Receivable for investment securities sold 12,900,783
U.S. government securities held as collateral (Note 4) 28,931,132
----------
Total assets 1,779,315,930
=============
Liabilities
Payable for investment securities purchased 9,562,600
Unrealized depreciation on foreign currency contracts
held, at value (Notes 1 and 5) 274,686
Payable upon return of securities loaned (Note 4) 54,491,332
Accrued investment management services fee 96,947
Other accrued expenses 6,766
-----
Total liabilities 64,432,331
----------
Net assets $1,714,883,599
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Equity Income Portfolio
Six months ended March 31, 1997 (Unaudited)
Investment income
Income:
<S> <C> <C>
Dividends (net of foreign taxes withheld of $41,375) $ 24,539,834
Interest 8,589,464
---------
Total income 33,129,298
==========
Expenses (Note 2):
Investment management services fee 4,055,225
Compensation of board members 5,894
Custodian fees 11,676
Audit fees 9,500
Administrative services fees and expenses 11,768
Other 12,863
------
Total expenses 4,106,926
---------
Earnings credits on cash balances (Note 2) (5,310)
Total net expenses 4,101,616
---------
Investment income -- net 29,027,682
==========
Realized and unrealized gain (loss) -- net
Netrealized gain on security transactions and foreign currency transactions
(including loss of $1,240,284 from foreign
currency transactions) (Note 3) 124,669,106
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies (16,262,599)
-----------
Net gain on investments and foreign currencies 108,406,507
-----------
Net increase in net assets resulting from operations $137,434,189
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Equity Income Portfolio
Six months ended For the period from
March 31, 1997 May 13, 1996* to
(Unaudited) Sept. 30, 1996
Operations
<S> <C> <C>
Investment income-- net $ 29,027,682 $ 22,182,820
Net realized gain on investments and
foreign currencies 124,669,106 16,088,401
Net change in unrealized appreciation or
depreciation of investments and on
translation of assets and liabilities in
foreign currencies (16,262,599) 40,690,701
----------- ----------
Net increase in net assets resulting
from operations 137,434,189 78,961,922
Net contributions 121,295,038 1,377,167,450
----------- -------------
Total increase in net assets 258,729,227 1,456,129,372
Net assets at beginning of period (Note 1) 1,456,154,372 25,000
- ------------- ------
Net assets at end of period $1,714,883,599 $1,456,154,372
============== ==============
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Equity Income Portfolio
(Unaudited as to March 31, 1997)
1. Summary of significant accounting policies
Equity Income Portfolio (the Portfolio) is a series of Growth and Income Trust
(the Trust) and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. Equity Income
Portfolio seeks to provide a high level of current income and, as a secondary
goal, steady growth of capital by investing primarily in dividend-paying stocks.
The Declaration of Trust permits the Trustees to issue non-transferable
interests in the Portfolio. On April 15, 1996, American Express Financial
Corporation (AEFC) contributed $25,000 to the Portfolio. Operations did not
formally commence until May 13, 1996, at which time an existing fund transferred
its assets to the Portfolio in return for an ownership percentage of the
Portfolio.
Significant accounting polices followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price; securities for which market quotations
are not readily available are valued at fair value according to methods selected
in good faith by the board. Determination of fair value involves, among other
things, reference to market indexes, matrixes and data from independent brokers.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy or
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The Portfolio also may buy or sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Portfolio may incur a
loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolio pays a premium whether or not
the option is exercised. The Portfolio also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.53% to 0.4% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees to be paid to an affiliate of
AEFC, audit and certain legal fees, fidelity bond premiums, registration fees
for units, office expenses, consultants' fees, compensation of trustees,
corporate filing fees, expenses incurred in connection with lending securities
of the Portfolio and any other expenses properly payable by the Trust or
Portfolio, approved by the board.
During the six months ended March 31, 1997, the Portfolio's custodian fees were
reduced by $5,310 as a result of earnings credits from overnight cash balances.
Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $780,844,222 and $742,915,048, respectively, for the six
months ended March 31, 1997. For the same period, the portfolio turnover rate
was 50%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $79,392 for this
period.
4. Lending of portfolio securities
At March 31, 1997, securities valued at $53,112,288 were on loan to brokers. For
collateral, the Portfolio received $25,560,200 in cash and U.S. government
securities valued at $28,931,132. Income from securities lending amounted to
$197,567 for the six months ended March 31, 1997. The risks to the Portfolio of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.
5. Foreign currency contracts
At March 31, 1997, the Portfolio had entered into a foreign currency exchange
contract that obligates the Portfolio to deliver currency at a specified future
date. The unrealized appreciation/depreciation (see Summary of significant
accounting policies) on this contract is included in the accompanying financial
statements. The terms of the open contract are as follows:
Currency to Currency to Unrealized Unrealized
Exchange date be delivered be received appreciation depreciation
April 14, 1997 5,725,000 9,142,825 $ -- $274,686
British Pound U.S. Dollar
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
Equity Income Portfolio
March 31, 1997 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (64.4%)
Issuer Shares Value (a)
<S> <C> <C>
Automotive & related (2.4%)
Chrysler 345,000 $ 10,350,000
Ford Motor 420,000 13,177,500
Genuine Parts 365,000 17,018,125
-----------
Total 40,545,625
Banks and savings & loans (7.8%)
Bank of Boston 225,000 15,075,000
Barnett Banks 350,000(c) 16,275,000
First Union 230,000 18,658,750
KeyCorp 390,000 19,012,500
Mellon Bank 245,000 17,823,750
Morgan (JP) 160,000 15,720,000
NationsBank 290,000 16,058,750
Norwest 345,000 15,956,250
-----------
Total 134,580,000
Beverages & tobacco (2.3%)
Anheuser-Busch 455,000 19,166,875
Philip Morris 185,000 21,113,125
-----------
Total 40,280,000
Building materials & construction (1.7%)
Martin Marietta Materials 425,000 10,943,750
Weyerhaeuser 400,000 17,850,000
-----------
Total 28,793,750
Chemicals (1.3%)
Dow Chemical 145,000 11,600,000
Nalco Chemical 265,000 9,904,375
-----------
Total 21,504,375
Electronics (2.2%)
Arrow Electronics 245,000 13,811,875
Thomas & Betts 570,000 24,367,500
-----------
Total 38,179,375
Energy (6.3%)
Amoco 200,000 17,325,000
Atlantic Richfield 140,000 18,900,000
Chevron 205,000 14,273,125
Exxon 180,000 19,395,000
Mobil 145,000 18,940,625
Texaco 180,800 19,797,600
-----------
Total 108,631,350
Food (1.7%)
Heinz (HJ) 520,000 20,540,000
Quaker Oats 250,000 9,125,000
-----------
Total 29,665,000
Health care (4.1%)
American Home Products 335,000 20,100,000
Baxter Intl 455,000 19,621,875
Bristol-Myers Squibb 320,000 18,880,000
Pharmacia & Upjohn 341,800 12,518,425
-----------
Total 71,120,300
Industrial equipment & services (0.7%)
General Signal 300,000 11,737,500
Insurance (2.3%)
Lincoln Natl 200,000 10,700,000
Marsh & McLennan 110,000 12,457,500
SAFECO 385,000 15,400,000
-----------
Total 38,557,500
Media (2.4%)
Dun & Bradstreet 850,000 21,568,750
McGraw-Hill 385,000(b) 19,683,125
-----------
Total 41,251,875
Multi-industry conglomerates (1.6%)
Minnesota Mining & Mfg 110,000 9,295,000
Natl Service Inds 445,000 17,410,625
-----------
Total 26,705,625
Paper & packaging (2.1%)
Union Camp 380,000 17,907,500
Unisource Worldwide 1,200,000 18,450,000
-----------
Total 36,357,500
Real estate investment trust (5.5%)
Duke Realty 130,000 5,281,250
Equity Residential 125,000 5,546,875
FelCor Suite Hotels 200,000 7,350,000
Gable Residential Trust 180,000 4,590,000
Kilroy Realty 130,000(b) 3,461,250
LTC Properties 210,000 3,491,250
Merry Land & Investment 220,000 4,510,000
Mid-America Apart Communities 235,000 6,580,000
Oasis 162,500 3,656,250
Omega Healthcare Investors 125,000 3,906,250
Patriot American Hospitality 260,000 6,305,000
Prentiss Properties Trust 200,000 5,075,000
Public Storage 150,000 4,350,000
Reckson Associates Realty 115,000 5,304,375
RFS Hotel Investors 255,000 4,430,625
Security Capital Industrial Trust 180,000(b) 3,757,500
Simon DeBartolo Group 140,000 4,235,000
Storage Trust Realty 160,000 4,120,000
Storage USA 105,000 3,871,875
Sun Communities 140,000 4,480,000
-----------
Total 94,302,500
Retail (2.2%)
May Dept Stores 370,000 16,835,000
Penney (JC) 445,000 21,193,125
-----------
Total 38,028,125
Utilities -- electric (5.3%)
DPL 630,000 15,198,750
Duke Power 320,000(c) 14,120,000
FPL Group 340,000 15,002,500
