-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ESDUwU3ol4i4CfFsRnmy9fIS2XJRuro5jRXBkNCtPs2jVXCdeurbp/53a9ht4osg xCae0HXMvEQL2jlXrNoDCA== 0000820027-02-000391.txt : 20020507 0000820027-02-000391.hdr.sgml : 20020507 ACCESSION NUMBER: 0000820027-02-000391 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020228 FILED AS OF DATE: 20020507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP VARIABLE PORTFOLIO INCOME SERIES INC CENTRAL INDEX KEY: 0000353967 IRS NUMBER: 511409529 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03219 FILM NUMBER: 02637032 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126718626 FORMER COMPANY: FORMER CONFORMED NAME: IDS LIFE SPECIAL INCOME FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: IDS LIFE SPECIAL INCOME FUND II INC DATE OF NAME CHANGE: 19851104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP VARIABLE PORTFOLIO PARTNERS SERIES INC CENTRAL INDEX KEY: 0001140533 IRS NUMBER: 412009111 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-10383 FILM NUMBER: 02637033 BUSINESS ADDRESS: STREET 1: 200 AXP FINANCIAL CENTER CITY: MINNEAPOLIS STATE: MN ZIP: 55474 BUSINESS PHONE: 6123309283 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP VARIABLE PORTFOLIO MONEY MARKET SERIES INC CENTRAL INDEX KEY: 0000353315 IRS NUMBER: 111409530 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03190 FILM NUMBER: 02637034 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126718626 FORMER COMPANY: FORMER CONFORMED NAME: IDS LIFE MONEYSHARE FUND INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP VARIABLE PORTFOLIO MANAGED FUND INC CENTRAL INDEX KEY: 0000764546 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04252 FILM NUMBER: 02637035 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH ST STREET 2: T33/52 CITY: MINNEAPOLAS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126718626 FORMER COMPANY: FORMER CONFORMED NAME: IDS LIFE MANAGED FUND INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP VARIABLE PORTFOLIO INVESTMENT SERIES INC CENTRAL INDEX KEY: 0000353968 IRS NUMBER: 411409539 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03218 FILM NUMBER: 02637036 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: IDS TOWER 10 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126718626 MAIL ADDRESS: STREET 1: IDS FINANCIAL SERVICES INC STREET 2: IDS TOWER 10 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 FORMER COMPANY: FORMER CONFORMED NAME: IDS LIFE INVESTMENT SERIES INC DATE OF NAME CHANGE: 19981102 FORMER COMPANY: FORMER CONFORMED NAME: IDS LIFE CAPITAL RESOURCE FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: IDS LIFE CAPITAL RESOURCE FUND II INC DATE OF NAME CHANGE: 19851104 N-30D 1 s6462u.txt AXP VARIABLE PORTFOLIO FUNDS - SEMIANNUAL REPORT [AMERICAN EXPRESS(R) FUNDS LOGO] AMERICAN EXPRESS(R) VARIABLE PORTFOLIO FUNDS 2002 SEMIANNUAL REPORT REFERENCES TO "FUND" THROUGHOUT THIS SEMIANNUAL REPORT REFER TO THE FOLLOWING INDIVIDUAL FUNDS, SINGULARLY OR COLLECTIVELY AS THE CONTEXT REQUIRES: AXP(R) VARIABLE PORTFOLIO - BLUE CHIP ADVANTAGE FUND AXP(R) VARIABLE PORTFOLIO - BOND FUND AXP(R) VARIABLE PORTFOLIO - CAPITAL RESOURCE FUND AXP(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND AXP(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND AXP(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND AXP(R) VARIABLE PORTFOLIO - EQUITY SELECT FUND AXP(R) VARIABLE PORTFOLIO - EXTRA INCOME FUND AXP(R) VARIABLE PORTFOLIO - FEDERAL INCOME FUND AXP(R) VARIABLE PORTFOLIO - GLOBAL BOND FUND AXP(R) VARIABLE PORTFOLIO - GROWTH FUND AXP(R) VARIABLE PORTFOLIO - INTERNATIONAL FUND AXP(R) VARIABLE PORTFOLIO - MANAGED FUND AXP(R) VARIABLE PORTFOLIO - NEW DIMENSIONS FUND(R) AXP(R) VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND AXP(R) VARIABLE PORTFOLIO - S&P 500 INDEX FUND AXP(R) VARIABLE PORTFOLIO - SMALL CAP ADVANTAGE FUND AXP(R) VARIABLE PORTFOLIO - STOCK FUND AXP(R) VARIABLE PORTFOLIO - STRATEGY AGGRESSIVE FUND THIS SEMIANNUAL REPORT MAY CONTAIN INFORMATION ON FUNDS NOT AVAILABLE UNDER YOUR VARIABLE ANNUITY CONTRACT OR LIFE INSURANCE POLICY. PLEASE REFER TO YOUR VARIABLE ANNUITY CONTRACT OR LIFE INSURANCE POLICY PROSPECTUS FOR INFORMATION REGARDING THE INVESTMENT OPTIONS AVAILABLE TO YOU. MANAGED BY: IDS LIFE INSURANCE COMPANY [AMERICAN EXPRESS(R) LOGO] TABLE OF CONTENTS From the Chairman 3 AXP VARIABLE PORTFOLIO - BLUE CHIP ADVANTAGE FUND Portfolio Manager Q & A 4 The 10 Largest Holdings 5 AXP VARIABLE PORTFOLIO - BOND FUND Portfolio Manager Q & A 6 The 10 Largest Holdings 7 AXP VARIABLE PORTFOLIO - CAPITAL RESOURCE FUND Portfolio Manager Q & A 8 The 10 Largest Holdings 9 AXP VARIABLE PORTFOLIO - CASH MANAGEMENT FUND Portfolio Manager Q & A 10 AXP VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND Portfolio Manager Q & A 11 The 10 Largest Holdings 11 AXP VARIABLE PORTFOLIO - EMERGING MARKETS FUND Portfolio Manager Q & A 12 The 10 Largest Holdings 13 AXP VARIABLE PORTFOLIO - EQUITY SELECT FUND Portfolio Managers' Q & A 14 The 10 Largest Holdings 15 AXP VARIABLE PORTFOLIO - EXTRA INCOME FUND Portfolio Managers' Q & A 16 The 10 Largest Holdings 17 AXP VARIABLE PORTFOLIO - FEDERAL INCOME FUND Portfolio Manager Q & A 18 AXP VARIABLE PORTFOLIO - GLOBAL BOND FUND Portfolio Manager Q & A 19 The 10 Largest Holdings 19 AXP VARIABLE PORTFOLIO - GROWTH FUND Portfolio Managers' Q & A 20 Outlook for the Fund 20 The 10 Largest Holdings 21 AXP VARIABLE PORTFOLIO - INTERNATIONAL FUND Portfolio Managers' Q & A 22 The 10 Largest Holdings 23 AXP VARIABLE PORTFOLIO - MANAGED FUND Portfolio Managers' Q & A 24 The 10 Largest Holdings 25 AXP VARIABLE PORTFOLIO - NEW DIMENSIONS FUND(R) Portfolio Managers' Q & A 26 The 10 Largest Holdings 27 AXP VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND Portfolio Managers' Q & A 28 The 10 Largest Holdings 29 AXP VARIABLE PORTFOLIO - S&P 500 Index Fund Portfolio Managers' Q & A 30 The 10 Largest Holdings 31 AXP VARIABLE PORTFOLIO - SMALL CAP ADVANTAGE FUND Portfolio Managers' Q & A 32 The 10 Largest Holdings 33 AXP VARIABLE PORTFOLIO - STOCK FUND Portfolio Manager Q & A 34 The 10 Largest Holdings 35 AXP VARIABLE PORTFOLIO - STRATEGY AGGRESSIVE FUND Portfolio Manager Q & A 36 The 10 Largest Holdings 37 ALL FUNDS Financial Statements 38 Notes to Financial Statements 57 Investments in Securities 78 2 [PHOTO OF ARNE H. CARLSON] ARNE H. CARLSON CHAIRMAN OF THE BOARD FROM THE CHAIRMAN For most of us investors, the past several months proved to be an extremely trying time. More recently, the events of this past September and the prospect of what may follow have added to our collective concern. While nothing can change what has happened, we can control how we respond. In broad terms, I would strongly advise that you keep a focus on your long-term financial goals and not let specific events dictate your investment decisions. Ultimately, it is where you finish, not where you are at the moment, that matters most. Your financial advisor plays an essential role in this process, so please let him or her help you by reviewing your situation and plotting the proper investment course. As I have indicated in the past, the role our Board plays in your financial future is to monitor and confirm that each American Express mutual fund meets its investment objective and that its management style stays on target. We want each fund to be able to deliver to you, the shareholder, the type of performance you expect and the best results that can be obtained. Toward that end, American Express has made significant changes in its investment management capability, and will continue to make changes as it strives to provide a consistent standard of excellence. On behalf of the Board, /s/ Arne H. Carlson Arne H. Carlson 3 [PHOTO OF JAMES M. JOHNSON, JR.] JAMES M. JOHNSON, JR., CFA PORTFOLIO MANAGER PORTFOLIO MANAGER Q & A AXP VP - BLUE CHIP ADVANTAGE FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: After struggling through an extended bear market, the stock market appeared to begin turning a corner over the past six months. The Fund registered a return of -2.43% for the period. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Standard & Poor's 500 Index (S&P 500 Index) and the Lipper Large-Cap Core Funds Index returned -1.69% and -1.36%, respectively, for the same period. Q: WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS? A: The period began on a momentous note, as the terrorist attacks of September 11th sent shockwaves around the world. Initially, equity markets reacted very negatively to the event, but the situation quickly changed. By late September, stock markets began moving up, although the environment remained quite volatile. That positive movement continued through the end of 2001, but in January and February of 2002, there was more uncertainty in the market. Some of the gains were given back as the period came to a close. The portfolio owns a representative group of holdings from the S&P 500 Index that are considered to be stocks with the best return potential. The portfolio benefited most from its stock selection in the financial, telecommunications services, health care services and semiconductor sectors. Among the best-performing stocks were a number of firms that benefited from an expected economic recovery, including Harley-Davidson, Circuit City Stores and Best Buy. However, the portfolio's performance relative to the S&P 500 Index was negatively affected by weak returns among computer hardware, computer services, telecommunications equipment, utilities and energy stocks. Q: HAVE YOU IMPLEMENTED ANY CHANGES TO THE PORTFOLIO IN AN EFFORT TO IMPROVE PERFORMANCE? A: Yes, we re-structured the portfolio's approach during the period. While our basic goal of tracking closely to the performance of the S&P 500 Index but outperforming it by 1% to 2% per year is unchanged, the way we seek to accomplish that goal is different. Beginning in November, we changed the management style from one driven by fundamental analysis of individual stocks to a more quantitative approach. Our new style, which we believe will work to the benefit of shareholders, focuses on a number of quantitative factors to determine stock selection. They include various assessments of a stock's valuation, earnings growth characteristics for each company and factors such as a healthy balance sheet. We also assess how external factors, such as the economic environment, will affect prospects for stocks, and make our judgments accordingly. Q: DOES THIS APPROACH FAVOR GROWTH OR VALUE STOCKS, AND HOW ELSE DOES IT AFFECT THE FUND? A: From a style perspective, our approach is neutral. In other words, the portfolio includes both growth and value stocks. However, the portfolio is more broadly diversified than it was prior to the change. The Fund now owns close to 200 stocks, whereas before it included about 120 stocks. We haven't changed our objective of tracking closely with the performance of the market as a whole, while outperforming it through superior stock selection. In fact, since our new approach was fully implemented in November, we've seen the Fund perform better than the S&P 500 Index in that brief time. Q: WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS? A: For starters, I expect volatility to remain an issue in the market. On the positive side, we continue to look for signs of an economic turnaround. The market clearly priced in some expectation of that with its rally at the end of 2001. What isn't clear is how fast, how strong and how sustainable a recovery will be. While the economy is likely to be the biggest issue affecting stocks in the near term, other variables will come into play as well. Fallout surrounding the Enron situation and further concerns about terrorist attacks may continue to play a role in how the market performs. The portfolio is positioned somewhat conservatively, which should be beneficial in an environment of continued uncertainty. Since our management approach is not highly dependent on the current economic scenario to drive performance, but on individual stock selection, we anticipate that the portfolio can perform well in the months ahead, and are confident that our new management approach will help us achieve our investment objectives. /s/ James M. Johnson, Jr. James M. Johnson, Jr., CFA 4 THE 10 LARGEST HOLDINGS AXP VP - BLUE CHIP ADVANTAGE FUND
PERCENT VALUE (OF NET ASSETS) (AS OF FEB. 28, 2002) General Electric 3.8% $3,090,395 Microsoft 3.0 2,467,782 Wal-Mart Stores 2.7 2,219,958 Exxon Mobil 2.7 2,217,727 Pfizer 2.5 2,019,942 Citigroup 2.2 1,828,688 Johnson & Johnson 1.8 1,479,870 Intel 1.8 1,467,869 Intl Business Machines 1.7 1,403,116 American Intl Group 1.7 1,397,071
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 23.9% OF NET ASSETS 5 [PHOTO OF RAY GOODNER] RAY GOODNER, CFA PORTFOLIO MANAGER PORTFOLIO MANAGER Q & A AXP VP - BOND FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: In an environment where significant events and a changing economy affected interest rate trends, the portfolio managed a positive gain. For the six months, the portfolio returned 2.05%. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Lehman Brothers Aggregate Bond Index and the Lipper Corporate Debt - - BBB rated Funds Index, returned 3.02% and 1.01%, respectively, for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: Early in the period, the shocking events of September 11th threw financial markets into turmoil. The immediate effect was that the U.S. economy, which appeared to be poised for a recovery, suffered a significant blow. This had a negative impact on the portfolio in the immediate aftermath. Prior to the terrorist attacks, I had positioned the portfolio to benefit from an upturn in the U.S. economy. That meant a greater emphasis on corporate bonds, including high-yield securities issued by companies with credit concerns. Typically, these bonds respond well to positive economic trends. When the economy was dealt this setback, corporate issues suffered as well. Fortunately, the Federal Reserve continued to reduce short-term interest rates, as it had been all year, and that helped restore confidence in the economy. High-yield bonds began to perform particularly well at the end of 2001, boosting the Fund's return. Those holdings struggled again in the closing months of the semiannual period, due in part to fallout from the problems surrounding Enron. However, the market stabilized again toward the end of February. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: Throughout the six-month span, I maintained a rather conservative stance in the portfolio's duration (a measure of the Fund's sensitivity to interest rate changes). In the weeks following the September 11th attacks, I reduced our positions in issues sensitive to those events such as bonds from companies in the travel and leisure industry. A greater emphasis was placed on bonds of consumer staple companies, and that provided some stability to the portfolio. As the economic environment began to improve, I put more money to work in bonds issued by companies with a weaker credit standing. These bonds were attractively priced and offered very competitive yields. I expect them to generate solid returns for the portfolio. Late in the period, portfolio additions included bonds from companies in consumer cyclical industries like autos and retail stores, which should benefit as the economy improves. Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: From all appearances, the U.S. economy seems to be getting back on track after a very sluggish 2001. If that proves to be the case, it presents both positives and negatives for the portfolio. On the positive side, better economic conditions should improve the fortunes of corporate bond issuers, who rely on solid cash flows to make timely interest and principal payments. I expect these bonds, a significant part of the portfolio, to perform well in the months ahead. The downside of an improved economy is that interest rates are likely to trend a bit higher in the months to come. I am maintaining a cautious position in the portfolio in light of that concern. However, it is important to point out that up to now, inflation has not proven to be a major concern for the economy. If that continues to be the case, it is likely that any increase in interest rates (which results in lower bond values) will be only modest. Therefore, I anticipate that the portfolio will be in a position to continue to offer solid returns throughout the rest of its fiscal year. /s/ Ray Goodner Ray Goodner, CFA 6 THE 10 LARGEST HOLDINGS AXP VP - BOND FUND
PERCENT VALUE (OF NET ASSETS) (AS OF FEB. 28, 2002) AT&T Wireless Services 7.88% 2011 1.0% $17,257,460 Union Pacific 6.65% 2011 1.0 16,952,762 GMAC 6.88% 2011 1.0 16,894,259 WorldCom 7.50% 2011 0.9 16,379,602 Dominion Virginia Power 5.75% 2006 0.9 15,304,185 BellSouth Capital Funding 7.88% 2030 0.8 14,003,412 Citizens Communications 9.25% 2011 0.8 13,613,875 Bowater Canada Finance 7.95% 2011 0.8 13,357,499 Enterprise Rent-A-Car USA Enterprise 8.00% 2011 0.7 12,789,240 Goldman Sachs Group 6.88% 2011 0.7 12,463,872
Excludes U.S. Treasury and government agency holdings. For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 8.6% OF NET ASSETS 7 [PHOTO OF JOE BARSKY] JOE BARSKY PORTFOLIO MANAGER PORTFOLIO MANAGER Q & A AXP VP - CAPITAL RESOURCE FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: The period proved to be a mixed bag for equity markets. During this time, the portfolio generated a return of -1.14%. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Standard & Poor's 500 Index returned -1.69% for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: Markets were already coming off more than a year of difficult times, and the U.S. economy was in the midst of a mild recession when the terrorist attacks of September 11th occurred. That took a toll on the markets in the immediate aftermath. Prior to the tragedy, the portfolio was starting to add more stocks of companies that would benefit from an economic rebound. Prospects for a recovery suffered a setback after the attacks. Some holdings in sectors directly affected, notably in the travel and leisure industry, were particularly hard hit. However, the significant selloff that took place in the week following September 11th created a solid buying opportunity, and efforts were made to take advantage of notable values in quality stocks that were very attractively priced. In the closing months of 2001, the equity markets performed particularly well, but some of those gains were given back in January and February as the six-month period came to an end. An encouraging note was that many of the portfolio's economically-sensitive stocks (those that should perform better as the economy improves) gained ground. Investors clearly became more optimistic that the economic recovery was firmly in place. Q: WHAT CHANGES WERE MADE TO THE PORTFOLIO DURING THE PERIOD? A: Among stocks added in the immediate aftermath of September 11th were FedEx and Starwood Hotels & Resorts Worldwide, which enjoyed strong comebacks over the remaining months of the period. Greater emphasis was also put on a number of industrial stocks such as Caterpillar, Illinois Tool Works and Dow Chemical. Many stocks in this sector saw their fortunes improve in line with economic expectations. Another area of increased interest was the insurance sector. While financial stocks as a whole struggled through much of the period, many insurance firms saw better results. These companies are well positioned to boost their premiums in light of an increasingly risky environment, and that should improve the earnings outlook for many of these firms. Technology stocks were a mixed bag and we held a neutral position in the portfolio, again with more focus on companies that can benefit from a cyclical upturn in the economy. Q: WHAT IS THE OUTLOOK FOR THE COMING MONTHS? A: There are mostly positive signs that the U.S. economy is moving beyond the slowdown that created such problems for the markets in 2000 and 2001. A stronger economy should eventually translate into better earnings for a number of companies. That creates a constructive environment for stocks, though volatility is likely to continue to be an issue in the market. Among other reasons, this can be traced to what continue to be rather high valuations among many stocks. As always, the portfolio will be focused on stocks of companies that offer solid, long-term growth potential. /s/ Joe Barsky Joe Barsky NOTE TO SHAREHOLDERS: IN APRIL 2002, DOUG CHASE SUCCEEDED JOE BARSKY AS THE PORTFOLIO MANAGER OF AXP VP - CAPITAL RESOURCE FUND. 8 THE 10 LARGEST HOLDINGS AXP VP - CAPITAL RESOURCE FUND
PERCENT VALUE (OF NET ASSETS) (AS OF FEB. 28, 2002) General Electric 3.4% $92,400,000 Exxon Mobil 3.3 90,860,000 Microsoft 3.2 87,510,000 Johnson & Johnson 2.9 79,170,000 Citigroup 2.8 76,925,000 American Intl Group 2.7 73,970,000 Pfizer 2.7 73,728,000 Wal-Mart Stores 2.5 68,211,000 Minnesota Mining & Mfg 2.1 58,965,000 American Home Products 2.1 57,195,000
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 27.7% OF NET ASSETS 9 [PHOTO OF MARY MCQUILLEN] MARY MCQUILLEN PORTFOLIO MANAGER PORTFOLIO MANAGER Q & A AXP VP - CASH MANAGEMENT FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: The portfolio's yield fell during the six-month period, reflecting a substantial decline in short-term interest rates. For the period, the Fund returned 1.01% and its seven-day yield was 1.37%. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies. The yield more closely reflects the current earnings of the money market portfolio than does total return.) Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING THE SIX MONTHS? A: The biggest impact on the Fund comes directly from the Federal Reserve (the Fed), which controls the market for short-term interest rates. During the period, the Fed continually reduced interest rates in an effort to jump-start the U.S. economy, which found itself in the throes of a mild recession. (Lower interest rates are designed to stimulate economic growth.) For example, the yield on three-month U.S. Treasury Bills declined from a level of 3.35% at the beginning of September to 1.85% at the end of the six-month period on February 28, 2002. Rates actually bottomed out a bit lower than that early in 2002, but moved slightly higher in February as the Fed gave indications that it no longer needed to reduce short-term interest rates. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: Given the expectation that interest rates were heading lower, we lengthened the portfolio's average maturity during the period. Longer-term securities offered a higher interest rate and an ability to lock in those rates. That was more attractive than having to continually reinvest in shorter-term securities in a market where yields were declining. With the Fed cutting interest rates through December, this strategy remained in place throughout the period. After the Fed seemed to signal it was done cutting short-term rates in January 2002, we stopped lengthening the portfolio's average maturity by the end of the period. It is also important to point out that we strived to maintain a very high level of quality in the portfolio. In fact, as the economy weakened, we eliminated some holdings issued by corporate borrowers who had seen their credit rating lowered due to difficult financial circumstances. Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: While there are signs that an economic recovery may be underway, I expect it to be a rather slow-moving rebound. Therefore, I don't look for a significant change in the interest rate environment in the near term. Farther out, if the Federal Reserve reverses its course of 2001 and begins raising short-term rates, I anticipate reducing the portfolio's average maturity. The degree of that reduction depends on market conditions, but if the trend of interest rates is up, owning holdings for a shorter-term and reinvesting in securities more often at higher rates of interest will benefit shareholders. As always, I will focus on following a prudent investment approach in order to maintain the portfolio's stable value while continuing to provide a competitive yield. /s/ Mary McQuillen Mary McQuillen NOTE TO SHAREHOLDERS: IN JANUARY 2002, MARY MCQUILLEN SUCCEEDED TERRY SEIERSTAD AS PORTFOLIO MANAGER OF AXP VP - CASH MANAGEMENT FUND. 10 PORTFOLIO MANAGER Q & A AXP VP - DIVERSIFIED EQUITY INCOME FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: Equity markets sustained significant volatility over the past six-month period. The Fund registered a return of -1.54%, although value stocks, the focus of the portfolio, rallied in the closing months of the period. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Russell 1000(R) Value Index and the Lipper Equity Income Funds Index returned -0.79% and -0.69%, respectively, for the same period. The unmanaged Standard & Poor's 500 Index posted a return of - -1.69% for the six months. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: This was a period of dramatic events that had a significant impact on the investment markets. The first and most notable were, of course, the terrorist attacks of September 11th. In the immediate aftermath of the attacks, stock markets declined dramatically. However, they quickly recovered and, in the final months of 2001, stocks performed well. Value stocks, the focus of this portfolio, slightly underperformed more growth-oriented segments of the market. However, in January and February the environment changed again, as increasing concerns tied to the Enron scandal took a toll on stocks. In this environment, our value-oriented portfolio held up better, including achieving a positive return in February when most of the rest of the stock market was in decline. Throughout the period, small-cap stocks tended to perform better than larger-cap issues. Within the Fund, consumer staple stocks such as Knight-Ridder, Albertson's and Supervalu were among the best performers. By contrast, stocks of basic materials and utilities companies struggled over the six-month span. In general, this environment was one where individual stocks that performed well tended to do so without regard to industry or market trends, driven instead by individual company factors. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: The major selloff in stocks in the week following the terrorist attacks created attractive buying opportunities, particularly among strong competitors in some of the hardest-hit industries. I put money to work in AMR (airlines) and Royal Caribbean Cruises (cruise lines), and added to our position in General Motors (autos). These consumer-sensitive stocks responded positively when it became apparent that consumer spending would accelerate after a pause in September. The increased focus on consumer stocks was also tied to expectations that the U.S. economy was on the verge of moving out of the recession that had started earlier in 2001. I maintained a solid position in industrial stocks that continued to offer attractive value and solid return potential. Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: It is clear that the U.S. economy is now enjoying positive growth once again after a mild recession in the middle of last year. However, it isn't obvious just how strong the recovery will be, and how quickly that will improve the outlook for corporate profits. The market's strong rally in late 2001 certainly priced in an expectation that corporate earnings would quickly get back on track, but it seems that we may have to wait longer to see a significant improvement. I continue to believe that many "old-line" companies that are included in the portfolio, such as Caterpillar and Ingersoll-Rand, will be better positioned to benefit from the environment than so-called new economy stocks, primarily in the technology sector. While the short-term environment is likely to remain quite volatile, I believe the portfolio's positioning in quality value stocks will prove beneficial over time. /s/ Warren E. Spitz Warren E. Spitz THE 10 LARGEST HOLDINGS AXP VP - DIVERSIFIED EQUITY INCOME FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- Lehman Brothers Holdings 2.9% $5,888,600 Ingersoll-Rand Cl A 2.7 5,569,499 SUPERVALU 2.3 4,570,702 Conoco 2.1 4,320,464 ChevronTexaco 2.0 4,057,680 XL Capital Cl A 1.9% $3,894,801 Burlington Northern Santa Fe 1.9 3,866,044 Morgan Stanley, Dean Witter & Co 1.8 3,594,012 CIGNA 1.7 3,511,846 Loews 1.7 3,473,901
[CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 21.0% OF NET ASSETS For further detail about these holdings, please refer to the section entitled "Investments in Securities." 11 [PHOTO OF JULIAN THOMPSON] JULIAN THOMPSON PORTFOLIO MANAGER PORTFOLIO MANAGER Q & A AXP VP - EMERGING MARKETS FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: In a period where most equity markets struggled, emerging markets enjoyed solid performance. For the six months, the portfolio generated a return of 17.67%. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Morgan Stanley Capital International (MSCI) Emerging Markets Free Index and the Lipper Emerging Markets Funds Index returned 12.45% and 12.11%, respectively, for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: The period began with a sharp selloff of stocks in the wake of the terrorist attacks in the United States on September 11. But the situation changed abruptly beginning in the last week of September. Investors began to anticipate that the U.S. and other economies would not be as hard hit as first thought. We saw Asian markets rally strongly as a result. Taiwan and Korea were among the strongest performing markets over the period. Korea experienced both a pickup in export activity and an improvement in its domestic economy. Smaller Asian markets also rallied significantly in anticipation of a recovery in global economic growth. Another geographic area of strength was Eastern Europe, notably Hungary, Poland and the Czech Republic. In Latin America, Mexico was a solid performer, though not able to keep pace with some of the market's leaders. Markets in nations that have faced financial challenges, including South Africa and Argentina, struggled during the six-month period. Argentina's financial crisis has been well publicized, and the portfolio avoided investments in that market during the period. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: The Fund's strong performance began early in the period when we had taken a defensive posture, including holding a large percentage of the portfolio in cash. Once the market overcame the strong selloff of mid-September, we were able to put significant assets to work. I boosted our position in Asian markets. These export-driven markets are particularly sensitive to global economic trends, and should benefit from an economic recovery that is anticipated to strengthen in 2002. At the same time, I reduced our exposure to those economies where long-term growth rates were threatened by poor capital flows and a deteriorating political environment. That included trimming our exposure to South Africa in half. Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: The outlook for emerging markets remains very positive. This asset class has been overshadowed in the last six years by a strong U.S. corporate environment. Fears over the reliability of accounting and credit quality in the developed world has brought a reappraisal of equity risk in the United States and other developed nations, with favorable results. The discount in prices of emerging market stocks in comparison to developed markets is beginning to narrow and we expect it to narrow further as capital begins to seek the higher returns which we believe only up-and-coming economies can provide at this point. With more money flowing into the market, emerging economies should experience positive growth, providing further support for our optimistic view. /s/ Julian Thompson Julian Thompson 12 THE 10 LARGEST HOLDINGS AXP VP - EMERGING MARKETS FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- Kookmin Bank New (Korea) 4.0% $300,718 Telefonos de Mexico ADR Cl L (Mexico) 3.7 275,918 Samsung Electronics (Korea) 3.4 253,902 Petroleo Brasileiro (Brazil) 3.0 222,487 Anglo American Place (United Kingdom) 2.8 209,448 YUKOS ADR (Russia) 2.7 204,900 Taiwan Semiconductor Mfg ADR (Taiwan) 2.7 202,053 Grupo Financiero BBVA Bancomer Cl O (Mexico) 2.4 175,594 SK Telecom (Korea) 2.1 153,184 America Movil ADR Cl L (Mexico) 2.0 152,891
Note: Certain foreign investment risks include: changes in currency exchange rates, adverse political or economic order, and lack of similar regulatory requirements followed by U.S. companies. For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 28.8% OF NET ASSETS 13 [PHOTO OF DUNCAN J. EVERED] DUNCAN J. EVERED PORTFOLIO MANAGER [PHOTO OF PAUL A. ROKOSZ] PAUL A. ROKOSZ PORTFOLIO MANAGER PORTFOLIO MANAGERS' Q & A AXP VP - EQUITY SELECT FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: In a volatile period for equity markets, the portfolio generated a positive return of 2.51%. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Russell Mid-Cap(R) Growth Index, the Lipper Mid-Cap Growth Funds Index and the Lipper Multi-Cap Growth Funds Index returned -3.20%, -6.78% and -7.42%, respectively, for the same period. The unmanaged Standard & Poor's MidCap 400 Index posted a return of 2.89% for the six months. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: The period started with weak economic activity and struggling equity markets. Of course, the events of September 11th had a dramatic impact on financial markets. In the immediate aftermath, stocks declined dramatically, but they ended 2001 on a strong note. This was due in part to gradual signs that the economy was finding its bearings and that the recession would be short-lived. Stocks rebounded sharply through December, but in January and February, they pulled back again. This appeared due in part to concerns stemming from the Enron scandal that left investors questioning accounting practices and earnings calculations. At the same time, some positive signs occurred among bellwether technology stocks, including Novellus Systems (one of our portfolio's holdings), that indicated better days could be ahead for stocks listed on the Nasdaq Index, which has struggled recently. Within the portfolio, a number of our largest consumer holdings, including Whole Foods Market, Williams-Sonoma and 99 Cents Only Stores performed particularly well. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: Since the bulk of our focus is on finding companies with good long-term return prospects, we made few significant changes to the Fund over the past six months. It is important to note that through various short-term swings, the portfolio maintains a disciplined approach to identifying and investing in attractive stocks of mid-sized, growth-oriented companies. In particular, our focus is on companies with a strong franchise within their industry, run by solid management teams with the ability to generate consistent performance. Most of these firms boast strong financial characteristics, including reliable cash flow and low debt. In the current market environment, it appears these factors may be more important than ever before. We believe in owning a broad array of mid-cap growth stocks. The portfolio is split about evenly between stocks that fall into one of four categories, namely technology, health care, consumer and miscellaneous. Throughout the period, we maintained a virtually fully-invested portfolio (that means we held very little cash). The nature of our management style is to have limited portfolio turnover and take a longer-term view of the investments that we make. Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: We anticipate that the market will continue to show significant volatility in the coming months, similar to what we've experienced for some time. While equity markets have struggled since early 2000, signs of an improved economy should create a more positive environment in the months ahead. That should eventually result in improved corporate profits, which bodes well for stocks. What's more, small- and mid-cap stocks typically perform quite well in comparison to larger-cap issues in the early stages of an economic recovery. If that happens again, the portfolio could be well-positioned to benefit from economic and market trends. Most important, we will maintain our disciplined investment approach, closely monitoring the stocks that are already part of the Fund while seeking new investment opportunities in the universe of domestic mid-cap growth stocks. /s/ Duncan J. Evered Duncan J. Evered /s/ Paul A. Rokosz Paul A. Rokosz 14 THE 10 LARGEST HOLDINGS AXP VP - EQUITY SELECT FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- Whole Foods Market 5.0% $1,806,892 Fiserv 3.8 1,371,228 Williams-Sonoma 3.6 1,311,204 SunGard Data Systems 3.2 1,157,626 Sigma-Aldrich 3.1 1,120,876 Biomet 2.9 1,047,445 Cheesecake Factory (The) 2.7 987,416 Maxim Integrated Products 2.7 978,806 Fastenal 2.7 960,035 Brinker Intl 2.7 956,369
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 32.4% OF NET ASSETS 15 [PHOTO OF SCOTT SCHROEPFER] SCOTT SCHROEPFER PORTFOLIO MANAGER PORTFOLIO MANAGERS' Q & A AXP VP - EXTRA INCOME FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: Challenging events during the six months had a major impact on the market for high-yield bonds. Over the semiannual reporting period, the portfolio registered a -2.17% return. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Merrill Lynch High Yield Bond Index and the Lipper High Yield Funds Index returned 1.63% and -3.68%, respectively, for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: The period proved to be a difficult one for the corporate bond market, particularly among low-grade bonds, the focus of this portfolio. It started with the tragic attacks of September 11th, which sent shockwaves through the world, including the financial markets. Investors quickly lost their appetite for risk, and high-yield bonds suffered as a result. The environment slowly improved toward the end of 2001, but the difficulties surrounding Enron proved to be another setback for the market. Investors became increasingly concerned that leveraged companies would have a difficult time meeting their financial obligations. This took a particular toll on our holdings among utilities, wireless and telecommunications companies. As the six-month period came to a close, the high-yield market again moved in a negative direction. It appeared during the period as if default rates, a common concern when investing in issues from companies with lower credit quality, reached their peak for the current cycle. On the positive side, high-yield bonds appeared quite attractively valued by the end of February, and more investors started showing an interest in putting money back into this part of the market. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: We have maintained a strong, ongoing position in sectors that held up well throughout the period, including cable television, health care and gaming issues. At the same time, we tried to put more money to work in bonds from issuers in more cyclical industries (sectors that should benefit from an improved economy) including steel, wood and paper products and energy companies. Some of these offered very attractive values, which should create solid upside potential if the economy continues to move in a more positive direction. By the end of the six-month period, we had positioned the portfolio in what we would consider to be a cautiously aggressive manner in an effort to take advantage of what may be ahead for the high-yield market. Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: Most signs appear to point toward an improving economy in 2002. That should be good news for issuers of low-grade bonds. Typically, a strong economy creates better cash flow so these companies are able to meet their debt obligations in a timely manner. If that proves to be the case, the rate of defaults among high-yield issuers should decline from last year's peaks. Along with a positive economic backdrop, there seems to be a healthy balance between the supply of bond issues and the demand (cash flow into the market). That should help give bond prices a lift. In addition, we feel that a more positive environment allows us to own a higher percentage of lower-rated bonds than we did last year. With the risk of default appearing to be lower, these bonds should help provide a yield advantage without significantly adding to the portfolio's risk. As always, our security selection process benefits from our experienced internal research staff that carefully reviews all bonds before they are added to the Fund. Given the current direction of the market, we anticipate that the coming months can provide positive opportunities for the portfolio. /s/ Scott Schroepher Scott Schroepfer /s/ Brian J. Lavin Brian J. Lavin 16 THE 10 LARGEST HOLDINGS AXP VP - EXTRA INCOME FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- Intermedia Communications 13.50% Pay-in-kind Series B Preferred 2.6% $15,773,206 CSC Holdings 11.13% Cm Series M Preferred 2.5 15,335,804 Mirant Americas Generation LLC 7.63% 2006 1.9 11,832,000 Allied Waste North America 10.00% 2009 1.5 9,274,512 Revlon Consumer Products 12.00% 2005 1.3 7,867,200 Nextel Communications 9.75% 2007 1.2 7,039,500 Adelphia Communications 13.00% Cm Series B Preferred 1.1 6,874,100 Quebecor Media 11.13% 2011 1.1 6,718,749 Adelphia Communications 10.25% 2006 1.1 6,489,000 Calpine Canada Energy Finance 8.50% 2008 1.0 6,177,728
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 15.3% OF NET ASSETS 17 [PHOTO OF SCOTT R. KIRBY] SCOTT R. KIRBY PORTFOLIO MANAGER PORTFOLIO MANAGER Q & A AXP VP - FEDERAL INCOME FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: After a slow start in which the bond market grappled with a very volatile environment, the portfolio made a solid recovery in the closing months of the period. As a result, the portfolio generated a return of 2.19% for the semiannual period. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Lehman Brothers Aggregate Bond Index, the unmanaged Merrill Lynch 1-3 Year U.S. Government Index, the unmanaged Merrill Lynch 1-5 Year U.S. Government Index and the Lipper Short U.S. Government Funds Index returned 3.02%, 3.12%, 3.09% and 2.72%, respectively, for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: The period started off in very challenging fashion for the investment markets. After coping with a sluggish economy throughout the summer, the tragic events of September 11th left an indelible mark. In the months that followed, the bond market continued to be rather volatile. Initially, investors sought higher-quality debt securities. That proved beneficial for our holdings of U.S. government-issued securities, but less so for the most prominent position in the portfolio, mortgage-backed securities. Mortgage bonds typically suffer in a volatile investment environment, and those circumstances existed for much of the rest of 2001. Late in the year as signs of an improving economy appeared, investors became nervous that interest rates might shoot higher. That also proved detrimental to the fortunes of our mortgage-backed holdings. However, the situation changed dramatically in January and February. The interest rate market began to stabilize, a more beneficial environment for mortgage bonds. In addition, concerns stemming from the accounting irregularities involving Enron and the fallout from that situation sent investors fleeing from corporate bonds. Mortgage-backed securities became even more attractive, once again giving our portfolio a boost. It should be noted that I employ a strategy of using short sales and investments in derivatives such as futures, options and forward contracts in an effort to reduce volatility in the portfolio. If underlying securities perform well, these investments will suffer losses. However, they provide an important hedge against the effects of a possible downturn in the market and help to provide overall stability to the portfolio. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: One of the challenges of the past six months has been trying to determine what direction interest rates are headed. That affects how we position the portfolio in terms of the maturity of our holdings. Typically, when rates move higher, it is advantageous to keep the portfolio's average duration lower. While there were reasons to expect higher rates, especially once the economy began to recover, no significant upward moves took place over this period. In fact, we more commonly witnessed rate declines (depending on the type of debt security involved). Therefore, I maintained a rather neutral stance in regard to the portfolio's interest rate sensitivity. In terms of the portfolio's asset mix, I made few changes. Mortgage-backed securities continue to represent the largest position (just less than half of the portfolio's value), with Treasury securities close behind. Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: It seems more apparent now that the economy is bouncing back from the difficulties it faced in 2001. That means the Federal Reserve, which aggressively lowered short-term interest rates throughout 2001, will be able to hold the line on rates, and most likely will begin raising them again at some point. With a better economic outlook, we should see interest rates begin to move higher this year, though not dramatically so. The risk of higher rates is tempered by the fact that inflation, which significantly affects the interest rate environment, remains under control. My focus now is to preserve the portfolio's share value while seeking to generate the most competitive yield possible. I believe our current emphasis on mortgage-backed securities will help us achieve that goal. /s/ Scott R. Kirby Scott R. Kirby 18 [PHOTO OF NIC PIFER] NIC PIFER PORTFOLIO MANAGER PORTFOLIO MANAGER Q & A AXP VP - GLOBAL BOND FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: A combination of declining interest rates and a strong dollar proved to be a mixed bag, resulting in a return of -1.07% for the portfolio during the six-month period. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Salomon Smith Barney World Government Bond Index and the Lipper Global Income Funds Index returned -3.78% and -0.35%, respectively, for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: There were three distinct periods of market activity during the six months. Early in the period, the tragic events of September 11th had a dramatic effect on the market. The impact of the attacks, combined with what was already a weakened global economic environment, led to a decline in interest rates. Government bonds performed particularly well, and the portfolio's heavy weighting in this part of the market proved to be beneficial. In mid-November, the environment changed, as investors became more encouraged about the direction of world economies. Bond yields moved higher, with corporate bonds performing better than government issues. Toward the end of 2001, another change occurred, and predominant sentiment shifted to the expectation that any economic recovery would be muted. Government bond yields declined again and there was significant volatility among corporate bonds of slightly lower quality within the investment-grade spectrum. At the same time, foreign currencies, most notably Japan's yen, but also the euro (Europe's common currency) lost ground in comparison to the dollar. By the end of the six months, we saw global bond markets enjoy mildly positive performance in local currency terms. However, a strong dollar reduced the net return to the portfolio. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: We began the period with about half of the Fund invested in domestic bonds. A significant weight was also placed in Europe, with only a very small position in Japan. During the period, I took advantage of attractive prices in emerging market bonds and was able to capitalize on some short-term gains. After a major selloff in Japanese bonds, I put more money to work in that market in January, significantly raising the portfolio's weighting in the yen. The portfolio's European position was boosted slightly, while I reduced our U.S. holdings. With the expectation that interest rates, in general, will probably drift higher in the months ahead, I have positioned the portfolio a bit more cautiously in terms of its interest-rate sensitivity. I am also putting more money to work in corporate bonds, which are likely to be among the best-performing sectors of the bond market in an improving economy. Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: The environment seems to be shifting quickly. Early in 2002, there was somewhat of a consensus that the U.S. economy, while improving this year, would not grow dramatically. In that environment, we would expect a fair amount of stability for interest rates, which would bode well for bonds. However, in recent weeks, much of the economic news has been better than expected, leading to some concern that bonds may be more vulnerable to a rising interest rate trend in the months ahead. With this as a backdrop, we expect our best opportunities to be found in overseas markets and among non-government bonds in the United States. My focus will be on preserving capital and generating a competitive level of distribution yield in order to help achieve a solid return for the remainder of the fiscal year. /s/ Nic Pifer Nic Pifer THE 10 LARGEST HOLDINGS AXP VP - GLOBAL BOND FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- U.S. Treasury 7.50% 2016 6.7% $12,858,403 Federal Republic of Germany 7.50% 2004 5.7 10,927,187 U.S. Treasury 3.00% 2004 3.4 6,500,761 Buoni Poliennali Del Tes (Italy) 8.50% 2004 3.3 6,303,517 Federal Republic of Germany 5.25% 2008 3.2 6,099,241 Govt of France 6.50% 2006 2.9% $5,595,340 Allgemeine Hypo Bank (Germany) 5.00% 2009 2.9 5,563,105 Belgium Kingdom 7.25% 2004 2.5 4,881,119 Federal Republic of Germany 8.00% 2002 2.4 4,555,207 Oesterreich Kontrollbank (Austria) 1.80% 2010 2.2 4,202,962