Northern States Power 360,000 17,055,000
Public Service of Colorado 410,000 15,887,500
Southern Co 605,000 12,780,625
-----------
Total 90,044,375
Utilities -- telephone (4.9%)
Ameritech 260,000 15,990,000
Bell Atlantic 195,000 11,870,625
BellSouth 440,000 18,590,000
GTE 515,000 24,011,875
NYNEX 300,000 13,687,500
-----------
Total 84,150,000
Foreign (7.6%) (d)
British Petroleum ADR 135,000 18,528,750
British Telecommunications ADR 250,000(c) 17,500,000
Imperial Chemical Inds 370,000(c) 16,835,000
Mid Ocean 465,000(b) 22,203,750
Royal Dutch Petroleum 135,000 23,625,000
SmithKline Beecham ADR 170,000 11,900,000
Tomkins 4,420,000 19,815,571
-----------
Total 130,408,071
Total common stocks
(Cost: $960,382,291) $1,104,842,846
Preferred stocks (11.1%)
Issuer Shares Value (a)
AirTouch Communications
4% 450,000 $ 10,406,250
AirTouch Communications
4% Cv 640,000 16,400,000
AutoZone
5.50% Cv 715,100(b) 16,232,770
Browning Ferris Inds
7.25% Cv 295,000 8,813,125
Circuit City Stores
5.50% 357,143(e) 11,482,147
ConAgra
4.50% Cv 325,000 16,493,750
Corning Delaware
6% 220,000 15,592,500
Crown Cork & Seal
4.50% Cv 670,000 32,997,500
Gannett
4.50% Cv 200,000 15,750,000
Ikon Office Solutions
$5.04 Cv 400,000 32,350,000
SunAmerica
$3.18 Cv 335,000(b) 13,232,500
----------
Total preferred stocks
(Cost: $183,946,852) $189,750,542
Bonds (13.8%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
Mortgage-backed securities (11.7%)
Federal Natl Mtge Assn 7.00 % 2026 $42,174,486 $ 40,363,514
Collateralized
Mtge Obligation 9.25 2016 356 355
U.S. Treasury 7.00 2006 53,700,000 53,873,451
8.125 2019-21 96,000,000 105,659,830
-----------
Total 199,897,150
Aerospace & defense (0.8%)
United Technologies
Cv 5.00 1998 13,943,025(f) 13,110,210
Healthcare (0.4%)
Tenet Healthcare
Sr Nts 8.625 2003 7,000,000 7,122,500
Multi-industry conglomerates (0.9%)
Emerson Electric
Cv 5.00 1999 15,791,804(f) 15,737,622
----------
Total bonds
(Cost: $243,379,042) $235,867,482
U.S. government agency (0.2%)
Federal Home Loan Mtge Corp
04-18-97 5.28 2,800,000 2,793,045
Commercial paper (11.3%)
American General Finance
04-16-97 5.28 6,500,000 6,485,781
Ameritech Capital Funding
04-17-97 5.33 6,500,000(g) 6,484,689
BHP Finance
04-14-97 5.33 5,900,000 5,888,708
CAFCO
04-02-97 5.29 2,400,000(g) 2,399,649
04-28-97 5.36 6,400,000(g) 6,374,464
Campbell Soup
04-04-97 5.35 4,000,000(g) 3,998,230
CIT Group Holdings
04-25-97 5.36 6,500,000 6,476,860
05-02-97 5.58 2,000,000 1,990,442
Commercial Credit
04-24-97 5.35 5,600,000 5,581,002
CPC Intl
04-30-97 5.55 8,000,000(g) 7,964,427
Dean Witter, Discover & Co
04-25-97 5.36 10,000,000 9,964,400
Deutsche Bank Financial
04-10-97 5.28 8,500,000 8,488,844
Fleet Funding
04-07-97 5.29 6,703,000(g) 6,697,124
04-09-97 5.34 4,000,000(g) 3,987,703
04-17-97 5.33 700,000(g) 698,348
04-22-97 5.31 3,700,000(g) 3,695,626
Ford Motor Credit
04-03-97 5.28 4,400,000 4,398,714
Gannett
04-16-97 5.33 6,000,000(g) 5,986,750
Kellogg
04-08-97 5.31 5,700,000 5,694,137
Kredietbank North America Finance
04-18-97 5.31 6,600,000 6,583,575
Lilly (Eli)
04-23-97 5.37 3,400,000 3,388,884
Metlife Funding
04-22-97 5.33 2,500,000 2,492,271
04-23-97 5.35 3,800,000 3,783,185
05-01-97 5.35 7,400,000 7,375,897
Motorola
05-08-97 5.58 4,200,000 4,176,042
Natl Australia Funding (Delaware)
04-28-97 5.49 1,700,000 1,693,038
05-27-97 5.35 2,000,000 1,981,592
Novartis Finance
04-18-97 5.37 12,200,000 12,169,178
Paccar Financial
04-01-97 5.32 5,100,000 5,100,000
04-23-97 5.52 7,400,000 7,375,128
Reed Elsevier
05-05-97 5.55 7,100,000(g) 7,062,985
SBC Communications Capital
04-18-97 5.42 9,500,000(g) 9,475,775
Siemens
04-09-97 5.32 3,700,000 3,695,642
Southern California Gas
04-07-97 5.32 5,700,000(g) 5,694,965
Toyota Motor Credit
04-28-97 5.52 3,700,000 3,684,737
Transamerica Finance
04-10-97 5.28 4,900,000 4,893,569
-------------
Total $ 193,882,361
Total short-term securities
(Cost: $196,677,388) $ 196,675,406
Total investment in securities
(Cost: $1,584,385,573) (h) $1,727,136,276
</TABLE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Security is partially or fully on loan. See Note 4 to the financial
statements.
(d) Foreign security values are stated in U.S. dollars.
(e) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(f) ELKS are equity-linked securities that are structured as an interest-bearing
debt security and linked to the common stock of another company. The terms of
ELKS differ from those of ordinary debt securities in that the principal amount
received at maturity is not fixed but is based on the price of the common stock
the ELK is linked to. The principal amount disclosed equals the current
estimated future value of the amount to be received upon maturity.
(g) 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 the guidelines established
by the board.
(h) At March 31, 1997, the cost of securities for federal income tax purposes
was approximately $1,584,384,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $173,623,000
Unrealized depreciation (30,871,000)
Net unrealized appreciation $142,752,000
See accompanying notes to investments in securities.
<PAGE>
<TABLE>
Financial statements
Statement of assets and liabilities
Total Return Portfolio
March 31, 1997 (Unaudited)
<CAPTION>
Assets
Investments in securities, at value (Note 1)
Investments in securities of unaffiliated issuers
<S> <C>
(identified cost $2,613,103,704) $2,787,732,044
Investments in securities of affiliated issuers
(identified cost $16,709,176) 6,765,000
Dividends and accrued interest receivable 11,461,076
Receivable for investment securities sold 129,731,294
Unrealized appreciation on foreign currency contracts
held, at value (Notes 1 and 4) 29,765
U.S. government securities held as collateral (Note 5) 10,694,263
----------
Total assets 2,946,413,442
=============
Liabilities
Disbursements in excess of cash on demand deposit 1,358,434
Payable for investment securities purchased 66,680,606
Unrealized depreciation on foreign currency contracts
held, at value (Notes 1 and 4) 41,136
Payable upon return of securities loaned (Note 5) 160,953,113
Accrued investment management services fee 148,255
Other accrued expenses 184,782
-------
Total liabilities 229,366,326
-----------
Net assets $2,717,047,116
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Total Return Portfolio
Six months ended March 31, 1997 (Unaudited)
Investment income
Income:
<S> <C>
Interest $ 28,047,942
Dividends (net of foreign taxes withheld of $601,063) 16,023,591
----------
Total income 44,071,533
----------
Expenses (Note 2):
Investment management services fee 6,308,880
Compensation of board members 15,418
Custodian fees 444,890
Audit fees 14,250
Administrative services fees and expenses 15,119
Other 16,605
------
Total expenses 6,815,162
Earnings credits on cash balances (Note 2) (4,283)
- ------
Total net expenses 6,810,879
---------
Investment income -- net 37,260,654
==========
Realized and unrealized gain (loss) -- net
Netrealized gain on security and foreign currency transactions (including gain
of $1,605,311 from foreign
currency transactions) (Note 3) 170,781,999
Net realized loss on sale of affiliated issuer (1,184,513)
Net realized loss on option contracts written (Note 7) (85,137)
Net realized loss on financial futures contracts (1,528,313)
----------
Net realized gain on investments and foreign currencies 167,984,036
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies (54,550,752)
-----------
Net gain on investments and foreign currencies 113,433,284
-----------
Net increase in net assets resulting from operations $150,693,938
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statements of changes in net assets
Total Return Portfolio
<CAPTION>
Six months ended For the period from
March 31, 1997 May 13, 1996* to
(Unaudited) Sept. 30, 1996
Operations
<S> <C> <C>
Investment income-- net $ 37,260,654 $ 31,175,277
Net realized gain on investments and
foreign currencies 167,984,036 26,015,535
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies (54,550,752) 75,342,945
----------- ----------
Net increase in net assets resulting
from operations 150,693,938 132,533,757
Net contributions (withdrawals) (232,836,687) 2,666,631,108
------------ -------------
Total increase (decrease) in net assets (82,142,749) 2,799,164,865
Net assets at beginning of period (Note 1) 2,799,189,865 25,000
- ------------- ------
Net assets at end of period $2,717,047,116 $2,799,189,865
============== ==============
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Total Return Portfolio
(Unaudited as to March 31, 1997)
1. Summary of significant accounting policies
Total Return Portfolio (the Portfolio) is a series of Growth and Income Trust
(the Trust) and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. Total Return
Portfolio seeks to provide maximum total return through a combination of growth
of capital and current income by investing in U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Declaration of Trust permits the Trustees to issue non-transferable
interests in the Portfolio. On April 15, 1996, American Express Financial
Corporation (AEFC) contributed $25,000 to the Portfolio. Operations did not
formally commence until May 13, 1996, at which time, an existing fund
transferred its assets to the Portfolio in return for an ownership percentage of
the Portfolio.
Significant accounting polices followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price; securities for which market quotations
are not readily available, including illiquid securities, are valued at fair
value according to methods selected in good faith by the board. Determination of
fair value involves, among other things, reference to market indexes, matrixes
and data from independent brokers. Short-term securities maturing in more than
60 days from the valuation date are valued at the market price or approximate
market value based on current interest rates; those maturing in 60 days or less
are valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy or
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The Portfolio also may buy or sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Portfolio may incur a
loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolio pays a premium whether or not
the option is exercised. The Portfolio also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete the obligations of the contract.
Illiquid securities
Investments in securities included issues that are illiquid. The Portfolio
currently limits investments in illiquid securities to 10% of the net assets, at
market value, at the time of purchase. The aggregate value of such securities at
March 31, 1997 was $14,956,950 representing 0.55% of the net assets. Pursuant to
guidelines adopted by the board, certain unregistered securities are determined
to be liquid and are not included within the 10% limitation specified above.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the Portfolio on
a forward-commitment or when-issued basis can take place one month or more after
the transaction date. During this period, such securities are subject to market
fluctuations, and they may affect the Portfolio's net assets the same as owned
securities. The Portfolio designates cash or liquid high-grade debt securities
at least equal to the amount of its commitment. As of March 31, 1997, the
Portfolio had entered into outstanding when-issued or forward-commitments of
$3,732,430.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.53% to 0.40% annually. The fees may be increased or decreased
by a performance adjustment based on a comparison of the performance of Class A
shares of IDS Managed Allocation Fund to the Lipper Growth and Income Fund
Index. Subsequently, the index used changed to Lipper Flexible Portfolio Fund
Index as of July 1996. The maximum adjustment is 0.08% of the Portfolio's
average daily net assets on an annual basis. The adjustment decreased the fee by
$509,802 for the six months ended March 31, 1997.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees to be paid to an affiliate of
AEFC, audit and certain legal fees, fidelity bond premiums, registration fees
for units, office expenses, consultants' fees, compensation of trustees,
corporate filing fees, expenses incurred in connection with lending securities
of the Portfolio, and any other expenses properly payable by the Trust or
Portfolio, approved by the board.
During the six months ended March 31, 1997, the Portfolio's custodian fees were
reduced by $4,283 as a result of earnings credits from overnight cash balances.
Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $1,215,447,560 and $1,711,115,837, respectively, for the
six months ended March 31, 1997. For the same period, the portfolio turnover
rate was 47%. Realized gains and losses are determined on an identified cost
basis.
Brokerage commissions paid to brokers affiliated with AEFC were $154,169 for the
six months ended March 31, 1997.
4. Foreign currency contracts
At March 31, 1997, the Portfolio had entered into five foreign currency exchange
contracts that obligate the Portfolio to deliver currencies at specified future
dates. The unrealized appreciation and/or depreciation (see Summary of
significant accounting policies) on these contracts is included in the
accompanying financial statements. The terms of the open contracts are as
follows:
Currency to Currency to Unrealized Unrealized
Exchange date be delivered be received appreciation depreciation
April 1, 1997 631,444 1,016,050 $ -- $22,801
British Pound U.S. Dollar
April 1, 1997 522,878 309,029 -- 4,447
Deutsche Mark U.S. Dollar
April 2, 1997 673,046 401,915 -- 1,590
Deutsche Mark U.S. Dollar
April 3, 1997 4,357,125 2,599,887 -- 12,298
Deutsche Mark U.S. Dollar
April 10, 1997 1,429,540 2,736,854 29,765 --
U.S. Dollar Dutch Guilder
----------- ----------
$29,765 $41,136
5. Lending of portfolio securities
At March 31, 1997, securities valued at $155,386,041 were on loan to brokers.
For collateral, the Portfolio received $150,258,850 in cash and government
securities valued at $10,694,263. Income from securities lending amounted to
$260,898 for the six months ended March 31, 1997. The risks to the Portfolio of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.
6. Interest rate futures contracts
At March 31, 1997, investments in securities included securities valued at
$20,809,500 that were pledged as collateral to cover initial margin deposits on
400 open sale contracts. The market value of the open sale contracts at March
31, 1997 was $42,371,875 with a net unrealized gain (see Summary of significant
accounting policies) of $675,313.
7. Option contracts written
The number of contracts and premium amounts associated with option contracts
written (see Summary of significant accounting policies) is as follows:
Period ended March 31, 1997
----------------------------------------------
Calls
Contracts Premium
- -----------------------------------------------------------------------
Balance Sept. 30, 1996 -- $ --
Opened 49,000 107,800
Closed (49,000) (107,800)
- -----------------------------------------------------------------------
Balance March 31, 1997 -- $ --
- -----------------------------------------------------------------------
<PAGE>
<TABLE>
Investments in securities
Total Return Portfolio
March 31, 1997 (Unaudited)
(Percentages represent value of investments compared to net assets)
Investments in securities of unaffiliated issuers
Common stocks (67.2%)
<CAPTION>
Issuer Shares Value (a)
Aerospace & defense (1.2%)
<S> <C> <C>
Allied Signal 25,000 $ 1,781,250
Boeing 42,066 4,148,759
General Dynamics 22,000 1,482,250
Raytheon 496,200 22,391,025
Rockwell Intl 30,000 1,946,250
United Technologies 20,000 1,505,000
-----------
Total 33,254,534
Airlines (0.5%)
AMR 166,300 13,719,750
Automotive & related (1.6%)
Chrysler 523,800(c) 15,714,000
Ford Motor 189,700 5,951,837
General Motors 375,700 20,804,387
-----------
Total 42,470,224
Banks and savings & loans (4.0%)
Bank of Boston 350,000 23,450,000
Barnett Banks 127,000(d) 5,905,500
Citicorp 120,000 12,990,000
First Union 112,964 9,164,205
KeyCorp 115,800 5,645,250
Mellon Bank 58,200 4,234,050
NationsBank 756,000 41,863,500
Norwest 124,800 5,772,000
-----------
Total 109,024,505
Beverages & tobacco (2.4%)
Anheuser-Busch 520,200 21,913,425
Coca-Cola 789,300 44,102,138
-----------
Total 66,015,563
Building materials & construction (0.7%)
Georgia-Pacific 13,200 957,000
Tyco Intl 279,100 15,350,500
Weyerhaeuser 69,100 3,083,587
-----------
Total 19,391,087
Chemicals (0.1%)
Monsanto 64,500 2,467,125
Communications equipment & services (0.1%)
Tellabs 50,000(b) 1,806,250
Computers & office equipment (4.2%)
Cisco Systems 121,900(b) 5,866,438
Compaq Computer 152,600(b) 11,692,975
Computer Associates Intl 230,500 8,960,687