Note: Certain foreign investment risks include: changes in currency exchange rates, adverse political or economic order, and lack of similar regulatory requirements followed by U.S. companies. For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 35.2% OF NET ASSETS 19 [PHOTO OF LISA A. COSTA] LISA A. COSTA SENIOR PORTFOLIO MANAGER PORTFOLIO MANAGERS' Q & A AXP VP - GROWTH FUND Q: HOW DID THE FUND PERFORM FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: Stocks continued to experience significant volatility during the period. The portfolio returned -7.38% over the six months. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Russell 1000(R) Growth Index and the Lipper Large-Cap Growth Funds Index returned -2.41% and -3.75%, respectively, for the same period. The unmanaged Standard & Poor's 500 Index posted a return of -1.69% for the six months. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: The period started with the stock market still struggling with the bear market environment that had begun in March 2000. The difficulties were particularly pronounced for growth stocks. Many of these issues were not living up to expectations for earnings improvement due in large part to the weakened state of the U.S. economy. The situation turned even worse in the immediate wake of the terrorist attacks of September 11th. The initial reaction by investors was a dramatic selloff of stocks. However, beginning in late September and continuing through December, stocks rallied. Growth stocks enjoyed particular strength during that period, especially those in the technology and consumer cyclical sectors. These areas benefited from expectations that the U.S. economy was on the verge of a recovery. That helped the portfolio regain some lost ground. We also benefited at that time from holding a reduced position in more defensive growth issues such as health care and consumer staple stocks. The situation took a turn for the worse in the opening months of 2002, as concerns related to the collapse of Enron shook investor confidence. Once again, growth stocks suffered the brunt of the damage as the six-month period came to an end. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO OVER THE PAST SIX MONTHS? A: In the early part of the period, we were in the process of adjusting the portfolio's mix. What was once a portfolio heavily focused on technology stocks became one with broader diversification among growth stocks. That meant a reduced position in technology stocks (though that continues to be a prominent theme in the portfolio) and more significant holdings in other growth industries, such as health care, financial services and consumer stocks. Among the names added to the portfolio were UnitedHealth Group and Baxter International (in the health care area) and Wal-Mart Stores, Costco Wholesale and Target (in the retail area). After the market's significant selloff following the September 11th attacks, the portfolio beefed up its position in attractively-priced technology stocks, which proved beneficial in the closing months of 2001. /s/ Lisa A. Costa /s/ Scott Mullinix Lisa A. Costa, Senior portfolio manager Scott Mullinix, Portfolio manager NOTE TO SHAREHOLDERS: IN APRIL 2002, NICK THAKORE SUCCEEDED LISA COSTA AND SCOTT MULLINIX AS THE PORTFOLIO MANAGER OF AXP VP - GROWTH FUND. THE FOLLOWING OUTLOOK FOR THE FUND IS PROVIDED BY WILLIAM F. TRUSCOTT, CHIEF INVESTMENT OFFICER. OUTLOOK FOR THE FUND Q: WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS? A: There is reason for optimism as we go forward. The U.S. economy appears to be on the mend after slipping into a recession in 2001. A better economy is likely to improve the earnings outlook for many companies, and as a result stocks should be positioned to enjoy better performance in 2002 after two consecutive years of negative performance. However, it is important to maintain modest expectations. The economic backdrop does not yet appear to be in place that would indicate reason to expect stock market returns comparable to the 20% level we became accustomed to in the 1990s. If an economic recovery takes place in the months ahead, growth stocks in specific industries such as the technology, media and consumer sectors should stand to benefit. The Fund will continue to take advantage of what are considered to be the most attractive opportunities among large-cap growth stocks. /s/ William F. Truscott William F. Truscott Chief Investment Officer 20 THE 10 LARGEST HOLDINGS AXP VP - GROWTH FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- Pfizer 6.6% $11,601,755 Microsoft 4.3 7,550,537 General Electric 3.2 5,691,994 Intl Business Machines 3.0 5,258,349 Intel 2.7 4,753,998 Home Depot 2.4 4,195,450 Medtronic 2.2 3,929,141 Citigroup 2.2 3,819,372 American Home Products 2.0 3,520,670 Dell Computer 2.0 3,434,379
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 30.6% OF NET ASSETS 21 [PHOTO OF MARK FAWCETT] MARK FAWCETT PORTFOLIO MANAGER PORTFOLIO MANAGERS' Q & A AXP VP - INTERNATIONAL FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: In a period of significant events and continued volatility in the equity markets, the portfolio returned -7.59%. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Morgan Stanley Capital International Europe, Australia and the Far East (MSCI EAFE) Index and the Lipper International Funds Index returned -8.33% and -5.97%, respectively, for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: The period started off in a very rocky way, as the tragic events of September 11th had worldwide ramifications. In the initial days following the attacks, world markets declined significantly. However, the situation changed quickly as September came to an end. In the fourth quarter of 2001, investors appeared to be encouraged that a global economic slowdown was nearing an end. Stock prices in most nations rose on those expectations, giving the portfolio a boost for the fourth quarter. The situation turned dramatically again in January, as investors, concerned in part about the accounting irregularities involving Enron and potentially affecting other companies, began to move money out of stocks. This continued until early February, when many non-U.S. markets again rallied, helping us close the six-month period on a positive note. Throughout the period, the portfolio generally benefited from its heavy exposure to European stocks. Japan struggled for much of the period, but began to show signs of improvement in the early months of 2002. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: Given signs that world markets were on the cusp of an economic recovery, we began to put increased emphasis on stocks of companies that should benefit from a cyclical upturn in economic growth. However, the recovery in terms of stocks seems to be very selective. Our greatest effort is to identify stocks of companies that are in solid financial shape (with few or no debt issues) and a proven capability of generating earnings. In recent months, we have looked increasingly to so-called "old economy" companies to generate positive return potential. Geographically, Europe remains attractive to us, though its economic recovery is likely to take longer than that of the United States. We are slowly moving more money into the Japanese market. Despite its lengthy economic troubles, that nation is starting to witness an improved environment. Emerging market countries also have been quite attractive, and a definite star performer over the six-month period. Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: The portfolio is generally positioned to take advantage of a better economic environment for the rest of 2002. Still, we anticipate that the markets will go through some ups and downs, as issues remain about stock valuations and whether additional fallout from the Enron situation will spread to other parts of the equity markets. While a strong dollar hurt us for much of the six-month period (a rising dollar versus foreign currencies detracts from the net returns realized in foreign investments), we see a fairly stable currency environment going forward, with little significant movement either benefiting or subtracting from our results. Our primary focus will be to identify strong companies in a position of market leadership. These firms are expected to offer the best potential in an environment of continued uncertainty. /s/ Mark Fawcett Mark Fawcett /s/ Mark Burgess Mark Burgess NOTE TO SHAREHOLDERS: IN FEBRUARY 2002, MARK BURGESS SUCCEEDED RICHARD LEADEM AND GAVIN CORR AS A CO-PORTFOLIO MANAGER OF AXP VP - INTERNATIONAL FUND, ALONG WITH MARK FAWCETT. 22 THE 10 LARGEST HOLDINGS AXP VP - INTERNATIONAL FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- Nokia (Finland) 3.4% $37,102,693 Vodafone Group (United Kingdom) 3.3 36,230,581 BP (United Kingdom) 3.2 35,019,578 TotalFinaElf (France) 3.2 34,496,900 BNP Paribas (France) 2.4 26,641,942 GlaxoSmithKline (United Kingdom) 2.2 24,534,107 Royal Bank of Scotland Group (United Kingdom) 2.2 24,099,310 Marks & Spencer (United Kingdom) 2.1 22,857,981 BHP Billiton (Australia) 2.0 21,860,261 ENI (Italy) 2.0 21,705,040
Note: Certain foreign investment risks include: changes in currency exchange rates, adverse political or economic order and lack of similar regulatory requirements followed by U.S. companies. For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 26.0% OF NET ASSETS 23 [PHOTO OF ALFRED HENDERSON] ALFRED HENDERSON PORTFOLIO MANAGER [PHOTO OF DAVID KUPLIC] DAVID KUPLIC PORTFOLIO MANAGER PORTFOLIO MANAGERS' Q & A AXP VP - MANAGED FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: In a period of momentous events that had a dramatic impact on the investment markets, the portfolio registered a -2.61% return. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Standard & Poor's 500 Index and the Lipper Flexible Portfolio Funds Index returned -1.69% and -1.52%, respectively, for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: With the U.S. economy already in a slowdown mode, the environment turned even more difficult following the tragic events of September 11th. The terrorist attacks sent shockwaves through the investment markets. The immediate impact was a significant decline in stocks, but that situation quickly reversed itself in the fourth quarter of 2001. In that period, stock markets performed better than they had all year. It was a welcome respite from what had been an extended bear market. Growth-oriented stocks performed particularly well in the fourth quarter, and we tried to take advantage of that. In the first two months of 2002, the market reversed course again as fallout from the Enron scandal shook investor confidence. A broad range of stocks suffered in this environment, including some prominent names in the portfolio, such as Tyco International (which we sold) and Calpine (to which we reduced the portfolio's exposure). Still, select stocks in the insurance and retail sectors performed well. The fixed income portfolio dealt with a volatile interest rate environment. Rates reached a low point in early November, then abruptly moved higher through the end of 2001. In January and early February, rates again drifted lower, boosting bond values. The portfolio's heavy exposure through this period was in investment-grade corporate bonds, which typically enjoy a performance advantage over other fixed-income investments. As signs of an economic recovery became more apparent, this segment of the bond market began to perform better. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: In the equity portion of the portfolio, we shifted our focus within the financial services sector to insurance companies, which have enjoyed strong performance since the September attacks. We also boosted the portfolio's technology exposure in an effort to take advantage of depressed prices among some high-quality companies. With the U.S. economy showing signs of improvement, we feel stocks such as those in the financial and semiconductor industries should perform relatively well. In the bond portfolio, we continued to place an emphasis on investment-grade corporate bonds and mortgage-backed securities. These segments of the market typically perform best when the economy is on the mend. While improvement in the economy was slow to develop, more positive signs appeared by the end of the period. Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: It now appears as if the U.S. economy has found its way out of the mild recession that afflicted it in 2001. In the equity market, a better economy should help improve the potential for increasing corporate profits. In addition, there appears to be a fair amount of cash still sitting on the sidelines which could add significant liquidity to the market. Still, there are reasons to be concerned, including the fact that stocks have maintained fairly high valuations and ongoing issues related to the Enron situation. Therefore, we can expect continued volatility for equities. In the bond market, we are likely to see interest rates move a bit higher, but given that there seems little reason to be concerned about the risk of inflation, we don't anticipate that rates will move dramatically higher. With our focus on corporate bonds, we feel the fixed income portfolio is well positioned to benefit from the environment that is most likely to exist over the next six months. /s/ Alfred Henderson Alfred Henderson /s/ David Kuplic David Kuplic NOTE TO SHAREHOLDERS: IN APRIL 2002, ROBERT EWING SUCCEEDED ALFRED HENDERSON AS THE PORTFOLIO MANAGER OF THE EQUITY PORTION OF AXP VP - MANAGED FUND. 24 THE 10 LARGEST HOLDINGS AXP VP - MANAGED FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- Pfizer 3.3% $103,835,647 Citigroup 2.9 90,506,017 Microsoft 2.8 87,510,000 Home Depot 2.3 73,750,000 Wal-Mart Stores 2.2 68,211,000 Nokia ADR Cl A 1.9 59,888,218 General Electric 1.8 56,787,500 Morgan Stanley, Dean Witter & Co 1.8 56,488,000 MBNA 1.7 53,816,424 Johnson & Johnson 1.5 45,675,000
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 22.2% OF NET ASSETS 25 [PHOTO OF GORDON M. FINES] GORDON M. FINES SENIOR PORTFOLIO MANAGER [PHOTO OF DOUG GUFFY] DOUG GUFFY PORTFOLIO MANAGER [PHOTO OF ANNE OBERMEYER] ANNE OBERMEYER PORTFOLIO MANAGER PORTFOLIO MANAGERS' Q & A AXP VP - NEW DIMENSIONS FUND Q: HOW DID THE FUND PERFORM FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: In another volatile period for the market, the portfolio returned -0.74%. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Standard & Poor's 500 Index and the Lipper Large-Cap Growth Funds Index returned -1.69% and - -3.75%, respectively, for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: The stock market found itself in the midst of another difficult year when we began the period in September 2001. Most notable was that the U.S. economy was in a mild recession. That environment made it difficult for companies to reach profit expectations, and stocks suffered as a result. The situation was made worse in the wake of the September 11th terrorist attacks, as investors initially reacted negatively and began a significant selloff. But the pessimism proved to be short-lived, and stocks began to respond much more favorably beginning in late September. We saw growth stocks, the focus of this portfolio, respond particularly well. With investors becoming encouraged that the economy was about to rise out of its recessionary state, stocks moved higher through the end of 2001. Growing concern about possible fallout related to the collapse of Enron and continued economic concerns cast a pall over the entire market during the opening months of 2002, as stocks gave back some of the gains of the previous months. Q: WHAT AREAS OF THE MARKET WORKED WELL FOR THE PORTFOLIO AND WHAT DETRACTED FROM PERFORMANCE? A: Technology stocks led the market's year-end rally, and we benefited in particular from our holdings in stocks such as Microsoft and IBM. Going into that period, we had de-emphasized technology stocks a bit, so the reduced weighting we maintained was somewhat detrimental to performance. Other names that performed well included Wal-Mart Stores in the retail sector, and Pfizer among our health care holdings. By contrast, energy stocks were among the weakest performers during the period. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO OVER THE PAST SIX MONTHS? A: We had shifted the portfolio to a more conservative stance during 2001. Given our concerns that many previously high-flying companies, particularly in the technology sector, still had to come back to earth in terms of their stock prices, it made sense to broaden the Fund's focus. We have been putting greater emphasis on companies that have solid earnings and, in some cases, pay a reasonable dividend to augment their price appreciation potential. We believe stocks such as these should be well-positioned with the market, as investors seem increasingly concerned about finding stocks of companies producing tangible results. As signs of a better economy appeared, we did take a slightly more aggressive posture, adding to our technology, health care and retail holdings. Many of these should benefit from a cyclical upturn in the economy. At the same time, we reduced the portfolio's energy position, as this industry was struggling with an environment of reduced demand and lower prices. Q: WHAT IS YOUR OUTLOOK GOING FORWARD? A: While we agree with expectations that the U.S. economy will improve during 2002, it may be a long, slow process. The market rebounded strongly between late September and the end of 2001, but it may have grown too far too fast. It is possible that in the coming months we'll see little improvement in the market's fortunes until corporate profits begin to turn around more dramatically. In the current environment, we are cautious that a number of stocks are still priced quite high, and that profits have not yet caught up to expectations. It is reasonable to expect better results as 2002 progresses, but there is also reason for caution about setting expectations too high. If this is a "slow-motion" economic recovery as anticipated, the market's recovery is likely to follow a similar path. /s/ Gordon M. Fines /s/ Doug Guffy /s/ Anne Obermeyer Gordon M. Fines Doug Guffy Anne Obermeyer DOUG GUFFY AND ANNE OBERMEYER ASSIST WITH THE MANAGEMENT OF THE FUND. 26 THE 10 LARGEST HOLDINGS AXP VP - NEW DIMENSIONS FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- Citigroup 4.1% $156,584,593 General Electric 3.7 140,089,950 Wal-Mart Stores 3.5 135,386,433 Microsoft 3.3 127,344,553 Pfizer 2.9 111,769,600 Intl Business Machines 2.8 107,097,980 American Intl Group 2.7 102,260,566 Viacom Cl B 2.7 101,605,476 Exxon Mobil 2.3 89,757,125 Philip Morris 2.3 87,715,762
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 30.3% OF NET ASSETS 27 PORTFOLIO MANAGERS' Q & A AXP VP - PARTNERS SMALL CAP VALUE FUND Q: HOW DID THE PORTFOLIO PERFORM FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: The portfolio, which is managed by two partner firms of American Express Financial Corporation, returned 9.06% during the six months. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Russell 2000(R) Value Index and the Lipper Small-Cap Value Funds Index returned 5.85% and 4.61%, respectively, for the same period. COMMENTS FROM THIRD AVENUE FUNDS MANAGEMENT TEAM Q: WHAT FACTORS IN THE MARKET AFFECTED YOUR PORTION OF THE PORTFOLIO DURING THE SIX-MONTH PERIOD? A: This was a period of significant volatility. It began with the terrorist attacks of September 11th, a tragic event that initially caused the market to decline dramatically. However, performance was strong through the rest of 2001. Markets were on shakier ground again in the opening months of 2002, as concerns centered on the Enron scandal took hold of the market. Our portfolio focused on acquiring common stocks of well-capitalized companies. These firms typically have solid, ongoing earnings or are positioning themselves to generate wealth creation. Our approach through this period has been to own companies from a broad range of businesses and industries, including real estate, semiconductor equipment and financial services. Q: WHAT SIGNIFICANT CHANGES DID YOU MAKE TO THE PORTFOLIO YOU MANAGED DURING THIS PERIOD? A: We found solid values among semiconductor and semiconductor equipment firms. Purchases included Coherent, Inc., a manufacturer of laser-based systems and precision optics; and TriQuint Semiconductor, a leading designer and manufacturer of integrated circuits. In the financial marketplace, we identified a number of opportunities. One was the Canadian conglomerate Brascan. Insurance companies, such as MONY Group and Phoenix Companies were also attractive, as was the insurance holding company Leucadia National. All of these additions to the portfolio offered solid value from a pricing perspective. Q: WHAT IS YOUR OUTLOOK FOR THE PERIOD AHEAD? A: We remain confident as ever in our "safe and cheap" investment philosophy, whose cornerstone is marked by companies with unquestionable financial strength and long-term staying power. These characteristics should offer a competitive advantage even if an economic downturn persists in the coming months. COMMENTS FROM ROYCE & ASSOCIATES MANAGEMENT TEAM Q: WHAT FACTORS IN THE MARKET AFFECTED YOUR PORTION OF THE PORTFOLIO DURING THE SIX-MONTH PERIOD? A: The portfolio benefited from solid performance among small stocks with a value orientation. Technology, the largest holding in the portion of the portfolio we manage, was the best performer, with particularly strong returns generated by semiconductor and equipment companies, component and systems firms and stocks in the telecommunications industry. Another large sector, consumer services, posted impressive gains. Retail stocks including Big Lots and Stein Mart were two of the major contributors. In addition, natural resources stocks such as companies in the oil and gas and energy services industries began to enjoy a solid rebound. Two sectors that are perennial favorites of value investors, financial intermediaries and industrial products companies, also turned in strong performance as a group. Q: WHAT SIGNIFICANT CHANGES DID YOU MAKE TO THE PORTFOLIO YOU MANAGED DURING THIS PERIOD? A: Our portfolio has remained fairly consistent. We maintain a focus on companies that are in a strong financial position, which should prove beneficial to the portfolio in the current market environment. Q: WHAT IS YOUR OUTLOOK FOR THE PERIOD AHEAD? A: We think that small-cap value stocks remain well positioned to be a leader in the equity market. This is especially true given our expectation that the stock market as a whole will continue to experience high volatility and generally modest returns. 28 THE 10 LARGEST HOLDINGS AXP VP - PARTNERS SMALL CAP VALUE FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- Brascan Cl A 2.4% $703,470 American Power Conversion 2.3 676,753 KEMET 2.3 664,632 Credence Systems 2.0 595,840 Precision Drilling 1.8 523,320 Brookfield Properties 1.7 506,356 Brown (Tom) 1.7 483,840 Nautica Enterprises 1.6 454,608 Phoenix Companies 1.5 447,500 MONY Group 1.5 442,176
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 18.8% OF NET ASSETS 29 [PHOTO OF JAMES M. JOHNSON, JR.] JAMES M. JOHNSON, JR., CFA PORTFOLIO MANAGER PORTFOLIO MANAGERS' Q & A AXP VP - S&P 500 INDEX FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: Stocks went through another volatile period over the past six months. However, the environment showed some signs of improvement throughout the period. With that as a backdrop, the portfolio returned -1.87%. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the Index upon which the portfolio's holdings are based, the unmanaged Standard & Poor's 500 Index, returned -1.69% for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: While the portfolio seeks to track very closely to the S&P 500 Index, it is not able to fully duplicate performance. Due to expenses and management of cash flows in and out of the Fund, its performance slightly lags that of the Index. The most significant event of the period occurred on September 11th with the unprecedented terrorist attacks in the U.S. This occurred in the midst of what already was a significant bear market. Investors initially reacted quite negatively to the news, but by the end of September, the fortunes of the market began to turn around. Stocks performed well through the rest of 2001, and enjoyed mixed returns in the opening months of 2002. Q: DID SIGNIFICANT CHANGES TAKE PLACE IN THE INDEX DURING THE YEAR? A: Inclusion in the S&P 500 Index can be affected by changes in the market environment, most notably mergers of two companies or the acquisition of one company by another. However, the pace of change was slower in recent months, due in part to reduced merger and acquisition activity in the market as a whole. A number of value stocks and troubled companies, most notably Enron, were removed from the list, while a mix of growth and value stocks were added to the Index. Our portfolio changed in accordance with these additions and deletions to the Index. Q: WHAT IS YOUR OUTLOOK FOR THE COMING YEAR? A: Since March 2000, the equity markets have been battling with a bear market mentality. Although we enjoyed a rally in the closing months of 2001, the market struggled again in 2002, before bouncing back in late February. The expectation exists that the U.S. economy will come out of a recession in 2002, which should create a better environment for equity investors. As always, the portfolio will be virtually fully invested in the stocks represented in the S&P 500 Index in order to generate returns for contract owners that generally track the performance of the Index. /s/ James M. Johnson, Jr. James M. Johnson, Jr., CFA /s/ David B. Factor David B. Factor, CFA 30 THE 10 LARGEST HOLDINGS AXP VP - S&P 500 INDEX FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- General Electric 3.7% $3,217,829 Microsoft 3.0 2,645,368 Exxon Mobil 2.7 2,378,507 Wal-Mart Stores 2.7 2,326,926 S&P Depositary Receipts 2.6 2,280,267 Pfizer 2.5 2,167,972 Citigroup 2.2 1,960,004 American Intl Group 1.9 1,626,970 Intel 1.8 1,615,028 Johnson & Johnson 1.8 1,572,803
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 24.9% OF NET ASSETS 31 [PHOTO OF JAKE HURWITZ] JAKE HURWITZ PORTFOLIO MANAGER [PHOTO OF KENT A. KELLEY] KENT A. KELLEY PORTFOLIO MANAGER PORTFOLIO MANAGERS' Q & A AXP VP - SMALL CAP ADVANTAGE FUND Q: HOW DID THE FUND PERFORM FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: During another volatile period for the markets, the portfolio returned -0.42% over the six months. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Russell 2000(R) Index and the Lipper Small-Cap Core Funds Index returned 0.85% and 1.80%, respectively, for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: The recession and the tragic events of September 11th made this a particularly tumultuous period for the stock market. There was a broad sell-off when trading resumed following the terrorist attacks, but the market changed course after September 21st. Fueled by additional short-term interest rate cuts by the Federal Reserve and growing optimism that the economy would recover in 2002, the stock market rallied sharply through the end of the year. Growth stocks and economically-sensitive sectors such as consumer and technology were the strongest performers during the fourth quarter rally. Our holdings among specialty retail, auto parts, and homebuilder stocks posted strong gains due to expectations of continued consumer spending in a recovering economy. In addition, micro-cap stocks (companies with market capitalizations under $300 million) performed extraordinarily well. Simultaneously, we saw a rotation out of defensive sectors such as health care, consumer staples, and utilities. The market again changed direction in January 2002 as concerns over the pace of economic recovery and the eventual magnitude of corporate earnings growth drove stocks lower. Within the small-cap segment of the market, value stocks performed better than growth stocks in January and February. Technology stocks, in particular, declined sharply in the first two months of 2002, and a slight overweight in this sector hurt the Fund's performance. Overall, our structure of investing in both growth and value stocks and diversifying the portfolio across economic sectors mitigated the high volatility and frequent changes in sector leadership that characterized the market during this period. Q: WHAT SIGNIFICANT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THIS PERIOD? A: In response to the weakness of the economy, the portfolio was positioned somewhat defensively at the beginning of this period through modest additions to our holdings in less economically-sensitive sectors such as health care services and energy. We shifted the portfolio toward a more aggressive position as positive economic data emerged and we became more confident that the economy would rebound in 2002. We added to our holdings in the technology and consumer cyclical sectors and increased our investments in micro-cap stocks. Throughout this six-month period, we adhered to our strategy of balanced investing and avoided heavily-weighted positions in any single industry or sector. Q: WHAT IS YOUR OUTLOOK FOR THE PERIOD AHEAD? A: We believe that the outlook for small-cap stocks remains favorable. We expect a moderate economic recovery with gradual improvement in corporate profits during 2002. Historically, small-cap stocks have outperformed large-cap stocks in the early stages of economic recoveries because they tend to be more economically sensitive and, therefore, benefit from expectations for an improving domestic economy. In addition, smaller stocks remain favorably priced relative to large-cap stocks, which reinforces our confidence in a positive outlook for the portfolio. We believe the Fund is well positioned to take advantage of these opportunities. /s/ Jake Hurwitz Jake Hurwitz /s/ Kent A. Kelley Kent A. Kelley 32 THE 10 LARGEST HOLDINGS AXP VP - SMALL CAP ADVANTAGE FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- IKON Office Solutions 0.7% $422,099 NVR 0.6 379,924 StanCorp Financial Group 0.6 360,795 M.D.C. Holdings 0.6 343,659 Pier 1 Imports 0.6 337,492 Independent Bank 0.6 336,237 GTECH Holdings 0.5 314,705 Emmis Communications Cl A 0.5 313,793 AmerUs Group 0.5 307,620 Mid Atlantic Medical Services 0.5 295,371
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 5.7% OF NET ASSETS 33 [PHOTO OF G. MICHAEL KENNEDY] G. MICHAEL KENNEDY PORTFOLIO MANAGER PORTFOLIO MANAGER Q & A AXP VP - STOCK FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: In a period marked by significant up-and-down moves in the equity markets, the portfolio returned -1.50% for the six-month period. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Standard & Poor's 500 Index and the Lipper Large-Cap Core Funds Index returned -1.69% and -1.36%, respectively, for the same period. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: The period began with the U.S. economy in the midst of a slowdown that had taken its toll on the stock market. By October, this slowdown officially achieved "recession" status. We entered the period with the portfolio positioned somewhat conservatively, a strategy that proved beneficial during the market's most difficult months. The terrorist attacks of September 11th initially sent the stock market reeling, but stocks quickly recovered in October, and closed out the year with a strong rally. Because of the portfolio's more conservative stance, specifically maintaining a lower-than-average exposure to technology, we were not able to fully capitalize on the year-end rally. However, owning a low-risk, broad-based portfolio proved to be beneficial in the first two months of 2002, when the stock market once again moved lower. Although many signs pointed to an improving economy in 2002, the accounting questions raised by the collapse of Enron took a toll on the financial markets in January and February. In the very last days of the period, stocks managed to stage another rally on the strength of improving economic fundamentals. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: In the closing months of 2001, I slowly shifted the portfolio into a more aggressive position. That included a significant reduction in our cash position, and adding stocks that could benefit from an upturn in the economy, particularly in manufacturing of capital goods and in basic materials. As this economic recovery is not expected to be as robust as in a typical rebound, I balanced the cyclical recovery stocks with selected consumer companies and health care firms that may provide solid earnings growth in the low double-digit range. I have taken more cautious positions in financial, technology and communication services stocks due to the uncertainty of the strength of the recovery. Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: It now appears that economic recovery is underway and there is little reason to think another recession will occur anytime soon. Still, it seems likely that improvement in the economy will be slow and less dramatic than in a typical recovery. This slow-motion recovery, tied to accounting concerns (such as with Enron) and what continue to be high valuations for technology stocks is likely to continue to cause significant volatility in financial markets. Since the recession was driven in large part by a decline in business spending, I would expect industrial and basic materials sectors to have the best earnings prospects going forward. Most important, due to the high financial leverage of both corporations and consumers, I anticipate the market will focus on companies with strong balance sheets and positive cash flows. While this recovery may be weaker and slower than those in the past, it is possible that it could provide for positive returns for a number of years. /s/ G. Michael Kennedy G. Michael Kennedy 34 THE 10 LARGEST HOLDINGS AXP VP - STOCK FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- General Electric 3.5% $121,274 Wal-Mart Stores 2.6 89,357 McGraw-Hill Companies 2.5 87,579 Microsoft 2.4 84,592 USA Networks 2.3 81,290 Caterpillar 2.3 78,769 Baxter Intl 2.3 78,670 Pfizer 2.2 74,670 Minnesota Mining & Mfg 2.1 72,291 Alcoa 2.0 69,505
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 24.2% OF NET ASSETS 35 [PHOTO OF LOUIS GIGLIO] LOUIS GIGLIO PORTFOLIO MANAGER PORTFOLIO MANAGER Q & A AXP VP - STRATEGY AGGRESSIVE FUND Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2002? A: In another volatile period for the stock market, particularly among aggressive growth stocks, the portfolio registered a -11.36% return. (The Fund's return figure does not reflect expenses that apply to the subaccounts, contracts or policies.) By comparison, the unmanaged Russell Mid-Cap(R) Growth Index and the Lipper Mid-Cap Growth Funds Index returned -3.20% and -6.78%, respectively, for the same period. The unmanaged Standard & Poor's MidCap 400 Index posted a return of 2.89% for the six months. Q: WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE SIX MONTHS? A: The market continued to be very challenging for aggressive growth stocks, which are the emphasis of this portfolio. Of course, the most significant event occurred early in the six-month period, with the September 11th attacks on the World Trade Center and Pentagon. Initially, these tragedies sent the stock markets reeling, but they quickly recovered. In the closing months of 2001, the portfolio's more aggressive posture, including its exposure to technology stocks, proved to be beneficial. However, as concerns grew over issues related to the Enron scandal, confidence seemed to fall out of the market once again. Growth stocks were particularly hard hit from mid-January through most of February, and that took a toll on the portfolio once again. This level of volatility has become somewhat of a fact of life over the past couple of years. With the stock market unable to shake its "bear market" mentality, the segment of the market that our portfolio emphasizes continued to struggle. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD? A: We began the period with a more broadly-diversified portfolio than was typically the case in the past. Given the volatile state of the market, this seemed to be a logical approach in order to offset some of the impact of the market's fluctuations. While this approach diluted some of the impact of the market's temporary upturn in the fourth quarter of 2001, it has helped to provide some stability in these difficult times. Much of our emphasis continues to be on technology stocks. This sector has been battered in the past two years, but I am encouraged that attractive opportunities exist among selected stocks. Among the issues added during the period were PeopleSoft (software) and Xilinx (semiconductors). I also like opportunities in other segments of the market, including biotechnology issues (IDEC Pharmaceuticals is a prominent name in the portfolio) and consumer issues (Starbucks plays a big part for us). Q: WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS? A: I've positioned the portfolio in anticipation of an upturn in the U.S. economy. Many positive signs that we had moved out of a mild recession came to light in recent months. That certainly should provide a better environment for companies to again boost their profits after many struggled significantly during the downturn. At the same time other factors, such as the Enron situation and the concern that many stocks still look historically expensive, increase the likelihood that we'll continue to experience a fair amount of volatility in the market. My efforts have been to identify mid-cap growth companies that are on very solid ground and well positioned to benefit from improved economic growth in the months ahead. While it is impossible to say just when the economy will fully bounce back and how far it will come, I feel the best approach in this aggressive portfolio is to be ready to capitalize on the opportunity. I expect that over time, this approach will best serve our shareholders. /s/ Louis Giglio Louis Giglio 36 THE 10 LARGEST HOLDINGS AXP VP - STRATEGY AGGRESSIVE FUND
PERCENT VALUE --------------- --------------------- (OF NET ASSETS) (AS OF FEB. 28, 2002) --------------- --------------------- MedImmune 2.1% $32,064,571 Xilinx 1.9 27,888,288 IDEC Pharmaceuticals 1.8 27,508,878 Stryker 1.8 26,629,500 Adobe Systems 1.7 26,088,097 Starbucks 1.7 25,600,926 Fiserv 1.6 23,810,454 Quest Diagnostics 1.6 23,719,395 PeopleSoft 1.6 23,346,117 Invitrogen 1.5 22,879,332
For further detail about these holdings, please refer to the section entitled "Investments in Securities." [CHART] THE 10 HOLDINGS LISTED HERE MAKE UP 17.3% OF NET ASSETS 37 FINANCIAL STATEMENTS STATEMENTS OF ASSETS AND LIABILITIES AMERICAN EXPRESS VARIABLE PORTFOLIO FUNDS
AXP VP - AXP VP - AXP VP - BLUE CHIP BOND CAPITAL ADVANTAGE FUND RESOURCE FEB. 28, 2002 (UNAUDITED) FUND FUND ASSETS Investments in securities, at value (Note 1)* (identified cost $84,495,760, $1,888,957,410 and $3,038,953,906) $ 81,825,391 $ 1,875,823,088 $ 2,988,037,799 Cash in bank on demand deposit 391,882 28,730 -- Receivable for investment securities sold 125,450 58,349,962 8,083,433 Dividends and accrued interest receivable -- 27,567,518 4,448,100 Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 5) -- 162,906 -- - ----------------------------------------------------------------------------------------------------------------------------------- Total assets 82,342,723 1,961,932,204 3,000,569,332 - ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Disbursements in excess of cash on demand deposit -- -- 226,517,529 Dividends payable to shareholders (Note 1) 156,844 6,944,318 4,760,433 Payable for investment securities purchased 127,693 74,352,946 15,456,199 Payable for securities puchased on a when-issued basis (Note 1) -- 147,305,148 -- Accrued investment management services fee 35,122 798,407 1,412,400 Accrued distribution fee 7,840 165,315 287,105 Accrued administrative services fee 2,509 63,349 103,306 Payable upon return of securities loaned (Note 6) -- 1,088,500 9,350,000 Other accrued expenses 12,452 76,772 124,096 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 342,460 230,794,755 258,011,068 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 82,000,263 $ 1,731,137,449 $ 2,742,558,264 =================================================================================================================================== REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 103,615 $ 1,646,009 $ 1,443,116 Additional paid-in capital 107,011,157 1,883,837,623 3,000,566,260 Undistributed (excess of distributions over) net investment income (1) 2,192,114 -- Accumulated net realized gain (loss) (Note 9) (22,435,523) (143,564,542) (208,535,005) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (Notes 5 and 7) (2,678,985) (12,973,755) (50,916,107) - ----------------------------------------------------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 82,000,263 $ 1,731,137,449 $ 2,742,558,264 =================================================================================================================================== Shares outstanding 10,361,477 164,600,926 144,311,626 - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value per share of outstanding capital stock $ 7.91 $ 10.52 $ 19.00 - ----------------------------------------------------------------------------------------------------------------------------------- *Including securities on loan, at value (Note 6) $ -- $ 1,047,410 $ 8,937,500 - -----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements 38
AXP VP - AXP VP - AXP VP - CASH DIVERSIFIED EMERGING MANAGEMENT EQUITY INCOME MARKETS FEB. 28, 2002 (UNAUDITED) FUND FUND FUND ASSETS Investments in securities, at value (Note 1)* (identified cost $1,099,034,175, $206,961,408 and $6,425,767) $ 1,099,034,175 $ 209,029,626 $ 7,167,195 Cash in bank on demand deposit 928,552 -- 422,272 Receivable for investment securities sold -- 189,286 165,274 Dividends and accrued interest receivable 380,035 465,387 11,721 - -------------------------------------------------------------------------------------------------------------------------------- Total assets 1,100,342,762 209,684,299 7,766,462 - -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Disbursements in excess of cash on demand deposit -- 629,787 -- Dividends payable to shareholders (Note 1) 1,117,952 621,319 -- Payable for investment securities purchased -- 3,271,421 249,375 Accrued investment management services fee 426,762 82,171 6,435 Accrued distribution fee 104,954 18,342 688 Accrued administrative services fee 24,971 5,869 550 Payable upon return of securities loaned (Note 6) -- 1,900,000 -- Other accrued expenses 42,707 26,572 42,282 - -------------------------------------------------------------------------------------------------------------------------------- Total liabilities 1,717,346 6,555,481 299,330 - -------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 1,098,625,416 $ 203,128,818 $ 7,467,132 ================================================================================================================================ REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 10,990,413 $ 204,229 $ 9,505 Additional paid-in capital 1,087,659,397 202,674,967 8,551,322 Undistributed (excess of distributions over) net investment income (21,273) 15,075 (1,374) Accumulated net realized gain (loss) (Note 9) (3,121) (1,833,671) (1,833,717) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies -- 2,068,218 741,396 - -------------------------------------------------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 1,098,625,416 $ 203,128,818 $ 7,467,132 ================================================================================================================================ Shares outstanding 1,099,041,279 20,422,889 950,502 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value per share of outstanding capital stock $ 1.00 $ 9.95 $ 7.86 - -------------------------------------------------------------------------------------------------------------------------------- *Including securities on loan, at value (Note 6) $ -- $ 1,848,000 $ -- - --------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 39