Computer Sciences 5,530(b) 341,477
Dell Computer 32,000(b) 2,164,000
First Data 372,800 12,628,600
Hewlett-Packard 235,000 12,513,750
Ikon Office Solutions 307,000 10,284,500
Microsoft 215,400(b) 19,749,487
Oracle 357,450(b) 13,784,166
Seagate Technology 45,000(b) 2,019,375
Silicon Graphics 465,800(b) 9,083,100
3Com 171,300(b) 5,610,075
-----------
Total 114,698,630
Electronics (1.0%)
AMP 90,000 3,093,750
Intel 150,000 20,868,750
LSI Logic 27,500(b) 955,625
Natl Semiconductor 50,000(b) 1,375,000
Thomas & Betts 5,974 255,388
-----------
Total 26,548,513
Energy (0.6%)
Unocal 410,000 15,631,250
Financial services (0.7%)
Federal Home Loan Mortgage 380,400 10,365,900
Travelers Group 164,000 7,851,500
-----------
Total 18,217,400
Food (1.6%)
CPC Intl 350,000 28,700,000
Quaker Oats 400,000 14,600,000
-----------
Total 43,300,000
Health care (6.8%)
ALZA 228,100(b) 6,272,750
American Home Products 409,200 24,552,000
Amgen 191,000(b) 10,672,125
Baxter Intl 300,000 12,937,500
Boston Scientific 91,400(b) 5,643,950
Bristol-Myers Squibb 387,400 22,856,600
Guidant 95,000 5,842,500
Johnson & Johnson 549,000 29,028,375
Lilly (Eli) 209,100 17,198,475
Medtronic 151,300 9,418,425
Merck 153,600 12,940,800
Pfizer 69,100 5,813,037
Pharmacia & Upjohn 13,200 483,450
Schering-Plough 300,000 21,825,000
-----------
Total 185,484,987
Health care services (1.1%)
Service Corp Intl 568,400 16,909,900
Tenet Healthcare 300,000(b) 7,387,500
United Healthcare 112,300 5,348,287
-----------
Total 29,645,687
Household products (1.8%)
Colgate-Palmolive 50,000 4,981,250
Gillette 81,800 5,940,725
Procter & Gamble 337,700 38,835,500
-----------
Total 49,757,475
Industrial equipment & services (1.5%)
Deere & Co 377,300 16,412,550
General Signal 383,200 14,992,700
Illinois Tool Works 126,000 10,284,750
-----------
Total 41,690,000
Insurance (0.7%)
AON 26,900 1,647,625
Providian 294,000 15,729,000
-----------
Total 17,376,625
Media (--%)
CS Wireless Systems 2,255(o) --
Metals (1.0%)
Aluminum Co of America 330,800 22,494,400
Freeport McMoRan Copper & Gold Cl B 150,000 4,556,250
-----------
Total 27,050,650
Multi-industry conglomerates (2.4%)
Emerson Electric 657,600 29,592,000
General Electric 227,300 22,559,525
Honeywell 45,000 3,054,375
Minnesota Mining & Mfg 93,300 7,883,850
Westinghouse Electric 148,000 2,627,000
-----------
Total 65,716,750
Paper & packaging (0.7%)
Champion Intl 8,500 386,750
Crown Cork & Seal 270,600 13,969,725
Intl Paper 72,800 2,830,100
Jefferson Smurfit 615,500 1,625,252
-----------
Total 18,811,827
Restaurants & lodging (0.3%)
Hilton Hotels 280,000 6,790,000
Retail (3.0%)
American Stores 300,000 13,350,000
AutoZone 190,000(b) 4,275,000
CUC Intl 370,000(b) 8,325,011
Federated Dept Stores 170,500(b) 5,605,188
Kroger 101,600(b) 5,156,200
Lowe's 187,500 7,007,813
Rite Aid 268,500 11,277,000
Wal-Mart Stores 966,700 26,946,762
-----------
Total 81,942,974
Textiles & apparel (0.1%)
Nike Cl B 41,400 2,566,800
Utilities -- gas (0.5%)
Sonat 248,850 13,562,325
Utilities -- telephone (2.8%)
AirTouch Communications 646,600(b) 14,871,800
Ameritech 175,000 10,762,500
BellSouth 260,000 10,985,000
GTE 270,000 12,588,750
MCI Communications 697,000 24,830,625
WorldCom 140,000(b) 3,080,000
-----------
Total 77,118,675
Foreign (25.8%)(e)
Australia (1.2%)
Broken Hill Proprietary 63,895 851,539
MIM Holdings 2,621,088 3,513,715
Pasminco 3,807,000 7,344,857
Westpac Banking 1,359,000(d) 7,883,881
WMC Limited 740,900(b,d) 4,681,483
Woodside Petroleum 1,145,000 8,432,278
-----------
Total 32,707,753
Austria (0.1%)
Boehler-Uddeholm 43,600(b,f) 3,015,690
Brazil (0.4%)
CEMIG 85,000(b) 3,570,000
Petroleo Brasileiro 170,000 3,421,250
Telebras ADR 33,000 3,378,375
-----------
Total 10,369,625
Canada (0.6%)
Northern Telecommunications 257,800 16,853,675
Toronto-Dominion Bank 3,257 82,116
-----------
Total 16,935,791
France (2.2%)
Accor 61,732 8,993,994
Credit Commercial de France 230,000(b) 11,040,164
Groupe AB 332,900(b) 3,204,163
Lafarge-Coppee 137,115 9,519,535
Lyonnaise des Eaux 98,555(b) 10,093,352
Michelin Cl B 134,050 7,986,415
SGS-THOMSON Microelectronics 48,280 3,396,669
Total Petroleum Cl B 81,000 7,024,472
-----------
Total 61,258,764
Germany (1.7%)
Bayer 217,000(d) $ 9,022,144
Daimler-Benz Aktieng 115,000(b) 9,197,242
Degussa 2,097(d) 895,122
Deutsche Telekom 483,921(b,d) 11,111,615
Hoechst 238,050(d) 9,640,454
SGL Carbon 47,170(b) 6,475,977
-----------
Total 46,342,554
Hong Kong (1.8%)
Cheung Kong Holdings 1,048,000 9,230,710
Hong Kong Telecom 2,000,000 3,419,928
HSBC Holdings 594,000 13,798,444
HSBC Holdings Group 121,797(b) 2,993,678
Hutchison Whampoa 569,000 4,277,395
New World Development 1,534,000(b) 8,275,091
Sun Hung Kai Properties 620,000 6,561,100
Wharf Holdings 410,000 1,568,844
-----------
Total 50,125,190
Italy (1.3%)
Credito Italiano 3,421,840(b) 4,864,152
ENI 2,468,420(d) 12,547,522
Stet Risp 2,196,600 7,799,593
Telecom Italia 4,170,900(b,d) 10,431,938
-----------
Total 35,643,205
Japan (3.7%)
Banyu Pharmaceutical 260,000 3,952,454
Dai Nippon Printing 370,000(b) 6,193,094
Denso 113,000 2,220,344
Fujitsu 457,000 4,656,101
Kirin Brewery 519,000 4,280,585
Mitsubishi Materials 1,057,000(b) 3,692,277
Mitsubishi Motors 409,000(b) 3,032,692
Mitsumi Electric 340,000(d) 6,240,802
NEC 645,000(b) 7,301,690
Nippon Express 710,000 4,730,654
Nippon Steel 1,746,000(b) 4,800,194
Secom 113,000(b) 6,350,368
Shinko Electric 133,000 4,581,386
Sony Corp ADR 81,000(b) 5,665,481
Sumitomo Electric Inds ADR 260,000(b) 3,531,980
Sumitomo Trust & Banking 1,050,000(b) 7,063,960
Takashimaya 471,000 4,532,142
TDK 160,000(b) 10,997,008
Yasuda Fire & Marine 1,260,000(b) 6,214,926
-----------
Total 100,038,138
Malaysia (0.4%)
Perushaan Otomobil 309,000(b) 1,957,551
Tenaga Nasional Bhd 393,000(b) 1,918,813
United Engineers Malaysia 810,000(b) 7,059,820
-----------
Total 10,936,184
Mexico (0.5%)
Cemex ADR Cl B 724,000(d) 5,882,500
Grupo Industrial 1,044,000 5,859,617
Grupo Televisa 35,700 888,038
-----------
Total 12,630,155
Netherlands (3.5%)
Akzo Nobel 44,040(b) 6,326,149
Gucci 94,300(b) 6,898,590
Intl Nederlanden Groep 204,000(b) 8,038,391
Philips Electronics NV 348,150 16,243,102
Royal Dutch Petroleum 266,900 46,707,500
Schlumberger 25,000 2,681,250
Unilever 330,400 8,778,705
-----------
Total 95,673,687
New Zealand (0.1%)
Carter Holt Harvey 1,068,000(b) 2,262,916
Phillipines (0.1%)
Manila Electric 220,000(b) 1,752,323
Singapore (2.0%)
City Developments 1,161,000(b) 10,287,850
Fraser & Neave 449,000 3,667,843
Keppel 591,000(b) 3,723,157
Malayan Banking 948,000 10,806,415
Overseas Chinese Banking 376,200 4,479,501
Overseas Union Bank 771,000 5,310,799
Sime Darby 1,486,000(b) 5,426,530
Straits Steamship Land 1,901,000 5,869,476
United Overseas Bank 398,000 4,077,812
-----------
Total 53,649,383
South Korea (0.1%)
Samsung Electronics 20,100 1,606,676
Spain (0.4%)
Repsol 81,360 3,397,799
Telefonica de Espana 310,050(b) 7,494,749
-----------
Total 10,892,548
Sweden (0.7%)
Asea Free Cl B 74,490(d) 8,448,809
Ericsson (LM) Tel Cl B ADR 320,160 11,310,670
-----------
Total 19,759,479
Switzerland (1.5%)
Ciba Specialty Chemicals 17,100(b) 1,414,107
CS Holdings 66,069(d) 7,931,494
La-Roche Holdings 1,150(b) 9,945,622
Novartis 17,100(b) 21,223,489
-----------
Total 40,514,712
United Kingdom (3.5%)
British Gas 2,156,920 5,766,405
EMI Group 204,347 3,748,530
Glaxo Wellcome 855,425 15,712,978
Granada Group 509,260 7,687,117
Great Universal Stores 1,042,000 11,442,919