AXP VP - AXP VP - AXP VP - EQUITY EXTRA FEDERAL SELECT INCOME INCOME FEB. 28, 2002 (UNAUDITED) FUND FUND FUND ASSETS Investments in securities, at value (Note 1) (identified cost $34,925,922, $672,916,354 and $179,409,280) $ 36,435,787 $ 599,686,335 $ 180,870,898 Cash in bank on demand deposit 208,896 1,549 -- Receivable for investment securities sold -- 12,071,583 14,093,686 Dividends and accrued interest receivable 14,056 17,722,450 1,350,638 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets 36,658,739 629,481,917 196,315,222 - ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Disbursements in excess of cash on demand deposit -- -- 231,947 Dividends payable to shareholders (Note 1) -- 5,286,358 359,038 Payable for investment securities purchased 555,793 10,716,477 13,856,447 Payable for securities puchased on a when-issued basis (Note 1) -- 4,890,113 18,518,090 Accrued investment management services fee 16,766 291,798 73,942 Accrued distribution fee 3,224 58,830 15,152 Accrued administrative services fee 1,548 23,532 6,061 Other accrued expenses 16,649 41,459 7,812 Option contracts written at value (premiums received, $29,554 for AXP VP - Extra Income Fund and $9,666 for AXP VP - Federal Income Fund (Note 8) -- 43,869 6,250 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 593,980 21,352,436 33,074,739 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 36,064,759 $ 608,129,481 $ 163,240,483 =================================================================================================================================== REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 36,771 $ 959,328 $ 157,186 Additional paid-in capital 35,619,767 894,331,319 160,616,104 Excess of distributions over net investment income (83,446) (38,077) (12,959) Accumulated net realized gain (loss) (Note 9) (1,018,198) (213,878,755) 1,082,276 Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (Note 7) 1,509,865 (73,244,334) 1,397,876 - ----------------------------------------------------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 36,064,759 $ 608,129,481 $ 163,240,483 =================================================================================================================================== Shares outstanding 3,677,129 95,932,781 15,718,574 - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value per share of outstanding capital stock $ 9.81 $ 6.34 $ 10.39 - -----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 40
AXP VP - AXP VP - AXP VP - GLOBAL GROWTH INTERNATIONAL BOND FUND FUND FEB. 28, 2002 (UNAUDITED) FUND ASSETS Investments in securities, at value (Note 1)* (identified cost $199,228,377, $190,037,452 and $1,135,333,587) $ 187,631,570 $ 179,614,307 $ 1,104,256,969 Cash in bank on demand deposit 557,269 17,299 -- Receivable for investment securities sold -- 21,083,521 2,698,262 Dividends and accrued interest receivable 4,011,355 132,168 1,697,245 Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 5) 57,940 -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total assets 192,258,134 200,847,295 1,108,652,476 - ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Disbursements in excess of cash on demand deposit -- -- 2,124,758 Dividends payable to shareholders (Note 1) 599,206 -- -- Payable for investment securities purchased -- 25,122,354 6,840,085 Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 5) 8,598 -- -- Accrued investment management services fee 123,434 87,114 707,292 Accrued distribution fee 18,368 17,285 104,711 Accrued administrative services fee 8,817 6,914 43,096 Payable upon return of securities loaned (Note 6) -- -- 8,058,750 Other accrued expenses 23,254 37,450 190,278 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 781,677 25,271,117 18,068,970 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 191,476,457 $ 175,576,178 $ 1,090,583,506 =================================================================================================================================== REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 203,320 $ 292,725 $ 1,413,531 Additional paid-in capital 209,825,616 313,093,557 1,778,284,862 Undistributed (excess of distributions over) net investment income 400,099 (105,003) (4,464,897) Accumulated net realized gain (loss) (Note 9) (7,343,020) (127,281,956) (653,493,983) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (Note 5) (11,609,558) (10,423,145) (31,156,007) - ----------------------------------------------------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 191,476,457 $ 175,576,178 $ 1,090,583,506 =================================================================================================================================== Shares outstanding 20,332,029 29,272,489 141,353,099 - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value per share of outstanding capital stock $ 9.42 $ 6.00 $ 7.72 - ----------------------------------------------------------------------------------------------------------------------------------- *Including securities on loan, at value (Note 6) $ -- $ -- $ 8,017,660 - -----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 41
AXP VP - AXP VP - AXP VP - MANAGED NEW PARTNERS FUND DIMENSIONS SMALL CAP FUND VALUE FEB. 28, 2002 (UNAUDITED) FUND ASSETS Investments in securities, at value (Note 1)* (identified cost $3,305,560,079, $3,521,829,531 and $22,362,942) $ 3,457,121,226 $ 3,877,277,148 $ 24,095,458 Cash in bank on demand deposit -- -- 5,306,719 Receivable for investment securities sold 14,350,062 2,995,813 153,645 Dividends and accrued interest receivable 21,673,413 5,657,902 14,465 - ---------------------------------------------------------------------------------------------------------------------------------- Total assets 3,493,144,701 3,885,930,863 29,570,287 - ---------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Disbursements in excess of cash on demand deposit 249,366,218 3,250,798 -- Dividends payable to shareholders (Note 1) 18,795,734 5,474,801 -- Payable for investment securities purchased 30,661,779 23,236,050 300,674 Accrued investment management and services fee 1,574,362 1,793,344 20,542 Accrued distribution fee 328,853 368,441 2,517 Accrued administrative services fee 77,548 126,177 1,611 Payable upon return of securities loaned (Note 6) 44,205,700 19,050,000 -- Other accrued expenses 125,474 119,909 7,866 Option contracts written at value (premiums received, $606,491 for AXP VP - Managed Fund and $102,898 AXP VP - New Dimensions Fund) (Note 8) 8,125 67,750 -- - ---------------------------------------------------------------------------------------------------------------------------------- Total liabilities 345,143,793 53,487,270 333,210 - ---------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 3,148,000,908 $ 3,832,443,593 $ 29,237,077 ================================================================================================================================== REPRESENTED BY Capital stock -- $.01 par value ($.001 for AXP VP -- Managed Fund) (Note 1) $ 230,586 $ 2,501,702 $ 27,253 Additional paid-in capital 3,058,675,139 3,848,729,014 27,320,941 Undistributed (excess of distributions over) net investment income 458,014 -- (26,796) Accumulated net realized gain (loss) (Note 9) (63,453,053 (374,265,701) 183,163 Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 152,090,222 355,478,578 1,732,516 - ---------------------------------------------------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 3,148,000,908 $ 3,832,443,593 $ 29,237,077 ================================================================================================================================== Shares outstanding 230,586,449 250,170,155 2,725,285 - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value per share of outstanding capital stock $ 13.65 $ 15.32 $ 10.73 - ---------------------------------------------------------------------------------------------------------------------------------- *Including securities on loan, at value (Note 6) $ 42,866,445 $ 17,913,500 $ -- - ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 42
AXP VP - AXP VP - AXP VP - S&P 500 SMALL CAP STOCK INDEX ADVANTAGE FUND FEB. 28, 2002 (UNAUDITED) FUND FUND ASSETS Investments in securities, at value (Note 1) (identified cost $98,838,818, $58,539,124 and $3,475,185) $ 87,974,552 $ 58,707,494 $ 3,521,091 Cash in bank on demand deposit 561,285 133,975 13,998 Receivable for investment securities sold 2,642 1,112,625 66,837 Dividends and accrued interest receivable 130,054 33,332 5,087 - ---------------------------------------------------------------------------------------------------------------------- Total assets 88,668,533 59,987,426 3,607,013 - ---------------------------------------------------------------------------------------------------------------------- LIABILITIES Dividends payable to shareholders (Note 1) 136,721 -- 3,772 Payable for investment securities purchased 996,612 1,456,656 137,839 Accrued investment management and services fee 18,578 34,972 1,397 Accrued distribution fee 8,008 5,534 312 Accrued administrative services fee 5,125 2,656 100 Other accrued expenses 17,600 11,804 2,930 - ---------------------------------------------------------------------------------------------------------------------- Total liabilities 1,182,644 1,511,622 146,350 - ---------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 87,485,889 $ 58,475,804 $ 3,460,663 ====================================================================================================================== REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 116,100 $ 57,941 $ 3,703 Additional paid-in capital 99,184,686 62,625,913 3,573,226 Undistributed (excess of distributions over) net investment income -- (43,594) -- Accumulated net realized gain (loss) (Note 9) (950,631) (4,332,826) (162,172) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (10,864,266) 168,370 45,906 - ---------------------------------------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 87,485,889 $ 58,475,804 $ 3,460,663 ====================================================================================================================== Shares outstanding 11,610,002 5,794,139 370,332 - ---------------------------------------------------------------------------------------------------------------------- Net asset value per share of outstanding capital stock $ 7.54 $ 10.09 $ 9.34 - ----------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 43
AXP VP - STRATEGY AGGRESSIVE FEB. 28, 2002 (UNAUDITED) FUND ASSETS Investments in securities, at value (Note 1)* (identified cost $1,701,379,705) $ 1,592,355,326 Cash in bank on demand deposit 195,835 Receivable for investment securities sold 17,835,561 Dividends and accrued interest receivable 779,555 - ------------------------------------------------------------------------------------------------------------------------------- Total assets 1,611,166,277 - ------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Payable for investment securities purchased 46,546,852 Accrued investment management and services fee 739,021 Accrued distribution fee 150,478 Accrued administrative services fee 57,742 Payable upon return of securities loaned (Note 6) 71,825,500 Other accrued expenses 66,122 Option contracts written at value (premium received, $646,490 for AXP VP - Strategy Aggressive Fund) (Note 8) 577,500 - ------------------------------------------------------------------------------------------------------------------------------- Total liabilities 119,963,215 - ------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 1,491,203,062 =============================================================================================================================== REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 2,029,977 Additional paid-in capital 2,671,810,777 Excess of distributions over net investment income (3,813,868) Accumulated net realized gain (loss) (Note 9) (1,069,868,435) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (108,955,389) - ------------------------------------------------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 1,491,203,062 =============================================================================================================================== Shares outstanding 202,997,705 - ------------------------------------------------------------------------------------------------------------------------------- Net asset value per share of outstanding capital stock $ 7.35 - ------------------------------------------------------------------------------------------------------------------------------- *Including securities on loan, at value (Note 6) $ 66,721,720 - -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements 44
AXP VP - AXP VP - AXP VP - BLUE CHIP BOND CAPITAL ADVANTAGE FUND RESOURCE SIX MONTHS ENDED FEB. 28, 2002 (UNAUDITED) FUND FUND INVESTMENT INCOME Income: Dividends $ 528,373 $ 770,888 $ 19,753,463 Interest 62,725 54,817,458 2,366,313 Less foreign taxes withheld (70) (33,015) -- - ------------------------------------------------------------------------------------------------------------------------- Total income 591,028 55,555,331 22,119,776 - ------------------------------------------------------------------------------------------------------------------------- EXPENSES (NOTE 2): Investment management services fee 210,217 5,110,006 9,451,377 Distribution fee 49,717 1,057,904 1,924,388 Administrative services fees and expenses 15,518 452,116 712,511 Custodian fees 13,180 60,265 67,050 Compensation of board members 5,267 8,625 13,183 Printing and postage 5,531 119,861 208,085 Audit fees 7,000 12,125 11,750 Other 1,145 5,016 3,353 - ------------------------------------------------------------------------------------------------------------------------- Total expenses 307,575 6,825,918 12,391,697 Earnings credits on cash balances (Note 2) (2,792) (1,743) (1,477) - ------------------------------------------------------------------------------------------------------------------------- Total net expenses 304,783 6,824,175 12,390,220 - ------------------------------------------------------------------------------------------------------------------------- Investment income (loss) -- net 286,245 48,731,156 9,729,556 - ------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) (7,641,185) (22,507,204) (207,014,380) Foreign currency transactions -- (55,847) -- Futures contracts (502,324) -- -- - ------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (8,143,509) (22,563,051) (207,014,380) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 5,853,728 8,937,366 157,353,167 - ------------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (2,289,781) (13,625,685) (49,661,213) - ------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ (2,003,536) $ 35,105,471 $ (39,931,657) =========================================================================================================================
See accompanying notes to financial statements. 45
AXP VP - AXP VP - AXP VP - CASH DIVERSIFIED EMERGING MANAGEMENT EQUITY INCOME MARKETS SIX MONTHS ENDED FEB. 28, 2002 (UNAUDITED) FUND FUND FUND INVESTMENT INCOME Income: Dividends $ -- $ 1,753,245 $ 49,536 Interest 15,249,491 104,723 5,042 Less foreign taxes withheld -- (9,993) (6,543) - ---------------------------------------------------------------------------------------------------------------------- Total income 15,249,491 1,847,975 48,035 - ---------------------------------------------------------------------------------------------------------------------- EXPENSES (NOTE 2): Investment management services fee 2,840,442 438,317 35,915 Distribution fee 699,302 96,208 3,823 Administrative services fees and expenses 172,727 30,644 3,059 Custodian fees 41,656 132,329 17,248 Compensation of board members 7,500 5,267 -- Printing and postage 76,405 -- 60 Audit fees 9,125 7,000 7,250 Other 2,785 2,732 2,724 - ---------------------------------------------------------------------------------------------------------------------- Total expenses 3,849,942 712,497 70,079 Expenses reimbursed by AEFC (Note 2) -- -- (19,878) - ---------------------------------------------------------------------------------------------------------------------- 3,849,942 712,497 50,201 Earnings credits on cash balances (Note 2) (3,056) (3,710) (1,810) - ---------------------------------------------------------------------------------------------------------------------- Total net expenses 3,846,886 708,787 48,391 - ---------------------------------------------------------------------------------------------------------------------- Investment income (loss) -- net 11,402,605 1,139,188 (356) - ---------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) -- (1,770,932) 56,948 Foreign currency transactions -- -- (16,509) - ---------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments -- (1,770,932) 40,439 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies -- 2,804,050 1,011,362 - ---------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies -- 1,033,118 1,051,801 - ---------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ 11,402,605 $ 2,172,306 $ 1,051,445 ======================================================================================================================
See accompanying notes to financial statements. 46
AXP VP - AXP VP - AXP VP - EQUITY EXTRA FEDERAL SELECT INCOME INCOME SIX MONTHS ENDED FEB. 28, 2002 (UNAUDITED) FUND FUND FUND INVESTMENT INCOME Income: Dividends $ 31,403 $ 2,891,448 $ -- Interest 10,007 31,095,757 2,849,430 Less foreign taxes withheld -- (2,264) -- - ---------------------------------------------------------------------------------------------------------------------- Total income 41,410 33,984,941 2,849,430 - ---------------------------------------------------------------------------------------------------------------------- EXPENSES (NOTE 2): Investment management services fee 79,697 1,850,259 419,748 Distribution fee 14,476 373,036 86,014 Administrative services fees and expenses 6,832 183,423 34,279 Custodian fees 64,332 38,830 12,300 Compensation of board members 1,367 6,200 5,267 Printing and postage 5,468 36,430 842 Audit fees 6,875 9,875 7,250 Other 3,473 3,540 4,498 - ---------------------------------------------------------------------------------------------------------------------- Total expenses 182,520 2,501,593 570,198 Expenses reimbursed by AEFC (Note 2) (54,880) -- -- - ---------------------------------------------------------------------------------------------------------------------- 127,640 2,501,593 570,198 Earnings credits on cash balances (Note 2) (2,784) (1,319) (1,031) - ---------------------------------------------------------------------------------------------------------------------- Total net expenses 124,856 2,500,274 569,167 - ---------------------------------------------------------------------------------------------------------------------- Investment income (loss) -- net (83,446) 31,484,667 2,280,263 - ---------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) (902,934) (55,130,193) 1,620,875 Futures contracts -- -- (435,969) Options contracts written -- -- 42,897 - ---------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (902,934) (55,130,193) 1,227,803 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 1,985,862 9,911,435 (635,642) - ---------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies 1,082,928 (45,218,758) 592,161 - ---------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ 999,482 $(13,734,091) $ 2,872,424 ======================================================================================================================
See accompanying notes to financial statements. 47
AXP VP - AXP VP - AXP VP - GLOBAL GROWTH INTERNATIONAL BOND FUND FUND SIX MONTHS ENDED FEB. 28, 2002 (UNAUDITED) FUND - --------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Income: Dividends $ -- $ 473,923 $ 5,357,307 Interest 5,016,009 95,653 836,541 Less foreign taxes withheld -- (1,129) (586,318) - --------------------------------------------------------------------------------------------------------------------------- Total income 5,016,009 568,447 5,607,530 - --------------------------------------------------------------------------------------------------------------------------- EXPENSES (NOTE 2): Investment management services fee 802,834 481,685 4,876,016 Distribution fee 119,469 108,859 723,774 Administrative services fees and expenses 57,750 43,969 302,745 Custodian fees 21,908 22,962 150,530 Compensation of board members 5,267 5,267 7,975 Printing and postage 7,269 3,355 45,990 Audit fees 8,875 7,125 10,625 Other 472 3,133 5,916 - --------------------------------------------------------------------------------------------------------------------------- Total expenses 1,023,844 676,355 6,123,571 Earnings credits on cash balances (Note 2) (2,188) (2,905) (1,928) - --------------------------------------------------------------------------------------------------------------------------- Total net expenses 1,021,656 673,450 6,121,643 - --------------------------------------------------------------------------------------------------------------------------- Investment income (loss)-- net 3,994,353 (105,003) (514,113) - --------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) (528,044) (74,707,534) (133,414,183) Foreign currency transactions 313,723 -- 1,785,963 Futures contracts (99,628) -- -- - --------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (313,949) (74,707,534) (131,628,220) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (5,759,378) 61,094,442 34,443,198 - --------------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (6,073,327) (13,613,092) (97,185,022) - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ (2,078,974) $ (13,718,095) $ (97,699,135) ===========================================================================================================================
See accompanying notes to financial statements. 48
AXP VP - AXP VP - AXP VP - MANAGED NEW PARTNERS FUND DIMENSIONS SMALL CAP FUND VALUE SIX MONTHS ENDED FEB. 28, 2002 (UNAUDITED) FUND - --------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Income: Dividends $ 13,619,648 $ 24,160,298 $ 54,271 Interest 37,576,835 452,378 26,422 Less foreign taxes withheld -- -- (529) - --------------------------------------------------------------------------------------------------------------------------- Total income 51,196,483 24,612,676 80,164 - --------------------------------------------------------------------------------------------------------------------------- EXPENSES (NOTE 2): Investment management services fee 10,539,075 11,528,919 75,146 Distribution fee 2,205,171 2,368,081 9,209 Administrative services fees and expenses 554,556 841,362 5,894 Custodian fees 103,800 84,895 12,109 Compensation of board members 13,966 14,600 -- Printing and postage 229,350 232,713 4,525 Audit fees 11,000 11,625 4,500 Other 11,061 4,374 8,780 - --------------------------------------------------------------------------------------------------------------------------- Total expenses 13,667,979 15,086,569 120,163 Expenses reimbursed by AEFC (Note 2) -- -- (13,203) - --------------------------------------------------------------------------------------------------------------------------- 13,667,979 15,086,569 106,960 Earnings credits on cash balances (Note 2) (1,942) (1,399) -- - --------------------------------------------------------------------------------------------------------------------------- Total net expenses 13,666,037 15,085,170 106,960 - --------------------------------------------------------------------------------------------------------------------------- Investment income (loss)-- net 37,530,446 9,527,506 (26,796) - --------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) (36,853,800) (110,760,390) 183,163 Options contracts written (Note 8) 8,171,547 1,470,877 -- - --------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (28,682,253) (109,289,513) 183,163 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (108,668,001) 65,012,403 1,813,491 - --------------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (137,350,254) (44,277,110) 1,996,654 - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ (99,819,808) $ (34,749,604) $ 1,969,858 ===========================================================================================================================
See accompanying notes to financial statements. 49
AXP VP - AXP VP - AXP VP - S&P 500 SMALL CAP STOCK INDEX ADVANTAGE FUND SIX MONTHS ENDED FEB. 28, 2002 (UNAUDITED) FUND FUND - --------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Income: Dividends $ 498,440 $ 203,617 $ 19,237 Interest 4,797 30,126 2,000 Less foreign taxes withheld (419) (359) -- - --------------------------------------------------------------------------------------------------------------------------- Total income 502,818 233,384 21,237 - --------------------------------------------------------------------------------------------------------------------------- EXPENSES (NOTE 2): Investment management services fee 100,076 182,725 7,235 Distribution fee 43,136 32,734 1,615 Administrative services fees and expenses 27,050 15,123 517 Custodian fees 101,514 36,444 12,825 Compensation of board members 5,267 5,267 -- Printing and postage 3,295 2,792 4,525 Audit fees 7,000 7,000 4,000 Other 1,870 1,245 7,624 - --------------------------------------------------------------------------------------------------------------------------- Total expenses 289,208 283,330 38,341 Expenses reimbursed by AEFC (Note 2) (118,408) -- (24,333) - --------------------------------------------------------------------------------------------------------------------------- 170,800 283,330 14,008 Earnings credits on cash balances (Note 2) (6,776) (4,632) (1,755) - --------------------------------------------------------------------------------------------------------------------------- Total net expenses 164,024 278,698 12,253 - --------------------------------------------------------------------------------------------------------------------------- Investment income (loss)-- net 338,794 (45,314) 8,984 - --------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) (334,061) (1,516,996) (155,289) Futures contracts (11,056) -- -- - --------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (345,117) (1,516,996) (155,289) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (1,158,335) 1,706,866 135,675 - --------------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (1,503,452) 189,870 (19,614) - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(1,164,658) $ 144,556 $ (10,630) ===========================================================================================================================
See accompanying notes to financial statements. 50
AXP VP - STRATEGY AGGRESSIVE SIX MONTHS ENDED FEB. 28, 2002 (UNAUDITED) FUND - ---------------------------------------------------------------------------------------- INVESTMENT INCOME Income: Dividends $ 1,364,908 Interest 1,836,458 Less foreign taxes withheld (744) - ---------------------------------------------------------------------------------------- Total income 3,200,622 - ---------------------------------------------------------------------------------------- EXPENSES (NOTE 2): Investment management services fee 5,035,215 Distribution fee 1,027,385 Administrative services fees and expenses 404,117 Custodian fees 38,219 Compensation of board members 9,300 Printing and postage 101,038 Audit fees 9,250 Other 4,093 - ---------------------------------------------------------------------------------------- Total expenses 6,628,617 Earnings credits on cash balances (Note 2) (3,771) - ---------------------------------------------------------------------------------------- Total net expenses 6,624,846 - ---------------------------------------------------------------------------------------- Investment income (loss)-- net (3,424,224) - ---------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) (339,034,441) Foreign currency transactions (4,172) Options contracts written (Note 8) 1,607,434 - ---------------------------------------------------------------------------------------- Net realized gain (loss) on investments (337,431,179) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 140,208,751 - ---------------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (197,222,428) - ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(200,646,652) ========================================================================================
See accompanying notes to financial statements. 51 STATEMENTS OF CHANGES IN NET ASSETS AMERICAN EXPRESS VARIABLE PORTFOLIO FUNDS
AXP VP - BLUE CHIP ADVANTAGE FUND AXP VP - BOND FUND FEB. 28, 2002 AUG. 31, 2001 FEB. 28, 2002 AUG. 31, 2001 SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED (UNAUDITED) (UNAUDITED) - ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS AND DISTRIBUTIONS Investment income (loss)-- net $ 286,245 $ 647,844 $ 48,731,156 $ 100,755,291 Net realized gain (loss) on investments (8,143,509) (13,066,999) (22,563,051) (7,798,194) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 5,853,728 (14,942,041) 8,937,366 51,135,996 - ------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (2,003,536) (27,361,196) 35,105,471 144,093,093 - ------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income (286,246) (648,430) (50,577,759) (97,571,632) - ------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales 7,872,555 44,698,549 153,365,625 214,172,408 Reinvestment of distributions at net asset value 244,242 595,131 51,371,834 98,443,073 Payments for redemptions (4,772,711) (7,650,542) (84,247,786) (200,613,116) - ------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 3,344,086 37,643,138 120,489,673 112,002,365 - ------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 1,054,304 9,633,512 105,017,385 158,523,826 Net assets at beginning of period 80,945,959 71,312,447 1,626,120,064 1,467,596,238 - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 82,000,263 $ 80,945,959 $ 1,731,137,449 $ 1,626,120,064 =============================================================================================================================== Undistributed (excess of distributions over) net investment income $ (1) $ -- $ 2,192,114 $ 4,038,717 - -------------------------------------------------------------------------------------------------------------------------------
AXP VP - CAPITAL RESOURCE FUND AXP VP - CASH MANAGEMENT FUND FEB. 28, 2002 AUG. 31, 2001 FEB. 28, 2002 AUG. 31, 2001 SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED (UNAUDITED) (UNAUDITED) - ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS AND DISTRIBUTIONS Investment income (loss)-- net $ 9,729,556 $ 5,650,665 $ 11,402,605 $ 42,889,591 Net realized gain (loss) on investments (207,014,380) 228,598,206 -- 6,388 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 157,353,167 (2,289,372,543) -- -- - ------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (39,931,657) (2,055,123,672) 11,402,605 42,895,979 - ------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income (8,417,774) (6,962,448) (11,462,248) (42,812,931) Net realized gain (226,597,742) (521,763,669) -- -- - ------------------------------------------------------------------------------------------------------------------------------- Total distributions (235,015,516) (528,726,117) (11,462,248) (42,812,931) - ------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales 8,694,382 88,415,110 518,765,440 1,141,462,249 Reinvestment of distributions at net asset value 7,662,169 524,721,290 13,095,685 43,981,927 Payments for redemptions (269,131,634) (678,846,922) (496,555,820) (904,636,054) - ------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (252,775,083) (65,710,522) 35,305,305 280,808,122 - ------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (527,722,256) (2,649,560,311) 35,245,662 280,891,170 Net assets at beginning of period 3,270,280,520 5,919,840,831 1,063,379,754 782,488,584 - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 2,742,558,264 $ 3,270,280,520 $ 1,098,625,416 $ 1,063,379,754 =============================================================================================================================== Undistributed (excess of distributions over) net investment income $ -- $ (1,311,782) $ (21,273) $ 38,370 - -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 52
AXP VP - DIVERSIFIED EQUITY INCOME FUND AXP VP - EMERGING MARKETS FUND FEB. 28, 2002 AUG. 31, 2001 FEB. 28, 2002 AUG. 31, 2001 SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED (UNAUDITED) (UNAUDITED) - ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS AND DISTRIBUTIONS Investment income (loss)-- net $ 1,139,188 $ 611,325 $ (356) $ 11,214 Net realized gain (loss) on investments (1,770,932) 935,098 40,439 (1,868,227) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 2,804,050 (1,632,035) 1,011,362 (117,625) - ------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 2,172,306 (85,612) 1,051,445 (1,974,638) - ------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income (1,108,617) (611,792) (1,018) -- Net realized gain (723,310) -- -- -- - ------------------------------------------------------------------------------------------------------------------------------- Total distributions (1,831,927) (611,792) (1,018) -- - ------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales 139,445,905 92,854,245 1,070,671 6,629,090 Reinvestment of distributions at net asset value 819,515 339,812 1,018 -- Payments for redemptions (42,987,271) (9,768,330) (359,293) (4,557,635) - ------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 97,278,149 83,425,727 712,396 2,071,455 - ------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 97,618,528 82,728,323 1,762,823 96,817 Net assets at beginning of period 105,510,290 22,781,967 5,704,309 5,607,492 - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 203,128,818 $ 105,510,290 $ 7,467,132 $ 5,704,309 =============================================================================================================================== Undistributed (excess of distributions over) net investment income $ 15,075 $ (15,496) $ (1,374) $ -- - -------------------------------------------------------------------------------------------------------------------------------
AXP VP - EQUITY SELECT FUND AXP VP - EXTRA INCOME FUND FEB. 28, 2002 AUG. 31, 2001(a) FEB. 28, 2002 AUG. 31, 2001 SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED YEAR ENDED (UNAUDITED) (UNAUDITED) - ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS AND DISTRIBUTIONS Investment income (loss)-- net $ (83,446) $ (10,149) $ 31,484,667 $ 65,147,355 Net realized gain (loss) on investments (902,934) (115,264) (55,130,193) (94,307,791) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 1,985,862 (528,321) 9,911,435 17,805,073 - ------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 999,482 (653,734) (13,734,091) (11,355,363) - ------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income -- -- (31,809,605) (63,606,197) - ------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales 34,621,813 13,564,420 77,311,643 125,002,446 Reinvestment of distributions at net asset value -- -- 31,498,537 64,378,242 Payments for redemptions (13,177,246) (1,343,355) (64,059,317) (100,064,441) - ------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 21,444,567 12,221,065 44,750,863 89,316,247 - ------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 22,444,049 11,567,331 (792,833) 14,354,687 Net assets at beginning of period 13,620,710 2,053,379(b) 608,922,314 594,567,627 - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 36,064,759 $ 13,620,710 $ 608,129,481 $ 608,922,314 =============================================================================================================================== Undistributed (excess of distributions over) net investment income $ (83,446) $ -- $ (38,077) $ 286,861 - -------------------------------------------------------------------------------------------------------------------------------
(a) For the period from May 1, 2001 (date the Fund became available) to Aug. 31, 2001. (b) Initial capital of $2,000,000 was contributed on April 26, 2001. The Fund had an increase in net assets resulting from operations of $53,379 during the period from April 26, 2001 to May 1, 2001 (date the Fund became available). See accompanying notes to financial statements. 53
AXP VP - FEDERAL INCOME FUND AXP VP - GLOBAL BOND FUND FEB. 28, 2002 AUG. 31, 2001 FEB. 28, 2002 AUG. 31, 2001 SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED (UNAUDITED) (UNAUDITED) - ------------------------------------------------------------------------------------------------------------------------- OPERATIONS AND DISTRIBUTIONS Investment income (loss)-- net $ 2,280,263 $ 3,089,285 $ 3,994,353 $ 8,272,166 Net realized gain (loss) on investments 1,227,803 199,900 (313,949) (3,553,295) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (635,642) 1,883,044 (5,759,378) 7,907,861 - ------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 2,872,424 5,172,229 (2,078,974) 12,626,732 - ------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income (2,293,222) (3,091,592) (4,743,209) (4,606,500) Net realized gain (264,298) (116) -- -- - ------------------------------------------------------------------------------------------------------------------------- Total distributions (2,557,520) (3,091,708) (4,743,209) (4,606,500) - ------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales 64,784,068 82,552,291 12,553,065 33,292,605 Reinvestment of distributions at net asset value 2,299,850 2,904,343 4,844,326 4,511,911 Payments for redemptions (10,633,503) (18,142,330) (10,568,566) (31,673,167) - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 56,450,415 67,314,304 6,828,825 6,131,349 - ------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 56,765,319 69,394,825 6,642 14,151,581 Net assets at beginning of period 106,475,164 37,080,339 191,469,815 177,318,234 - ------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 163,240,483 $ 106,475,164 $ 191,476,457 $ 191,469,815 ========================================================================================================================= Undistributed (excess of distributions over) net investment income $ (12,959) $ -- $ 400,099 $ 1,148,955 - -------------------------------------------------------------------------------------------------------------------------
AXP VP - GROWTH FUND AXP VP - INTERNATIONAL FUND FEB. 28, 2002 AUG. 31, 2001 FEB. 28, 2002 AUG. 31, 2001 SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED (UNAUDITED) (UNAUDITED) - ---------------------------------------------------------------------------------------------------------------------------------- OPERATIONS AND DISTRIBUTIONS Investment income (loss)-- net $ (105,003) $ (377,905) $ (514,113) $ 5,493,944 Net realized gain (loss) on investments (74,707,534) (50,507,065) (131,628,220) (511,319,846) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 61,094,442 (94,509,206) 34,443,198 (337,202,909) - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (13,718,095) (145,394,176) (97,699,135) (843,028,811) - ---------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income -- -- (3,769,378) (5,512,064) Net realized gain -- -- (2,224,868) (408,041,324) Excess distributions from net investment income (Note 1) -- -- -- (8,206,027) - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions -- -- (5,994,246) (421,759,415) - ---------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales 21,546,559 135,579,014 130,110,299 234,314,455 Reinvestment of distributions at net asset value -- -- 9,254,079 416,274,714 Payments for redemptions (9,156,990) (8,042,894) (255,000,007) (464,642,918) - ---------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 12,389,569 127,536,120 (115,635,629) 185,946,251 - ---------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (1,328,526) (17,858,056) (219,329,010) (1,078,841,975) Net assets at beginning of period 176,904,704 194,762,760 1,309,912,516 2,388,754,491 - ---------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 175,576,178 $ 176,904,704 $ 1,090,583,506 $ 1,309,912,516 ==================================================================================================================================
See accompanying notes to financial statements. 54
AXP VP - MANAGED FUND AXP VP - NEW DIMENSIONS FUND FEB. 28, 2002 AUG. 31, 2001 FEB. 28, 2002 AUG. 31, 2001 SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED (UNAUDITED) (UNAUDITED) - ---------------------------------------------------------------------------------------------------------------------------------- OPERATIONS AND DISTRIBUTIONS Investment income (loss)-- net $ 37,530,446 $ 109,178,811 $ 9,527,506 $ 5,667,061 Net realized gain (loss) on investments (28,682,253) 220,281,576 (109,289,513) (254,409,564) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (108,668,001) (1,300,681,441) 65,012,403 (1,644,598,334) - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (99,819,808) (971,221,054) (34,749,604) (1,893,340,837) - ---------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income (38,352,187) (98,962,920) (9,709,670) (5,302,433) Net realized gain (250,253,587) (302,887,014) (3,533,136) (349,235,295) - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions (288,605,774) (401,849,934) (13,242,806) (354,537,728) - ---------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales 11,874,745 116,758,124 136,215,927 503,794,426 Reinvestment of distributions at net asset value 40,443,583 412,774,099 5,933,273 354,346,255 Payments for redemptions (274,957,312) (620,315,746) (154,041,157) (282,156,566) - ---------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (222,638,984) (90,783,523) (11,891,957) 575,984,115 - ---------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (611,064,566) (1,463,854,511) (59,884,367) (1,671,894,450) Net assets at beginning of period 3,759,065,474 5,222,919,985 3,892,327,960 5,564,222,410 - ---------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 3,148,000,908 $ 3,759,065,474 $ 3,832,443,593 $ 3,892,327,960 ================================================================================================================================== Undistributed net investment income $ 458,014 $ 1,279,755 $ -- $ 182,164 - ----------------------------------------------------------------------------------------------------------------------------------
AXP VP - PARTNERS SMALL CAP VALUE FUND AXP VP - S&P 500 INDEX FUND FEB. 28, 2002 AUG. 31, 2001(a) FEB. 28, 2002 AUG. 31, 2001 SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED YEAR ENDED (UNAUDITED) (UNAUDITED) - ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS AND DISTRIBUTIONS Investment income (loss)-- net $ (26,796) $ (2,267) $ 338,794 $ 322,649 Net realized gain (loss) on investments 183,163 -- (345,117) (602,036) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 1,813,491 (84,704) (1,158,335) (10,412,119) - ------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 1,969,858 (86,971) (1,164,658) (10,691,506) - ------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income -- -- (343,721) (321,521) Net realized gain -- -- -- (58,609) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions -- -- (343,721) (380,130) - ------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales 22,931,528 866,506 34,492,210 55,760,130 Reinvestment of distributions at net asset value -- -- 323,345 289,786 Payments for redemptions (449,252) -- (1,723,361) (10,084,873) - ------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 22,482,276 866,506 33,092,194 45,965,043 - ------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 24,452,134 779,535 31,583,815 34,893,407 Net assets at beginning of period 4,784,943 4,005,408(b) 55,902,074 21,008,667 - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 29,237,077 $ 4,784,943 $ 87,485,889 $ 55,902,074 =============================================================================================================================== Undistributed (excess of distributions over) net investment income $ (26,796) $ -- $ -- $ 4,927 - -------------------------------------------------------------------------------------------------------------------------------
(a) For the period from Aug. 14, 2001 (date the Fund became available) to Aug. 31, 2001. (b) Initial capital of $4,000,000 was contributed on Aug. 2, 2001. The Fund had an increase in net assets resulting from operations of $5,408 during the period from Aug. 2, 2001 to Aug. 14, 2001 (date the Fund became available). See accompanying notes to financial statements. 55
AXP VP - SMALL CAP ADVANTAGE FUND AXP VP - STOCK FUND FEB. 28, 2002 AUG. 31, 2001 FEB. 28, 2002 AUG. 31, 2001(a) SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED PERIOD ENDED (UNAUDITED) (UNAUDITED) - ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS AND DISTRIBUTIONS Investment income (loss)-- net $ (45,314) $ (33,650) $ 8,984 $ 866 Net realized gain (loss) on investments (1,516,996) (2,644,285) (155,289) (6,883) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 1,706,866 (3,904,322) 135,675 (53,195) - ------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 144,556 (6,582,257) (10,630) (59,212) - ------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income -- (3,626) (9,172) (2,137) Net realized gain -- (1,082,370) -- -- - ------------------------------------------------------------------------------------------------------------------------------- Total distributions -- (1,085,996) (9,172) (2,137) - ------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales 11,043,777 29,983,806 1,598,290 80,732 Reinvestment of distributions at net asset value -- 1,085,996 7,537 -- Payments for redemptions (1,942,675) (5,272,551) (109,442) -- - ------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 9,101,102 25,797,251 1,496,385 80,732 - ------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 9,245,658 18,128,998 1,476,583 19,383 Net assets at beginning of period 49,230,146 31,101,148 1,984,080 1,964,697(b) - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 58,475,804 $ 49,230,146 $ 3,460,663 $ 1,984,080 =============================================================================================================================== Undistributed (excess of distributions over) net investment income $ (43,594) $ 1,720 $ -- $ 188 - -------------------------------------------------------------------------------------------------------------------------------
(a) For the period from Aug.13, 2001 (date the Fund became available) to Aug. 31, 2001. (b) Initial capital of $2,000,000 was contributed on Aug. 2, 2001. The Fund had a decrease in net assets resulting from operations of $35,303 during the period from Aug. 2, 2001 to Aug. 13, 2001 (date the Fund became available).
AXP VP - STRATEGY AGGRESSIVE FUND FEB. 28, 2002 AUG. 31, 2001 SIX MONTHS ENDED YEAR ENDED (UNAUDITED) - -------------------------------------------------------------------------------------------------------------- OPERATIONS AND DISTRIBUTIONS Investment income (loss)-- net $ (3,424,224) $ 2,693,368 Net realized gain (loss) on investments (337,431,179) (712,183,970) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 140,208,751 (1,515,699,404) - -------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (200,646,652) (2,225,190,006) - -------------------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income -- (4,199,226) Net realized gain -- (979,638,932) - -------------------------------------------------------------------------------------------------------------- Total distributions -- (983,838,158) - -------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales 44,931,734 232,145,175 Reinvestment of distributions at net asset value 2,827,564 981,016,852 Payments for redemptions (170,418,996) (386,518,713) - -------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (122,659,698) 826,643,314 - -------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (323,306,350) (2,382,384,850) Net assets at beginning of period 1,814,509,412 4,196,894,262 - -------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 1,491,203,062 $ 1,814,509,412 ==============================================================================================================
See accompanying notes to financial statements. 56 NOTES TO FINANCIAL STATEMENTS AMERICAN EXPRESS VARIABLE PORTFOLIO FUNDS (UNAUDITED AS TO FEB. 28, 2002) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Each Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, (non-diversified for AXP VP - Global Bond Fund, AXP VP - Partners Small Cap Value Fund and AXP VP - S&P 500 Index Fund) open-end management investment company. Each Fund has 10 billion authorized shares of capital stock. The following Fund became available on May 1, 2001. Prior to this date, American Express Financial Corporation (AEFC) purchased the following shares of capital stock at $10 per share, which represented the initial capital in the Fund:
FUND NUMBER OF SHARES - -------------------------------------------------------------------------------- AXP VP - Equity Select Fund 200,000 - --------------------------------------------------------------------------------
The following Fund became available on Aug. 13, 2001. Prior to this date, AEFC purchased the following shares of capital stock at $10 per share, which represented the initial capital in the Fund:
FUND NUMBER OF SHARES - -------------------------------------------------------------------------------- AXP VP - Stock Fund 200,000 - --------------------------------------------------------------------------------
The following Fund became available on Aug. 14, 2001. Prior to this date, AEFC purchased the following shares of capital stock at $10 per share, which represented the initial capital in the Fund:
FUND NUMBER OF SHARES - -------------------------------------------------------------------------------- AXP VP - Partners Small Cap Value Fund 400,000 - --------------------------------------------------------------------------------
The primary investments of each Fund are as follows: AXP VP - Blue Chip Advantage Fund invests primarily in common stocks of companies that are included in the Standard & Poor's 500 Composite Stock Price Index (S&P 500). AXP VP - Bond Fund invests primarily in bonds and other debt obligations. AXP VP - Capital Resource Fund invests primarily in U.S. common stocks and other securities convertible into common stock. AXP VP - Cash Management Fund invests primarily in money market instruments, such as marketable debt obligations issued by the U.S. government or its agencies, bank certificates of deposit bankers' acceptances, letters of credit and commercial paper. AXP VP - Diversified Equity Income Fund invests primarily in dividend-paying common and preferred stocks. AXP VP - Emerging Markets Fund invests primarily in equity securities of companies in emerging market countries. AXP VP - Equity Select Fund invests primarily in growth stocks of medium-sized companies. AXP VP - Extra Income Fund invests primarily in high-yielding, high risk corporate bonds (junk bonds) issued by U.S. and foreign companies and governments. AXP VP - Federal Income Fund invests primarily in debt obligations guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities. AXP VP - Global Bond Fund invests primarily in debt securities of U.S. and foreign issuers. AXP VP - Growth Fund invests primarily in common stocks and securities convertible into common stocks that appear to offer growth opportunities. AXP VP - International Fund invests primarily in equity securities of foreign issuers that offer strong growth potential. AXP VP - Managed Fund invests primarily in a combination of common and preferred stocks, convertible securities, bonds and other debt securities. AXP VP - New Dimensions Fund invests primarily in common stocks showing potential for significant growth. AXP VP - Partners Small Cap Value Fund invests primarily in equity securities of small capitalization companies. AXP VP - S&P 500 Index Fund invests primarily in securities that are expected to provide investment results that correspond to the performance of the S&P 500 Index. AXP VP - Small Cap Advantage Fund invests primarily in equity securities of small companies. AXP VP - Stock Fund invests primarily in common stocks and securities convertible into common stocks. AXP VP - Strategy Aggressive Fund invests primarily in securities of growth companies. Shares of each Fund are sold through the purchase of a variable annuity contract or life insurance policy. 57 Each Fund's significant accounting policies are summarized as follows: USE OF ESTIMATES Preparing financial statements that conform to accounting principles generally accepted in the United States of America requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. VALUATION OF SECURITIES All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which foreign securities are traded, and before the close of business of the Fund, are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board. Short-term securities in all Funds, except AXP VP - Cash Management Fund, maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on the current interest rates; those maturing in 60 days or less are valued at amortized cost. Pursuant to Rule 2a-7 of the 1940 Act, all securities in AXP VP - Cash Management Fund are valued at amortized cost which approximates market value in order to maintain a constant net asset value of $1 per share. OPTION TRANSACTIONS To produce incremental earnings, protect gains and facilitate buying and selling of securities for investments, the Funds, except AXP VP - Cash Management Fund, may buy and sell put and call options and write covered call options on portfolio securities and write cash-secured puts. The risk in writing a call option is that the Funds give up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Funds 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 Funds pay a premium whether or not the option is exercised. The Funds also have the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. The Funds may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Funds will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. FUTURES TRANSACTIONS To gain exposure to or protect itself from market changes, the Funds, except AXP VP - Cash Management Fund, may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Funds 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 of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Funds are 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 Funds each day. The variation margin payments are equal to the daily changes in the contract value and recorded as unrealized gains and losses. The Funds recognize a realized gain or loss when the contract is closed or expires. FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Funds, except AXP VP - Cash Management Fund and AXP VP - Federal Income Fund, 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 Funds and the resulting unrealized appreciation and/or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Funds are subject to the credit risk that the other party will not complete its contract obligations. 58 ILLIQUID SECURITIES As of Feb. 28, 2002, investments in securities for AXP VP - Bond Fund, AXP VP - Capital Resource Fund, AXP VP - Extra Income Fund, AXP VP - Managed Fund and AXP VP - Strategy Aggressive Fund, included issues that are illiquid which the Funds currently limit to 10% of net assets, at market value, at the time of purchase. The aggregate value of such securities as of Feb. 28, 2002, was $13,076,660, $15,000,000, $19,879,185, $1,930,000 and $64,468,735, representing 0.76%, 0.55%, 3.27%, 0.06% and 4.32% of net assets for AXP VP - Bond Fund, AXP VP - Capital Resource Fund, AXP VP - Extra Income Fund, AXP VP - Managed Fund and AXP VP - Strategy Aggressive Fund, respectively. These securities are valued at fair value according to methods selected in good faith by the board. According to the board guidelines certain unregistered securities are determined to be liquid and are not included within the 10% limitation specified above. SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD-COMMITMENT BASIS Delivery and payment for securities that have been purchased by AXP VP - Bond Fund, AXP VP - Extra Income Fund, AXP VP - Federal Income Fund, AXP VP - Managed Fund and AXP VP - Strategy Aggressive Fund on a when-issued or forward-commitment basis can take place one month or more after the transaction date. During this period, when-issued securities are subject to market fluctuations, and they may affect each Fund's net assets the same as owned securities. The Funds designate cash or liquid securities at least equal to the amount of its commitment. As of Feb. 28, 2002, AXP VP - Bond Fund, AXP -- Extra Income Fund, AXP VP - Federal Income Fund and AXP VP - Managed Fund have entered into outstanding when-issued commitments of $147,305,148, $4,890,113, $18,518,090 and $15,290,084, respectively. As of Feb. 28, 2002, AXP VP - Strategy Aggressive Fund had entered into outstanding forward-commitments of $4,750,000. These funds may also enter into transactions to sell purchase commitments to third parties at current market values and concurrently acquire other purchase commitments for similar securities at later dates. As an inducement for these Funds to "roll over" its purchase commitments, these Funds receive negotiated amounts in the form of reductions of the purchase price of the commitment. FEDERAL TAXES Each Fund's policy is to comply with all sections of the Internal Revenue Code that apply to regulated investment companies and to distribute substantially all of its taxable income to the Variable Accounts. No provision for income or excise taxes is thus required. Each Fund is treated as a separate entity for federal income tax purposes. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of deferred losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, the timing and amount of market discount recognized as ordinary income, foreign tax credits 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. The effect on dividend distributions of certain book-to-tax differences is presented as "excess distributions" in the statement of changes in net assets. 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) are recorded by the Funds. DIVIDENDS As of Feb. 28, 2002, dividends declared for each Fund payable March 1, 2002 are as follows:
FUND AMOUNT PER SHARE - -------------------------------------------------------------------------------- AXP VP - Blue Chip Advantage Fund $0.015 AXP VP - Bond Fund 0.042 AXP VP - Capital Resource Fund 0.033 AXP VP - Cash Management Fund 0.001 AXP VP - Diversified Equity Income Fund 0.030 AXP VP - Extra Income Fund 0.055 AXP VP - Federal Income Fund 0.023 AXP VP - Global Bond Fund 0.029 AXP VP - Managed Fund 0.082 AXP VP - New Dimensions Fund 0.022 AXP VP - S&P 500 Index Fund 0.012 AXP VP - Stock Fund 0.010 - --------------------------------------------------------------------------------
Distributions to the Variable Accounts are recorded as of the close of business on the record date and are payable on the first business day following the record date. Dividends from net investment income are declared daily and distributed monthly for AXP VP - Bond Fund, AXP VP - Cash Management Fund, AXP VP - Extra Income Fund, AXP VP - Federal Income Fund and AXP VP - Global Bond Fund and declared and distributed quarterly, when available, for AXP VP - Blue Chip Advantage Fund, AXP VP - Capital Resource Fund, AXP VP - Diversified Equity Income Fund, AXP VP - Emerging Markets Fund, AXP VP - Equity Select Fund, AXP VP - - Growth Fund, AXP VP - International Fund, AXP VP - Managed Fund, AXP VP - New Dimensions Fund, AXP VP - Partners Small Cap Value Fund, AXP VP -S&P 500 Index Fund, AXP VP-- Small Cap Advantage Fund, AXP VP - Stock Fund and AXP VP - Strategy Aggressive Fund. Capital gain distributions, when available, will be made annually. However, an additional capital gain distribution may be made during the fiscal year in order to comply with the Internal Revenue Code, as applicable to regulated investment companies. 59 OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including level-yield amortization of premium and discount, is accrued daily. 2. EXPENSES The Funds have an Investment Management Agreement with IDS Life for managing investments, record keeping and other services that are based solely on the assets of each Fund. The management fee is a percentage of each Fund's average daily net assets in reducing percentages annually as follows:
FUND PERCENTAGE RANGE - -------------------------------------------------------------------------------- AXP VP - Blue Chip Advantage Fund 0.560% to 0.470% AXP VP - Bond Fund 0.610% to 0.535% AXP VP - Capital Resource Fund 0.630% to 0.570% AXP VP - Cash Management Fund 0.510% to 0.440% AXP VP - Diversified Equity Income Fund 0.560% to 0.470% AXP VP - Emerging Markets Fund 1.170% to 1.095% AXP VP - Equity Select Fund 0.650% to 0.560% AXP VP - Extra Income Fund 0.620% to 0.545% AXP VP - Federal Income Fund 0.610% to 0.535% AXP VP - Global Bond Fund 0.840% to 0.780% AXP VP - Growth Fund 0.630% to 0.570% AXP VP - International Fund 0.870% to 0.795% AXP VP - Managed Fund 0.630% to 0.550% AXP VP - New Dimensions Fund 0.630% to 0.570% AXP VP - Partners Small Cap Value Fund 1.020% to 0.920% AXP VP - S&P 500 Index Fund 0.290% to 0.260% AXP VP - Small Cap Advantage Fund 0.790% to 0.650% AXP VP - Stock Fund 0.560% to 0.470% AXP VP - Strategy Aggressive Fund 0.650% to 0.575% - --------------------------------------------------------------------------------
For the following Funds the fee may be adjusted upward or downward by a performance incentive adjustment. The adjustment is based on a comparison of the performance of each Fund to the stated index up to a maximum percentage of each Fund's average daily net assets after deducting 1% from the performance difference. If the performance difference is less than 1%, the adjustment will be zero. The index name, maximum percentage adjustment and the amount the fee was increased (decreased) for each Fund for the six months ended Feb. 28, 2002 are as follows:
MAXIMUM PERCENTAGE INDEX INCREASE FUND ADJUSTMENT NAME (DECREASE) - --------------------------------------------------------------------------------------------------------------- AXP VP - Blue Chip Advantage Fund 0.08% Lipper Large-Cap Core Funds Index $(12,514) AXP VP - Diversified Equity Income Fund 0.08% Lipper Equity Income Funds Index 7,305 AXP VP - Emerging Markets Fund 0.12% Lipper Emerging Markets Funds Index 130 AXP VP - Equity Select Fund 0.12% Lipper Multi-Cap Growth Funds Index 4,424 AXP VP - Growth Fund 0.12% Lipper Large-Cap Growth Funds Index (66,966) AXP VP - Partners Small Cap Value Fund 0.12% Lipper Small-Cap Value Funds Index -- AXP VP - Small Cap Advantage Fund 0.12% Lipper Small-Cap Core Funds Index (24,150) AXP VP - Stock Fund 0.08% Lipper Large-Cap Core Funds Index -- - ---------------------------------------------------------------------------------------------------------------
The first adjustment for AXP VP - Equity Select Fund, AXP VP - Partners Small Cap Value Fund and AXP VP-- Stock Fund was made on Feb. 1, 2002 and covered the six-month period beginning Sept. 1, 2001. IDS Life, in turn, pays to AEFC a fee based on a percentage of each Fund's average daily net assets for the year. This fee is equal to 0.35% for AXP VP - International Fund and AXP VP - S&P 500 Index Fund and 0.25% for each remaining Fund. AEFC has Subadvisory Agreements with American Express Asset Management International Inc., a wholly-owned subsidiary of AEFC to subadvise the assets of AXP VP - Emerging Markets Fund and AXP VP - International Fund and Kenwood Capital Management LLC, an indirect subsidiary of AEFC to subadvise the assets of AXP VP - Small Cap Advantage Fund. AEFC has Subadvisory Agreements with Royce & Associates, Inc. (Royce), a wholly-owned subsidiary of Legg Mason and EQSF Advisers, Inc. (Third Avenue) for AXP VP - Partners Small Cap Value Fund. New investments in the Fund, net of any redemptions are allocated to the Subadvisers in equal portions. In addition to paying its own management fee, brokerage commissions, taxes and costs of certain legal services, each Fund will reimburse IDS Life an amount equal to the cost of certain expenses incurred and paid by IDS Life in connection with each Fund's operations. The Funds also pay custodian fees to American Express Trust Company, an affiliate of IDS Life. The reimbursement paid by AXP VP - Cash Management Fund will be limited to 0.25% of the Fund's average daily net assets. 60 The Funds have an agreement with IDS Life for distribution services. Under a Plan and Agreement of Distribution, each Fund pays a distribution fee at an annual rate up to 0.125% of each Fund's average daily net assets. The Funds have an Administrative Services Agreement with AEFC. Under this agreement, each Fund pays AEFC a fee for administration and accounting services at a percentage of each Fund's average daily net assets in reducing percentages annually as follows:
FUND PERCENTAGE RANGE - -------------------------------------------------------------------------------- AXP VP - Blue Chip Advantage Fund 0.040% to 0.020% AXP VP - Bond Fund 0.050% to 0.025% AXP VP - Capital Resource Fund 0.050% to 0.030% AXP VP - Cash Management Fund 0.030% to 0.020% AXP VP - Diversified Equity Income Fund 0.040% to 0.020% AXP VP - Emerging Markets Fund 0.100% to 0.050% AXP VP - Equity Select Fund 0.060% to 0.030% AXP VP - Extra Income Fund 0.050% to 0.025% AXP VP - Federal Income Fund 0.050% to 0.025% AXP VP - Global Bond Fund 0.060% to 0.040% AXP VP - Growth Fund 0.050% to 0.030% AXP VP - International Fund 0.060% to 0.035% AXP VP - Managed Fund 0.040% to 0.020% AXP VP - New Dimensions Fund 0.050% to 0.030% AXP VP - Partners Small Cap Value Fund 0.080% to 0.055% AXP VP - S&P 500 Index Fund 0.080% to 0.065% AXP VP - Small Cap Advantage Fund 0.060% to 0.035% AXP VP - Stock Fund 0.040% to 0.020% AXP VP - Strategy Aggressive Fund 0.060% to 0.035% - --------------------------------------------------------------------------------
A minor portion of additional administrative service expenses paid by the Funds are consultants' fees and fund office expenses. Under this agreement, the Funds also pay taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees and any other expenses properly payable by the Funds and approved by the board. Through April 30, 2002, IDS Life and AEFC agreed to waive certain fees and reimburse expenses to the extent that total expenses exceed the following percentage of the Fund's average daily net assets:
FUND PERCENTAGE - -------------------------------------------------------------------------------- AXP VP - Emerging Markets Fund 1.750% AXP VP - Equity Select Fund 1.100% AXP VP - Partners Small Cap Value Fund 1.500% AXP VP - S&P 500 Index Fund 0.495% AXP VP - Stock Fund 1.100% - --------------------------------------------------------------------------------
During the six months ended Feb. 28, 2002, the Fund's custodian fees were reduced as a result of earnings credits from overnight cash balances as follows:
FUND REDUCTION - -------------------------------------------------------------------------------- AXP VP - Blue Chip Advantage Fund $2,792 AXP VP - Bond Fund 1,743 AXP VP - Capital Resource Fund 1,477 AXP VP - Cash Management Fund 3,056 AXP VP - Diversified Equity Income Fund 3,710 AXP VP - Emerging Markets Fund 1,810 AXP VP - Equity Select Fund 2,784 AXP VP - Extra Income Fund 1,319 AXP VP - Federal Income Fund 1,031 AXP VP - Global Bond Fund 2,188 AXP VP - Growth Fund 2,905 AXP VP - International Fund 1,928 AXP VP - Managed Fund 1,942 AXP VP - New Dimensions Fund 1,399 AXP VP - S&P 500 Index Fund 6,776 AXP VP - Small Cap Advantage Fund 4,632 AXP VP - Stock Fund 1,755 AXP VP - Strategy Aggressive Fund 3,771 - --------------------------------------------------------------------------------
61 3. SECURITIES TRANSACTIONS For the six months ended Feb. 28, 2002, cost of purchases and proceeds from sales of securities aggregated, respectively, $2,742,635,983 and $2,709,700,000 for AXP VP - Cash Management Fund. Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated for each Fund are as follows:
FUND PURCHASES PROCEEDS - -------------------------------------------------------------------------------- AXP VP - Blue Chip Advantage Fund $ 63,394,076 $ 55,515,234 AXP VP - Bond Fund 1,374,064,872 1,215,296,363 AXP VP - Capital Resource Fund 894,536,812 1,118,212,285 AXP VP - Diversified Equity Income Fund 128,687,218 32,764,587 AXP VP - Emerging Markets Fund 7,363,924 6,279,966 AXP VP - Equity Select Fund 27,956,345 6,656,773 AXP VP - Extra Income Fund 399,524,310 351,501,073 AXP VP - Federal Income Fund 314,395,487 254,592,493 AXP VP - Global Bond Fund 40,648,697 38,188,765 AXP VP - Growth Fund 133,492,001 125,084,544 AXP VP - International Fund 992,333,119 1,052,387,040 AXP VP - Managed Fund 999,384,556 1,219,093,350 AXP VP - New Dimensions Fund 502,112,041 543,657,500 AXP VP - Partners Small Cap Value Fund 18,861,595 978,149 AXP VP - S&P 500 Index Fund 65,971,398 32,907,442 AXP VP - Small Cap Advantage 41,142,049 31,278,684 AXP VP - Stock Fund 2,499,596 1,262,450 AXP VP - Strategy Aggressive Fund 1,802,809,721 1,827,146,917 - --------------------------------------------------------------------------------
Net realized gains and losses on investment sales are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with IDS Life for the six months ended Feb. 28, 2002 are as follows:
FUND AMOUNT PAID - -------------------------------------------------------------------------------- AXP VP - Capital Resource Fund $356,688 AXP VP - Growth Fund 3,534 AXP VP - Managed Fund 90,474 AXP VP - New Dimensions Fund 12,489 AXP VP - Small Cap Advantage Fund 203 AXP VP - Strategy Aggressive Fund 18,777 - --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED FEB. 28, 2002 AXP VP - AXP VP - AXP VP - BLUE CHIP BOND CAPITAL ADVANTAGE FUND RESOURCE FUND FUND - ------------------------------------------------------------------------------------- Sold 993,690 14,573,627 421,924 Issued for reinvested distributions 30,090 4,865,899 363,680 Redeemed (608,182) (8,039,847) (13,185,601) - ------------------------------------------------------------------------------------- Net increase (decrease) 415,598 11,399,679 (12,399,997) - ------------------------------------------------------------------------------------- YEAR ENDED AUG. 31, 2001 AXP VP - AXP VP - AXP VP - BLUE CHIP BOND CAPITAL ADVANTAGE FUND RESOURCE FUND FUND - ------------------------------------------------------------------------------------- Sold 4,578,047 20,474,405 3,268,646 Issued for reinvested distributions 62,379 9,473,695 20,207,526 Redeemed (830,421) (19,386,908) (25,857,643) - ------------------------------------------------------------------------------------- Net increase (decrease) 3,810,005 10,561,192 (2,381,471) - -------------------------------------------------------------------------------------
62
SIX MONTHS ENDED FEB. 28, 2002 AXP VP - AXP VP - AXP VP - CASH DIVERSIFIED EMERGING MANAGEMENT EQUITY INCOME MARKETS FUND FUND FUND - ----------------------------------------------------------------------------------------- Sold 518,943,130 14,405,477 146,400 Issued for reinvested distributions 13,100,128 82,166 147 Redeemed (496,728,482) (4,408,414) (50,184) - ----------------------------------------------------------------------------------------- Net increase (decrease) 35,314,776 10,079,229 96,363 - ----------------------------------------------------------------------------------------- YEAR ENDED AUG. 31, 2001 AXP VP - AXP VP - AXP VP - CASH DIVERSIFIED EMERGING MANAGEMENT EQUITY INCOME MARKETS FUND FUND FUND - ----------------------------------------------------------------------------------------- Sold 1,141,853,439 8,994,259 850,549 Issued for reinvested distributions 43,992,712 33,297 -- Redeemed (904,948,475) (949,778) (580,015) - ----------------------------------------------------------------------------------------- Net increase (decrease) 280,897,676 8,077,778 270,534 - ----------------------------------------------------------------------------------------- SIX MONTHS ENDED FEB. 28, 2002 AXP VP - AXP VP - AXP VP - EQUITY EXTRA FEDERAL SELECT INCOME INCOME FUND FUND FUND - ----------------------------------------------------------------------------------------- Sold 3,637,961 11,788,097 6,225,510 Issued for reinvested distributions -- 4,794,512 221,250 Redeemed (1,384,337) (9,777,775) (1,023,963) - ----------------------------------------------------------------------------------------- Net increase (decrease) 2,253,624 6,804,834 5,422,797 - ----------------------------------------------------------------------------------------- YEAR ENDED AUG. 31, 2001 AXP VP - AXP VP - AXP VP - EQUITY EXTRA FEDERAL SELECT INCOME INCOME FUND(a) FUND FUND - ----------------------------------------------------------------------------------------- Sold 1,359,718 17,537,045 8,067,542 Issued for reinvested distributions -- 8,950,281 284,959 Redeemed (136,198) (14,013,580) (1,781,550) - ----------------------------------------------------------------------------------------- Net increase (decrease) 1,223,520 12,473,746 6,570,951 - ----------------------------------------------------------------------------------------- SIX MONTHS ENDED FEB. 28, 2002 AXP VP - AXP VP - AXP VP - GLOBAL GROWTH INTERNATIONAL BOND FUND FUND FUND - ----------------------------------------------------------------------------------------- Sold 1,297,084 3,455,819 16,712,782 Issued for reinvested distributions 502,825 -- 1,129,204 Redeemed (1,091,345) (1,495,278) (32,568,142) - ----------------------------------------------------------------------------------------- Net increase (decrease) 708,564 1,960,541 (14,726,156) - ----------------------------------------------------------------------------------------- YEAR ENDED AUG. 31, 2001 AXP VP - AXP VP - AXP VP - GLOBAL GROWTH INTERNATIONAL BOND FUND FUND FUND - ----------------------------------------------------------------------------------------- Sold 3,494,915 13,821,210 21,489,411 Issued for reinvested distributions 481,363 -- 37,293,869 Redeemed (3,338,032) (982,335) (43,403,263) - ----------------------------------------------------------------------------------------- Net increase (decrease) 638,246 12,838,875 15,380,017 - -----------------------------------------------------------------------------------------
63
SIX MONTHS ENDED FEB. 28, 2002 AXP VP - AXP VP - AXP VP - MANAGED NEW PARTNERS FUND DIMENSIONS SMALL CAP FUND VALUE FUND - ----------------------------------------------------------------------------------------- Sold 795,075 8,817,308 2,281,754 Issued for reinvested distributions 2,648,783 377,680 -- Redeemed (18,572,537) (10,361,870) (42,890) - ----------------------------------------------------------------------------------------- Net increase (decrease) (15,128,679) (1,166,882) 2,238,864 - ----------------------------------------------------------------------------------------- YEAR ENDED AUG. 31, 2001 AXP VP - AXP VP - AXP VP - MANAGED NEW PARTNERS FUND DIMENSIONS SMALL CAP FUND VALUE FUND(c) - ----------------------------------------------------------------------------------------- Sold 6,592,195 26,193,556 86,421 Issued for reinvested distributions 23,648,244 18,720,715 -- Redeemed (35,481,482) (15,847,022) -- - ----------------------------------------------------------------------------------------- Net increase (decrease) (5,241,043) 29,067,249 86,421 - ----------------------------------------------------------------------------------------- SIX MONTHS ENDED FEB. 28, 2002 AXP VP - AXP VP - AXP VP - S&P 500 SMALL CAP STOCK INDEX ADVANTAGE FUND FUND FUND - ----------------------------------------------------------------------------------------- Sold 4,557,780 1,130,682 173,351 Issued for reinvested distributions 41,779 -- 802 Redeemed (236,891) (194,019) (12,186) - ----------------------------------------------------------------------------------------- Net increase (decrease) 4,362,668 936,663 161,967 - ----------------------------------------------------------------------------------------- YEAR ENDED AUG. 31, 2001 AXP VP - AXP VP - AXP VP - S&P 500 SMALL CAP STOCK INDEX ADVANTAGE FUND(b) FUND FUND - ----------------------------------------------------------------------------------------- Sold 6,410,898 2,768,854 8,365 Issued for reinvested distributions 32,745 106,893 -- Redeemed (1,220,691) (489,806) -- - ----------------------------------------------------------------------------------------- Net increase (decrease) 5,222,952 2,385,941 8,365 - ----------------------------------------------------------------------------------------- SIX MONTHS ENDED FEB. 28, 2002 AXP VP - STRATEGY AGGRESSIVE FUND - ----------------------------------------------------------------------------------------- Sold 5,690,480 Issued for reinvested distributions 341,129 Redeemed (21,940,532) - ----------------------------------------------------------------------------------------- Net increase (decrease) (15,908,923) - ----------------------------------------------------------------------------------------- YEAR ENDED AUG. 31, 2001 AXP VP - STRATEGY AGGRESSIVE FUND - ----------------------------------------------------------------------------------------- Sold 17,266,687 Issued for reinvested distributions 83,425,555 Redeemed (32,672,270) - ----------------------------------------------------------------------------------------- Net increase (decrease) 68,019,972 - -----------------------------------------------------------------------------------------
(a) For the period from May 1, 2001 (date the Fund became available) to Aug. 31, 2001. (b) For the period from Aug. 13, 2001 (date the Fund became available) to Aug. 31, 2001. (c) For the period from Aug. 14, 2001 (date the Fund became available) to Aug. 31, 2001. 64 5. FOREIGN CURRENCY CONTRACTS As of Feb. 28, 2002, AXP VP - Bond Fund and AXP VP - Global Bond Fund had entered into foreign currency exchange contracts that obligate the Funds to deliver currencies at specified future dates. The unrealized appreciation and/or depreciation on these contracts is included in the accompanying financial statements. See "Summary of significant accounting policies." The terms of the open contracts are as follows: AXP VP - BOND FUND
EXCHANGE DATE CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION - ------------------------------------------------------------------------------------------------------------- March 26, 2002 5,525,000 4,839,900 $ 65,270 $-- European Monetary Unit U.S. Dollar March 26, 2002 9,050,000 7,918,524 97,636 -- European Monetary Unit U.S. Dollar - ---------------------------------------------------------------------------------------------------------- $162,906 $-- - ----------------------------------------------------------------------------------------------------------
AXP VP - GLOBAL BOND FUND
EXCHANGE DATE CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION - ------------------------------------------------------------------------------------------------------------- March 8, 2002 6,361,514 850,000,000 $ -- $8,598 U.S. Dollar Japanese Yen March 22, 2002 3,050,000 1,576,850 4,362 -- Australian Dollar U.S. Dollar March 22, 2002 9,320,000 8,108,400 52,803 -- European Monetary Unit U.S. Dollar March 22, 2002 2,265,000 951,300 775 -- New Zealand Dollar U.S. Dollar - ---------------------------------------------------------------------------------------------------------- $57,940 $8,598 - ----------------------------------------------------------------------------------------------------------