Johnson Matthey 316,230 2,843,224
Kingfisher 906,980(b) 10,452,584
Lloyds TSB Group 639,900 5,258,543
NFC 2,065,378(b) 5,623,611
Premier Farnell 462,030(b) 3,534,606
Redland 952,400 5,640,787
Shell Transport & Trading 449,488 8,027,231
Siebe 593,402(b) 10,021,340
-----------
Total 95,759,875
Total common stocks of unaffiliated issuers
(Cost: $1,649,666,310) $1,825,934,254
Preferred stocks & other (1.9%)
Issuer Shares Value (a)
AKZO
Warrants 82,040 $ 1,093,604
Bar Technologies
Warrants 3,000 150,000
BNP
Warrants 125,500 1,246,171
Henkel
5.35% 140,400 7,743,885
Paxson Communications
12.5% Pay-in-kind 19,700(m) 1,945,375
Straits Steamship
Warrants 303,000(b) 316,739
Station Casinos
7% Cv 15,000 646,875
UNUM
$2.34 Cv 550,000 38,981,250
Total preferred stocks & other
(Cost: $43,201,931) $52,123,899
Bonds (16.0%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
U.S. government obligations (2.9%)
U.S. Treasury 3.375% 2007 $ 8,008,320 $ 7,875,622
5.75 1997 26,000,000 26,005,980
6.25 2023 14,700,000(c) 13,043,310
6.75 2000 32,000,000(c) 32,111,680
-----------
Total 79,036,592
Mortgage-backed securities (2.7%)
Federal Home
Loan Mtge Corp 7.00 2026 182,063 174,644
7.50 2025 27,678,102 27,262,930
8.50 2026 7,050,433 7,228,815
Federal Natl
Mtge Assn 7.00 2025 98,892 94,645
7.50 2024-25 36,781,628 36,188,712
Structured Assets Securities Corp
Collateralized Mtge
Obligation 6.76 2028 2,500,000 2,473,047
-----------
Total 73,422,793
Aerospace & defense (0.3%)
Alliant Techsystems
Sr Sub Nts 11.75 2003 2,000,000 2,192,500
Newport News Ship 8.625 2006 800,000 820,000
Northrop Grumman 7.75 2016 5,000,000 4,812,850
-----------
Total 7,825,350
Airlines (0.2%)
Northwest
Airlines Cl B 8.07 2015 3,968,199 3,964,825
Northwest
Airlines Cl C 8.97 2015 1,973,418 2,017,307
-----------
Total 5,982,132
Banks & savings and loans (0.1%)
First Nationwide 10.625 2003 1,960,000(f) 2,072,700
U.S. Trust
Capital A 8.40 2027 1,500,000(f) 1,482,585
-----------
Total 3,555,285
Building materials & construction (0.2%)
AAF McQuay
Sr Nts 8.875 2003 3,330,000 3,267,563
Southdown 10.00 2006 2,350,000 2,502,750
-----------
Total 5,770,313
Communications equipment & services (0.7%)
Geotek Communications
Cv 12.00 2001 2,780,000(g) 2,363,000
Intl Cable Telephone
Cv 7.25 2005 14,500,000 14,282,500
Shared Technologies
Zero Coupon Cv 12.25 2006 4,250,000(h) 3,500,938
-----------
Total 20,146,438
Electronics (0.2%)
Thomas & Betts 6.50 2006 4,500,000 4,167,270
Energy (0.1%)
Forcenergy
Sr Sub Nts 9.50 2006 1,000,000 992,500
Transamerican
Refining 18.00 2002 2,000,000(i) 1,835,000
-----------
Total 2,827,500
Energy equipment & services (0.2%)
Cliff's Drilling
Sr Nts 10.25 2003 3,500,000 3,657,500
Noble Drilling 9.125 2006 1,000,000 1,070,000
-----------
Total 4,727,500
Financial services (0.2%)
Cityscape Financial 11.00 1998 6,000,000(g) 6,000,600
Furniture & appliances (0.2%)
Interface 9.50 2005 2,500,000 2,575,000
Lifestyle Furnishings 10.875 2006 3,250,000 3,461,250
-----------
Total 6,036,250
Health care (0.2%)
Dade Intl
Sr Sub Nts 11.125 2006 2,000,000 2,247,500
Lilly (Eli) 6.77 2036 5,000,000 4,389,250
-----------
Total 6,636,750
Health care services (0.4%)
Manor Care 7.50 2006 7,000,000 6,930,350
Owens & Minor
Sr Sub Nts 10.875 2006 1,200,000 1,293,000
Tenet Healthcare
Sr Nts 8.625 2003 2,000,000 2,035,000
-----------
Total 10,258,350
Industrial equipment & services (0.1%)
AGCO 8.50 2006 2,800,000 2,852,500
Insurance (0.7%)
American
United Life 7.75 2026 5,000,000(g) 4,573,350
Executive Risk
Capital Trust 8.675 2027 1,500,000 1,470,720
Metropolitan Life 7.80 2025 4,800,000(f) 4,568,688
Minnesota
Mutual Life 8.25 2025 4,500,000(f) 4,579,335
Nationwide Trust
Credit Sensitive Nts 9.875 2025 3,500,000 3,735,060
-----------
Total 18,927,153
Leisure time & entertainment (0.1%)
Trump Atlantic City Funding
1st Mtge 11.25 2006 3,725,000 3,454,937
Media (1.2%)
Cablevision Systems
Sr Sub Deb 10.50 2016 3,000,000 3,022,500
CS Wireless Systems
Zero Coupon 11.38 2001 8,200,000(h) 2,583,000
Heritage Media Services
Sr Sub Nts 8.75 2006 5,000,000 5,175,000
Lamar Advertising 9.625 2006 800,000 806,000
News American
Holdings 10.125 2012 2,175,000 2,428,148
Time Warner 9.15 2023 10,000,000 10,651,500
Univision Network
Zero Coupon 15.18 2002 7,500,000(h) 6,965,625
-----------
Total 31,631,773
Metals (0.1%)
Bar Technologies 13.50 2001 3,000,000(f) 2,992,500
Retail (0.7%)
Dayton Hudson 8.50 2022 2,500,000 2,476,325
Grand Union 12.00 2004 2,500,000(d) 2,456,250
Kroger 8.15 2006 5,000,000 5,075,000
Wal-Mart Stores 7.00 2006 9,711,323 9,596,341
-----------
Total 19,603,916
Transportation (0.1%)
Enterprise Rent-A-Car
Medium-term Nts 6.95 2006 3,000,000(f) 2,865,000
Utilities -- electric (0.4%)
El Paso Electric
1st Mtge 7.75 2001 5,000,000 4,987,450
Public Service Electric & Gas
1st Mtge 6.75 2016 7,365,000 6,750,464
-----------
Total 11,737,914
Utilities -- gas (0.2%)
Columbia Gas System 7.32 2010 5,043,000 4,768,409
Utilities -- telephone (0.3%)
Omnipoint
Sr Nts 11.625 2006 5,000,000 4,200,000
WorldCom 7.75 2007 3,000,000 2,971,290
-----------
Total 7,171,290
Miscellaneous (0.7%)
Adams Outdoor Advertising
Sr Nts 10.75 2006 3,900,000 4,095,000
Outsourcing
Solutions 11.00 2006 1,075,000(f) 1,134,125
Pierce Leahy
Sr Sub Nts 11.125 2006 750,000 821,250
Prime Succession
Sr Sub Nts 10.75 2004 1,275,000 1,373,813
SC Intl 13.00 2005 4,000,000 4,440,000
USI American Holdings
Sr Nts 7.25 2006 3,500,000(f) 3,318,350
Unifi Communications
with Warrants 14.00 2004 3,000,000(f) 2,970,000
Total 18,152,538
Foreign (2.8%)(e)
Airplanes GPA Cl D
(U.S. Dollar) 10.875 2019 2,750,000 3,011,250
ALFA Bank Loan Participation
(U.S. Dollar) 11.10 1997 1,000,000(i) 1,000,000
Banque Audi
(U.S. Dollar)
Sr Unsub Nts 9.375 2001 1,000,000(f) 1,025,000
CEI Citicorp
(Argentine Peso) 8.50 2002 1,000,000(f) 986,250
(U.S. Dollar) 11.25 2007 2,000,000(f) 1,912,500
Celestica Intl
(U.S. Dollar)
Sr Sub Nts 10.50 2006 1,000,000 1,076,250
Corp Andina De Fomento
(U.S. Dollar) 7.10 2003 6,500,000 6,336,070
Dao Heng Bank
(U.S. Dollar)
Sr Sub Nts 7.75 2007 2,500,000(f) 2,440,625
Dominion Textiles
(U.S. Dollar) 9.25 2006 3,500,000 3,570,000
FSW Intl
(U.S. Dollar)
Sr Nts 12.50 2006 2,250,000 2,306,250
Globo Communicacoes
(U.S. Dollar) 10.50 2006 500,000(f) 507,500
Govt of Poland PDI Euro
(U.S. Dollar) 3.75 2014 4,150,000(i) 3,299,250
Govt of Russia
(U.S. Dollar) 6.60 2049 2,500,000(l) 1,681,250
(U.S. Dollar) 9.25 2001 850,000(f) 830,875
Grupo Televisa
( U.S. Dollar)
Sr Nts 11.375 2003 2,750,000 2,901,250
GST Telecommunications
(U.S. Dollars)
Zero Coupon Cv 0.42 2000 1,000,000(h) 765,000
Imexsa Export Trust
(U.S. Dollar) 10.125 2003 3,000,000(f) 3,048,750
MDC Communications
(U.S. Dollar) 10.50 2006 1,000,000 1,035,000
Perez Companc
(U.S. Dollar) 9.00 2004 1,000,000(f) 972,500
Phillipine Long Distance
(U.S. Dollar) 7.85 2007 1,250,000(f) 1,181,138
(U.S. Dollar) 8.35 2017 1,000,000(f) 931,250
PLD Telekom
(U.S. Dollar) Zero Coupon
with Warrants 16.19 2004 3,000,000(h) 2,587,500
Plitt Theatres
(U.S Dollar) 10.875 2004 5,000,000 5,037,500
Polysindo Intl
Finance
(U.S. Dollar) 11.375 2006 1,375,000 1,476,406
Ras Laffan Liquid Natural Gas
(U.S. Dollar) 8.30 2014 5,000,000 5,024,050
Republic of Brazil
(U.S. Dollar)
C Bonds 8.00 2014 2,753,425(i) 2,047,860
Republic of Columbia
(U.S. Dollar) 8.70 2016 2,250,000 2,238,750
Republic of Panama
(U. S. Dollar) 7.875 2002 1,000,000(f) 973,280
Russian Principal Loans
(U.S. Dollar)
Zero Coupon 6.38 2020 3,500,000(h,l) 1,960,000