6. LENDING OF PORTFOLIO SECURITIES Presented below is information regarding securities on loan as of Feb. 28, 2002.
AXP VP - AXP VP - AXP VP - AXP VP - BOND CAPITAL RESOURCE DIVERSIFIED EQUITY INTERNATIONAL FUND FUND INCOME FUND FUND - ------------------------------------------------------------------------------------------------------------------- Value of securities on loan to brokers $1,047,410 $8,937,500 $1,848,000 $8,017,660 - ------------------------------------------------------------------------------------------------------------------- Collateral received for securities loaned: Cash $1,088,500 $9,350,000 $1,900,000 $8,058,750 U.S. government securities, at value -- -- -- -- - ------------------------------------------------------------------------------------------------------------------- Total collateral received for securities loaned $1,088,500 $9,350,000 $1,900,000 $8,058,750 - ------------------------------------------------------------------------------------------------------------------- AXP VP - AXP VP - AXP VP - MANAGED NEW DIMENSIONS STRATEGY FUND FUND AGGRESSIVE FUND - ------------------------------------------------------------------------------------------------------------------- Value of securities on loan to brokers $42,866,445 $17,913,500 $66,721,720 - ------------------------------------------------------------------------------------------------------------------- Collateral received for securities loaned: Cash $44,205,700 $19,050,000 $71,825,500 U.S. government securities, at value -- -- -- - ------------------------------------------------------------------------------------------------------------------- Total collateral received for securities loaned $44,205,700 $19,050,000 $71,825,500 - -------------------------------------------------------------------------------------------------------------------
Income from securities lending amounted to $9,546, $2,812, $305, $367, $174,055, $140,910, $2,514 and $44,290 for AXP VP - Bond Fund, AXP VP - Capital Resource Fund, AXP VP - Diversified Equity Income Fund, AXP VP - Global Bond Fund, AXP VP - - International Fund, AXP VP - Managed Fund, AXP VP - New Dimensions Fund and AXP VP - Strategy Aggressive Fund, respectively, for the six months ended Feb. 28, 2002. The risks to each Fund of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. 65 7. FUTURES CONTRACTS As of Feb. 28, 2002, AXP VP - Blue Chip Advantage Fund's investments in securities included securities valued at $1,634,590 that were pledged as collateral to cover initial margin deposits on 31 open purchase stock index futures contracts. The market value of the open purchase contracts as of Feb. 28, 2002 was $1,715,695 with a net unrealized loss of $8,616. See "Summary of significant accounting policies." As of Feb. 28, 2002, AXP VP - Federal Income Fund's investments in securities included securities valued at $354,211 that were pledged as collateral to cover initial margin deposits on 272 open sale interest rate futures contracts. The market value of the open sale contracts as of Feb. 28, 2002 was $28,823,531 with a net unrealized loss of $67,158. See "Summary of significant accounting policies." 8. OPTIONS CONTRACTS WRITTEN Contracts and premiums associated with options contracts written by AXP VP - Extra Income Fund during the six months ended Feb. 28, 2002 are as follows:
CALLS - -------------------------------------------------------------------------------- CONTRACTS PREMIUMS - -------------------------------------------------------------------------------- Balance Aug. 31, 2001 -- $ -- Opened 154 29,554 Closed -- -- Exercised -- -- Expired -- -- - -------------------------------------------------------------------------------- Balance Feb. 28, 2002 154 $29,554 - --------------------------------------------------------------------------------
See "Summary of significant accounting policies." Contracts and premiums associated with options contracts written by AXP VP - Federal Income Fund during the six months ended Feb. 28, 2002 are as follows:
CALLS PUTS - ------------------------------------------------------------------------------- CONTRACTS PREMIUMS CONTRACTS PREMIUMS - ------------------------------------------------------------------------------- Balance Aug. 31, 2001 -- $ -- -- $ -- Opened 110 34,326 145 49,342 Closed -- -- (120) (39,676) Exercised -- -- -- -- Expired (110) (34,326) -- -- - ------------------------------------------------------------------------------- Balance Feb. 28, 2002 -- $ -- 25 $ 9,666 - -------------------------------------------------------------------------------
See "Summary of significant accounting policies." Contracts and premiums associated with options contracts written by AXP VP - Managed Fund during the six months ended Feb. 28, 2002 are as follows:
CALLS - -------------------------------------------------------------------------------- CONTRACTS PREMIUMS - -------------------------------------------------------------------------------- Balance Aug. 31, 2001 34,750 $ 6,713,103 Opened 72,450 13,772,463 Closed (11,708) (1,854,339) Exercised (43,231) (8,336,490) Expired (49,011) (9,688,246) - -------------------------------------------------------------------------------- Balance Feb. 28, 2002 3,250 $ 606,491 - -------------------------------------------------------------------------------
See "Summary of significant accounting policies." Contracts and premiums associated with options contracts written by AXP VP - New Dimensions Fund during the six months ended Feb. 28, 2002 are as follows:
CALLS PUTS - -------------------------------------------------------------------------------- CONTRACTS PREMIUMS CONTRACTS PREMIUMS - -------------------------------------------------------------------------------- Balance Aug. 31, 2001 -- $ -- -- $ -- Opened 11,379 1,477,473 2,500 369,614 Closed (3,521) (450,362) (600) (61,698) Exercised -- -- -- -- Expired (7,358) (973,612) (1,700) (258,517) - -------------------------------------------------------------------------------- Balance Feb. 28, 2002 500 $ 53,499 200 $ 49,399 - -------------------------------------------------------------------------------
See "Summary of significant accounting policies." 66 Contracts and premiums associated with options contracts written by AXP VP - Strategy Aggressive Fund during the six months ended Feb. 28, 2002 are as follows:
CALLS PUTS - -------------------------------------------------------------------------------- CONTRACTS PREMIUMS CONTRACTS PREMIUMS - -------------------------------------------------------------------------------- Balance Aug. 31, 2001 250 $ 64,040 -- $ -- Opened 12,560 2,418,063 9,700 1,305,388 Closed (5,950) (1,269,822) (1,700) (309,395) Exercised (1,260) (470,624) -- -- Expired (2,600) (566,160) (5,000) (525,000) - -------------------------------------------------------------------------------- Balance Feb. 28, 2002 3,000 $ 175,497 3,000 $ 470,993 - --------------------------------------------------------------------------------
See "Summary of significant accounting policies." 9. CAPITAL LOSS CARRY-OVER For federal income tax purposes, capital loss carry-overs were as follows as of Aug. 31, 2001:
FUND CARRY-OVER EXPIRATION DATE - -------------------------------------------------------------------------------- AXP VP - Blue Chip Advantage Fund $ 14,103,510 2008-2010 AXP VP - Bond Fund 117,820,101 2007-2010 AXP VP - Emerging Markets Fund 1,798,853 2008-2010 AXP VP - Equity Select Fund 15,572 2009 AXP VP - Extra Income Fund 157,254,819 2007-2010 AXP VP - Global Bond Fund 6,990,665 2007-2010 AXP VP - Growth Fund 49,827,348 2008-2010 AXP VP - International Fund 517,628,188 2010 AXP VP - New Dimensions Fund 260,168,215 2010 AXP VP - S&P 500 Index Fund 542,347 2009-2010 AXP VP - Small Cap Advantage Fund 1,999,380 2009-2010 AXP VP - Stock Fund 6,881 2009 AXP VP - Strategy Aggressive Fund 734,114,311 2009-2010 - --------------------------------------------------------------------------------
It is unlikely the board will authorize a distribution of any net realized capital gains for a Fund until its capital loss carry-over has been offset or expires. 67 10. FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating each Fund's results. AXP VP - BLUE CHIP ADVANTAGE FUND
- ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(g) 2001 2000(b) Net asset value, beginning of period $8.14 $ 11.62 $ 9.78 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03 .07 .02 Net gains (losses) (both realized and unrealized) (.23) (3.47) 1.85 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL FROM INVESTMENT OPERATIONS (.20) (3.40) 1.87 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.03) (.08) (.03) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $7.91 $ 8.14 $11.62 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $82 $81 $71 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(c,d) .77%(f) .78% .95%(f) - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets .72%(f) .81% .34%(f) - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 74% 124% 226% - ------------------------------------------------------------------------------------------------------------------------------------ Total return(e) (2.43%) (29.40%) 19.13% - ------------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Sept. 15, 1999 (date the Fund became available) to Aug. 31, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratio of expenses would have been 0.96% for the period ended Aug. 31, 2000. (e) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (f) Adjusted to an annual basis. (g) Six months ended Feb. 28, 2002 (Unaudited). AXP VP - BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------- PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(e) 2001 2000 1999 1998 Net asset value, beginning of period $10.61 $10.29 $10.56 $11.08 $11.99 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .30 .70 .75 .79 .88 Net gains (losses) (both realized and unrealized) (.08) .30 (.27) (.52) (.68) - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations .22 1.00 .48 .27 .20 - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.31) (.68) (.75) (.77) (.85) Distributions from realized gains -- -- -- (.02) (.26) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions (.31) (.68) (.75) (.79) (1.11) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.52 $10.61 $10.29 $10.56 $11.08 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $1,731 $1,626 $1,468 $1,750 $1,852 - ------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b) .81%(d) .80% .79% .68% .67% - ------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 5.76%(d) 6.72% 7.30% 7.22% 7.39% - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 79% 122% 70% 68% 48% - ------------------------------------------------------------------------------------------------------------------------------- Total return(c) 2.05% 10.07% 4.69% 2.40% 1.54% - -------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (d) Adjusted to an annual basis. (e) Six months ended Feb. 28, 2002 (Unaudited). 68 AXP VP - CAPITAL RESOURCE FUND
- ---------------------------------------------------------------------------------------------------------------------------------- PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(e) 2001 2000 1999 1998 Net asset value, beginning of period $20.87 $ 37.21 $34.62 $26.80 $27.97 - ---------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .07 .05 .01 .06 .11 Net gains (losses) (both realized and unrealized) (.31) (12.96) 6.20 10.28 (.54) - ---------------------------------------------------------------------------------------------------------------------------------- Total from investment operations (.24) (12.91) 6.21 10.34 (.43) - ---------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) (.04) (.01) (.06) (.11) Distributions from realized gains (1.57) (3.39) (3.61) (2.46) (.63) - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.63) (3.43) (3.62) (2.52) (.74) - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $19.00 $ 20.87 $37.21 $34.62 $26.80 - ---------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $2,743 $ 3,270 $5,920 $5,621 $4,453 - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b) .80%(d) .78% .77% .66% .66% - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .63%(d) .13% (.02%) .17% .34% - ---------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 31% 62% 52% 56% 68% - ---------------------------------------------------------------------------------------------------------------------------------- Total return(c) (1.14%) (36.48%) 19.26% 40.12% (1.67%) - ----------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (d) Adjusted to an annual basis. (e) Six months ended Feb. 28, 2002 (Unaudited). AXP VP - CASH MANAGEMENT FUND
- ---------------------------------------------------------------------------------------------------------------------------------- PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(e) 2001 2000 1999 1998 Net asset value, beginning of period $ 1.00 $ 1.00 $1.00 $1.00 $1.00 - ---------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01 .05 .05 .05 .05 - ---------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.01) (.05) (.05) (.05) (.05) - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $1.00 $1.00 $1.00 - ---------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $1,099 $1,063 $ 783 $ 690 $ 428 - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b) .69%(d) .68% .68% .56% .57% - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 2.04%(d) 4.76% 5.38% 4.60% 5.13% - ---------------------------------------------------------------------------------------------------------------------------------- Total return(c) 1.01% 4.94% 5.52% 4.72% 5.25% - ----------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (d) Adjusted to an annual basis. (e) Six months ended Feb. 28, 2002 (Unaudited). 69 AXP VP - DIVERSIFIED EQUITY INCOME FUND
- ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(g) 2001 2000(b) Net asset value, beginning of period $10.20 $10.05 $ 9.76 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .06 .11 .10 Net gains (losses) (both realized and unrealized) (.21) .15 .30 - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations (.15) .26 .40 - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) (.11) (.11) Distributions from realized gains (.04) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions (.10) (.11) (.11) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 9.95 $10.20 $10.05 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 203 $ 106 $ 23 - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c,d) .93%(f) .91% .95%(f) - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 1.48%(f) 1.49% 1.42%(f) - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 22% 68% 53% - ----------------------------------------------------------------------------------------------------------------------------------- Total return(e) (1.54%) 2.56% 4.21% - -----------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Sept. 15, 1999 (date the Fund became available) to Aug. 31, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses would have been 1.17% and 1.49% for the periods ended 2001 and 2000, respectively. (e) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (f) Adjusted to an annual basis. (g) Six months ended Feb. 28, 2002 (Unaudited). AXP VP - EMERGING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(g) 2001 2000(b) Net asset value, beginning of period $ 6.68 $ 9.61 $10.23 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) -- .01 (.01) Net gains (losses) (both realized and unrealized) 1.18 (2.94) (.60) - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.18 (2.93) (.61) - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Tax return of capital -- -- (.01) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 7.86 $ 6.68 $ 9.61 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 7 $ 6 $ 6 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(c,d) 1.64%(f) 1.75% 1.69%(f) - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets (.01%)(f) .20% (.36%)(f) - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 96% 203% 37% - ------------------------------------------------------------------------------------------------------------------------------------ Total return(e) 17.67% (30.49%) (6.03%) - ------------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from May 1, 2000 (date the Fund became available) to Aug. 31, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses would have been 2.29%, 3.49% and 2.42% for the periods ended 2002, 2001 and 2000, respectively. (e) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (f) Adjusted to an annual basis. (g) Six months ended Feb. 28, 2002 (Unaudited). 70 AXP VP - EQUITY SELECT FUND
- ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(g) 2001(b) Net asset value, beginning of period $9.57 $10.27 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.02) (.01) Net gains (losses) (both realized and unrealized) .26 (.69) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations .24 (.70) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.81 $ 9.57 - ----------------------------------------------------------------------------------------------------------------------------------- Ratios/supplemental data Net assets, end of period (in millions) $ 36 $ 14 - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c,d) 1.10%(f) 1.10%(f) - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (.72%)(f) (.45%)(f) - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 29% 19% - ----------------------------------------------------------------------------------------------------------------------------------- Total return(e) 2.51% (6.82%) - -----------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from May 1, 2001 (date the Fund became available) to Aug. 31, 2001. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses would have been 1.58% and 2.99% for the periods ended 2002 and 2001, respectively. (e) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (f) Adjusted to an annual basis. (g) Six months ended Feb. 28, 2002 (Unaudited). AXP VP - EXTRA INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------------- PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(e) 2001 2000 1999 1998 Net asset value, beginning of period $ 6.83 $ 7.76 $ 8.75 $ 9.54 $10.39 - ---------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .34 .79 .85 .92 .95 Net gains (losses) (both realized and unrealized) (.48) (.95) (.99) (.69) (.80) - ---------------------------------------------------------------------------------------------------------------------------------- Total from investment operations (.14) (.16) (.14) .23 .15 - ---------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.35) (.77) (.85) (.92) (.95) Distributions from realized gains -- -- -- (.10) (.05) - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions (.35) (.77) (.85) (1.02) (1.00) - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 6.34 $ 6.83 $ 7.76 $ 8.75 $ 9.54 - ---------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $608 $ 609 $ 595 $ 638 $ 564 - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b) .84%(d) .82% .82% .70% .69% - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 10.55%(d) 11.04% 10.35% 10.17% 9.21% - ---------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 63% 86% 63% 50% 66% - ---------------------------------------------------------------------------------------------------------------------------------- Total return(c) (2.17%) (1.89%) (1.59%) 2.61% 1.03% - ----------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (d) Adjusted to an annual basis. (e) Six months ended Feb. 28, 2002 (Unaudited). 71 AXP VP - FEDERAL INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(g) 2001 2000(b) Net asset value, beginning of period $10.34 $ 9.95 $10.02 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .17 .52 .51 Net gains (losses) (both realized and unrealized) .07 .39 (.06) - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations .24 .91 .45 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.17) (.52) (.52) Distributions from realized gains (.02) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.19) (.52) (.52) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.39 $10.34 $ 9.95 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $163 $106 $37 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(c,d) .83%(f) .84% .87%(f) - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets 3.31%(f) 4.94% 5.49%(f) - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 198% 95% 67% - ------------------------------------------------------------------------------------------------------------------------------------ Total return(e) 2.19% 9.29% 4.64% - ------------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Sept. 15, 1999 (date the Fund became available) to Aug. 31, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses would have been 0.87% and 0.89% for the periods ended 2001 and 2000, respectively. (e) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (f) Adjusted to an annual basis. (g) Six months ended Feb. 28, 2002 (Unaudited). AXP VP - GLOBAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------- PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(e) 2001 2000 1999 1998 Net asset value, beginning of period $ 9.76 $ 9.34 $ 9.84 $10.09 $10.32 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .20 .43 .32 .55 .60 Net gains (losses) (both realized and unrealized) (.30) .23 (.51) (.29) (.21) - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations (.10) .66 (.19) .26 .39 - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.24) (.24) (.31) (.51) (.58) Distributions from realized gains -- -- -- -- (.04) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions (.24) (.24) (.31) (.51) (.62) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 9.42 $ 9.76 $ 9.34 $ 9.84 $10.09 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $191 $191 $ 177 $ 197 $ 183 - ------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b) 1.07%(d) 1.07% 1.07% .96% .95% - ------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 4.18%(d) 4.54% 4.81% 5.36% 5.81% - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 21% 34% 50% 56% 14% - ------------------------------------------------------------------------------------------------------------------------------- Total return(c) (1.07%) 7.14% (1.90%) 2.50% 3.82% - -------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (d) Adjusted to an annual basis. (e) Six months ended Feb. 28, 2002 (Unaudited). 72 AXP VP - GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(g) 2001 2000(b) Net asset value, beginning of period $6.48 $ 13.46 $ 9.72 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) -- (.01) -- Net gains (losses) (both realized and unrealized) (.48) (6.97) 3.75 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations (.48) (6.98) 3.75 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Tax return of capital -- -- (.01) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $6.00 $ 6.48 $13.46 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 176 $ 177 $ 195 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(c,d) .78%(f) .90% .95%(f) - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets (.12%)(f) (.19%) (.09%)(f) - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 75% 41% 17% - ------------------------------------------------------------------------------------------------------------------------------------ Total return(e) (7.38%) (51.87%) 38.59% - ------------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Sept. 15, 1999 (date the Fund became available) to Aug. 31, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses would have been 0.91% and 0.97% for the periods ended 2001 and 2000, respectively. (e) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (f) Adjusted to an annual basis. (g) Six months ended Feb. 28, 2001 (Unaudited). AXP VP - INTERNATIONAL FUND
- ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(e) 2001 2000 1999 1998 Net asset value, beginning of period $ 8.39 $ 16.98 $17.26 $14.25 $ 14.09 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) -- .03 .06 .12 .14 Net gains (losses) (both realized and unrealized) (.62) (5.57) 2.50 3.04 .42 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations (.62) (5.54) 2.56 3.16 .56 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.03) (.03) (.01) (.07) (.15) Distributions from realized gains (.02) (2.97) (2.83) (.08) (.19) Excess distributions from net investment income -- (.05) -- -- -- Excess distributions from realized gains -- -- -- -- (.06) - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.05) (3.05) (2.84) (.15) (.40) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 7.72 $ 8.39 $16.98 $17.26 $ 14.25 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $1,091 $ 1,310 $2,389 $2,221 $2,023 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(b) 1.06%(d) 1.04% 1.02% .94% .94% - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets (.09%)(d) .31% .27% .70% .94% - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 89% 278% 118% 102% 86% - ------------------------------------------------------------------------------------------------------------------------------------ Total return(c) (7.59%) (36.90%) 14.74% 22.18% 4.09% - ------------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (d) Adjusted to an annual basis. (e) Six months ended Feb. 28, 2002 (Unaudited). 73 AXP VP - MANAGED FUND
- ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(e) 2001 2000 1999 1998 Net asset value, beginning of period $15.30 $ 20.81 $18.84 $17.25 $18.87 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .16 .44 .47 .50 .49 Net gains (losses) (both realized and unrealized) (.56) (4.32) 2.85 3.29 (.12) - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations (0.40) (3.88) 3.32 3.79 .37 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.16) (.39) (.48) (.49) (.48) Distributions from realized gains (1.09) (1.24) (.87) (1.71) (1.50) Excess distributions from net investment income -- -- -- -- (.01) - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (1.25) (1.63) (1.35) (2.20) (1.99) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $13.65 $ 15.30 $20.81 $18.84 $17.25 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $3,148 $ 3,759 $5,223 $5,046 $4,413 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(b) .77%(d) .76% .75% .63% .64% - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets 2.13%(d) 2.46% 2.37% 2.62% 2.56% - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 29% 63% 49% 44% 50% - ------------------------------------------------------------------------------------------------------------------------------------ Total return(c) (2.61%) (19.37%) 18.42% 22.98% 1.74% - ------------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (d) Adjusted to an annual basis. (e) Six months ended Feb. 28, 2002 (Unaudited). AXP VP - NEW DIMENSIONS FUND
- ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(e) 2001 2000 1999 1998 Net asset value, beginning of period $15.49 $ 25.03 $18.87 $13.29 $12.95 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .04 .02 .03 .06 .08 Net gains (losses) (both realized and unrealized) (.16) (8.01) 6.34 5.60 .34 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations (.12) (7.99) 6.37 5.66 .42 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.04) (.02) (.04) (.06) (.08) Distributions from realized gains (.01) (1.53) (.17) (.02) -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.05) (1.55) (.21) (.08) (.08) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $15.32 $ 15.49 $25.03 $18.87 $13.29 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $3,832 $ 3,892 $5,564 $3,538 $1,960 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(b) .80%(d) .79% .78% .68% .69% - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets .50%(d) .12% .15% .34% .59% - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 13% 27% 28% 27% 34% - ------------------------------------------------------------------------------------------------------------------------------------ Total return(c) (.74%) (33.05%) 34.01% 42.61% 3.19% - ------------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credit on cash balances. (c) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (d) Adjusted to an annual basis. (e) Six months ended Feb. 28, 2002 (Unaudited). 74 AXP VP - PARTNERS SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------------------------------- PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(g) 2001(b) Net asset value, beginning of period $ 9.84 $10.01 - --------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) (.01) Net gains (losses) (both realized and unrealized) .90 (.16) - --------------------------------------------------------------------------------------------------------- Total from investment operations .89 (.17) - --------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.73 $ 9.84 - --------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $29 $5 - --------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c,d) 1.45%(f) 1.50%(f) - --------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (.36%)(f) (1.15%)(f) - --------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 8% 0% - --------------------------------------------------------------------------------------------------------- Total return(e) 9.06% (1.77%) - ---------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Aug. 14, 2001 (date the Fund became available) to Aug. 31, 2001. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses would have been 1.63% and 6.86% for the periods ended 2002 and 2001, respectively. (e) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (f) Adjusted to an annual basis. (g) Six months ended Feb. 28, 2002 (Unaudited). AXP VP - S&P 500 INDEX FUND
- ----------------------------------------------------------------------------------------------------------------------- PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(g) 2001 2000(b) Net asset value, beginning of period $ 7.71 $ 10.38 $10.06 - ----------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03 .06 .02 Net gains (losses) (both realized and unrealized) (.17) (2.65) .33 - ----------------------------------------------------------------------------------------------------------------------- Total from investment operations (.14) (2.59) .35 - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.03) (.06) (.03) Distributions from realized gains -- (.02) -- - ----------------------------------------------------------------------------------------------------------------------- Total distributions (.03) (.08) (.03) - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 7.54 $ 7.71 $10.38 - ----------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $87 $56 $21 - ----------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c,d) .49%(f) .49% .48%(f) - ----------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .98%(f) .85% .72%(f) - ----------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 47% 137% 44% - ----------------------------------------------------------------------------------------------------------------------- Total return(e) (1.87%) (24.96%) 3.49% - -----------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from May 1, 2000 (date the Fund became available) to Aug. 31, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses would have been 0.84%, 1.31% and 1.57% for the periods ended 2002, 2001 and 2000, respectively. (e) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (f) Adjusted to an annual basis. (g) Six months ended Feb. 28, 2002 (Unaudited). 75 AXP VP - SMALL CAP ADVANTAGE FUND
- ------------------------------------------------------------------------------------------------------------------------- PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(g) 2001 2000(b) Net asset value, beginning of period $10.13 $12.58 $ 9.90 - ------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) (.01) (.02) Net gains (losses) (both realized and unrealized) (.03) (2.09) 2.78 - ------------------------------------------------------------------------------------------------------------------------- Total from investment operations (.04) (2.10) 2.76 - ------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Distributions from realized gains -- (.35) (.08) - ------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.09 $10.13 $12.58 - ------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 58 $ 49 $31 - ------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c,d) 1.08%(f) 1.16% 1.19%(f) - ------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (.17%)(f) (.08%) (.24%)(f) - ------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 62% 152% 169% - ------------------------------------------------------------------------------------------------------------------------- Total return(e) (.42%) (16.68%) 28.19% - -------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Sept. 15, 1999 (date the Fund became available) to Aug. 31, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses would have been 1.26% and 1.43% for the periods ended 2001 and 2000, respectively. (e) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (f) Adjusted to an annual basis. (g) Six months ended Feb. 28, 2002 (Unaudited). AXP VP - STOCK FUND
- ------------------------------------------------------------------------------------------------------------------- PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(g) 2001(b) Net asset value, beginning of period $ 9.52 $ 9.82 - ------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .02 .01 Net gains (losses) (both realized and unrealized) (.17) (.30) - ------------------------------------------------------------------------------------------------------------------- Total from investment operations (.15) (.29) - ------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.03) (.01) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 9.34 $ 9.52 - ------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 3 $ 2 - ------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c,d) 1.08%(f) 1.10%(f) - ------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .70%(f) .90%(f) - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 56% 4% - ------------------------------------------------------------------------------------------------------------------- Total return(e) (1.50%) (2.97%) - -------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Aug. 13, 2001 (date the Fund became available) to Aug. 31, 2001. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses would have been 2.97% and 11.36% for the periods ended 2002 and 2001, respectively. (e) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (f) Adjusted to an annual basis. (g) Six months ended Feb. 28, 2002 (Unaudited). 76 AXP VP - STRATEGY AGGRESSIVE FUND
- ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED AUG. 31, 2002(e) 2001 2000 1999 1998 Net asset value, beginning of period $ 8.29 $ 27.82 $16.46 $13.10 $ 17.17 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.02) .01 .01 .05 .01 Net gains (losses) (both realized and unrealized) (.92) (13.01) 13.17 4.36 (2.57) - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations (.94) (13.00) 13.18 4.41 (2.56) - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income -- (.02) -- (.05) (.01) Distributions from realized gains -- (6.51) (1.82) (1.00) (1.49) Excess distributions from realized gains -- -- -- -- (.01) - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions -- (6.53) (1.82) (1.05) (1.51) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 7.35 $ 8.29 $27.82 $16.46 $ 13.10 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 1,491 $ 1,815 $4,197 $2,327 $ 1,976 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(b) .81%(d) .78% .77% .67% .66% - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets (.42%)(d) .10% .04% .31% .08% - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 115% 166% 143% 207% 176% - ------------------------------------------------------------------------------------------------------------------------------------ Total return(c) (11.36%) (53.61%) 84.97% 35.27% (16.40%) - ------------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (b) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges. (d) Adjusted to an annual basis. (e) Six months ended Feb. 28, 2002 (Unaudited). 77 INVESTMENTS IN SECURITIES AXP VP - BLUE CHIP ADVANTAGE FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (97.8%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (2.4%) Boeing 8,700 $399,852 L-3 Communications Holdings 800(b) 87,880 Lockheed Martin 10,300 581,023 Northrop Grumman 4,300 460,272 United Technologies 5,600(d) 408,520 ---------- Total 1,937,547 - -------------------------------------------------------------------------------- AUTOMOTIVE & RELATED (0.6%) General Motors 3,600 190,080 Johnson Controls 3,500 310,660 ---------- Total 500,740 - -------------------------------------------------------------------------------- BANKS AND SAVINGS & LOANS (6.4%) Bank of America 15,425 986,428 Bank One 10,200 365,568 Fifth Third Bancorp 3,100 197,656 FleetBoston Financial 9,236 308,298 Golden State Bancorp 9,500 289,560 Golden West Financial 6,400 408,000 GreenPoint Financial 7,600 334,400 J.P. Morgan Chase 4,400 128,700 U.S. Bancorp 20,249 422,192 Wachovia 18,900 628,047 Washington Mutual 17,600 572,528 Wells Fargo 13,000 609,700 ---------- Total 5,251,077 - -------------------------------------------------------------------------------- BEVERAGES & TOBACCO (4.1%) Anheuser-Busch 7,750 394,088 Coca-Cola 13,750 651,613 Coca-Cola Enterprises 7,900 137,697 Pepsi Bottling Group 9,800 243,530 PepsiCo 14,500 732,250 Philip Morris 22,900 1,205,913 ---------- Total 3,365,091 - -------------------------------------------------------------------------------- BUILDING MATERIALS & CONSTRUCTION (1.0%) Georgia-Pacific 17,300 443,745 Lennar 6,300 347,823 ---------- Total 791,568 - -------------------------------------------------------------------------------- CHEMICALS (0.8%) du Pont (EI) de Nemours 3,900 182,676 Praxair 5,100 295,290 Republic Services 11,800(b) 211,810 ---------- Total 689,776 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (1.4%) AT&T Wireless Services 19,900(b) 200,791 Verizon Communications 19,450 910,260 ---------- Total 1,111,051 - -------------------------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (12.6%) Automatic Data Processing 8,200 432,222 Cisco Systems 64,760(b) 924,125 Compaq Computer 15,500 157,170 Computer Associates Intl 15,100 245,828 Dell Computer 24,000(b) 592,560 Electronic Data Systems 6,700 395,501 EMC 23,800(b) 259,420 First Data 8,000 652,160 Fiserv 5,200(b) 222,248 Hewlett-Packard 27,500 553,300 Intl Business Machines 14,300 1,403,116 Microsoft 42,300(b) 2,467,782 Network Associates 8,300(b) 196,876 NVIDIA 5,500(b) 280,555 Oracle 41,900(b) 696,378 Pitney Bowes 6,700 279,524 SABRE Holdings Cl A 2,900(b) 127,629 Storage Technology 7,600(b) 145,920 Tech Data 7,500(b) 343,500 ---------- Total 10,375,814 - -------------------------------------------------------------------------------- ELECTRONICS (3.3%) Analog Devices 3,400(b) 126,514 Applied Materials 2,800(b) 121,716 Intel 51,360 1,467,869 KLA-Tencor 5,100(b) 295,341 LSI Logic 18,300(b) 274,317 Tektronix 3,600(b) 86,076 Texas Instruments 10,700 314,045 ---------- Total 2,685,878 - -------------------------------------------------------------------------------- ENERGY (5.9%) Anadarko Petroleum 2,200 114,620 Apache 1,320 69,630 Burlington Resources 1,500 56,370 ChevronTexaco 8,390 708,452 Conoco 5,300 146,598 Devon Energy 1,700 74,256 Exxon Mobil 53,698 2,217,727 FirstEnergy 2,900 106,140 Kerr-McGee 1,000 55,290 Marathon Oil 2,800 77,000 Occidental Petroleum 3,300 88,572 Phillips Petroleum 3,100 183,241 Royal Dutch Petroleum ADR 16,700(c) 857,879 Unocal 1,800 64,674 ---------- Total 4,820,449 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (0.9%) Baker Hughes 3,900 137,709 Progress Energy 2,000 89,480 Reliant Energy 3,500 72,800 Schlumberger 5,300 308,513 Transocean Sedco Forex 4,100 114,841 ---------- Total 723,343 - -------------------------------------------------------------------------------- FINANCIAL SERVICES (7.0%) Citigroup 40,413 1,828,688 Countrywide Credit Inds 8,200 336,610 Fannie Mae 11,550 903,788 Freddie Mac 9,300 592,782 Household Intl 9,400 484,100 Lehman Brothers Holdings 3,320 187,580 MBNA 9,600 332,928 Merrill Lynch 4,100 196,595 MGIC Investment 6,000 402,720 Morgan Stanley, Dean Witter & Co 5,550 272,616 Radian Group 3,500 163,345 ---------- Total 5,701,752 - -------------------------------------------------------------------------------- FOOD (1.3%) ConAgra Foods 11,900 278,579 Hershey Foods 1,700 120,105 Kellogg 6,100 210,755 Sara Lee 11,500 240,580 Smithfield Foods 7,400(b) 182,780 ---------- Total 1,032,799 - -------------------------------------------------------------------------------- FURNITURE & APPLIANCES (0.7%) Mohawk Inds 2,800(b) 176,204 Whirlpool 5,200 390,520 ---------- Total 566,724 - -------------------------------------------------------------------------------- HEALTH CARE (12.4%) Abbott Laboratories 14,800 836,940 American Home Products 7,300 463,915 Amgen 6,000(b) 347,880 Baxter Intl 7,086 393,131 Biogen 4,100(b) 217,915 Boston Scientific 17,900(b) 400,244 Bristol-Myers Squibb 14,050 660,350 Guidant 9,500(b) 394,250 Johnson & Johnson 24,300 1,479,870 Lilly (Eli) 10,600 802,738 Medtronic 7,900 351,866 Merck & Co 17,050 1,045,677 Mylan Laboratories 9,500 288,610 Pfizer 49,315 2,019,942 Pharmacia 7,800 320,190 Schering-Plough 6,700 231,083 ---------- Total 10,254,601 - -------------------------------------------------------------------------------- HEALTH CARE SERVICES (1.8%) Cardinal Health 3,500 231,315 Tenet Healthcare 5,800(b) 334,950 UnitedHealth Group 6,500 471,185 Wellpoint Health Networks 3,500(b) 425,670 ---------- Total 1,463,120 - --------------------------------------------------------------------------------