Rogers Cantel Mobile
(U.S. Dollar) 9.375 2008 2,800,000 2,870,000
Transport Martima Mex
(U.S. Dollar) 10.00 2006 1,525,000 1,465,906
Veninfotel
Pay-in-kind Cv 10.00 2002 2,000,000(g,m) 2,020,000
Vneshekonom
(U.S. Dollar)
Zero Coupon 8.10 1997 1,000,000(n) 781,250
Zhuhai Highway
(U.S. Dollar) 11.50 2008 5,000,000(f) 5,643,750
-----------
Total 74,944,210
Total bonds
(Cost: $445,838,163) $435,495,263
U.S. government agency (0.1%)
Federal Natl Mtge Assn Disc Nt
04-04-97 5.26% $ 1,700,000 $ 1,699,257
Certificate of deposit (0.7%)
Morgan Guaranty
04-28-97 5.40 20,000,000 19,909,874
Commercial paper (16.4%)
ABB Treasury Center USA
04-30-97 5.57 10,000,000(j) 9,955,292
05-08-97 5.36 2,700,000(j) 2,685,237
Ameritech Capital Funding
04-14-97 5.37 4,600,000(j) 4,590,540
04-29-97 5.30 4,476,000(j) 4,456,392
ANZ (Delaware)
05-01-97 5.41 1,400,000 1,393,401
Associates Corp North America
04-07-97 5.32 10,200,000 10,191,024
Bank of America
06-02-97 5.41 10,700,000 10,694,365
Barclays U.S. Funding
04-16-97 5.31 10,000,000 9,974,597
05-14-97 5.37 4,800,000 4,767,375
BBV Finance (Delaware)
04-18-97 5.35 6,900,000 6,882,633
Beneficial
05-07-97 5.36 9,300,000 9,245,873
BHP Finance
04-08-97 5.37 9,100,000 9,088,692
CAFCO
04-25-97 5.31 5,300,000(j) 5,281,379
05-05-97 5.31 5,000,000(j) 4,973,065
05-16-97 5.40 2,100,000(j) 2,085,182
CIT Group Holdings
05-13-97 5.58 600,000 596,115
CPC Intl
04-30-97 5.55 12,200,000(j) 12,145,751
05-13-97 5.40 5,600,000(j) 5,561,294
Cargill
04-21-97 5.28 4,600,000 4,584,367
Cargill Global
11-18-97 5.49 1,800,000(j) 1,731,676
Ciesco LP
04-01-97 5.36 9,200,000 9,200,000
04-03-97 5.36 5,000,000(j) 4,997,436
Clorox
04-17-97 5.44 6,800,000 6,781,155
Commercial Credit
04-10-97 5.28 1,500,000 1,498,031
Commerzbank U.S. Finance
04-21-97 5.30 7,500,000 7,478,083
05-12-97 5.36 8,000,000 7,946,669
05-19-97 5.44 10,000,000 9,925,275
Fleet Funding
04-07-97 5.30 5,000,000(j) 4,995,608
Ford Motor Credit
04-09-97 5.28 10,000,000 9,988,333
04-24-97 5.35 6,400,000 6,378,247
Goldman Sachs Group
04-11-97 5.32 4,400,000 4,393,522
04-15-97 5.33 5,900,000 5,887,839
Household Finance
04-23-97 5.33 5,200,000 5,183,158
Kellogg
04-03-97 5.28 3,300,000 3,299,038
04-22-97 5.33 5,000,000 4,984,542
Kredietbank North America Finance
04-18-97 5.30 4,300,000 4,289,319
Lincoln Natl
04-11-97 5.32 3,200,000(j) 3,195,289
Merrill Lynch
05-13-97 5.54 6,700,000 6,657,008
Metlife Funding
04-22-97 5.34 5,605,000 5,587,639
04-28-97 5.52 8,487,000 8,451,991
05-02-97 5.58 3,800,000 3,781,839
05-05-97 5.34 10,800,000 10,745,940
Michigan Consolidated Gas
04-23-97 5.36 3,500,000 3,488,578
Mobil Australia Finance (Delaware)
04-02-97 5.37 6,200,000(j) 6,198,754
08-22-97 5.41 10,000,000(j) 9,764,400
Morgan Stanley Group
05-14-97 5.33 1,400,000 1,390,348
Motorola
05-08-97 5.58 9,400,000 9,346,381
Natl Australia Funding (Delaware)
04-28-97 5.49 6,300,000 6,274,202
05-12-97 5.36 10,000,000 9,934,754
05-15-97 5.37 7,100,000 7,050,851
Novartis Finance
04-22-97 5.35 4,700,000(j) 4,685,387
Paccar Financial
05-22-97 5.33 3,900,000 3,868,187
Pitney Bowes
05-09-97 5.37 6,800,000 6,758,732
Rabobank USA Finance
04-17-97 5.44 10,000,000 9,974,155
Reed Elsevier
04-16-97 5.40 9,900,000(j) 9,875,951
04-28-97 5.57 1,700,000(j) 1,692,924
05-23-97 5.57 22,000,000(j) 21,824,587
Southwestern Bell Telephone
04-14-97 5.32 11,900,000 11,874,749
SAFECO Credit
05-15-97 5.39 6,700,000 6,654,512
Siemens
04-28-97 5.40 11,600,000 11,553,281
05-16-97 5.40 7,500,000 7,449,750
USAA Capital
05-01-97 5.31 8,000,000 7,961,551
05-06-97 5.35 7,300,000 7,262,314
05-14-97 5.35 9,000,000 8,940,217
05-27-97 5.43 10,000,000 9,907,958
08-26-97 5.39 4,200,000 4,098,299
-----------
Total 444,361,033
Letters of credit (0.3%)
Bank of America --
Hyundai Motor Finance
05-19-97 5.37 5,000,000 4,960,285
First Chicago--
Commed Fuel
04-08-97 5.42 500,000 499,260
Student Loan Marketing Assn
05-02-97 5.53 2,762,000 2,748,919
-----------
Total 8,208,464
Total short-term securities
(Cost: $474,397,300) $ 474,178,628
Total investments in securities of unaffiliated issuers
(Cost: $2,613,103,704) $2,787,732,044
Investments in securities of affiliated issuer (k)
Common stock (0.3%)
Issuer Shares Value (a)
China North Inds Investment 16,500,000(b) $ 6,765,000
Total investments in securities of affiliated issuer
(Cost: $16,709,176) $ 6,765,000
Total investments in securities
(Cost: $2,629,812,880)(p) $2,794,497,044
</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) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 6 to the financial statements):
Type of security Notional amount
Sale contracts
U.S. Treasury Bonds June 1997 $40,000,000
(d) Security is partially or fully on loan. See Note 5 to the financial
statements.
(e) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(f) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(g) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at March 31, 1997, is as follows:
Security Acquisition date Cost
American UnitedLife*
7.75% 2026 02-13-96 5,000,000
Cityscape Financial
11.00% 1998 11-21-96 thru 3-13-97 6,000,000
Geotek Communications
12.00% Cv 2001 03-05-96 2,780,000
Veninfotel
10.00% 2002 03-06-97 2,000,000
* Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended.
(h) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(i) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on March 31, 1997.
(j) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(k) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
six months ended March 31, 1997 are as follows:
Beginning Purchase Sales Ending Dividend
Issuer cost cost cost cost income
China North
Inds Investment $18,789,176 $ -- $2,080,000 $16,709,176 $ --
(l) At March 31, 1997, the cost of securities purchased, including interest
purchased, on a when-issued basis was $3,732,430.
(m) Pay-in-kind securities are securities in which the issuer has the option to
make interest payments in cash or in additional securities. The securities
issued as interest usually have the same terms, including maturity date, as the
pay-in-kind securities.
(n) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of aquisition.
(o) Negligible market value.
(p) At March 31, 1997, the cost of securities for federal income tax purposes
was approximately $2,629,809,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $241,442,000
Unrealized depreciation (76,754,000)
Net unrealized appreciation $164,688,000
<PAGE>
Financial statements
Statement of assets and liabilities
Equity Portfolio
March 31, 1997 (Unaudited)
Assets
Investments in securities, at value (Note 1)
Investments in securities of unaffiliated issuers
(identified cost $2,914,403,825) $3,565,562,904
Investments in securities of affiliated issuers
(identified cost $33,897,526) 45,858,072
Dividends and accrued interest receivable 8,265,522
Receivable for investment securities sold 66,257
U.S. government securities held as collateral (Note 4) 68,808,487
----------
Total assets 3,688,561,242
=============
Liabilities
Disbursements in excess of cash on demand deposit 837,609
Payable for investment securities purchased 5,986,457
Unrealized depreciation on foreign currency
contracts held, at value (Notes 1 and 5) 60
Payable upon return of securities loaned (Note 4) 227,029,987
Accrued investment management services fee 156,030
Other accrued expenses 10,309
------
Total liabilities 234,020,452
-----------
Net assets $3,454,540,790
==============
See accompanying notes to financial statements.
<PAGE>
Statement of operations
Equity Portfolio
Six months ended March 31, 1997 (Unaudited)
Investment income
Income:
Dividends (net of foreign taxes withheld of $250,326) $ 32,012,885
Dividends earned from affiliates 138,000
Interest 6,218,164
---------
Total income 38,369,049
==========
Expenses (Note 2):
Investment management services fee 8,118,125
Compensation of board members 9,199
Custodian fees 114,660
Audit fees 14,000
Administrative services fees and expenses 22,804
Other 5,107
-----
Total expenses 8,283,895
Earnings credits on cash balances (Note 2) (1,501)
------
Total net expenses 8,282,394
---------
Investment income -- net 30,086,655
==========
Realized and unrealized gain -- net
Netrealized gain on security and foreign currency
transactions (including loss of $444,649 from
foreign currency transactions) (Note 3) 195,764,259
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies 15,687,803
----------
Net gain on investments and foreign currencies 211,452,062
-----------
Net increase in net assets resulting from operations $241,538,717
============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Statements of changes in net assets
Equity Portfolio
<CAPTION>
Six months ended For the period from
March 31, 1997 May 13, 1996* to
(Unaudited) Sept. 30, 1996
Operations
<S> <C> <C>
Investment income-- net $ 30,086,655 $ 38,250,649
Net realized gain (loss) on
investments and foreign currencies 195,764,259 (4,205,188)
Net change in unrealized appreciation
or depreciation of investments and
on translation of assets and liabilities
in foreign currencies 15,687,803 140,669,806
---------- -----------
Net increase in net assets resulting
from operations 241,538,717 174,715,267
Net contributions (withdrawals) (72,046,022) 3,110,307,828
----------- -------------
Total increase in net assets 169,492,695 3,285,023,095
Net assets at beginning of period (Note 1) 3,285,048,095 25,000
- ------------- ------
Net assets at end of period $3,454,540,790 $3,285,048,095
============== ==============
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Equity Portfolio
(Unaudited as to March 31, 1997)
1. Summary of significant accounting policies
Equity Portfolio (the Portfolio) is a series of Growth and Income Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. Equity Portfolio
invests primarily in common stocks and securities convertible into common
stocks. The Declaration of Trust permits the Trustees to issue non-transferable
interests in the Portfolio. On April 15, 1996, American Express Financial
Corporation (AEFC) contributed $25,000 to the Portfolio. Operations did not
formally commence until May 13, 1996, at which time, an existing fund
transferred its assets to the Portfolio in return for an ownership percentage of
the Portfolio.
Significant accounting policies followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price; securities for which market quotations
are not readily available, including illiquid securities, are valued at fair
value according to methods selected in good faith by the board. Determination of
fair value involves, among other things, reference to market indexes, matrixes
and data from independent brokers. Short-term securities maturing in more than
60 days from the valuation date are valued at the market price or approximate
market value based on current interest rates; those maturing in 60 days or less
are valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy or
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The Portfolio also may buy or sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Portfolio may incur a
loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolio pays a premium whether or not
the option is exercised. The Portfolio also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete the obligations of the contract.
Illiquid securities
At March 31, 1997, investments in securities included issues that are illiquid.
The Portfolio currently limits investments in illiquid securities to 10% of the
net assets, at market value, at the time of purchase. The aggregate value of
such securities at March 31, 1997 was $10,633,993 representing 0.31% of the
Portfolio's net assets. Pursuant to guidelines adopted by the board, certain
unregistered securities are determined to be liquid and are not included within
the 10% limitation specified above.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.53% to 0.4% 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 Stock Fund to the Lipper Growth and Income Fund Index. The maximum
adjustment is 0.08% of the Portfolio's average daily net assets on an annual
basis. The adjustment decreased the fee by $163,261 for the six months ended
March 31, 1997.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees to be paid to an affiliate of
AEFC, audit and certain legal fees, fidelity bond premiums, registration fees
for units, office expenses, consultants' fees, compensation of trustees,
corporate filing fees, expenses incurred in connection with lending securities
of the Portfolio, and any other expenses properly payable by the Trust or
Portfolio, approved by the board.
During the six months ended March 31, 1997, the Portfolio's custodian fees were
reduced by $1,501 as a result of earnings credits from overnight cash balances.
Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $1,242,266,176 and $1,231,057,025, respectively, for the
six months ended March 31, 1997. For the same period, the portfolio turnover
rate was 37%. Realized gains and losses are determined on an identified cost
basis.
Brokerage commissions paid to brokers affiliated with AEFC were $255,491 during
this period.
4. Lending of portfolio securities
At March 31, 1997, securities valued at $217,727,815 were on loan to brokers.
For collateral, the Portfolio received $158,221,500 in cash and U.S. government
securities valued at $68,808,487. Income from securities lending amounted to
$536,634 for the six months ended March 31, 1997. The risks to the Portfolio of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.
5. Foreign currency contracts
At March 31, 1997, the Portfolio had entered into a foreign currency exchange
contract that obligates the Portfolio to deliver currency at a specified future
date. The unrealized appreciation and/or depreciation (see Summary of
significant accounting policies) on this contract is included in the
accompanying financial statements. The terms of the open contract are as
follows:
Currency to be Currency to be Unrealized Unrealized
Exchange date delivered received appreciation depreciation
April 1, 1997 292,824 $66,197 $ -- $60
South African U.S. Dollar
Commercial Rand
<PAGE>
<TABLE>
Investments in securities
Equity Portfolio
March 31, 1997 (Unaudited)
(Percentages represent value of investments compared to net assets)
Investments in securities of unaffiliated issuers
Common stocks (82.1%)
<CAPTION>
Issuer Shares Value (a)
Aerospace & defense (2.8%)
<S> <C> <C>
Boeing 450,000 $ 44,381,250
General Motors Cl H 500,000 27,125,000
Lockheed Martin 306,084 25,711,056
-----------
Total 97,217,306
Airlines (0.8%)
AMR 350,000(b) 28,875,000
Automotive & related (1.6%)
Eaton 386,200 27,371,925
Genuine Parts 600,000 27,975,000
-----------
Total 55,346,925
Banks and savings & loans (6.0%)
Barnett Banks 800,000(c) 37,200,000
First Union 450,000 36,506,250
KeyCorp 600,000 29,250,000
Morgan (JP) 200,000 19,650,000
NationsBank 950,000 52,606,250
Norwest 400,000 18,500,000
Washington Mutual 250,000 12,078,125
-----------
Total 205,790,625
Beverages & tobacco (2.4%)
Anheuser-Busch 700,000 29,487,500
Coca-Cola 600,000 33,525,000
Philip Morris 200,000 22,825,000
-----------
Total 85,837,500
Chemicals (1.3%)
Monsanto 600,000 22,950,000
Praxair 500,000 22,437,500
-----------
Total 45,387,500
Communications equipment & services (0.9%)
Northern Telecommunications 450,000 29,418,750
Computers & office equipment (4.1%)
Cisco Systems 400,000(b) 19,250,000
Compaq Computer 465,000(b) 35,630,625
Computer Associates Intl 250,000 9,718,750
Hewlett-Packard 550,000 29,287,500
Oracle 750,000(b) 28,921,875
Silicon Graphics 900,000(b) 17,550,000
-----------
Total 140,358,750
Electronics (1.6%)
Intel 400,000 55,650,000
Energy (1.5%)
Elf Aquitaine 500,000(c) 24,625,000
Unocal 700,000 26,687,500
-----------
Total 51,312,500
Food (1.2%)
ConAgra 400,000 21,700,000
CPC Intl 250,000 20,500,000
-----------
Total 42,200,000
Health care (8.6%)
ALZA 400,000 11,000,000
American Home Products 600,000 36,000,000
Amgen 500,000(b) 27,937,500
Baxter Intl 800,000 34,500,000
Guidant 500,000 30,750,000
Johnson & Johnson 650,000 34,368,750
Medtronic 500,000 31,125,000
Merck 200,000 16,850,000
Pfizer 425,000 35,753,125
Schering-Plough 550,000 40,012,500
-----------
Total 298,296,875
Health care services (1.2%)
Service Corp Intl 800,000 23,800,000
Tenet Healthcare 700,000 17,237,500
-----------
Total 41,037,500
Household products (3.4%)
Colgate-Palmolive 400,000 39,850,000
Gillette 600,000 43,575,000
Procter & Gamble 300,000 34,500,000
-----------
Total 117,925,000
Industrial equipment & services (2.6%)
AGCO 500,000 13,812,500
Deere 1,000,000 43,500,000
Illinois Tool Works 400,000 32,650,000
-----------
Total 89,962,500
Insurance (3.4%)