See accompanying notes to investments in securities. 78
ISSUER SHARES VALUE(a) HOUSEHOLD PRODUCTS (3.1%) Alberto-Culver Cl B 1,700 $88,519 Clorox 8,800 385,352 Colgate-Palmolive 3,400 190,332 Gillette 5,600 191,464 Kimberly-Clark 4,800 300,480 Newell Rubbermaid 14,300 445,159 Procter & Gamble 11,200 949,648 ---------- Total 2,550,954 - -------------------------------------------------------------------------------- INDEXES (0.9%) Nasdaq-100 Index Tracking 22,550(b) 761,063 - -------------------------------------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (0.5%) Ingersoll-Rand Cl A 7,900 395,000 - -------------------------------------------------------------------------------- INSURANCE (3.8%) Ambac Financial Group 4,400 273,020 American Intl Group 18,887 1,397,071 CIGNA 3,300 296,010 MBIA 5,800 339,010 MetLife 11,600 369,808 PMI Group 3,000 212,550 UnumProvident 9,100 257,712 ---------- Total 3,145,181 - -------------------------------------------------------------------------------- LEISURE TIME & ENTERTAINMENT (2.8%) AOL Time Warner 28,800(b) 714,240 Blockbuster Cl A 8,900 210,040 Disney (Walt) 14,000 322,000 Harley-Davidson 2,900 148,654 Intl Game Technology 6,700(b) 452,384 Viacom Cl B 10,000(b) 465,500 ---------- Total 2,312,818 - -------------------------------------------------------------------------------- MEDIA (1.6%) Clear Channel Communications 8,500(b) 396,270 Comcast Cl A 7,700(b) 260,799 Gannett 6,800 518,024 New York Times Cl A 3,600 158,040 ---------- Total 1,333,133 - -------------------------------------------------------------------------------- METALS (0.9%) Alcoa 11,000 413,270 Shaw Group 13,900(b) 337,631 ---------- Total 750,901 - -------------------------------------------------------------------------------- MISCELLANEOUS (0.1%) Intersil 4,300(b) 117,734 - -------------------------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (6.4%) Cendant 29,000(b) 504,890 General Electric 80,270(d) 3,090,395 Grainger (WW) 3,900 231,153 Honeywell Intl 5,900 224,908 Minnesota Mining & Mfg 2,600 306,618 Textron 3,500 166,355 Tyco Intl 9,420(c) 274,122 Xerox 42,900 416,559 ---------- Total 5,215,000 - -------------------------------------------------------------------------------- PAPER & PACKAGING (0.4%) Ball 8,200 346,778 - -------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUST (0.2%) Equity Office Properties Trust 3,100 88,970 Equity Residential Properties Trust 2,500 67,375 ---------- Total 156,345 - -------------------------------------------------------------------------------- RESTAURANTS & LODGING (0.6%) McDonald's 8,100 211,410 Tricon Global Restaurants 4,750(b) 280,868 ---------- Total 492,278 - -------------------------------------------------------------------------------- RETAIL (7.3%) Best Buy 6,800(b) 458,320 Circuit City Stores- Circuit City Group 7,500 134,100 Home Depot 19,200 960,000 Kroger 18,655(b) 413,208 Lowe's Companies 9,900 447,975 Penney (JC) 11,300 220,802 RadioShack 6,600 181,104 Safeway 2,100(b) 90,258 Sears, Roebuck & Co 9,700 510,026 Target 4,400 184,360 Wal-Mart Stores 35,800 2,219,958 Walgreen 3,800 152,912 ---------- Total 5,973,023 - -------------------------------------------------------------------------------- TEXTILES & APPAREL (0.3%) VF 6,500 273,325 - -------------------------------------------------------------------------------- TRANSPORTATION (1.2%) Burlington Northern Santa Fe 15,000 435,300 FedEx 7,000(b) 405,020 Union Pacific 1,900 115,273 ---------- Total 955,593 - -------------------------------------------------------------------------------- UTILITIES-- ELECTRIC (2.0%) AES 6,700(b) $34,572 Ameren 1,400 57,218 American Electric Power 2,900 127,165 Consolidated Edison 2,000 81,600 Dominion Resources 2,300 134,044 DTE Energy 1,600 66,272 Duke Energy 6,800 240,040 Entergy 2,100 86,688 Exelon 2,600 128,128 FPL Group 1,900 100,909 PG&E 3,800(b) 80,598 Public Service Enterprise Group 2,000 84,340 Sempra Energy 2,100 46,872 Southern Co 6,600 167,640 TXU 2,600 132,262 Xcel Energy 3,200 75,680 ---------- Total 1,644,028 - -------------------------------------------------------------------------------- UTILITIES-- GAS (0.5%) Dynegy Cl A 3,000 76,710 El Paso 3,900 152,412 KeySpan 1,400 44,870 Kinder Morgan 800 32,800 Williams Companies 4,600 71,070 ---------- Total 377,862 - -------------------------------------------------------------------------------- UTILITIES-- TELEPHONE (2.6%) ALLTEL 2,400 133,560 BellSouth 14,380 557,369 Qwest Communications Intl 13,200 114,840 SBC Communications 25,415 961,703 Sprint (PCS Group) 8,700(b) 80,475 WorldCom-WorldCom Group 40,700(b) 306,064 ---------- Total 2,154,011 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $82,896,656) $80,226,357 - -------------------------------------------------------------------------------- SHORT-TERM SECURITIES (2.0%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCIES Federal Home Loan Bank Disc Nt 03-15-02 1.56% $1,000,000 $999,352 Federal Home Loan Mtge Corp Disc Nt 03-12-02 1.59 600,000 599,682 - -------------------------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $1,599,104) $1,599,034 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $84,495,760)(e) $81,825,391 ================================================================================
See accompanying notes to investments in securities. 79 NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of Feb. 28, 2002, the value of foreign securities represented 1.4% of net assets. (d) Partially pledged as initial margin deposit on the following open stock index futures contracts (see Note 7 to the financial statements):
TYPE OF SECURITY CONTRACTS --------------------------------------------------------------------------- PURCHASE CONTRACTS S&P 500 Index, March 2002 31
(e) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $84,496,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 4,468,000 Unrealized depreciation (7,139,000) --------------------------------------------------------------------------- Net unrealized depreciation $(2,671,000) ---------------------------------------------------------------------------
80 INVESTMENTS IN SECURITIES AXP VP - BOND FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
BONDS (94.2%) ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT GOVERNMENT OBLIGATIONS (8.9%) Federal Republic of Brazil (U.S. Dollar) 07-26-07 11.25% $8,600,000(c) $8,591,400 01-11-12 11.00 7,000,000(c) 6,454,000 Federal Republic of Germany (European Monetary Unit) 11-11-04 7.50 15,000,000(c) 14,039,213 Govt of Russia (Russian Ruble) 12-15-01 -- 2,760,000(b,c) 88,986 02-06-02 -- 2,273,000(b,c) 73,285 05-22-02 -- 2,273,000(b,c) 73,505 06-05-02 -- 2,273,000(b,c) 73,512 09-18-02 -- 2,273,000(b,c) 73,761 10-09-02 -- 2,273,000(b,c) 73,131 01-22-03 -- 2,273,000(b,c) 72,493 02-05-03 -- 2,273,000(b,c) 72,552 05-21-03 -- 2,273,000(b,c) 71,680 06-04-03 -- 2,273,000(b,c) 71,563 09-17-03 -- 2,273,000(b,c) 70,903 10-08-03 -- 2,273,000(b,c) 70,243 01-21-04 -- 2,273,000(b,c) 69,445 U.S. Treasury 11-15-16 7.50 91,700,000 110,197,723 TIPS 01-15-07 3.38 5,000,000(k) 5,722,730 United Mexican States (U.S. Dollar) 01-14-12 7.50 8,000,000(c) 8,140,000 ----------- Total 154,100,125 - -------------------------------------------------------------------------------- MORTGAGE-BACKED SECURITIES (26.9%) Federal Home Loan Mtge Corp 05-01-07 9.00 795,931 824,079 03-01-13 5.50 2,998,056 3,029,558 04-01-15 7.50 10,172,184 10,759,210 08-01-24 8.00 1,438,682 1,535,189 01-01-25 9.00 336,591 370,090 07-01-28 6.00 7,444,162 7,454,930 09-01-28 6.00 22,928,829 22,961,995 12-01-29 7.00 29,606,005 30,534,595 Collateralized Mtge Obligation 03-15-22 7.00 10,455,000 10,915,661 07-15-22 7.00 12,940,000 13,474,293 Federal Natl Mtge Assn 03-15-04 4.75 10,000,000 10,291,780 07-15-05 7.00 13,000,000 14,186,393 09-01-07 8.50 1,460,736 1,537,894 12-01-13 5.50 10,688,719 10,786,119 02-01-14 5.50 17,377,646 17,517,954 04-01-14 5.50 148,555 149,909 07-01-16 6.00 5,671,003 5,763,409 08-01-16 6.00 4,706,796 4,783,490 11-01-21 8.00 147,075 158,213 04-01-22 8.00 988,616 1,058,249 04-01-23 8.50 2,048,269 2,232,561 06-01-24 9.00 2,006,852 2,211,031 02-01-27 7.50 4,431,443 4,644,815 09-01-28 6.50 9,977,409 10,175,255 10-01-28 6.00 15,708,452 15,721,660 11-01-28 6.00 7,021,765 7,027,669 11-01-28 6.50 14,752,912 15,045,452 12-01-28 6.00 3,225,515 3,228,226 12-01-28 6.50 18,250,940 18,612,843 01-01-29 6.50 14,876,832 15,171,830 02-01-29 6.00 8,164,401 8,171,265 03-01-29 6.50 19,005,586 19,372,211 06-01-29 6.00 4,691,563 4,695,545 09-01-29 6.00 4,605,900 4,609,810 03-01-30 7.00 60,000,000(e) 61,799,999 04-01-30 6.00 20,000,000(e) 19,793,750 04-01-30 7.00 22,000,000(e) 22,570,624 01-01-31 7.50 12,816,858 13,381,364 03-01-31 6.00 5,000,000(e) 4,968,750 02-01-32 6.50 20,000,000(e) 20,293,750 03-01-32 7.50 18,000,000(e) 18,748,125 Collateralized Mtge Obligation 06-25-23 5.25 5,750,000 5,807,500 ----------- Total 466,377,045 - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE (0.2%) Alliant Techsystems Company Guaranty 05-15-11 8.50 1,125,000 1,203,750 L-3 Communications Sr Sub Nts Series B 05-01-07 10.38 1,710,000 1,812,600 ----------- Total 3,016,350 - -------------------------------------------------------------------------------- AIRLINES (1.6%) American Airlines 10-01-06 7.80 2,000,000(d) 1,985,600 1st Series 2001 Cl C 05-23-16 7.38 6,853,521 6,359,314 Continental Airlines Series 1998A 09-15-17 6.65% $7,330,497 $6,909,354 Series D 12-01-06 7.57 5,600,000 4,823,699 Delta Air Lines 12-15-09 7.90 7,200,000 6,776,669 United Air Lines 10-01-10 7.03 1,764,040 1,675,591 ----------- Total 28,530,227 - -------------------------------------------------------------------------------- AUTOMOTIVE & RELATED (1.7%) Advance Stores Sr Sub Nts 04-15-08 10.25 1,850,000(d) 1,947,125 ArvinMeritor 03-01-12 8.75 2,400,000 2,464,512 DaimlerChrysler North America Holding Company Guaranty 09-01-04 6.90 3,000,000 3,127,890 01-15-12 7.30 5,100,000 5,253,428 Ford Motor 07-16-31 7.45 4,700,000 4,502,934 Ford Motor Credit 07-16-04 6.70 2,000,000 2,046,960 02-01-11 7.38 10,000,000 10,083,050 ----------- Total 29,425,899 - -------------------------------------------------------------------------------- BANKS AND SAVINGS & LOANS (3.5%) Bank of Singapore (U.S. Dollar) Sub Nts 08-10-09 7.88 10,500,000(c,d) 11,371,595 Cullen/Frost Capital Series A 02-01-27 8.42 5,000,000 4,664,550 FCB/NC Capital Trust 1 Company Guaranty 03-01-28 8.05 4,625,000 4,159,605 FleetBoston Financial 09-15-05 7.25 11,500,000 12,402,980 Marshall & Ilsley Series E 09-01-06 5.75 4,900,000 5,015,885 Provident Trust Company Guaranty 04-15-28 8.29 5,500,000 4,878,302 Sovereign Bancorp Sr Nts 05-15-04 10.25 1,205,000 1,271,275 11-15-06 10.50 1,280,000 1,388,800
See accompanying notes to investments in securities. 81
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT Union Planters Bank Sub Nts 03-15-08 6.50% $5,000,000 $5,020,340 Washington Mutual Bank 06-15-11 6.88 9,700,000 10,024,193 ----------- Total 60,197,525 - -------------------------------------------------------------------------------- BEVERAGES & TOBACCO (0.3%) Constellation Brands Sr Sub Nts Series B 01-15-12 8.13 2,500,000 2,593,750 Cott Beverages Company Guaranty 12-15-11 8.00 2,500,000(d) 2,553,125 ----------- Total 5,146,875 - -------------------------------------------------------------------------------- BUILDING MATERIALS & CONSTRUCTION (2.4%) Collins & Aikman Floor Cover Sr Sub Nts 02-15-10 9.75 345,000(d) 356,213 Louisiana Pacific Sr Nts 11-15-08 10.88 325,000 326,625 08-15-10 8.88 840,000 835,974 Sr Sub Nts 08-15-05 8.50 1,670,000 1,676,055 Masco 05-03-04 6.00 9,800,000 10,017,560 Nortek Sr Nts Series B 09-01-07 9.13 500,000 513,125 08-01-08 8.88 2,000,000 2,042,500 Pulte Homes Company Guaranty 08-01-11 7.88 10,000,000 10,133,040 Schuler Homes Company Guaranty 04-15-08 9.00 420,000 416,850 07-15-09 9.38 3,000,000 3,180,000 WCI Communities Company Guaranty 02-15-11 10.63 3,560,000 3,809,200 Weyerhaeuser 08-01-06 6.00 8,800,000 8,906,832 ----------- Total 42,213,974 - -------------------------------------------------------------------------------- CHEMICALS (2.2%) Airgas Company Guaranty 10-01-11 9.13 3,360,000 3,528,000 Allied Waste North America Company Guaranty Series B 01-01-09 7.88 4,450,000 4,383,250 Sr Nts 12-01-08 8.50 1,850,000(d) 1,887,000 Equistar Chemical/Funding Company Guaranty 09-01-08 10.13 2,095,000 2,095,000 IMC Global Company Guaranty Series B 06-01-08 10.88 2,900,000 3,161,000 06-01-11 11.25 840,000 911,400 Lyondell Chemical 12-15-08 9.50 720,000(d) 723,600 Series B 05-01-07 9.88 1,250,000 1,268,750 MacDermid 07-15-11 9.13 880,000 915,200 Noveon Company Guaranty Series B 02-28-11 11.00 1,600,000 1,690,000 Praxair 03-01-08 6.50 6,500,000 6,698,575 Resolution Performance Sr Sub Nts 11-15-10 13.50 1,025,000 1,148,000 Waste Management Company Guaranty 05-15-09 6.88 10,350,000 10,237,910 ----------- Total 38,647,685 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (3.4%) AT&T Wireless Services Sr Nts 03-01-11 7.88 16,600,000 17,257,460 03-01-31 8.75 6,000,000 6,567,630 Brocade Communications Cv 01-01-07 2.00 1,300,000(d) 1,105,000 Celcaribe Sr Nts 03-15-04 14.50 1,747,000 943,380 Citizens Communications 05-15-11 9.25 12,500,000 13,613,875 Comverse Technology Cv 12-01-05 1.50 2,210,000 1,679,600 EchoStar DBS Sr Nts 02-01-09 9.38 2,100,000 2,157,750 Nextel Communications Sr Nts 02-01-11 9.50 3,715,000 2,284,725 Price Communications Wireless Company Guaranty Series B 12-15-06 9.13 5,030,000 5,080,300 Rural Cellular Sr Sub Nts Series B 05-15-08 9.63 675,000 540,000 Verizon New England Sr Nts 09-15-11 6.50 7,000,000 7,165,830 Western Wireless Sr Sub Nts 02-01-07 10.50 660,000 554,400 ----------- Total 58,949,950 - -------------------------------------------------------------------------------- COMPUTER SOFTWARE & SERVICES (0.4%) Computer Sciences 06-15-06 6.75 5,650,000 5,888,487 Extreme Networks Cv 12-01-06 3.50 1,160,000(d) 801,850 Wind River Systems Cv 12-15-06 3.75 530,000(d) 449,175 ----------- Total 7,139,512 - -------------------------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (0.1%) Acxiom Cv 02-15-09 3.75 1,010,000(d) 1,044,088 Adaptec Cv 03-05-07 3.00 1,090,000(d) 1,090,000 Emulex Cv 02-01-07 1.75 340,000(d) 308,550 ----------- Total 2,442,638 - -------------------------------------------------------------------------------- ELECTRONICS (0.7%) Celestica (U.S. Dollar) Zero Coupon Cv 08-01-20 3.92 6,100,000(c,h) 2,562,000 Kulicke & Soffa Inds Cv 12-15-06 4.75 1,200,000 1,168,500 RF Micro Devices Cv 08-15-05 3.75 2,070,000 1,687,050 Solectron Zero Coupon Cv 11-20-20 3.92 6,400,000(h) 2,904,000 STMicroelectronics (U.S. Dollar) Zero Coupon Cv 11-16-10 3.82 2,550,000(c,d,h) 1,689,375 Triquint Semiconductor Cv Sub Nts 03-01-07 4.00 1,800,000 1,300,500 Veeco Instruments Cv 12-21-08 4.13 1,470,000(d) 1,343,213 ----------- Total 12,654,638 - --------------------------------------------------------------------------------
See accompanying notes to investments in securities. 82
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT ENERGY (2.4%) Anadarko Finance Company Guaranty Series B 05-01-11 6.75% $5,000,000 $5,194,700 Ashland Medium-term Nts Series J 08-15-05 7.83 5,000,000 5,377,205 Calpine Canada Energy Finance (U.S. Dollar) Company Guaranty 05-01-08 8.50 2,000,000(c) 1,440,030 Conoco Funding Company Guaranty 10-15-11 6.35 7,000,000 7,227,163 Devon Energy Cv 08-15-08 4.90 1,282,000 1,261,168 Forest Oil Sr Nts 12-15-11 8.00 3,750,000(d) 3,787,500 Hanover Equipment Trust Sr Nts 09-01-08 8.50 1,695,000(d) 1,711,950 Luscar Coal (U.S. Dollar) Sr Nts 10-15-11 9.75 1,875,000(c,d) 1,989,844 Newfield Exploration Sr Nts 03-01-11 7.63 3,500,000 3,435,947 Petroliam Nasional (U.S. Dollar) 08-15-15 7.75 2,800,000(c,d) 2,931,062 Phillips Petroleum 05-25-10 8.75 5,000,000 5,906,685 Westport Resources Company Guaranty 11-01-11 8.25 2,025,000(d) 2,030,063 ----------- Total 42,293,317 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (0.2%) Key Energy Services Company Guaranty Series B 03-01-08 8.38 960,000 979,200 Sr Nts 03-01-08 8.38 1,130,000 1,146,950 Nabors Inds Zero Coupon Cv 06-20-20 2.06 2,900,000(h) 1,845,125 ----------- Total 3,971,275 - -------------------------------------------------------------------------------- FINANCIAL SERVICES (6.1%) Amvescap (U.S. Dollar) Sr Nts 01-15-07 5.90 3,000,000(c,d) 3,006,411 Citigroup Sub Nts 10-01-10 7.25 10,000,000 10,852,000 Credit Suisse First Boston USA 01-15-12 6.50 8,650,000 8,825,353 E*TRADE Group Cv 02-01-07 6.00 1,570,000 1,199,072 GMAC 09-15-06 6.13 5,000,000 4,988,755 09-15-11 6.88 17,000,000 16,894,259 Goldman Sachs Group 01-15-11 6.88 12,000,000 12,463,872 Household Finance 01-24-06 6.50 10,000,000 10,156,700 07-15-06 7.20 4,900,000 5,109,720 10-15-11 6.38 10,400,000 10,022,272 Indah Kiat Finance Mauritius (U.S. Dollar) Company Guaranty 07-01-07 10.00 2,530,000(b,c) 480,700 LaBranche Sr Nts 08-15-04 9.50 2,760,000 2,932,610 Sr Sub Nts 03-02-07 12.00 2,500,000 2,875,000 Legg Mason Sr Nts 07-02-08 6.75 4,900,000 4,877,068 MBNA 01-17-07 6.25 3,000,000 2,940,258 Ohio Savings Capital Company Guaranty 06-03-27 9.50 5,000,000(d) 4,852,850 Swiss Re America Holdings Cv 11-21-21 3.25 1,130,000(d) 1,050,900 Verizon Global Funding 12-01-30 7.75 2,050,000 2,290,494 ----------- Total 105,818,294 - -------------------------------------------------------------------------------- FOOD (0.3%) Kellogg Series B 04-01-11 6.60 5,000,000 5,226,100 - -------------------------------------------------------------------------------- FURNITURE & APPLIANCES (0.1%) Falcon Products Company Guaranty Series B 06-15-09 11.38 730,000 649,700 Interface Sr Nts 02-01-10 10.38 970,000(d) 1,008,800 ----------- Total 1,658,500 - -------------------------------------------------------------------------------- HEALTH CARE (0.9%) Allergan Zero Coupon Cv 11-01-20 2.51% $1,790,000(h) $1,107,563 American Home Products 03-15-11 6.70 10,000,000 10,561,299 Enzon Cv 07-01-08 4.50 1,140,000 986,100 Invitrogen Cv 12-15-06 2.25 1,170,000(d) 1,007,663 Laboratory Corp of America Holdings Zero Coupon Cv 09-11-21 1.90 1,650,000(d,h) 1,161,188 Quest Diagnostic Cv 11-30-21 1.75 1,100,000 1,164,625 ----------- Total 15,988,438 - -------------------------------------------------------------------------------- HEALTH CARE SERVICES (0.9%) Charles River Laboratories Cv 02-01-22 3.50 1,140,000(d) 1,122,900 Clarent Hospital Sr Nts 08-15-05 11.50 1,934,000(g) 1,934,000 Coventry Health Care Sr Nts 02-15-12 8.13 2,500,000(d) 2,562,500 HCA 06-01-06 7.13 2,540,000 2,628,900 02-01-11 7.88 2,600,000 2,756,000 Insight Healthcare Services Sr Sub Nts 11-01-11 9.88 665,000(d) 684,950 Paracelsus Healthcare Sr Sub Nts 08-15-06 10.00 5,275,000(b,j) -- Triad Hospitals Company Guaranty 05-01-09 8.75 4,300,000 4,579,500 ----------- Total 16,268,750 - -------------------------------------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (0.2%) Terex Company Guaranty Series D 04-01-08 8.88 840,000 848,400 Sr Sub Nts 07-15-11 9.25 2,500,000(d) 2,575,000 ----------- Total 3,423,400 - --------------------------------------------------------------------------------
See accompanying notes to investments in securities. 83
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT INSURANCE (1.4%) American Intl Group Zero Coupon Cv 11-09-31 1.57% $2,500,000(h) $1,534,375 Americo Life Sr Sub Nts 06-01-05 9.25 4,500,000 4,488,750 Executive Risk Capital Company Guaranty Series B 02-01-27 8.68 3,500,000 3,635,664 Lincoln Natl 12-15-11 6.20 4,300,000 4,309,718 New England Mutual 02-15-24 7.88 5,000,000(d) 5,304,450 Zurich Capital Trust I Company Guaranty 06-01-37 8.38 5,000,000(d) 5,034,680 ----------- Total 24,307,637 - -------------------------------------------------------------------------------- LEISURE TIME & ENTERTAINMENT (1.8%) Choctaw Resort Development Enterprises Sr Nts 04-01-09 9.25 2,500,000 2,575,000 Coast Hotels & Casino Company Guaranty 04-01-09 9.50 550,000 581,625 Hammons (JQ) Hotels 1st Mtge 02-15-04 8.88 1,035,000 1,029,825 Mandalay Resort Group 11-15-36 7.00 1,125,000 1,015,313 MGM Mirage Sr Nts 10-15-06 7.25 6,250,000 6,215,544 Mohegan Tribal Gaming Sr Sub Nts 04-01-12 8.00 1,955,000(d) 1,957,444 Six Flags Sr Nts 02-01-09 9.50 2,100,000 2,170,875 02-01-10 8.88 830,000(d,g) 827,925 Station Casinos Sr Nts 02-15-08 8.38 1,500,000 1,548,750 Sr Sub Nts 07-01-10 9.88 1,000,000 1,070,000 United Artists Theatre Series 1995A 07-01-15 9.30 4,176,342 3,424,600 Viacom Company Guaranty 05-15-11 6.63 8,000,000 8,197,039 ----------- Total 30,613,940 - -------------------------------------------------------------------------------- MEDIA (4.9%) Adelphia Communications Sr Nts 11-01-06 10.25 3,375,000 3,476,250 Sr Nts Series B 03-01-07 9.88 2,085,000 2,095,425 American Media Operation Sr Sub Nts 05-01-09 10.25 1,725,000(d) 1,757,344 AOL Time Warner 04-15-06 6.13 2,907,000 2,961,561 Australis Media (U.S. Dollar) 05-15-03 15.75 10,081,770(b,c,j) -- Belo (AH) 11-01-08 8.00 3,800,000 3,942,500 Charter Communications Holdings LLC/Capital Sr Nts 10-01-09 10.75 8,250,000 8,250,000 Clear Channel Communications 11-01-06 6.00 7,000,000 6,836,193 Comcast Cable Communications Sr Nts 06-15-13 7.13 12,000,000 12,116,736 Corus Entertainment (U.S. Dollar) Sr Sub Nts 03-01-12 8.75 2,745,000(c,d) 2,807,037 CSC Holdings Sr Nts Series B 04-01-11 7.63 8,000,000 7,795,936 Cumulus Media Company Guaranty 07-01-08 10.38 220,000 233,200 Pegasus Satellite Sr Nts 08-01-06 12.38 650,000 513,500 Quebecor Media (U.S. Dollar) Sr Nts 07-15-11 11.13 220,000(c) 236,500 Time Warner 08-15-04 7.98 1,500,000 1,606,500 08-15-06 8.11 3,000,000 3,277,350 08-15-07 8.18 3,000,000 3,303,300 Company Guaranty 01-15-28 6.95 5,000,000 4,699,200 Time Warner Cos 02-01-24 7.57 10,000,000 10,109,200 Veninfotel (U.S. Dollar) Cv Pay-in-kind 03-01-02 10.00 8,090,827(c,g,i) 8,090,827 ----------- Total 84,108,559 - -------------------------------------------------------------------------------- METALS (0.7%) AK Steel Sr Nts 12-15-06 9.13% $2,500,000 $2,600,000 Compass Minerals Group Sr Sub Nts 08-15-11 10.00 3,440,000(d) 3,612,000 Imexsa Export Trust (U.S. Dollar) 05-31-03 10.13 1,370,947(c,d) 507,250 Inco (U.S. Dollar) Cv 03-15-16 7.75 1,901,000(c) 1,889,404 Normandy Yandal Operations (U.S. Dollar) Sr Nts 04-01-08 8.88 3,850,000(c) 3,869,250 ----------- Total 12,477,904 - -------------------------------------------------------------------------------- MISCELLANEOUS (1.7%) Bistro Trust 12-31-02 9.50 7,000,000(d) 6,020,000 Colonial Capital Company Guaranty Series A 01-15-27 8.92 3,000,000 2,725,956 EOP Operating LP Sr Nts 07-15-11 7.00 6,500,000 6,699,738 ISG Resources 04-15-08 10.00 3,150,000 2,787,750 Meritage Company Guaranty 06-01-11 9.75 1,915,000 2,020,325 MSX Intl Company Guaranty 01-15-08 11.38 2,215,000 1,702,781 NSM Steel Company Guaranty 02-01-06 12.00 1,577,781(b,d) 491,952 02-01-08 12.25 5,300,000(b,d) 1,648,512 Omega Cabinets Sr Sub Nts 06-15-07 10.50 2,300,000 2,415,000 Outsourcing Solutions Sr Sub Nts Series B 11-01-06 11.00 1,180,000 997,100 Rural Cellular Series B 10-03-08 5.89 1,263,584(g) 1,111,954 Series C 04-03-09 6.14 1,263,584(g) 1,111,954 ----------- Total 29,733,022 - --------------------------------------------------------------------------------
See accompanying notes to investments in securities. 84
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT MULTI-INDUSTRY CONGLOMERATES (0.6%) Tyco Intl Group (U.S. Dollar) 10-15-11 6.38% $6,440,000(c) $5,789,399 (U.S. Dollar) Company Guaranty 06-15-05 6.38 5,160,000(c) 4,716,999 ----------- Total 10,506,398 - -------------------------------------------------------------------------------- PAPER & PACKAGING (2.4%) Abitibi-Consolidated (U.S. Dollar) 08-01-10 8.55 8,000,000(c) 8,496,936 APP China Group (U.S. Dollar) Sr Nts 03-15-05 14.00 2,600,000(b,c,d) 468,000 Berry Plastics Company Guaranty Series B 07-15-07 11.00 840,000 865,200 Bowater Canada Finance (U.S. Dollar) Company Guaranty 11-15-11 7.95 13,000,000(c) 13,357,499 Crown Paper Sr Sub Nts 09-01-05 11.00 3,450,000(b) 34,500 Graphic Packaging Sr Sub Nts 02-15-12 8.63 2,940,000(d) 3,042,900 Packaging Corp of America Company Guaranty 04-01-09 9.63 3,220,000 3,550,050 Pactiv 06-15-17 8.13 6,000,000 6,498,672 Plastipak Holdings Sr Nts 09-01-11 10.75 675,000(d) 725,625 Riverwood Intl Company Guaranty 04-01-06 10.25 975,000 1,006,688 08-01-07 10.63 1,540,000 1,640,100 04-01-08 10.88 535,000 555,063 Silgan Holdings Sr Sub Deb 06-01-09 9.00 525,000 543,375 ----------- Total 40,784,608 - -------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUST (0.1%) Meristar Hospitality Company Guaranty 01-15-11 9.13 800,000 796,000 Sr Sub Nts 08-15-07 8.75 700,000 645,750 RFS Partnership LP Company Guaranty 03-01-12 9.75 450,000(d) 459,000 ----------- Total 1,900,750 - -------------------------------------------------------------------------------- RESTAURANTS & LODGING (0.4%) Extended Stay America Sr Sub Nts 06-15-11 9.88 2,500,000 2,612,500 Park Place Entertainment Sr Nts 11-15-06 8.50 480,000 500,488 Sr Sub Nts 09-15-08 8.88 2,500,000 2,618,750 05-15-11 8.13 800,000 813,000 Prime Hospitality 1st Mtge 01-15-06 9.25 225,000 231,750 ----------- Total 6,776,488 - -------------------------------------------------------------------------------- RETAIL (3.8%) Albertson's Sr Nts 02-15-11 7.50 10,000,000 10,891,970 Best Buy Cv 01-15-22 2.25 1,170,000(d) 1,114,425 Federated Dept Stores Sr Nts 09-01-08 6.63 8,000,000 8,219,520 Kroger Sr Nts 07-15-06 8.15 3,000,000 3,341,670 09-15-29 8.00 9,000,000 10,220,040 Pathmark Stores Sr Sub Nts 02-01-12 8.75 3,360,000(d) 3,481,800 Safeway 09-15-04 7.25 10,000,000 10,687,500 Target 01-15-11 6.35 5,000,000 5,217,200 12-01-22 8.50 3,000,000 3,286,029 Wal-Mart CRAVE Trust 07-17-06 7.00 8,083,146(d) 8,497,084 ----------- Total 64,957,238 - -------------------------------------------------------------------------------- TRANSPORTATION (2.1%) Enterprise Rent-A-Car USA Finance 01-15-11 8.00 12,000,000(d) 12,789,240 Greater Beijing First Expressways (U.S. Dollar) Sr Nts 06-15-07 9.50 2,290,000(b,c) 1,122,100 Interpool 08-01-07 7.35 2,320,000 2,134,400 Union Pacific 01-15-11 6.65 16,400,000 16,952,762 Vectura Group Company Guaranty Series B 06-30-08 10.25 2,045,000(b) 1,472,400 Zhuhai Highway (U.S. Dollar) Sub Nts 07-01-08 12.00 4,140,000(b,c,d) 1,035,000 ----------- Total 35,505,902 - -------------------------------------------------------------------------------- UTILITIES-- ELECTRIC (4.6%) Cleveland Electric Illuminating 1st Mtge Series B 05-15-05 9.50 11,000,000 11,117,040 1st Mtge Series E 07-01-23 9.00 4,000,000 4,073,960 CMS Energy Sr Nts 05-15-02 8.13 5,000,000 5,004,550 Dominion Virginia Power Sr Nts Series A 03-31-06 5.75 15,000,000 15,304,185 Duke Energy Field Services 08-16-05 7.50 2,500,000 2,608,240 FirstEnergy Series B 11-15-11 6.45 5,200,000 5,211,596 Ipalco Enterprises 11-14-11 7.63 6,000,000(d) 5,557,536 Midland Funding I Series 1991-C 07-23-02 10.33 218,429 219,898 Series 1994-C 07-23-02 10.33 188,161 189,426 Midland Funding II Series A 07-23-05 11.75 5,000,000 5,391,290 Mirant Americas Generation Sr Nts 05-01-11 8.30 2,500,000 2,125,000 NRG Northest Generating Company Guaranty Series A1 12-15-04 8.07 1,125,000 1,153,361 Company Guaranty Series B1 06-15-15 8.84 4,000,000 4,153,720 PowerGen US Funding LLC 10-15-04 4.50 4,000,000 3,974,588 Sithe Independence Funding Series A 12-30-13 9.00 7,500,000 7,894,725 Texas Utilities Electric Medium-term Nts 1st Mtge Series B 03-01-02 9.70 6,000,000 6,001,152 ----------- Total 79,980,267 - --------------------------------------------------------------------------------
See accompanying notes to investments in securities. 85
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT UTILITIES-- GAS (1.9%) El Paso Sr Nts 05-15-09 6.75% $5,500,000 $5,378,670 12-15-12 7.38 5,000,000 4,991,100 01-15-32 7.75 6,200,000 6,074,518 Southern Natural Gas 03-01-32 8.00 4,800,000 4,809,163 Southwest Gas 02-15-11 8.38 3,000,000 3,061,980 Williams Companies 11-15-04 6.63 2,450,000 2,367,901 09-01-11 7.13 7,000,000 6,444,620 ----------- Total 33,127,952 - -------------------------------------------------------------------------------- UTILITIES-- TELEPHONE (4.2%) AT&T 11-15-11 7.30 5,700,000(d) 5,712,141 BellSouth Capital Funding 02-15-30 7.88 12,000,000 14,003,412 Dobson/Sygnet Communications Sr Nts 12-15-08 12.25 800,000 752,000 France Telecom (U.S. Dollar) 03-01-31 8.50 10,000,000(c,l) 10,975,560 New England Tel & Tel 08-01-31 9.00 7,500,000 7,950,750 Vodafone Group (U.S. Dollar) 02-15-10 7.75 10,900,000(c) 12,042,320 WorldCom 05-15-11 7.50 17,000,000 16,379,602 05-15-31 8.25 5,000,000 4,806,205 ----------- Total 72,621,990 - -------------------------------------------------------------------------------- TOTAL BONDS (Cost: $1,635,800,091) $1,630,893,172 - -------------------------------------------------------------------------------- PREFERRED STOCKS & OTHER (0.6%) ISSUER SHARES VALUE(a) Asia Pulp & Paper Warrants 5,100(b,c,d,j) $-- Duke Energy 8.25% Cv 43,000 1,067,690 General Motors 5.25% Cv Series B 87,500 2,279,375 Intermedia Communications 13.50% Pay-in kind Series B 5,251(i) 5,040,749 Nextel Communications 13.00% Cm Pay-in-kind Series D 1,699(i) 611,641 NSM Steel Warrants 3,355,391(b,d) 3 Prudential Financial 6.75% Cv 28,200 1,531,260 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS & OTHER (Cost: $11,626,213) $10,530,718 - -------------------------------------------------------------------------------- COMMON STOCKS (--%) ISSUER SHARES VALUE(a) BayCorp Holdings 28(b) $255 PhoneTel Technologies 596,400(b) 25,347 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $7,144,988) $25,602 - -------------------------------------------------------------------------------- SHORT-TERM SECURITIES (13.5%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCIES (8.3%) Federal Home Loan Bank Disc Nts 03-22-02 1.60% $16,700,000 $16,683,377 04-26-02 1.73 35,000,000 34,901,557 05-01-02 1.76 13,300,000 13,259,915 Federal Home Loan Mtge Corp Disc Nts 03-05-02 1.70 7,800,000 7,798,158 04-04-02 1.72 10,000,000 9,983,917 04-11-02 1.68 15,000,000 14,971,392 04-23-02 1.75 15,000,000 14,960,738 Federal Natl Mtge Assn Disc Nts 04-03-02 1.74 11,900,000 11,880,444 04-17-02 1.68 20,000,000 19,957,381 ----------- Total 144,396,879 - -------------------------------------------------------------------------------- COMMERCIAL PAPER (5.2%) Emerson Electric 03-07-02 1.78 3,300,000(f) 3,298,858 04-08-02 1.78 5,600,000(f) 5,589,201 Gannett 03-11-02 1.76 10,000,000(f) 9,994,623 ING U.S. Funding 03-18-02 1.78 5,700,000 5,694,927 Morgan Stanley, Dean Witter & Co 03-25-02 1.79 10,000,000 9,987,570 03-26-02 1.79 3,800,000 3,795,087 04-08-02 1.78 1,800,000 1,796,529 04-15-02 1.79 4,000,000 3,990,851 Nordea North America 04-02-02 1.62 4,600,000 4,591,989 04-02-02 1.68 3,600,000 3,593,730 Salomon Smith Barney 03-21-02 1.78 7,900,000 7,891,797 04-08-02 1.79 15,900,000 15,869,167 SBC Intl 03-18-02 1.72 3,200,000(f) 3,197,248 Unilever Capital 03-01-02 1.87 1,100,000(f) 1,099,943 03-18-02 1.78 6,300,000(f) 6,294,393 USAA Capital 04-26-02 1.76 3,300,000 3,290,804 ----------- Total 89,976,717 - -------------------------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $234,386,118) $234,373,596 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $1,888,957,410)(m) $1,875,823,088 ================================================================================
See accompanying notes to investments in securities. 86 NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. For long-term debt securities, item identified is in default as to payment of interest and/or principal. (c) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the currency indicated. As of Feb. 28, 2002, the value of foreign securities represented 7.5% of net assets. (d) 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. (e) At Feb. 28, 2002, the cost of securities purchased, including interest purchased, on a when-issued basis was $147,305,148. (f) 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. (g) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at Feb. 28, 2002, is as follows:
SECURITY ACQUISITION COST DATES -------------------------------------------------------------------------------------------- Clarent Hospital 11.50% Sr Nts 2005 11-19-01 $2,736,221 Rural Cellular 5.89% Series B 2008 10-31-01 thru 01-17-02 1,216,199 6.14% Series C 2009 10-31-01 thru 01-17-02 1,216,199 Six Flags* 8.88% Sr Nts 2010 01-31-02 thru 02-01-02 827,045 Veninfotel (U.S. Dollar) 10.00% Cv Pay-in-kind 2002 03-05-97 thru 01-30-02 8,090,827
* Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. (h) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. (i) Pay-in-kind securities are securities in which the issuer makes interest or dividend payments in cash or in additional securities. The securities usually have the same terms as the original holdings. (j) Negligible market value. (k) U.S. Treasury inflation-protection securities (TIPS) are securities in which the principal amount is adjusted for inflation and the semiannual interest payments equal a fixed percentage of the inflation-adjusted principal amount. (l) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on Feb. 28, 2002. (m) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $1,888,957,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 41,321,000 Unrealized depreciation (54,455,000) -------------------------------------------------------------------------- Net unrealized depreciation $(13,134,000) --------------------------------------------------------------------------