American Intl Group 300,000 35,212,500
EXEL 1,190,000 50,277,500
Travelers/Aetna Property Casualty 1,000,000 31,750,000
-----------
Total 117,240,000
Leisure time & entertainment (0.6%)
Disney (Walt) 300,000 21,900,000
Media (1.0%)
Donnelley (RR) & Sons 1,000,000 34,875,000
Metals (4.6%)
Freeport-McMoRan Copper & Gold 1,500,000 45,562,500
Getchell Gold 946,200 38,439,375
Martin Marietta Materials 1,000,000 25,750,000
Stillwater Mining 890,000(b) 17,466,250
UCAR Intl 800,000(b) 31,700,000
-----------
Total 158,918,125
Multi-industry conglomerates (2.8%)
Emerson Electric 400,000 18,000,000
General Electric 575,000 57,068,750
Westinghouse Electric 1,200,000 21,300,000
-----------
Total 96,368,750
Paper & packaging (2.3%)
Crown Cork & Seal 600,000(b) 30,975,000
Kimberly-Clark 475,000 47,203,125
-----------
Total 78,178,125
Restaurants & lodging (0.6%)
Hilton Hotels 800,000 19,400,000
Retail (3.4%)
Federated Dept Stores 500,000(b) 16,437,500
Penney (JC) 550,000 26,193,750
Safeway 1,000,000(b,c) 46,375,000
Wal-Mart Stores 1,000,000 27,875,000
-----------
Total 116,881,250
Textiles & apparel (0.9%)
Nike Cl B 500,000 31,000,000
Transportation (0.6%)
Union Pacific 350,000 19,862,500
Utilities - electric (0.8%)
FPL Group 600,000 26,475,000
Utilities - telephone (4.6%)
AT&T 500,000 17,375,000
BellSouth 700,000 29,575,000
GTE 500,00 23,312,500
MCI Communications 1,000,000 35,625,000
SBC Communications 500,000 26,312,500
U S West Communications 800,000 27,200,000
-----------
Total 159,400,000
Foreign (16.5%)(d)
Ashanti Goldfields 500,000(c) 6,875,000
Barclays 1,443,212 24,242,294
Bre-X Minerals 1,500,000 2,914,935
British Telecommunications 4,000,000 29,317,404
Cimpor Cimentos de Portugal 602,000(e) 12,558,858
Commonwealth Bank 4,041,400(c) 26,676,744
Compagnie de General 225,000(c) 30,657,227
Ericsson (LM) ADR 7,000,000 33,250,000
Euro-Nevada Mining 23,300 673,289
Euro-Nevada Mining 230,400(e) 6,657,756
Natl Mutual 16,000,000 19,578,544
Railtrack 4,000,000 29,778,060
Renaissance Energy 500,000(b) 14,213,470
Repsol ADR 650,000 26,487,500
Royal Dutch Petroleum 150,000 26,250,000
Schlumberger 350,000 37,537,500
SGL Carbon 250,000 34,322,542
SmithKline Beecham ADR 500,000 35,000,000
South African Breweries 440,200(e) 13,944,563
Telefonos de Mexico 1,000,000(c) 38,500,000
TOTAL Cl B 700,000 29,662,500
Unilever 200,000 37,250,000
Veba 500,000(c) 28,312,350
Woolworths 10,000,000(c) 26,732,720
-----------
Total 571,393,256
Total common stocks of unaffiliated issuers
(Cost: $2,209,430,561) $2,836,508,737
AirTouch Communications
4% 525,000 $12,140,625
Altera
8% 347,826(e) 15,086,953
Circuit City Stores
5.50% 535,715(e) 17,223,237
Citicorp
5.50% 250,000 24,718,750
ConAgra
4.50% Cv 350,000 17,762,500
Crown Cork & Seal
4.50% Cv 225,000 11,081,250
Duracell
3% 195,000 11,456,250
Finova Finance Trust
5.50% Cv 200,000 10,450,000
Hilton Hotels
8% 400,000(j) 9,350,000
Host Marriott Financial Trust
6.75% Cv 300,000(e) 16,875,000
Ikon Office Solutions
6.50% Cv 315,850 25,544,369
McKesson
4.50% Cv 200,000(f) 10,650,000
Medtronic
$2.76 Cv 275,000 17,231,500
Merck
4.50% Cv 225,000 17,690,625
Merrill Lynch
6.25% Cv 515,000 19,441,250
Natl Australia Bank
7.875% 270,000 6,750,000
Station Casinos
7% Cv 110,000 4,743,750
SunAmerica
$3.188 Cv 500,000 19,750,000
Telemex
7.75% Cv 665,000 $ 26,101,250
UNUM
$2.34 Cv 650,000 46,068,750
Total preferred stocks & other
(Cost: $315,459,252) $340,116,059
Bonds (3.9%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
Domestic (2.8%)
Adaptec
Cv 4.75% 2004 $15,000,000(e) $14,756,250
Salomon-Applied Materials ELK
Cv 8.50 1998 24,645,969(f) 24,212,725
Salomon-Emerson Electric ELK
Cv 5.50 1999 30,084,390(f) 28,509,324
Federated Dept Stores 5.00 2003 5,000,000 5,800,000
Scandinavian Broadcasting
Cv Sub Deb 7.25 2005 15,000,000 13,687,500
Softkey Intl
Cv 5.50 2000 15,000,000(e) 11,550,000
-----------
Total 98,515,799
Foreign (1.1%) (d)
BAA Plc 5.75 2006 6,000,000 10,309,215
(British Pound)
Baan 4.50 2001 11,500,000(e) 13,397,500
(U.S. Dollar)
Dresdner 2.25 2001 15,000,000(i) 10,633,993
(Canadian Dollar)
William Resources 9.66 2002 4,500,000 3,142,808
(U.S. Dollar)
-----------
Total 37,483,516
Total bonds
(Cost: $136,635,502) $135,999,315
Certificate of deposit (0.1%)
Morgan Guaranty Trust
04-28-97 5.40% $ 4,600,000 $ 4,579,271
Commercial paper (7.1%)
American General Finance
04-24-97 5.36 12,400,000 12,357,854
Ameritech Capital Funding
04-14-97 5.34 5,400,000(g) 5,388,894
04-17-97 5.33 5,000,000(g) 4,988,222
Associates Corp North America
05-07-97 5.53 13,700,000 13,624,650
Barclays U.S. Funding
04-16-97 5.31 3,600,000 3,595,230
BellSouth Telecommunications
04-10-97 5.33 3,600,000 3,590,855
BHP Finance
04-03-97 5.27 7,000,000 6,997,958
CAFCO
04-21-97 5.37 3,800,000(g) 3,787,718
Cargill
05-08-97 5.36 3,600,000 3,577,586
Ciesco LP
04-15-97 5.34 4,600,000 4,590,501
Commercial Credit
04-22-97 5.34 7,600,000 7,576,459
04-24-97 5.35 7,600,000 7,574,217
Commerzbank U.S. Finance
05-20-97 5.48 30,100,000 29,971,560
Consolidated Natural Gas
04-30-97 5.29 1,820,000 1,811,057
Dean Witter, Discover & Co
04-15-97 5.38 600,000 598,427
05-06-97 5.36 8,200,000 8,157,588
Fleet Funding
04-07-97 5.29 7,000,000(g) 6,993,863
04-09-97 5.33 2,092,000(g) 2,089,536
04-10-97 5.29 10,000,000(g) 9,986,850
04-22-97 5.31 7,000,000(g) 6,978,481
Gateway Fuel
04-08-97 5.31 1,700,000 1,698,258
Household Finance
04-23-97 5.33 5,100,000 5,083,482
Kredietbank North America Finance
04-18-97 5.30 300,000 299,255
04-18-97 5.30 3,300,000 3,291,803
Metlife Funding
05-01-97 5.35 5,900,000 5,873,893
05-02-97 5.34 7,800,000 7,764,402
05-05-97 5.34 5,700,000 5,671,468
Mobil Australia Finance (Delaware)
04-30-97 5.35 6,500,000(g) 6,472,196
Morgan Stanley Group
05-20-97 5.34 2,500,000 2,480,281
Natl Australia Funding (Delaware)
04-28-97 5.49 17,500,000 17,428,337
Novartis Finance
04-04-97 5.32 4,400,000 4,398,057
04-21-97 5.34 4,800,000(g) 4,785,840
Pfizer
04-21-97 5.32 8,200,000(g) 8,175,901
Reed Elsevier
04-21-97 5.39 8,600,000(g) 8,572,388
St. Paul Companies
04-11-97 5.28 4,300,000(g) 4,293,729
Siemens
04-25-97 5.30 11,000,000 10,961,427
Southern California Gas
04-07-97 5.32 1,988,000(g) 1,986,244
Unilever Capital
04-07-97 5.34 3,000,000(g) 2,996,889
-----------
Total 246,471,356
Letter of credit (0.1%)
Bank of America --
Formosa Plastics
05-09-97 5.39 1,900,000 1,888,166
Total short-term securities
(Cost: $252,878,510) $ 252,938,793
Total investments in securities of unaffiliated issuers
(Cost: $2,914,403,825) $3,565,562,904
Investments in securities of affiliated issuers (h)
Common stocks (1.3%)
Issuer Shares Value (a)
Meridian Gold 3,800,000 $ 9,608,072
Mutual Risk Management 1,000,000 36,250,000
Total investments in securities of affiliated issuers
(Cost: $33,897,526) $ 45,858,072
Total investment in securities
(Cost: $2,948,301,351)(k) $3,611,420,976
</TABLE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Security is partially or fully on loan. See Note 4 to the financial
statements.
(d) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(e) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(f) ELKS are equity-linked securities that are structured as an interest-bearing
debt security of a brokerage firm and linked to the common stock of another
company. The terms of ELKS differ from those of ordinary debt securities in that
the principal amount received at maturity is not fixed but is based on the price
of the common stock the ELK is linked to. The principal amount disclosed equals
the current estimated future value of the amount to be received upon maturity.
(g) 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 the guidelines established
by the board.
(h) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliated during the
period ended March 31, 1997 are as follows:
Beginning Purchase Sales Ending Dividend
Issuer cost cost cost cost income
Meridian Gold $ 6,941,711 $ 275,758 $ -- $ 7,217,469 $ --
Mutual Risk
Management* 9,937,262 16,742,795 -- 26,680,057 138,000
--------- ---------- ---------- -------
Total $16,878,973 $17,018,553 $ -- $33,897,526 $138,000
* Issuer was not an affiliate for the entire fiscal period.
(i)Identifies issues considered to be illiquid (see Note 1 to the financial
statements). Information concerning such security holdings at March 31, 1997 is
as follows:
Security Acquisition date Cost
Dresdner* 09-05-96 thru 09-11-96 $10,110,635
* Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended.
(j) PRIDES -- Preferred Redeemed Increased Dividend Equity Securities are
structured as convertible preferred securities issued by a company. Investors
receive an enchanced yield but based upon a specific formula, potential
appreciation is limited. PRIDES pay dividends, have voting rights, are
non-callable for three years and upon maturity, convert into shares of common
stock.
(k) At March 31, 1997, the cost of securities for federal income tax purposes
was approximately $2,948,301,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $731,944,000
Unrealized depreciation (68,824,000)
Net unrealized appreciation $663,120,000
See accompanying notes to investments in securities.
American Express Service Corporation, Distributor
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