87 INVESTMENTS IN SECURITIES AXP VP - CAPITAL RESOURCE FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (102.2%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (0.3%) United Technologies 100,000 $ 7,295,000 - -------------------------------------------------------------------------------------------- AUTOMOTIVE & RELATED (0.3%) Eaton 100,000 8,074,000 - -------------------------------------------------------------------------------------------- BANKS AND SAVINGS & LOANS (1.5%) Bank of America 300,000 19,185,000 J.P. Morgan Chase 500,000 14,625,000 U.S. Bancorp 400,000 8,340,000 -------------- Total 42,150,000 - -------------------------------------------------------------------------------------------- BEVERAGES & TOBACCO (0.9%) Coca-Cola 500,000 23,695,000 - ------------------------------------------------------------------------------------------- BUILDING MATERIALS & CONSTRUCTION (0.7%) Vulcan Materials 400,000 19,332,000 - -------------------------------------------------------------------------------------------- CHEMICALS (1.1%) Dow Chemical 1,000,000 31,280,000 - -------------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (3.9%) Motorola 1,700,000 22,100,000 Nokia ADR Cl A 1,000,000(c) 20,770,000 Tellabs 1,800,000(b) 18,468,000 Verizon Communications 1,000,000 46,800,000 -------------- Total 108,138,000 - -------------------------------------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (10.5%) Automatic Data Processing 300,000 15,813,000 Brocade Communications Systems 500,000(b) 10,985,000 Cisco Systems 2,000,000(b) 28,540,000 Dell Computer 850,000(b) 20,986,500 EMC 900,000(b) 9,810,000 Intl Business Machines 400,000 39,248,000 Microsoft 1,500,000(b) 87,510,000 SAP ADR 500,000(c) 17,085,000 Siebel Systems 500,000(b) 13,880,000 State Street 450,000 22,815,000 Sun Microsystems 1,200,000(b) 10,212,000 VERITAS Software 325,000(b) 11,534,250 -------------- Total 288,418,750 - -------------------------------------------------------------------------------------------- ELECTRONICS (5.9%) Applied Materials 650,000(b) 28,255,500 Intel 2,000,000 57,160,000 Jabil Circuit 1,000,000(b) 18,650,000 Micron Technology 650,000(b) 20,897,500 Taiwan Semiconductor Mfg ADR 1,100,000(b,c) 17,875,000 Texas Instruments 650,000 19,077,500 -------------- Total 161,915,500 - -------------------------------------------------------------------------------------------- ENERGY (8.2%) Apache 450,000 $ 23,737,500 ChevronTexaco 400,000 33,776,000 Exxon Mobil 2,200,000 90,860,000 Kerr-McGee 650,000 35,938,500 Phillips Petroleum 700,000 41,377,000 -------------- Total 225,689,000 - -------------------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (0.6%) Transocean Sedco Forex 600,000 16,806,000 - -------------------------------------------------------------------------------------------- FINANCIAL SERVICES (5.3%) Citigroup 1,700,000 76,925,000 Fannie Mae 250,000 19,562,500 Merrill Lynch 500,000 23,975,000 Morgan Stanley, Dean Witter & Co 500,000 24,560,000 -------------- Total 145,022,500 - -------------------------------------------------------------------------------------------- FOOD (3.7%) General Mills 700,000 32,361,000 Hershey Foods 300,000 21,195,000 Kraft Foods Cl A 1,200,000 46,920,000 -------------- Total 100,476,000 - -------------------------------------------------------------------------------------------- HEALTH CARE (13.1%) Abbott Laboratories 900,000 50,895,000 American Home Products 900,000 57,195,000 Genentech 500,000(b) 23,600,000 Immunex 800,000(b) 22,992,000 Johnson & Johnson 1,300,000 79,170,000 Medtronic 800,000 35,632,000 Merck & Co 300,000 18,399,000 Pfizer 1,800,000 73,728,000 -------------- Total 361,611,000 - -------------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS (3.2%) Colgate-Palmolive 400,000 22,392,000 Gillette 1,400,000 47,866,000 Procter & Gamble 200,000 16,958,000 -------------- Total 87,216,000 - -------------------------------------------------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (2.9%) Caterpillar 750,000 41,632,500 Illinois Tool Works 500,000 36,780,000 -------------- Total 78,412,500 - -------------------------------------------------------------------------------------------- INSURANCE (9.4%) ACE 1,200,000(c) 52,680,000 American Intl Group 1,000,000 73,970,000 Everest Re Group 350,000(c) 25,497,500 Marsh & McLennan 500,000 52,775,000 Montpelier Re Holdings 150,000(b,c,e) 15,000,000 XL Capital Cl A 400,000(c) 38,104,000 -------------- Total 258,026,500 - -------------------------------------------------------------------------------------------- LEISURE TIME & ENTERTAINMENT (2.1%) AOL Time Warner 1,000,000(b) $ 24,800,000 Viacom Cl B 700,000(b) 32,585,000 -------------- Total 57,385,000 - -------------------------------------------------------------------------------------------- MEDIA (2.5%) Comcast Cl A 400,000(b) 13,548,000 Univision Communications Cl A 400,000(b) 16,496,000 USA Networks 1,300,000(b) 38,428,000 -------------- Total 68,472,000 - -------------------------------------------------------------------------------------------- METALS (4.3%) Alcoa 750,000 28,177,500 Martin Marietta Materials 1,050,000 43,837,500 Nucor 800,000 45,200,000 -------------- Total 117,215,000 - -------------------------------------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (6.7%) General Electric 2,400,000 92,400,000 Minnesota Mining & Mfg 500,000 58,965,000 Tyco Intl 1,100,000(c) 32,010,000 -------------- Total 183,375,000 - -------------------------------------------------------------------------------------------- RESTAURANTS & LODGING (1.1%) Starwood Hotels & Resorts Worldwide 850,000 30,600,000 - -------------------------------------------------------------------------------------------- RETAIL (6.0%) Gap 500,000 5,985,000 Home Depot 900,000 45,000,000 Target 1,100,000 46,090,000 Wal-Mart Stores 1,100,000 68,211,000 -------------- Total 165,286,000 - -------------------------------------------------------------------------------------------- TRANSPORTATION (1.3%) FedEx 600,000(b) 34,716,000 - -------------------------------------------------------------------------------------------- UTILITIES -- ELECTRIC (2.8%) Dominion Resources 700,000 40,796,000 Duke Energy 1,000,000 35,300,000 -------------- Total 76,096,000 - -------------------------------------------------------------------------------------------- UTILITIES -- TELEPHONE (3.9%) AT&T 2,500,000 38,850,000 Liberty Media Cl A 1,900,000(b) 24,320,000 SBC Communications 1,125,000 42,570,000 -------------- Total 105,740,000 - -------------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $2,853,350,871) $2,802,442,750 --------------
See accompanying notes to investments in securities. 88
SHORT-TERM SECURITIES (6.8%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCIES (4.9%) Federal Home Loan Bank Disc Nts 03-06-02 1.70% $13,400,000 $ 13,396,453 03-13-02 1.66 9,700,000 9,694,538 03-22-02 1.60 25,000,000 24,975,115 Federal Home Loan Mtge Corp Disc Nts 03-12-02 1.59 20,300,000 20,289,241 03-26-02 1.74 11,800,000 11,785,171 04-23-02 1.75 13,900,000 13,863,617 Federal Natl Mtge Assn Disc Nts 03-25-02 1.71 20,000,000 19,976,250 04-03-02 1.72 20,000,000 19,969,288 -------------- Total 133,949,673 - -------------------------------------------------------------------------------------------- COMMERCIAL PAPER (1.9%) Duke Energy 03-01-02 1.90% $ 2,100,000 $ 2,099,889 Emerson Electric 03-07-02 1.78 2,000,000(d) 1,999,308 Gannett 03-18-02 1.77 5,600,000(d) 5,595,044 Morgan Stanley, Dean Witter & Co 03-08-02 1.80 4,600,000 4,598,160 03-12-02 1.73 5,500,000 5,496,609 03-25-02 1.79 4,100,000 4,094,903 03-26-02 1.79 14,900,000 14,880,738 Nordea North America 04-02-02 1.68 4,100,000 4,092,859 Toyota Motor Credit 03-04-02 1.78 4,100,000 4,099,189 Unilever Capital 04-18-02 1.77 4,700,000(d) 4,688,677 -------------- Total 51,645,376 - -------------------------------------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $185,603,035) $ 185,595,049 - -------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $3,038,953,906)(f) $2,988,037,799 ============================================================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of Feb. 28, 2002, the value of foreign securities represented 8.0% of net assets. (d) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board. (e) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at Feb. 28, 2002, is as follows:
SECURITY ACQUISITION COST DATE - -------------------------------------------------------------------------------- Montpelier Re Holdings 12-10-01 $15,000,000
(f) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $3,038,954,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 261,462,000 Unrealized depreciation (312,378,000) - ----------------------------------------------------------------------------- Net unrealized depreciation $ (50,916,000) - -----------------------------------------------------------------------------
89 INVESTMENTS IN SECURITIES AXP VP - CASH MANAGEMENT FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
U.S. GOVERNMENT AGENCIES (24.2%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY Federal Home Loan Bank Disc Nts 03-08-02 3.19% $ 6,000,000 $ 5,996,278 03-15-02 1.57 11,600,000 11,592,918 04-19-02 1.74 7,000,000 6,983,469 05-01-02 1.77 2,000,000 1,994,036 05-15-02 1.74 6,600,000 6,576,213 06-19-02 1.82 4,700,000 4,674,006 Federal Home Loan Mtge Corp Disc Nts 03-01-02 2.34 5,000,000 5,000,000 03-05-02 1.67 5,000,000 4,999,072 03-07-02 1.81 5,800,000 5,798,255 03-15-02 2.02 4,300,000 4,296,622 03-25-02 1.58 2,000,000 1,997,893 04-16-02 1.74 8,800,000 8,780,435 04-25-02 1.69 4,300,000 4,288,898 04-25-02 1.73 4,200,000 4,188,899 05-23-02 1.77 5,000,000 4,979,711 05-23-02 1.91 4,000,000 3,982,478 06-07-02 1.78 4,000,000 3,980,727 06-20-02 1.83 9,600,000 9,546,128 06-26-02 1.77 2,000,000 1,988,560 07-01-02 1.79 3,000,000 2,981,903 Federal Natl Mtge Assn Disc Nts 03-07-02 3.35 5,000,000 4,997,208 04-10-02 1.67 5,000,000 4,990,722 04-24-02 1.70 3,200,000 3,191,840 05-01-02 1.73 2,500,000 2,492,693 05-01-02 1.75 3,000,000 2,991,155 05-07-02 1.75 5,000,000 4,983,808 05-08-02 1.77 2,500,000 2,491,689 05-16-02 1.74 5,000,000 4,981,739 05-22-02 1.76 12,900,000 12,848,579 05-29-02 1.78 6,000,000 5,973,745 05-30-02 1.80 7,500,000 7,466,438 06-06-02 1.82 5,000,000 4,975,548 06-07-02 1.76 4,000,000 3,980,944 06-13-02 1.72 5,300,000 5,273,818 06-13-02 1.74 5,800,000 5,771,013 06-13-02 1.80 4,000,000 3,979,316 06-18-02 1.84 2,500,000 2,486,148 06-20-02 1.82 20,300,000 20,186,709 06-20-02 1.83 11,000,000 10,938,272 06-27-02 1.85 5,000,000 4,969,844 06-27-02 1.86 16,400,000 16,300,821 07-03-02 1.75 3,600,000 3,578,424 07-10-02 1.76 8,800,000 8,744,121 Student Loan Marketing Assn Disc Nts 06-28-02 1.81 7,800,000 7,753,590 06-28-02 1.82 5,000,000 4,970,085 - ----------------------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT AGENCIES (Cost: $265,944,770) 265,944,770 - ----------------------------------------------------------------------------------------- CERTIFICATES OF DEPOSIT (10.8%) Abbey Natl Yankee 06-14-02 1.86% $ 3,000,000 $ 3,000,000 Banque Nationale de Paris Yankee 04-08-02 1.85 3,000,000 3,000,000 04-10-02 1.84 5,000,000 5,000,000 05-30-02 2.14 4,000,000 4,000,000 06-05-02 1.83 3,000,000 3,000,000 06-07-02 1.98 5,000,000 5,000,000 06-11-02 1.77 5,000,000 5,000,000 06-11-02 1.83 3,000,000 3,000,000 06-17-02 1.70 5,000,000 5,000,000 06-25-02 1.85 2,800,000 2,800,000 07-09-02 1.85 2,000,000 2,000,000 Canadian Imperial Bank Yankee 05-29-02 1.81 5,000,000 5,000,000 Credit Agricole Indosuez Yankee 06-10-02 1.78 4,200,000 4,200,000 06-11-02 1.79 5,000,000 5,000,000 06-24-02 1.76 5,000,000 5,000,000 06-25-02 1.85 2,300,000 2,300,000 06-27-02 1.84 3,000,000 3,000,000 Dresdner Bank Yankee 04-04-02 2.00 2,000,000 2,000,000 04-11-02 1.90 5,000,000 5,000,000 05-02-02 1.80 5,000,000 5,000,000 06-25-02 1.80 5,000,000 5,000,000 Toronto Dominion Bank Yankee 05-17-02 1.81 5,000,000 5,000,000 Westdeutsche Landesbank Yankee 04-26-02 2.14 4,000,000 4,000,000 05-06-02 1.87 3,000,000 3,000,000 05-28-02 2.12 3,600,000 3,600,000 06-12-02 1.78 5,000,000 5,000,000 06-12-02 1.86 5,000,000 5,000,000 06-21-02 1.72 4,500,000 4,500,000 06-24-02 1.78 3,200,000 3,200,000 06-25-02 1.83 2,800,000 2,800,000 - ----------------------------------------------------------------------------------------- TOTAL CERTIFICATES OF DEPOSIT (Cost: $118,400,000) $ 118,400,000 - ----------------------------------------------------------------------------------------- COMMERCIAL PAPER (65.1%) BANKS AND SAVINGS & LOANS (13.0%) Abbey Natl North America 03-14-02 2.23% $10,000,000 $ 9,991,948 04-18-02 2.11 3,000,000 2,991,600 05-16-02 2.07 4,000,000 3,982,604 06-05-02 1.75 3,000,000 2,986,080 06-14-02 1.64 8,400,000 8,360,065 06-14-02 1.67 3,000,000 2,985,475 06-14-02 1.86 2,500,000 2,486,510 ANZ (Delaware) 05-28-02 1.81 7,100,000 7,068,760 Commerzbank U.S. Finance 03-11-02 1.80 7,400,000 7,396,300 03-13-02 1.81 5,000,000 4,996,983 03-20-02 2.52 6,600,000 6,591,222 03-20-02 2.72 3,000,000 2,995,693 04-01-02 1.85 5,000,000 4,992,035 04-03-02 1.77 2,300,000 2,296,268 04-08-02 1.76 5,000,000 4,990,711 05-01-02 1.86 5,000,000 4,984,326 07-08-02 1.83 6,000,000 5,960,870 Credit Agricole Indosuez 03-05-02 2.06 5,000,000 4,998,856 05-29-02 2.13 4,000,000 3,979,036 Deutsche Bank Financial 04-23-02 1.80 5,000,000 4,986,750 ING U.S. Funding 05-09-02 1.81 5,000,000 4,982,750 Societe Generale North America 03-12-02 1.84 3,000,000 2,998,313 04-15-02 1.65 5,000,000 4,989,688 06-06-02 1.98 1,000,000 994,692 06-24-02 1.84 2,300,000 2,286,555 Westpac Capital 04-15-02 2.24 4,900,000 4,886,341 04-17-02 2.25 4,500,000 4,486,840 05-28-02 1.87 2,000,000 1,990,907 05-28-02 1.96 6,000,000 5,971,400 06-05-02 1.98 5,000,000 4,973,733 06-14-02 1.77 5,000,000 4,974,333 -------------- Total 143,557,644 - ----------------------------------------------------------------------------------------- BROKER DEALERS (4.1%) Goldman Sachs Group 03-04-02 2.00 2,300,000 2,299,617 03-21-02 1.94 3,000,000(c) 3,000,000 04-09-02 1.85 5,000,000 4,989,979 07-01-02 1.89 7,500,000 7,452,344 07-02-02 1.83 2,500,000 2,484,454 07-16-02 1.89 2,500,000 2,482,161 12-12-02 1.81 2,000,000(c) 2,000,000
See accompanying notes to investments in securities. 90
ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY BROKER DEALERS (CONT.) Merrill Lynch 03-05-03 1.08% $ 2,000,000(c) $ 2,000,000 Morgan Stanley, Dean Witter & Co 03-25-02 1.79 5,700,000 5,693,198 03-26-02 1.79 5,000,000 4,993,785 05-09-02 1.84 2,500,000 2,491,231 05-14-02 1.81 5,000,000 4,981,500 -------------- Total 44,868,269 - ----------------------------------------------------------------------------------------- COMMERCIAL FINANCE (0.4%) Nestle Capital 04-24-02 2.25 4,500,000 4,484,880 - ----------------------------------------------------------------------------------------- ENERGY (0.5%) Chevron Transport 04-04-02 1.81 3,000,000(b) 2,994,871 Chevron UK Investment 05-07-02 1.82 2,000,000(b) 1,993,263 -------------- Total 4,988,134 - ----------------------------------------------------------------------------------------- FINANCIAL SERVICES (24.9%) AEGON Funding 03-01-02 2.44 5,000,000(b) 5,000,000 04-18-02 2.26 5,000,000(b) 4,985,000 Caterpillar Financial Services 03-19-02 2.03 5,000,000 4,994,925 03-27-02 1.86 2,500,000 2,496,642 06-04-02 1.82 12,400,000 12,340,773 06-10-02 1.87 3,000,000 2,984,345 Dexia Bank (Delaware) 04-05-02 1.81 5,000,000 4,991,201 04-10-02 1.70 6,100,000 6,088,478 05-06-02 1.81 4,600,000 4,584,820 05-06-02 1.82 3,000,000 2,990,045 06-03-02 1.82 2,000,000 1,990,548 06-04-02 1.86 5,400,000 5,373,638 06-04-02 1.87 5,000,000 4,975,458 06-04-02 1.94 6,100,000 6,068,932 06-10-02 1.87 2,000,000 1,989,563 Falcon Asset 03-26-02 1.81 4,000,000(b) 3,994,972 03-28-02 1.80 2,000,000(b) 1,997,300 04-04-02 1.80 4,000,000(b) 3,993,200 Household Finance 03-01-02 1.83 9,400,000 9,400,000 03-08-02 1.81 9,600,000 9,596,621 03-11-02 1.80 3,000,000 2,998,500 03-13-02 1.80 4,000,000 3,997,600 04-22-02 1.83 4,000,000 3,989,427 05-31-02 1.78 3,000,000 2,986,578 Intl Lease Finance 03-11-02 2.00% $ 2,000,000 $ 1,998,889 03-15-02 2.36 2,000,000 1,998,164 04-01-02 2.46 1,000,000 997,890 04-05-02 2.11 3,000,000 2,993,846 04-09-02 1.80 5,000,000 4,990,250 04-15-02 1.80 5,000,000 4,988,750 04-16-02 1.82 5,000,000 4,988,372 04-23-02 2.08 4,000,000 3,987,810 05-17-02 1.83 5,000,000 4,980,536 06-17-02 1.83 5,000,000 4,972,700 Nordea North America 03-11-02 1.85 5,000,000 4,997,431 04-29-02 2.01 4,000,000 3,986,889 05-02-02 1.79 5,000,000 4,984,672 05-13-02 1.82 10,000,000 9,963,297 05-20-02 2.09 3,500,000 3,483,822 06-03-02 1.86 2,000,000 1,990,339 06-12-02 1.78 5,000,000 4,974,679 06-12-02 1.90 5,000,000 4,972,963 06-17-02 1.67 3,000,000 2,985,060 Sheffield Receivables 03-13-02 1.80 4,300,000(b) 4,297,420 04-30-02 1.84 3,000,000(b) 2,990,850 07-19-02 2.22 2,000,000(b) 1,982,889 Southern Co Funding 03-21-02 1.79 2,300,000(b) 2,297,713 03-21-02 1.86 9,100,000(b) 9,090,597 04-02-02 1.80 7,100,000(b) 7,088,640 05-13-02 1.83 5,000,000(b) 4,981,547 Tyco Capital 05-08-02 1.81 5,000,000 4,983,000 Variable Funding Capital 03-13-02 1.84 5,000,000(b) 4,996,933 05-07-02 1.81 3,000,000(b) 2,989,950 Verizon Global Funding 03-14-02 2.46 5,000,000(b) 4,995,558 04-02-02 2.48 5,000,000(b) 4,989,022 04-02-02 2.49 5,000,000(b) 4,988,978 04-03-02 2.50 5,000,000(b) 4,988,588 06-26-02 2.18 4,000,000(b) 3,971,920 06-26-02 2.25 3,000,000(b) 2,978,258 Verizon Network Funding 06-18-02 1.86 2,000,000 1,988,797 06-18-02 1.99 5,000,000 4,970,025 06-28-02 1.88 1,000,000 993,819 -------------- Total 274,609,429 - ----------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS (0.9%) Gillette 04-22-02 2.19 5,000,000(b) 4,984,256 05-13-02 1.81 5,000,000(b) 4,981,750 -------------- Total 9,966,006 - ----------------------------------------------------------------------------------------- MEDIA (0.5%) Gannett 04-04-02 1.80% $ 5,300,000(b) $ 5,290,990 - ----------------------------------------------------------------------------------------- MISCELLANEOUS (13.0%) Alpine Securitization 03-21-02 1.80 3,000,000(b) 2,997,000 Amsterdam Funding 04-03-02 1.83 2,500,000(b) 2,495,806 04-24-02 1.80 2,800,000(b) 2,792,440 05-22-02 1.83 4,400,000(b) 4,381,760 Barton Capital 04-04-02 1.80 1,000,000(b) 998,300 04-05-02 1.81 4,400,000(b) 4,392,257 Charta 03-05-02 1.65 1,000,000(b) 999,817 03-06-02 1.75 6,000,000(b) 5,998,542 03-27-02 1.80 3,000,000(b) 2,996,100 CIT Group Holdings 03-04-02 2.05 3,000,000 2,999,488 Corporate Receivables 04-18-02 1.80 2,800,000(b) 2,793,280 04-24-02 1.80 5,000,000(b) 4,986,500 05-02-02 1.81 2,000,000(b) 1,993,800 CXC 05-02-02 1.84 2,500,000(b) 2,492,121 05-14-02 2.01 3,000,000(b) 2,987,667 Delaware Funding 03-22-02 1.80 2,300,000(b) 2,297,585 03-28-02 1.82 5,000,000(b) 4,993,175 05-16-02 1.83 3,000,000(b) 2,988,473 Edison Asset Securitization 04-01-02 1.80 3,000,000(b) 2,995,350 04-11-02 1.81 4,300,000(b) 4,291,136 04-12-02 1.81 3,000,000(b) 2,993,665 Enterprise Funding 04-30-02 1.82 10,000,000(b) 9,969,832 Fleet Funding 04-01-02 1.80 5,000,000(b) 4,992,250 04-02-02 1.80 3,000,000(b) 2,995,200 Kitty Hawk Funding 03-18-02 1.80 2,000,000(b) 1,998,300 03-20-02 1.80 2,300,000(b) 2,297,815 03-20-02 2.47 5,000,000(b) 4,993,482 Old Line Funding 03-15-02 1.65 1,000,000(b) 999,358 04-22-02 1.80 5,000,000(b) 4,987,000 04-24-02 1.80 2,800,000(b) 2,792,440 Park Avenue Receivables 03-14-02 1.80 3,000,000(b) 2,998,050 03-19-02 1.80 3,000,000(b) 2,997,300 04-12-02 1.81 4,000,000(b) 3,991,553
See accompanying notes to investments in securities. 91
ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY MISCELLANEOUS (CONT.) Preferred Receivables 03-06-02 1.81% $ 3,000,000(b) $ 2,999,246 04-01-02 1.80 5,000,000(b) 4,992,250 Receivables Capital 05-10-02 1.90 2,000,000(b) 1,992,650 05-10-02 2.07 4,500,000(b) 4,481,975 Three Rivers Funding 03-04-02 1.81 3,000,000(b) 2,999,548 03-18-02 1.80 3,800,000(b) 3,796,770 Windmill Funding 03-20-02 1.75 3,000,000(b) 2,997,229 04-04-02 1.80 3,300,000(b) 3,294,390 05-01-02 1.82 2,000,000(b) 1,993,866 -------------- Total 142,424,766 - ----------------------------------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (1.9%) GE Capital Intl Funding 03-06-02 2.33% $ 2,000,000(b) $ 1,999,353 04-05-02 1.73 3,000,000(b) 2,994,954 04-19-02 1.80 5,000,000(b) 4,987,749 05-08-02 1.82 3,000,000(b) 2,989,743 General Electric Capital 07-09-02 1.82 3,000,000 2,980,392 General Electric Capital Services 04-12-02 1.81 4,500,000 4,490,498 -------------- Total 20,442,689 - ----------------------------------------------------------------------------------------- UTILITIES -- ELECTRIC (4.8%) Duke Energy 03-01-02 1.90% $ 3,500,000 $ 3,500,000 Natl Rural Utilities 03-04-02 1.71 5,000,000 4,999,288 03-04-02 1.80 3,000,000 2,999,550 03-06-02 1.75 3,200,000 3,199,222 03-08-02 1.86 5,000,000 4,998,192 03-11-02 1.81 7,500,000 7,496,229 03-12-02 1.83 2,500,000 2,498,602 04-08-02 1.85 8,000,000 7,984,378 UBS Finance (Delaware) 06-03-02 2.01 2,000,000 1,989,556 06-06-02 1.79 5,000,000 4,976,019 06-13-02 1.85 8,000,000 7,957,475 -------------- Total 52,598,511 - ----------------------------------------------------------------------------------------- UTILITIES -- TELEPHONE (1.0%) SBC Communications 05-03-02 2.00 4,000,000(b) 3,986,070 05-03-02 2.09 2,500,000(b) 2,490,900 05-06-02 2.07 5,000,000(b) 4,981,117 -------------- Total 11,458,087 - ----------------------------------------------------------------------------------------- TOTAL COMMERCIAL PAPER (Cost: $714,689,405) $ 714,689,405 - ----------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $1,099,034,175)(d) $1,099,034,175 =========================================================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) 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. (c) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on Feb. 28, 2002. (d) Also represents the cost of securities for federal income tax purposes at Feb. 28, 2002. 92 INVESTMENTS IN SECURITIES AXP VP - DIVERSIFIED EQUITY INCOME FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (95.1%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (0.9%) Goodrich 64,217 $ 1,916,877 - ------------------------------------------------------------------------- AIRLINES (1.0%) AMR 80,900(b) 2,111,490 - ------------------------------------------------------------------------- AUTOMOTIVE & RELATED (2.0%) Eaton 21,318 1,721,215 General Motors 45,914 2,424,260 ------------ Total 4,145,475 - ------------------------------------------------------------------------- BANKS AND SAVINGS & LOANS (1.8%) FleetBoston Financial 30,473 1,017,189 J.P. Morgan Chase 34,420 1,006,785 Washington Mutual 52,310 1,701,644 ------------ Total 3,725,618 - ------------------------------------------------------------------------- BEVERAGES & TOBACCO (0.7%) Philip Morris 28,077 1,478,535 - ------------------------------------------------------------------------- BUILDING MATERIALS & CONSTRUCTION (1.8%) Fluor 34,055 1,291,025 Hanson ADR 73,594(c) 2,460,983 ------------ Total 3,752,008 - ------------------------------------------------------------------------- CHEMICALS (1.5%) Dow Chemical 97,911 3,062,656 - ------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (1.3%) Verizon Communications 54,486 2,549,945 - ------------------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (1.0%) Pitney Bowes 36,209 1,510,640 Solectron 60,067(b) 496,754 ------------ Total 2,007,394 - ------------------------------------------------------------------------- ELECTRONICS (0.3%) Thomas & Betts 31,500 601,650 - ------------------------------------------------------------------------- ENERGY (10.3%) BP ADR 34,530(c) 1,710,962 ChevronTexaco 48,054 4,057,680 Conoco 156,199 4,320,464 Kerr-McGee 59,528 3,291,303 Marathon Oil 113,600 3,124,000 Phillips Petroleum 49,800 2,943,678 Unocal 33,700 1,210,841 ------------ Total 20,658,928 - ------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (4.4%) McDermott Intl 212,650(b) 3,045,148 Pioneer Natural Resources 128,081(b) 2,538,565 Tidewater 87,649 3,416,558 ------------ Total 9,000,271 - ------------------------------------------------------------------------- FINANCIAL SERVICES (5.2%) Citigroup 22,761 $ 1,029,935 Lehman Brothers Holdings 104,223 5,888,600 Morgan Stanley, Dean Witter & Co 73,168 3,594,012 ------------ Total 10,512,547 - ------------------------------------------------------------------------- FOOD (4.4%) Archer-Daniels-Midland 79,990 1,107,862 ConAgra Foods 91,000 2,130,310 Heinz (HJ) 11,949 487,161 Kellogg 15,800 545,890 SUPERVALU 176,135 4,570,702 ------------ Total 8,841,925 - ------------------------------------------------------------------------- FURNITURE & APPLIANCES (1.7%) Whirlpool 45,578 3,422,908 - ------------------------------------------------------------------------- HEALTH CARE (2.0%) Merck & Co 34,000 2,085,220 Schering-Plough 58,300 2,010,767 ------------ Total 4,095,987 - ------------------------------------------------------------------------- HEALTH CARE SERVICES (0.8%) PacifiCare Health Systems 113,684(b) 1,676,839 - ------------------------------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (7.4%) Caterpillar 48,066 2,668,144 Illinois Tool Works 32,719 2,406,810 Ingersoll-Rand Cl A 111,390 5,569,499 Parker-Hannifin 53,630 2,671,847 Tomkins ADR 119,100(c) 1,676,928 ------------ Total 14,993,228 - ------------------------------------------------------------------------- INSURANCE (12.7%) Aon 80,382 2,783,629 Chubb 9,632 723,748 CIGNA 39,151 3,511,846 Jefferson-Pilot 39,548 1,999,942 Lincoln Natl 39,615 2,028,684 Loews 59,556 3,473,901 SAFECO 84,522 2,869,522 St. Paul Companies 46,400 2,268,960 Torchmark 52,366 2,104,590 XL Capital Cl A 40,886(c) 3,894,801 ------------ Total 25,659,623 - ------------------------------------------------------------------------- LEISURE TIME & ENTERTAINMENT (1.0%) Royal Caribbean Cruises 112,800 2,084,544 - ------------------------------------------------------------------------- MEDIA (2.0%) Donnelley (RR) & Sons 41,811 1,196,213 Knight-Ridder 43,003 2,898,402 ------------ Total 4,094,615 - ------------------------------------------------------------------------- METALS (1.8%) Alcoa 74,017 $ 2,780,818 Martin Marietta Materials 22,969 958,956 ------------ Total 3,739,774 - ------------------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (8.8%) Crane 50,722 1,239,138 Diebold 60,490 2,207,885 Dover 33,141 1,311,389 Eastman Kodak 69,731 2,196,527 General Electric 51,900 1,998,150 Honeywell Intl 66,400 2,531,169 Textron 45,095 2,143,365 Tyco Intl 21,723(c) 632,139 Xerox 144,600 1,404,066 YORK Intl 65,531 2,293,585 ------------ Total 17,957,413 - ------------------------------------------------------------------------- PAPER & PACKAGING (2.4%) Abitibi-Consolidated 178,750(c) 1,530,100 Intl Paper 76,590 3,350,813 ------------ Total 4,880,913 - ------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUST (2.6%) Crescent Real Estate Equities 141,687 2,551,782 Equity Residential Properties Trust 60,190 1,622,121 JDN Realty 85,172 1,044,209 ------------ Total 5,218,112 - ------------------------------------------------------------------------- RESTAURANTS & LODGING (0.6%) Starwood Hotels & Resorts Worldwide 32,400 1,166,400 - ------------------------------------------------------------------------- RETAIL (1.9%) Albertson's 69,841 2,113,389 Charming Shoppes 240,300(b) 1,811,862 ------------ Total 3,925,251 - ------------------------------------------------------------------------- TEXTILES & APPAREL (1.0%) Kellwood 82,558 1,996,252 - ------------------------------------------------------------------------- TRANSPORTATION (1.9%) Burlington Northern Santa Fe 133,220 3,866,044 - ------------------------------------------------------------------------- UTILITIES -- ELECTRIC (4.5%) Calpine 61,200(b) 449,820 CMS Energy 42,600 928,680 Dominion Resources 44,647 2,602,027 Duke Energy 62,600 2,209,780 Exelon 60,000 2,956,800 ------------ Total 9,147,107 - -------------------------------------------------------------------------
See accompanying notes to investments in securities. 93
ISSUER SHARES VALUE(a) UTILITIES -- GAS (2.0%) El Paso 24,741 $ 966,878 Ocean Energy 51,136 933,232 Williams Companies 138,800 2,144,460 ------------ Total 4,044,570 - ------------------------------------------------------------------------- UTILITIES -- TELEPHONE (3.4%) AT&T 148,500 2,307,690 Liberty Media Cl A 82,444(b) 1,055,283 SBC Communications 46,361 1,754,300 Sprint (FON Group) 128,600 1,811,974 ------------ Total 6,929,247 - ------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $191,332,980) $193,264,146 - ------------------------------------------------------------------------- PREFERRED STOCK (0.3%) Xerox 7.50% Cv 9,000(d) $ 587,250 - ------------------------------------------------------------------------- TOTAL PREFERRED STOCK (Cost: $450,000) $ 587,250 - ------------------------------------------------------------------------- SHORT-TERM SECURITIES (7.5%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCIES Federal Home Loan Bank Disc Nts 03-13-02 1.66% $1,900,000 $ 1,898,930 03-15-02 1.56 500,000 499,676 03-20-02 1.57 1,400,000 1,398,852 03-27-02 1.74 2,000,000 1,997,389 Federal Home Loan Mtge Corp Disc Nts 04-09-02 1.75 1,800,000 1,796,500 04-23-02 1.75 2,000,000 1,994,765 Federal Natl Mtge Assn Disc Nts 03-07-02 1.79 200,000 199,937 03-08-02 1.71 1,500,000 1,499,430 03-22-02 1.58 500,000 499,533 04-03-02 1.67 800,000 798,772 04-15-02 1.72 800,000 798,281 04-17-02 1.72 1,800,000 1,796,165 - ------------------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $15,178,428) $ 15,178,230 - ------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $206,961,408)(e) $209,029,626 =========================================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of Feb. 28, 2002, the value of foreign securities represented 5.9% of net assets. (d) 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. (e) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $206,961,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $11,843,000 Unrealized depreciation (9,774,000) - -------------------------------------------------------------------------------- Net unrealized appreciation $ 2,069,000 - --------------------------------------------------------------------------------
94 INVESTMENTS IN SECURITIES AXP VP - EMERGING MARKETS FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (91.7%)(c) ISSUER SHARES VALUE(a) BRAZIL (7.0%) BEVERAGES & TOBACCO (1.0%) Companhia de Bebidas das Americas ADR 3,883 $ 78,126 - ---------------------------------------------------------------------- ENERGY (3.0%) Petroleo Brasileiro 9,018 222,487 - ---------------------------------------------------------------------- METALS (0.3%) Companhia Siderurgica Nacional 1,168,000 21,211 - ---------------------------------------------------------------------- PAPER & PACKAGING (1.2%) Aracruz Celulose ADR 4,201 87,381 - ---------------------------------------------------------------------- UTILITIES -- TELEPHONE (1.5%) Tele Norte Leste Participacoes ADR 2,483 37,617 Telemar Norte Leste SA 2,873,000(b) 74,170 ---------- Total 111,787 - ---------------------------------------------------------------------- CHILE (2.2%) UTILITIES -- ELECTRIC (1.2%) Empresa Nacional de Electricidad 8,928 86,602 - ---------------------------------------------------------------------- UTILITIES -- TELEPHONE (1.0%) Compania de Telecomunicaciones de Chile ADR 5,140(b) 71,960 - ---------------------------------------------------------------------- CHINA (1.2%) UTILITIES -- ELECTRIC Beijing Datang Power Generation Cl H 238,000 90,784 - ---------------------------------------------------------------------- HONG KONG (2.6%) COMMUNICATIONS EQUIPMENT & SERVICES China Mobile 50,500(b) 145,686 China Unicom 52,000(b) 50,004 ---------- Total 195,690 - ---------------------------------------------------------------------- HUNGARY (0.9%) ENERGY MOL Magyar Olaj-es Gazipari GDR 3,498 66,287 - ---------------------------------------------------------------------- INDIA (7.4%) BANKS AND SAVINGS & LOANS (0.9%) HDFC Bank ADR 4,300(b) 69,230 - ---------------------------------------------------------------------- BEVERAGES & TOBACCO (1.0%) ITC GDR 4,724 72,377 - ---------------------------------------------------------------------- BUILDING MATERIALS & CONSTRUCTION (1.1%) Associated Cement 24,934 83,659 - ---------------------------------------------------------------------- HEALTH CARE (2.0%) Cipla Limited 3,303 $ 68,151 Ranbaxy Laboratories 4,815 80,969 ---------- Total 149,120 - ---------------------------------------------------------------------- HOUSEHOLD PRODUCTS (1.3%) Hindustan Lever 19,211 98,480 - ---------------------------------------------------------------------- LEISURE TIME & ENTERTAINMENT (1.1%) Hero Honda Motors 11,350 80,438 - ---------------------------------------------------------------------- ISRAEL (3.4%) COMMUNICATIONS EQUIPMENT & SERVICES (0.4%) Partner Communications ADR 6,661(b) 33,039 - ---------------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (1.2%) Check Point Software Technologies 3,290(b) 91,857 - ---------------------------------------------------------------------- HEALTH CARE (1.0%) Teva Pharmaceutical Inds ADR 1,359 77,504 - ---------------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (0.8%) IDB Development 2,300(b) 56,338 - ---------------------------------------------------------------------- KOREA (19.1%) AUTOMOTIVE & RELATED (1.2%) Hyundai Motor 3,127 85,975 - ---------------------------------------------------------------------- BANKS AND SAVINGS & LOANS (6.0%) Kookmin Bank New 6,876 300,718 Shinhan Financial Group 10,930(b) 147,781 ---------- Total 448,499 - ---------------------------------------------------------------------- BEVERAGES & TOBACCO (3.1%) Hite Brewery 2,300 137,246 Korea Tobacco & Ginseng GDR 15,024(d) 92,247 ---------- Total 229,493 - ---------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (2.1%) SK Telecom 780 153,184 - ---------------------------------------------------------------------- ELECTRONICS (4.7%) Samsung Electro Mechanics 2,140 95,046 Samsung Electronics 980 253,902 ---------- Total 348,948 - ---------------------------------------------------------------------- METALS (1.0%) Pohang Iron & Steel 670 74,141 - ---------------------------------------------------------------------- RETAIL (1.0%) Shinsegae 560 77,408 - ---------------------------------------------------------------------- MALAYSIA (5.0%) AUTOMOTIVE & RELATED (0.7%) Perusahaan Otomobil Nasional Berhad 21,000 $ 53,053 - ---------------------------------------------------------------------- BANKS AND SAVINGS & LOANS (1.5%) Malayan Banking 48,400 110,174 - ---------------------------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (1.3%) Sime Darby Berhad 75,000 98,289 - ---------------------------------------------------------------------- LEISURE TIME & ENTERTAINMENT (1.5%) Tanjong Public 47,000 113,171 - ---------------------------------------------------------------------- MEXICO (11.2%) BEVERAGES & TOBACCO (1.5%) Grupo Modelo Series C 46,280 110,969 - ---------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (2.0%) America Movil ADR Cl L 8,447 152,891 - ---------------------------------------------------------------------- FINANCIAL SERVICES (2.4%) Grupo Financiero BBVA Bancomer Cl O 168,642(b) 175,594 - ---------------------------------------------------------------------- MEDIA (1.6%) Grupo Televisa 2,770(b) 119,387 - ---------------------------------------------------------------------- UTILITIES -- TELEPHONE (3.7%) Telefonos de Mexico ADR Cl L 7,206 275,918 - ---------------------------------------------------------------------- PERU (1.0%) METALS Compania de Minas Buenaventura ADR 2,854 73,947 - ---------------------------------------------------------------------- POLAND (1.5%) BANKS AND SAVINGS & LOANS Bank Polska Kasa Opieki 4,589(b) 112,885 - ---------------------------------------------------------------------- RUSSIA (5.1%) COMMUNICATIONS EQUIPMENT & SERVICES (1.0%) Vimpel-Communications ADR 2,610(b) 77,230 - ---------------------------------------------------------------------- ENERGY (2.8%) YUKOS ADR 2,000 204,900 - ---------------------------------------------------------------------- UTILITIES -- ELECTRIC (1.3%) RAO Unified Energy Systems ADR 6,653 99,794 - ----------------------------------------------------------------------
See accompanying notes to investments in securities. 95
ISSUER SHARES VALUE(a) SINGAPORE (2.5%) BANKS AND SAVINGS & LOANS (1.5%) DBS Group Holdings 5,000 $ 36,847 United Overseas Bank 10,000 75,877 ---------- Total 112,724 - ---------------------------------------------------------------------- TRANSPORTATION (1.0%) Keppel 33,000 74,218 - ---------------------------------------------------------------------- SOUTH AFRICA (2.8%) COMMUNICATIONS EQUIPMENT & SERVICES (0.7%) M-cell 42,600 49,202 - ---------------------------------------------------------------------- METALS (2.1%) Gold Fields 10,000 86,449 Impala Platinum Holdings 1,412 73,387 ---------- Total 159,836 - ---------------------------------------------------------------------- SOUTH KOREA (1.0%) ELECTRONICS Samsung Electronics 630 72,570 - ---------------------------------------------------------------------- TAIWAN (10.7%) COMPUTERS & OFFICE EQUIPMENT (1.9%) Asustek Computer GDR 29,000(d) 140,650 - ---------------------------------------------------------------------- ELECTRONICS (8.8%) Compal Electronics 20,750(d) 135,949 Hon Hai Precision Inds GDR 13,308(d) 126,426 Realtek Semiconductor 6,000(b,d) 111,000 Taiwan Semiconductor Mfg ADR 12,434(b) 202,053 United Microelectronics ADR 9,800(b) 82,810 ---------- Total 658,238 - ---------------------------------------------------------------------- THAILAND (1.8%) BANKS AND SAVINGS & LOANS (0.7%) Bangkok Bank 32,900(b) $ 50,818 - ---------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (1.1%) PTT Exploration 31,400 82,632 - ---------------------------------------------------------------------- TURKEY (1.6%) BANKS AND SAVINGS & LOANS (0.8%) Yapi Kredit Finance 24,928,832 59,865 - ---------------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (0.8%) Koc Holding 2,915,000 60,598 - ---------------------------------------------------------------------- UNITED KINGDOM (3.8%) METALS Anglo American Place 12,330 209,448 BHP Billiton 12,870 72,813 ---------- Total 282,261 - ---------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $6,118,378) $6,843,819 - ---------------------------------------------------------------------- PREFERRED STOCK (1.7%)(c) BRAZIL Banco Itau 1,443,000(b) $ 123,563 - ---------------------------------------------------------------------- TOTAL PREFERRED STOCK (Cost: $107,573) $ 123,563 - ---------------------------------------------------------------------- SHORT-TERM SECURITY (2.7%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCY Federal Natl Mtge Assn Disc Nt 03-22-02 1.58% $200,000 $ 199,813 - ---------------------------------------------------------------------- TOTAL SHORT-TERM SECURITY (Cost: $199,816) $ 199,813 - ---------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $6,425,767)(e) $7,167,195 ======================================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. (d) 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. (e) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $6,426,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 943,000 Unrealized depreciation (202,000) - -------------------------------------------------------------------------------- Net unrealized appreciation $ 741,000 - --------------------------------------------------------------------------------
96 INVESTMENTS IN SECURITIES AXP VP - EQUITY SELECT FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (96.9%) ISSUER SHARES VALUE(a) AIRLINES (0.9%) Skywest 12,850 $ 326,390 - ------------------------------------------------------------------------- CHEMICALS (3.1%) Sigma-Aldrich 24,586 1,120,876 - ------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (0.5%) Finisar 29,922(b) 182,524 - ------------------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (18.0%) Acxiom 29,995(b) 437,927 Advent Software 5,342(b) 259,140 BMC Software 37,418(b) 600,559 Dendrite Intl 27,805(b) 301,128 DST Systems 7,460(b) 311,007 Fair, Isaac & Co 12,818 786,384 Fiserv 32,083(b) 1,371,228 Intuit 9,676(b) 366,624 Investors Financial Services 5,341 371,093 Manugistics Group 24,565(b) 318,362 McData Cl B 15,012(b) 240,192 SunGard Data Systems 37,500(b) 1,157,626 ----------- Total 6,521,270 - ------------------------------------------------------------------------- ELECTRONICS (7.7%) American Power Conversion 29,950(b) 392,046 Maxim Integrated Products 21,390(b) 978,806 Micrel 8,897(b) 178,652 Microchip Technology 19,308(b) 659,947 Novellus Systems 10,680(b) 454,861 PMC-Sierra 7,265(b) 106,142 ----------- Total 2,770,454 - ------------------------------------------------------------------------- ENERGY (5.8%) Apache 6,383 336,703 Murphy Oil 10,680 920,403 Newfield Exploration 10,739(b) 389,718 Pogo Producing 17,092 461,484 ----------- Total 2,108,308 - ------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (1.4%) Ensco Intl 10,672 271,816 Tidewater 5,844 227,799 ----------- Total 499,615 - ------------------------------------------------------------------------- FINANCIAL SERVICES (4.3%) Legg Mason 12,874 $ 674,855 Paychex 23,512 868,768 ----------- Total 1,543,623 - ------------------------------------------------------------------------- FOOD (0.6%) Performance Food Group 5,346(b) 199,352 - ------------------------------------------------------------------------- HEALTH CARE (14.6%) Apogent Technologies 18,209(b) 437,198 Applera-Applied Biosystem Group 13,880 313,688 Biogen 9,678(b) 514,386 Biomet 34,275 1,047,445 Diagnostic Products 16,074 576,253 IDEC Pharmaceuticals 9,676(b) 607,846 Immunex 20,356(b) 585,031 Invitrogen 8,466(b) 386,388 MedImmune 9,673(b) 398,818 Techne 14,428(b) 426,203 ----------- Total 5,293,256 - ------------------------------------------------------------------------- HEALTH CARE SERVICES (6.6%) AmerisourceBergen 3,224 218,265 Express Scripts Cl A 12,289(b) 636,202 First Health Group 11,786(b) 270,842 Health Management Associates Cl A 42,750(b) 754,537 Lincare Holdings 19,247(b) 484,255 ----------- Total 2,364,101 - ------------------------------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (5.0%) Cintas 19,241 852,184 Fastenal 12,845 960,035 ----------- Total 1,812,219 - ------------------------------------------------------------------------- MEDIA (5.1%) Catalina Marketing 16,592(b) 598,639 Univision Communications Cl A 16,066(b) 662,562 Westwood One 16,070(b) 574,824 ----------- Total 1,836,025 - ------------------------------------------------------------------------- METALS (1.2%) Martin Marietta Materials 10,677 445,765 - ------------------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (4.5%) Danaher 8,566 $ 575,892 DeVry 14,992(b) 485,441 Robert Half Intl 21,369(b) 555,808 ----------- Total 1,617,141 - ------------------------------------------------------------------------- RESTAURANTS & LODGING (6.7%) Brinker Intl 27,850(b) 956,369 Cheesecake Factory (The) 28,948(b) 987,416 Starbucks 20,314(b) 467,425 ----------- Total 2,411,210 - ------------------------------------------------------------------------- RETAIL (10.8%) 99 Cents Only Stores 16,065(b) 547,817 Copart 8,066(b) 140,268 GameStop 2,300(b) 43,930 PETCO Animal Supplies 1,700(b) 34,425 Whole Foods Market 40,650(b) 1,806,892 Williams-Sonoma 28,913(b) 1,311,204 ----------- Total 3,884,536 - ------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $33,426,729) $34,936,665 - ------------------------------------------------------------------------- SHORT-TERM SECURITIES (4.2%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCIES Federal Home Loan Bank Disc Nts 03-01-02 1.73% $200,000 $ 199,990 03-22-02 1.70 700,000 699,273 Federal Home Loan Mtge Corp Disc Nt 03-05-02 1.69 600,000 599,859 - ------------------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $1,499,193) $ 1,499,122 - ------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $34,925,922)(c) $36,435,787 =========================================================================
Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $34,926,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 2,712,000 Unrealized depreciation (1,202,000) - -------------------------------------------------------------------------------- Net unrealized appreciation $ 1,510,000 - --------------------------------------------------------------------------------
97 INVESTMENTS IN SECURITIES AXP VP - EXTRA INCOME FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
BONDS (82.7%) ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT GOVERNMENT OBLIGATIONS & AGENCIES (0.9%) Federal Republic of Brazil (U.S. Dollar) 04-15-14 8.00% $1,539,263(c) $1,252,575 Republic of Panama (U.S. Dollar) 02-08-11 9.63 2,500,000(c) 2,656,250 07-23-12 9.38 1,250,000(c) 1,296,875 ----------- Total 5,205,700 - --------------------------------------------------- AEROSPACE & DEFENSE (0.8%) Alliant Techsystems Company Guaranty 05-15-11 8.50 2,150,000 2,300,500 Sequa Sr Nts 08-01-09 9.00 2,500,000 2,456,250 ----------- Total 4,756,750 - --------------------------------------------------- AUTOMOTIVE & RELATED (0.8%) Advance Stores Sr Sub Nts 04-15-08 10.25 1,615,000(d) 1,699,788 ArvinMeritor 03-01-12 8.75 2,200,000 2,259,136 CSK Auto Sr Nts 06-15-06 12.00 670,000(d) 696,800 ----------- Total 4,655,724 - --------------------------------------------------- BEVERAGES & TOBACCO (0.2%) Constellation Brands Sr Sub Nts Series B 01-15-12 8.13 1,425,000 1,478,438 - --------------------------------------------------- BUILDING MATERIALS & CONSTRUCTION (5.0%) Collins & Aikman Floor Cover Sr Sub Nts 02-15-10 9.75 3,530,000(d) 3,644,725 Louisiana Pacific Sr Nts 11-15-08 10.88 4,850,000 4,874,250 08-15-10 8.88 680,000 676,741 Sr Sub Nts 08-15-05 8.50 3,165,000 3,176,476 Nortek Sr Nts Series B 03-15-07 9.25 600,000 618,750 09-01-07 9.13 3,800,000 3,899,750 Sr Sub Nts Series B 06-15-11 9.88 3,460,000 3,529,200 Schuler Homes Company Guaranty 07-15-11 10.50% $4,430,000 $4,762,250 Tyco Intl Group (U.S. Dollar) Company Guaranty 08-01-03 4.95 1,000,000(c) 940,559 WCI Communities Company Guaranty 02-15-11 10.63 3,775,000 4,039,250 ----------- Total 30,161,951 - --------------------------------------------------- CHEMICALS (8.0%) Allied Waste North America Company Guaranty Series B 01-01-09 7.88 5,650,000 5,565,249 08-01-09 10.00 9,115,000 9,274,512 Sr Nts 12-01-08 8.50 3,500,000(d) 3,570,000 Equistar Chemical/Funding Company Guaranty 09-01-08 10.13 5,300,000 5,300,000 Huntsman ICI Chemicals LLC Company Guaranty 07-01-09 10.13 3,850,000 3,388,000 IMC Global Company Guaranty Series B 06-01-08 10.88 4,210,000 4,588,900 06-01-11 11.25 2,195,000 2,381,575 Lyondell Chemical 12-15-08 9.50 2,585,000(d) 2,597,925 Series B 05-01-07 9.88 2,700,000 2,740,500 Sr Sub Nts 05-01-09 10.88 380,000 361,000 MacDermid 07-15-11 9.13 2,490,000 2,589,600 Noveon Company Guaranty Series B 02-28-11 11.00 2,035,000 2,149,469 Resolution Performance Sr Sub Nts 11-15-10 13.50 2,475,000 2,772,000 Sterling Chemicals Company Guaranty Series B 07-15-06 12.38 2,400,000(b) 1,848,000 ----------- Total 49,126,730 - --------------------------------------------------- COMMERCIAL FINANCE (0.6%) Advance Holding Zero Coupon Series B 04-15-03 16.60 3,900,000(h) 3,568,500 - --------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (6.8%) Alamosa Delaware Company Guaranty 02-01-11 12.50% $1,650,000 $1,188,000 08-15-11 13.63 2,015,000 1,531,400 American Cellular Company Guaranty 10-15-09 9.50 1,200,000 972,000 Birch Telecom Sr Nts 06-15-08 14.00 3,000,000(b) 30,000 Cable Satisfaction Intl (U.S. Dollar) 03-01-10 12.75 3,365,000(c) 1,951,700 EchoStar Broadband Sr Nts 10-01-07 10.38 200,000 210,500 EchoStar DBS Sr Nts 01-15-09 9.13 4,415,000(d) 4,475,706 02-01-09 9.38 5,150,000 5,291,625 Fairpoint Communications Sr Sub Nts Series B 05-01-08 9.50 540,000 464,400 Global Telesystems (U.S. Dollar) Sr Nts 12-15-07 11.50 4,150,000(b,c) 15,563 06-15-08 10.88 2,700,000(b,c) 10,125 Horizon PCS Sr Nts 06-15-11 13.75 2,500,000(d) 1,775,000 Zero Coupon Company Guaranty 10-01-05 15.18 5,925,000(h) 1,688,625 NATG Holdings LLC/Orius Capital Company Guaranty Series B 02-01-10 12.75 4,600,000(b) 138,000 Nextel Communications Sr Nts 02-01-11 9.50 3,595,000 2,210,925 Price Communications Wireless Company Guaranty Series B 12-15-06 9.13 5,300,000 5,353,000 Rural Cellular Sr Sub Nts 01-15-10 9.75 3,600,000(d) 2,916,000 Sr Sub Nts Series B 05-15-08 9.63 6,345,000 5,076,000 US Unwired Zero Coupon Company Guaranty Series B 11-01-04 11.37 4,675,000(h,l) 2,547,875 Western Wireless Sr Sub Nts 02-01-07 10.50 4,250,000 3,570,000 ----------- Total 41,416,444 - ---------------------------------------------------
See accompanying notes to investments in securities. 98
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT ENERGY (3.8%) Calpine Canada Energy Finance (U.S. Dollar) Company Guaranty 05-01-08 8.50% $8,580,000(c) $6,177,728 Chesapeake Energy Company Guaranty 04-01-11 8.13 600,000 588,000 Sr Nts Series B 03-15-12 8.50 1,200,000 1,179,000 Energy Corp of America Sr Sub Nts Series A 05-15-07 9.50 3,550,000 2,418,438 Grant Prideco Company Guaranty Series B 12-01-07 9.63 2,350,000 2,350,000 Hanover Equipment Trust Sr Nts 09-01-08 8.50 2,950,000(d) 2,979,500 09-01-11 8.75 4,085,000(d) 4,105,424 Ocean Energy Company Guaranty Series B 07-01-08 8.38 2,750,000 2,928,833 Westport Resources Company Guaranty 11-01-11 8.25 585,000(d) 586,463 ----------- Total 23,313,386 - --------------------------------------------------- ENERGY EQUIPMENT & SERVICES (0.4%) Hanover Compressor Cv 03-15-08 4.75 700,000 549,500 Key Energy Services Sr Nts 03-01-08 8.38 1,695,000(i) 1,720,425 ----------- Total 2,269,925 - --------------------------------------------------- FINANCIAL SERVICES (1.6%) LaBranche Sr Nts 08-15-04 9.50 2,660,000 2,826,356 Sr Sub Nts 03-02-07 12.00 4,700,000 5,405,000 Tyco Capital 08-15-05 7.25 1,250,000 1,217,104 ----------- Total 9,448,460 - --------------------------------------------------- FOOD (0.6%) Aurora Foods Sr Sub Nts Series B 07-01-08 8.75 1,000,000 935,000 Sr Sub Nts Series D 02-15-07 9.88 1,720,000 1,694,200 RAB Enterprises Company Guaranty 05-01-05 10.50 2,400,000 840,000 ----------- Total 3,469,200 - --------------------------------------------------- FURNITURE & APPLIANCES (1.6%) Falcon Products Company Guaranty Series B 06-15-09 11.38% $3,355,000 $2,985,950 Interface Company Guaranty 04-01-08 7.30 2,670,000 2,443,050 Sr Nts 02-01-10 10.38 2,715,000(d) 2,823,600 Sealy Mattress Company Guaranty Series C 12-15-07 9.88 1,660,000 1,643,400 ----------- Total 9,896,000 - --------------------------------------------------- HEALTH CARE SERVICES (3.1%) Alliance Imaging Sr Sub Nts 04-15-11 10.38 1,475,000 1,570,875 Clarent Hospital Sr Nts 08-15-05 11.50 1,608,000(l) 1,608,000 Hanger Orthopedic Group Sr Nts 02-15-09 10.38 2,460,000(d) 2,533,800 Insight Healthcare Services Sr Sub Nts 11-01-11 9.88 1,010,000(d) 1,040,300 Magellan Health Services Sr Nts 11-15-07 9.38 2,000,000(d) 1,950,000 Sr Sub Nts 02-15-08 9.00 2,715,000 2,239,875 Paracelsus Healthcare Sr Sub Nts 08-15-06 10.00 4,385,000(b,j) -- Triad Hospitals Company Guaranty 05-01-09 8.75 4,810,000 5,122,650 Vanguard Health Systems Company Guaranty 08-01-11 9.75 2,825,000 2,952,125 ----------- Total 19,017,625 - --------------------------------------------------- HOUSEHOLD PRODUCTS (1.6%) Revlon Consumer Products Sr Nts 12-01-05 12.00 8,195,000(d) 7,867,200 02-01-06 8.13 2,500,000 1,600,000 ----------- Total 9,467,200 - --------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (1.2%) Blount Company Guaranty 06-15-05 7.00 1,800,000 1,485,000 Motors & Gears Sr Nts Series D 11-15-06 10.75 2,455,000 2,319,975 Terex Company Guaranty Series B 04-01-11 10.38% $1,000,000 $1,075,000 Sr Sub Nts 07-15-11 9.25 2,390,000(d) 2,461,700 ----------- Total 7,341,675 - --------------------------------------------------- INSURANCE (0.4%) Americo Life Sr Sub Nts 06-01-05 9.25 2,725,000 2,718,188 - --------------------------------------------------- LEISURE TIME & ENTERTAINMENT (7.9%) Alliance Atlantis Communications (U.S. Dollar) Sr Sub Nts 12-15-09 13.00 2,700,000(c) 2,997,000 AMC Entertainment Sr Sub Nts 02-01-11 9.50 1,900,000 1,776,500 02-01-12 9.88 4,150,000(d) 3,973,625 Ameristar Casinos Company Guaranty 02-15-09 10.75 2,270,000 2,508,350 Carmike Cinemas 02-01-09 10.38 1,500,000 1,320,000 Choctaw Resort Development Enterprises Sr Nts 04-01-09 9.25 805,000 829,150 Cinemark USA Sr Sub Nts Series B 08-01-08 8.50 775,000 697,500 08-01-08 9.63 2,565,000 2,455,988 Coast Hotels & Casino Company Guaranty 04-01-09 9.50 5,000,000 5,287,499 Hammons (JQ) Hotels 1st Mtge 02-15-04 8.88 5,350,000 5,323,249 MGM Mirage Company Guaranty 06-01-07 9.75 1,000,000 1,083,750 09-15-10 8.50 3,500,000 3,705,482 Mohegan Tribal Gaming Sr Sub Nts 07-01-11 8.38 1,375,000 1,409,375 04-01-12 8.00 1,400,000(d) 1,401,750 Regal Cinemas Company Guaranty 02-01-12 9.38 1,730,000(d) 1,786,225 Six Flags Sr Nts 06-15-07 9.75 3,050,000 3,160,563 02-01-09 9.50 1,200,000 1,240,500 02-01-10 8.88 1,750,000(l) 1,745,625
See accompanying notes to investments in securities. 99
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT Station Casinos Sr Sub Nts 07-01-10 9.88% $1,965,000 $2,102,550 Trump Atlantic City Assn/Funding 1st Mtge Company Guaranty 05-01-06 11.25 820,000 557,600 United Artists Theatre 07-01-15 9.30 1,025,181 840,649 Series 1995A 07-01-15 9.30 2,464,048 2,020,520 ----------- Total 48,223,450 - --------------------------------------------------- MEDIA (13.2%) Adelphia Communications Sr Nts 11-01-06 10.25 6,300,000 6,489,000 10-01-10 10.88 750,000 795,000 American Media Operation Sr Sub Nts 05-01-09 10.25 2,200,000(d) 2,241,250 Australis Holdings Property (U.S. Dollar) Sr Disc Nts 11-01-02 15.00 2,260,000(b,c) 226 Australis Media (U.S. Dollar) 05-15-03 15.75 4,500,000(b,c,j) -- (U.S. Dollar) Sr Disc Nts 05-15-03 15.75 47,958(b,c,j) -- CanWest Media (U.S. Dollar) Sub Sr Nts 05-15-11 10.63 1,720,000(c) 1,883,400 Charter Communications Holdings LLC Sr Nts 04-01-07 8.25 2,065,000 1,879,150 Charter Communications Holdings LLC/Capital Sr Nts 04-01-09 10.00 1,435,000 1,391,950 10-01-09 10.75 2,600,000 2,600,000 11-15-09 9.63 2,500,000(d) 2,400,000 11-15-09 9.63 1,155,000 1,108,800 01-15-10 10.25 1,650,000 1,608,750 Zero Coupon Sr Disc Nts 04-01-04 14.16 2,350,000(h) 1,645,000 01-15-07 12.13 8,440,000(d,h) 4,599,800 Coaxial Communications/Phoenix Company Guaranty 08-15-06 10.00 4,495,000 4,495,000 Corus Entertainment (U.S. Dollar) Sr Sub Nts 03-01-12 8.75 2,210,000(c,d) 2,259,946 Cumulus Media Company Guaranty 07-01-08 10.38 5,525,000 5,856,500 Diamond Cable Communications (U.S. Dollar) Sr Disc Nts 12-15-05 11.75% $1,600,000(c) $536,000 02-15-07 10.75 2,970,000(c) 1,009,800 MDC (U.S. Dollar) Sr Sub Nts 12-01-06 10.50 5,090,000(c) 3,919,300 Mediacom Broadband LLC Company Guaranty 07-15-13 11.00 950,000 1,040,250 Nexstar Finance LLC Company Guaranty 04-01-08 12.00 853,000 882,855 Paxson Communications Company Guaranty 07-15-08 10.75 1,560,000 1,684,800 Zero Coupon Sr Disc Nts 01-15-06 12.25 465,000(d,h) 317,363 Pegasus Communications Sr Nts Series B 10-15-05 9.63 4,280,000 3,210,000 Pegasus Media & Communications Series B 07-01-05 12.50 3,930,000 3,537,000 Pegasus Satellite Sr Nts 08-01-06 12.38 2,250,000 1,777,500 Quebecor Media (U.S. Dollar) Sr Nts 07-15-11 11.13 6,250,000(c) 6,718,749 Radio Unica Zero Coupon Company Guaranty 08-01-02 20.70 460,000(h) 188,600 Regional Independent Medical (U.S. Dollar) Sr Nts 07-01-08 10.50 3,600,000(c) 3,708,000 Sinclair Broadcast Group Sr Sub Nts 12-15-11 8.75 1,280,000(d) 1,344,000 Susquehanna Media Sr Sub Nts 05-15-09 8.50 600,000 621,000 Telemundo Holdings Zero Coupon Sr Disc Nts Series D 08-15-03 11.50 5,000,000(h) 4,625,000 TeleWest Communications (U.S. Dollar) Zero Coupon Sr Disc Nts 04-15-04 14.61 3,050,000(c,h) 1,159,000 Veninfotel (U.S. Dollar) Cv Pay-in-kind 03-01-02 10.00 1,407,100(c,g,l)1,407,100 XM Satellite Radio 03-15-10 14.00 3,000,000 2,160,000 ----------- Total 81,100,089 - --------------------------------------------------- METALS (1.6%) AK Steel Sr Nts 12-15-06 9.13% $2,550,000 $2,652,000 Compass Minerals Group Sr Sub Nts 08-15-11 10.00 645,000(d) 677,250 Great Lakes Carbon Company Guaranty Pay-in-kind Series B 05-15-08 10.25 6,209,000(g) 3,725,400 Neenah Sr Sub Nts Series B 05-01-07 11.13 1,830,000 750,300 WCI Steel Sr Nts Series B 12-01-04 10.00 4,405,000 2,026,300 ----------- Total 9,831,250 - --------------------------------------------------- MISCELLANEOUS (5.7%) Advanced Glassfiber Yarn Sr Sub Nts 01-15-09 9.88 1,600,000 592,000 Centaur Mining & Exploration (U.S. Dollar) Company Guaranty 12-01-07 11.00 1,500,000(b,c) 75,000 Consolidated Container LLC/ Consolidated Container 07-15-09 10.13 1,110,000 710,400 Eott Energy Partners LP/Energy Finance Company Guaranty 10-01-09 11.00 5,300,000 4,399,000 GT Group Telecom (U.S. Dollar) 06-30-08 9.89 4,000,000(c) 2,600,000 ISG Resources 04-15-08 10.00 3,440,000 3,044,400 Isle of Capri Casinos Company Guaranty 04-15-09 8.75 3,800,000 3,800,000 Meritage Company Guaranty 06-01-11 9.75 2,980,000 3,143,900 MSX Intl Company Guaranty 01-15-08 11.38 2,460,000 1,891,125 Nationwide Credit Sr Nts Series A 01-15-08 10.25 1,462,000(b) 434,945 Nextel Communications Series A 12-20-07 4.40 3,937,500(i) 3,297,656 NSM Steel Company Guaranty 02-01-06 12.00 779,610(b,d) 243,082 02-01-08 12.25 1,200,000(b,d) 373,248
See accompanying notes to investments in securities. 100
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT Omega Cabinets Sr Sub Nts 06-15-07 10.50% $2,155,000 $2,262,750 Outsourcing Solutions Sr Sub Nts Series B 11-01-06 11.00 4,590,000 3,878,550 Prime Succession Holding Cv Pay-in-kind 08-29-04 14.25 171,069(g) 128,302 Resolution Performance Sr Sub Nts 11-30-08 10.37 1,714,286(d) 1,714,286 Rural Cellular Series A 04-03-08 6.00 2,504,342(l) 2,153,734 ----------- Total 34,742,378 - --------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (1.6%) Jordan Inds Sr Nts 08-01-07 10.38 800,000 464,000 Sr Nts Series D 08-01-07 10.38 8,590,000 4,982,200 Tyco Intl Group (U.S. Dollar) Company Guaranty 06-15-05 6.38 1,000,000(c) 914,147 02-15-06 6.38 2,340,000(c) 2,126,817 08-01-06 5.80 1,600,000(c) 1,435,624 ----------- Total 9,922,788 - --------------------------------------------------- PAPER & PACKAGING (5.0%) Berry Plastics Company Guaranty Series B 07-15-07 11.00 1,450,000 1,493,500 Company Guaranty Series C 04-15-04 12.25 2,350,000 2,367,625 Sr Sub Nts 04-15-04 12.25 1,115,000 1,123,363 BPC Holding Sr Nts Series B 06-15-06 12.50 2,316,813 2,270,477 Crown Paper Sr Sub Nts 09-01-05 11.00 4,785,000(b) 47,850 Doman Inds (U.S. Dollar) Sr Nts Series B 11-15-07 9.25 3,010,000(c) 692,300 Graphic Packaging Sr Sub Nts 02-15-12 8.63 3,735,000(d) 3,865,725 Plastipak Holdings Sr Nts 09-01-11 10.75 2,330,000(d) 2,504,750 Pliant Company Guaranty 06-01-10 13.00 829,000 878,740 Riverwood Intl Company Guaranty 04-01-06 10.25% $1,100,000 $1,135,750 08-01-07 10.63 2,485,000 2,646,525 04-01-08 10.88 2,880,000 2,988,000 Silgan Holdings Sr Sub Deb 06-01-09 9.00 4,845,000 5,014,574 Stone Container Sr Nts 08-01-16 12.58 3,100,000 3,289,875 ----------- Total 30,319,054 - --------------------------------------------------- REAL ESTATE INVESTMENT TRUST (1.5%) MeriStar Hospitality Company Guaranty 01-15-08 9.00 3,025,000 3,009,875 01-15-11 9.13 1,225,000 1,218,875 Sr Sub Nts 08-15-07 8.75 500,000 461,250 MeriStar Hospitality Operating Partnership Finance Sr Nts 06-15-09 10.50 1,950,000(d) 2,047,500 RFS Partnership LP Company Guaranty 03-01-12 9.75 2,500,000(d) 2,550,000 ----------- Total 9,287,500 - --------------------------------------------------- RESTAURANTS & LODGING (2.4%) Extended Stay America Sr Sub Nts 06-15-11 9.88 4,880,000 5,099,600 Park Place Entertainment Sr Sub Nts 05-15-11 8.13 4,590,000 4,664,588 Prime Hospitality Sr Sub Nts Series B 04-01-07 9.75 4,500,000 4,680,000 ----------- Total 14,444,188 - --------------------------------------------------- RETAIL (1.3%) Dairy Mart Convenience Stores Sr Sub Nts 03-15-04 10.25 3,850,000(b) 1,155,000 Flooring America Company Guaranty 10-15-07 9.25 1,109,000(b) 1,109 Pathmark Stores Sr Sub Nts 02-01-12 8.75 4,045,000(d) 4,191,631 Rite Aid 01-15-07 7.13 3,550,000 2,360,750 ----------- Total 7,708,490 - --------------------------------------------------- TRANSPORTATION (0.6%) American Architectural Company Guaranty 12-01-07 11.75% $1,600,000(b) $240,000 Interpool 08-01-07 7.20 940,000 860,100 08-01-07 7.35 2,335,000 2,148,200 Transport Marit Mexico (U.S. Dollar) Sr Nts 11-15-06 10.25 500,000(c) 405,000 ----------- Total 3,653,300 - --------------------------------------------------- UTILITIES -- ELECTRIC (2.2%) Mirant Americas Generation Sr Nts 05-01-11 8.30 550,000 467,500 Mirant Americas Generation LLC Sr Nts 05-01-06 7.63 13,920,000 11,832,000 10-01-08 7.20 1,000,000(d) 825,000 ----------- Total 13,124,500 - --------------------------------------------------- UTILITIES -- TELEPHONE (2.2%) Adelphia Business Solutions Sr Nts Series B 09-01-04 12.25 5,658,000(b) 678,960 Dobson Communications Sr Nts 07-01-10 10.88 1,255,000 1,154,600 Dobson/Sygnet Communications Sr Nts 12-15-08 12.25 4,300,000 4,042,000 Nextel Communications Sr Disc Nts 10-31-07 9.75 12,350,000 7,039,500 PSINet Sr Nts 12-01-06 10.50 5,850,000(b) 526,500 08-01-09 11.00 1,000,000(b) 90,000 ----------- Total 13,531,560 - --------------------------------------------------- TOTAL BONDS (Cost: $553,182,905) $503,200,443 - ---------------------------------------------------
See accompanying notes to investments in securities. 101
COMMON STOCKS (0.1%)(b) ISSUER SHARES VALUE(a) Aurora Foods 28,042(d) $117,776 PhoneTel Technologies 149,580 6,357 Prime Succession Holdings 240,901 337,262 - --------------------------------------------------- TOTAL COMMON STOCKS (Cost: $4,093,950) $461,395 - --------------------------------------------------- PREFERRED STOCKS & OTHER (11.0%) ISSUER SHARES VALUE(a) Adelphia Communications 13.00% Cm Series B 64,850 $6,874,100 Bestel Warrants 1,000(b) 80,000 Cable Satisfaction Intl Warrants 3,365(b,c) 34 Century Maintenance Supply 13.25% Pay-in-kind Series C 50,165(g) 4,514,850 Communications & Power Inds 14.00% Series B 46,437 1,114,494 CSC Holdings 11.13% Cm Series M 149,618 15,335,804 11.75% Cm Series H 25,855 2,669,529 Dobson Communications 13.00% Pay-in-kind 2,579(g) 2,192,150 Horizon PCS Warrants 5,325(b) 159,750 Intermedia Communications 13.50% Pay-in-kind Series B 16,430(g) 15,773,206 IPCS Warrants 3,155(b) $135,665 Nextel Communications 11.13% Pay-in-kind Series E 2,944(g) 942,080 13.00% Cm Pay-in-kind Series D 5,806(g) 2,090,134 NSM Steel Warrants 759,711(b,c,d) 1 NTL 13.00% Pay-in-kind Series B 5,296(g) 158,889 Pegasus Satellite 12.75% Cm Pay-in-kind Series B 2,483(g) 1,490,085 Rural Cellular 12.25% Pay-in-kind 5,633(g) 2,816,500 SGW Holding Cm Pay-in-kind Series B 17,327(b,g,l) 86,634 Cv Series A 9,677(b,l) 19,354 Warrants 250(b,l) 3 UbiquiTel Warrants 4,900(b) 156,800 Varde Fund V LP 5,000,000(b,e,l) 5,756,500 Wayland Investment Fund LLC 6,000,000(b,e,l) 4,554,360 XM Satellite Radio Warrants 1,900(b) 38,000 XO Communications 13.50% Pay-in-kind Series E 1(g,j) -- - --------------------------------------------------- TOTAL PREFERRED STOCKS & OTHER (Cost: $86,572,558) $66,958,922 - --------------------------------------------------- SHORT-TERM SECURITIES (4.8%)(f) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON PAYABLE DATE OF AT PURCHASE MATURITY U.S. GOVERNMENT AGENCIES (3.8%) Federal Home Loan Bank Disc Nts 03-22-02 1.60% $700,000 $699,303 04-03-02 1.71 1,700,000 1,697,390 04-12-02 1.70 5,600,000 5,588,629 Federal Home Loan Mtge Corp Disc Nts 03-05-02 1.70 300,000 299,929 03-19-02 1.69 5,300,000 5,295,287 04-02-02 1.74 6,800,000 6,789,153 Federal Natl Mtge Assn Disc Nt 03-28-02 1.57 2,600,000 2,596,734 ----------- Total 22,966,425 - --------------------------------------------------- COMMERCIAL PAPER (1.0%) Duke Energy 03-01-02 1.90 4,300,000 4,299,773 Emerson Electric 03-07-02 1.78 1,800,000(k) 1,799,377 ----------- Total 6,099,150 - --------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $29,066,941) $29,065,575 - --------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $672,916,354)(m) $599,686,335 ===================================================
See accompanying notes to investments in securities. 102 NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. For long-term debt securities, item identified is in default as to payment of interest and/or principal. (c) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the currency indicated. As of Feb. 28, 2002, the value of foreign securities represented 7.9% of net assets. (d) 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. (e) The share amount for Limited Liability Companies (LLC) or Limited Partnerships (LP) represents capital contributions. (f) At Feb. 28, 2002, securities valued at $1,219,488 were held to cover open call options written as follows (see Note 8 to the financial statements):
ISSUER NOTIONAL AMOUNT EXERCISE PRICE EXPIRATION DATE VALUE(a) -------------------------------------------------------------------------------------------- Brazil C Bonds May 2002 30-year $1,540,000 $79.19 May 2002 $43,869
(g) Pay-in-kind securities are securities in which the issuer makes interest or dividend payments in cash or in additional securities. The securities usually have the same terms as the original holdings. (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) At Feb. 28, 2002, the cost of securities purchased, including interest purchased, on a when-issued basis was $4,890,113. (j) Negligible market value. (k) 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. (l) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at Feb. 28, 2002, is as follows:
SECURITY ACQUISITION COST DATES ----------------------------------------------------------------------------------------------------------------- Clarent Hospital 11.50% Sr Nts 2005 11-19-01 $3,053,706 Rural Cellular 6.00% Series A 2008 12-11-01 thru 01-17-02 2,343,992 SGW Holdings Cm Pay-in-kind Series B 08-12-97 thru 02-11-02 268,720 Cv Series A 08-12-97 100,002 Warrants 08-12-97 78,900 Six Flags* 8.88% Sr Nts 2010 02-01-02 1,743,770 US Unwired 11.37% Zero Coupon Company Guaranty 11-30-01 thru 01-31-02 3,431,375 Varde Fund V LP 04-27-00 thru 06-19-00 5,000,000 Veninfotel (U.S. Dollar) 10.00% Cv Pay-in-kind 2002 03-05-97 thru 01-30-02 1,407,100 Wayland Investment Fund LLC 5-17-00 6,671,880
* Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. (m) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $672,916,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 17,840,000 Unrealized depreciation (91,070,000) ----------------------------------------------------------------------------------------------------------------- Net unrealized depreciation $(73,230,000) -----------------------------------------------------------------------------------------------------------------
103 INVESTMENTS IN SECURITIES AXP VP - FEDERAL INCOME FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
BONDS (97.0%) ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT MORTGAGE-BACKED SECURITIES (55.2%) Federal Farm Credit Bank 12-15-04 3.88% $2,000,000 $2,001,068 06-19-07 6.75 2,440,000 2,651,206 Federal Home Loan Bank 08-15-03 4.13 5,300,000 5,402,496 08-15-05 6.88 3,000,000 3,252,015 Federal Home Loan Mtge Corp 01-01-12 5.50 1,723,174 1,749,055 06-01-14 6.50 664,730 688,373 06-01-15 7.50 1,123,889 1,188,747 07-01-31 7.19 829,519 843,455 03-15-32 6.50 5,000,000 5,171,480 Collateralized Mtge Obligation 12-15-08 6.00 1,000,000 1,040,115 07-15-10 5.50 2,000,000 2,078,440 06-15-11 5.25 2,000,000 2,040,004 02-15-14 5.50 2,000,000 2,010,518 04-15-28 6.50 5,000,000 5,155,078 Federal Natl Mtge Assn 03-01-14 5.50 651,973 657,237 04-01-14 5.50 717,747 724,288 04-01-14 6.00 1,593,072 1,631,276 06-01-14 6.50 127,242 131,986 07-01-14 6.00 769,573 786,527 12-01-14 5.50 792,649 799,049 03-01-15 6.50 2,000,000(b) 2,061,250 04-01-15 6.50 5,000,000(b) 5,137,500 07-01-16 6.00 4,538,512 4,612,465 10-01-29 6.50 1,103,536 1,124,824 03-01-30 7.00 4,000,000(b) 4,120,000 04-01-30 7.00 5,000,000(b) 5,129,688 08-01-31 7.00 2,869,895 2,960,270 03-01-32 7.00 2,000,000(b) 2,062,800 Collateralized Mtge Obligation 09-25-10 5.00 2,000,000 2,016,780 11-25-14 5.50 1,000,000 1,037,480 02-15-17 5.50 1,000,000 1,017,031 Interest Only 06-01-23 7.00 296,580(c) 71,225 Govt Natl Mtge Assn 04-15-13 7.00% $1,226,105 $1,289,609 05-15-16 6.00 4,698,900 4,802,211 10-15-28 6.50 1,354,297 1,382,355 Student Loan Mtge Assn 06-30-04 5.00 4,000,000 4,131,240 09-30-04 3.63 5,000,000 4,966,500 03-15-06 5.25 2,000,000 2,052,462 ------------- Total 89,978,103 - ----------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS & AGENCIES (40.9%) U.S. Treasury 05-15-04 7.25 25,750,000 27,970,938 08-15-04 6.00 2,500,000 2,658,200 08-15-04 7.25 7,000,000 7,645,330 11-15-04 7.88 6,600,000 7,342,500 08-15-05 10.75 13,560,000 16,566,523 05-15-09 5.50 200,000 209,468 11-15-09 10.38 2,000,000 2,345,940 01-15-12 3.38 2,000,000(e,f) 2,024,062 ------------- Total 66,762,961 - ----------------------------------------------------- FINANCIAL SERVICES (0.9%) Citicorp 12-07-06 4.10 1,500,000 1,504,670 - ----------------------------------------------------- TOTAL BONDS (Cost: $156,754,983) $158,245,734 - ----------------------------------------------------- OPTION PURCHASED (--%) ISSUER NOTIONAL EXERCISE EXPIRATION VALUE(a) AMOUNT PRICE DATE PUT May U.S. Treasury Notes $7,500,000 $106 May 2002 $51,563 - ----------------------------------------------------- TOTAL OPTION PURCHASED (Cost: $79,597) $51,563 - ----------------------------------------------------- SHORT-TERM SECURITIES (13.8%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON PAYABLE DATE OF AT PURCHASE MATURITY U.S. GOVERNMENT AGENCIES (8.5%) Federal Home Loan Bank Disc Nt 03-15-02 1.57% $9,700,000 $9,693,654 Federal Home Loan Mtge Corp Disc Nt 03-26-02 1.72 2,200,000 2,197,275 Federal Natl Mtge Assn Disc Nt 04-03-02 1.67 2,000,000 1,996,929 ------------- Total 13,887,858 - ----------------------------------------------------- COMMERCIAL PAPER (5.3%) Barclays U.S. Funding 04-09-02 1.78 2,000,000 1,996,045 Caterpillar 03-08-02 1.86 600,000(d) 599,622 Kimberly-Clark 03-20-02 1.64 500,000(d) 499,545 Morgan Stanley, Dean Witter & Co 04-08-02 1.78 2,100,000 2,095,950 Salomon Smith Barney 04-11-02 1.79 2,500,000 2,494,779 Toyota Motor Credit 03-04-02 1.78 1,000,000 999,802 ------------- Total 8,685,743 - ----------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $22,574,700) $22,573,601 - ----------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $179,409,280)(g) $180,870,898 =====================================================
See accompanying notes to investments in securities. 104 NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) At Feb. 28, 2002, the cost of securities purchased, including interest purchased, on a when-issued basis was $18,518,090. (c) Interest-only represents securities that entitle holders to receive only interest payments on the underlying mortgages. The yield to maturity of an interest-only is extremely sensitive to the rate of principal payments on the underlying mortgage assets. A rapid (slow) rate of principal repayments may have an adverse (positive) effect on yield to maturity. The principal amount shown is the notional amount of the underlying mortgages. (d) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board. (e) Partially pledged as initial deposit on the following open interest rate futures contracts (see Note 7 to the financial statements):
TYPE OF SECURITY NOTIONAL AMOUNT ------------------------------------------------------------------- SALE CONTRACTS U.S. Treasury Notes, June 2002, 5-year $23,000,000 U.S. Treasury Notes, June 2002, 10-year 4,200,000
(f) At Feb. 28, 2002, securities valued at $2,587,500 were held to cover open put options written as follows (see Note 8 to the financial statements):
ISSUER NOTIONAL AMOUNT EXERCISE PRICE EXPIRATION DATE VALUE(a) --------------------------------------------------------------------------------------------------------- U.S. Treasury Notes May 2002, 5-year $2,500,000 $103.50 May 2002 $6,250
(g) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $179,409,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $1,627,000 Unrealized depreciation (165,000) --------------------------------------------------------------------------------------------------------- Net unrealized appreciation $1,462,000 ---------------------------------------------------------------------------------------------------------
105 INVESTMENTS IN SECURITIES AXP VP - GLOBAL BOND FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
BONDS (93.7%)(c) ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT AUSTRALIA (0.8%) New South Wales Treasury (Australian Dollar) 03-01-08 8.00% 2,700,000 $1,531,122 - -------------------------------------------------- AUSTRIA (2.2%) Oesterreich Kontrollbank (Japanese Yen) 03-22-10 1.80 530,000,000 4,202,962 - -------------------------------------------------- BELGIUM (2.5%) Belgium Kingdom (European Monetary Unit) Series 14 04-29-04 7.25 5,300,000 4,881,119 - -------------------------------------------------- BRAZIL (0.5%) Federal Republic of Brazil (U.S. Dollar) 01-11-12 11.00 1,100,000 1,014,200 - -------------------------------------------------- CANADA (4.3%) Calpine Canada Energy Finance (U.S. Dollar) Company Guaranty 05-01-08 8.50 1,400,000 1,008,021 Govt of Canada (Canadian Dollar) 12-01-03 7.50 5,300,000 3,534,996 (U.S. Dollar) 11-05-08 5.25 1,000,000 1,015,257 Province of British Columbia (Canadian Dollar) 08-23-10 6.38 2,100,000 1,379,143 Rogers Communication (Canadian Dollar) Sr Nts 07-15-07 8.75 2,000,000 1,237,146 ----------- Total 8,174,563 - -------------------------------------------------- CAYMAN ISLANDS (--%) Zhuhai Highway (U.S. Dollar) Sub Nts 07-01-08 11.50 250,000(b,d) 62,500 - -------------------------------------------------- COSTA RICA (0.5%) Republic of Costa Rica (U.S. Dollar) 02-01-12 8.11 1,000,000(d) 1,025,000 - -------------------------------------------------- DENMARK (1.4%) Govt of Denmark (Danish Krone) 05-15-03 8.00 21,700,000 2,640,032 - -------------------------------------------------- DOMINICAN REPUBLIC (0.5%) Dominican Republic (U.S. Dollar) 09-27-06 9.50% $1,000,000(d) $1,047,500 - -------------------------------------------------- FRANCE (5.1%) France Telecom (U.S. Dollar) Zero Coupon 03-01-02 7.20 2,000,000(e) 2,057,916 Govt of France (European Monetary Unit) 10-25-06 6.50 6,000,000 5,595,340 04-25-11 6.50 2,200,000 2,110,605 ----------- Total 9,763,861 - -------------------------------------------------- GERMANY (24.5%) Allgemeine Hypo Bank (European Monetary Unit) 09-02-09 5.00 6,510,000 5,563,105 Bayerische Landesbank (U.S. Dollar) Sub Nts 12-01-08 5.88 800,000 813,968 Depfa Deutsche Pfandbriefbank (European Monetary Unit) 02-03-05 5.00 3,000,000 2,637,473 Federal Republic of Germany (European Monetary Unit) 07-22-02 8.00 5,180,000 4,555,207 07-15-03 6.50 3,200,000 2,863,954 11-11-04 7.50 11,675,000 10,927,187 08-19-05 5.00 4,400,000 3,877,767 01-04-08 5.25 6,850,000 6,099,241 06-20-16 6.00 2,914,364 2,728,483 07-04-27 6.50 3,820,000 3,800,293 Treuhandanstalt (European Monetary Unit) 01-29-03 7.13 3,200,000 2,851,705 ----------- Total 46,718,383 - -------------------------------------------------- HUNGARY (1.1%) Govt of Hungary (Hungarian Forint) 05-12-06 8.50 585,000,000 2,128,076 - -------------------------------------------------- INDONESIA (0.1%) Tjiwi Kimia Finance Mauritius (U.S. Dollar) Company Guaranty 08-01-04 10.00 1,300,000(b) 227,500 - -------------------------------------------------- ITALY (6.8%) Buoni Poliennali Del Tes (European Monetary Unit) 01-01-04 8.50% 6,757,875 $6,303,517 11-01-26 7.25 3,075,191 3,251,716 Republic of Italy (Japanese Yen) 03-27-08 3.80 400,000,000 3,523,103 ----------- Total 13,078,336 - -------------------------------------------------- JAPAN (1.0%) Inter-American Development Bank (Japanese Yen) 07-08-09 1.90 245,000,000 1,958,682 - -------------------------------------------------- MEXICO (0.9%) United Mexican States (British Pound) Medium-term Nts Series E 05-30-02 8.75 750,000 1,065,410 (U.S. Dollar) 01-14-11 8.38 700,000 751,100 ----------- Total 1,816,510 - -------------------------------------------------- NEW ZEALAND (0.9%) Govt of New Zealand (New Zealand Dollar) 11-15-06 8.00 4,000,000 1,792,008 - -------------------------------------------------- NORWAY (2.3%) Govt of Norway (Norwegian Krone) 11-30-04 5.75 24,000,000 2,638,559 05-15-09 5.50 16,040,000 1,704,662 ----------- Total 4,343,221 - -------------------------------------------------- PANAMA (0.4%) Republic of Panama (U.S. Dollar) 02-08-11 9.63 750,000 796,875 - -------------------------------------------------- UNITED KINGDOM (4.2%) European Investment Bank (British Pound) 12-07-06 7.63 1,500,000 2,341,755 United Kingdom Treasury (British Pound) 06-07-02 7.00 2,000,000 2,851,994 06-10-03 8.00 1,950,000 2,880,118 ----------- Total 8,073,867 - --------------------------------------------------
See accompanying notes to investments in securities. 106
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT UNITED STATES (33.6%) Allied Waste North America (U.S. Dollar) Company Guaranty Series B 04-01-08 8.88% $1,200,000 $1,239,000 American Airline (U.S. Dollar) 05-23-11 6.82 1,300,000 1,275,677 AT&T Wireless Services (U.S. Dollar) Sr Nts 03-01-11 7.88 1,000,000 1,039,606 Citicorp (European Monetary Unit) 09-19-09 6.25 3,000,000 1,372,527 DaimlerChrysler North America Holding (U.S. Dollar) Company Guaranty 01-15-12 7.30 1,100,000 1,133,092 Delta Air Lines (U.S. Dollar) 09-18-11 7.11 1,050,000 1,081,605 DTE Burns Harbor LLC (U.S. Dollar) Sr Nts 01-30-03 6.57 135,840(d) 116,822 Federal Natl Mtge Assn (U.S. Dollar) 08-15-04 6.50 3,000,000 3,206,469 02-15-08 5.75 3,600,000 3,744,334 03-01-29 6.50 1,688,507 1,721,079 Ford Motor Credit (Japanese Yen) 02-07-05 1.20 400,000,000 2,820,400 (U.S. Dollar) 09-10-02 6.55 3,000,000 3,030,360 GMAC (U.S. Dollar) 09-15-06 6.13 1,000,000 997,751 HCA (U.S. Dollar) 06-01-06 7.13% $1,300,000 $1,345,500 Household Finance (U.S. Dollar) 05-09-05 8.00 1,300,000 1,383,051 IBM (Japanese Yen) 04-14-03 .90 190,000,000 1,428,667 Intl Paper (European Monetary Unit) 08-11-06 5.38 1,800,000 1,530,720 J.P. Morgan Chase (U.S. Dollar) Sub Nts 02-01-11 6.75 1,000,000 1,027,150 LaBranche (U.S. Dollar) Sr Sub Nts 03-02-07 12.00 900,000 1,035,000 NRG Energy (U.S. Dollar) 04-01-31 8.63 800,000 776,106 Railcar Leasing (U.S. Dollar) 01-15-13 7.13 3,000,000(d) 3,194,310 U.S. Treasury (U.S. Dollar) 01-31-04 3.00 6,500,000 6,500,761 02-15-05 7.50 2,800,000 3,106,684 08-15-10 5.75 1,500,000 1,590,705 11-15-16 7.50 10,700,000 12,858,403 02-15-26 6.00 1,500,000 1,572,180 Washington Mutual (U.S. Dollar) Sr Nts 01-15-07 5.63 1,000,000 1,008,785 WorldCom (U.S. Dollar) 05-15-11 7.50% $1,000,000 $963,506 05-15-31 8.25 1,000,000 961,241 Zurich Capital Trust I (U.S. Dollar) Company Guaranty 06-01-37 8.38 1,000,000(d) 1,006,936 ----------- Total 64,068,427 - -------------------------------------------------- TOTAL BONDS (Cost: $190,941,300) $179,344,744 - -------------------------------------------------- SHORT-TERM SECURITIES (4.3%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON PAYABLE DATE OF AT PURCHASE MATURITY U.S. GOVERNMENT AGENCIES Federal Home Loan Bank Disc Nt 03-22-02 1.70% $2,000,000 $1,997,923 Federal Home Loan Mtge Corp Disc Nts 03-05-02 1.69 500,000 499,883 04-09-02 1.71 1,500,000 1,497,150 04-16-02 1.73 800,000 798,193 Federal Natl Mtge Assn Disc Nts 03-28-02 1.57 1,700,000 1,697,864 04-03-02 1.72 300,000 299,539 04-24-02 1.70 1,500,000 1,496,274 - --------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $8,287,077) $8,286,826 - --------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $199,228,377)(f) $187,631,570 ===================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. For long-term debt securities, item identified is in default as to payment of interest and/or principal. (c) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the currency indicated. (d) 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. (e) 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. (f) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $199,228,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 2,674,000 Unrealized depreciation (14,270,000) ------------------------------------------------- Net unrealized depreciation $(11,596,000) -------------------------------------------------
107 INVESTMENTS IN SECURITIES AXP VP - GROWTH FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (96.0%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (1.3%) Lockheed Martin 33,800 $1,906,658 Northrop Grumman 750 80,280 Raytheon 9,600 371,424 ----------- Total 2,358,362 - ------------------------------------------------ AIRLINES (1.3%) Southwest Airlines 110,901 2,341,120 - ------------------------------------------------ BANKS AND SAVINGS & LOANS (1.3%) Zions Bancorp 42,072 2,223,505 - ------------------------------------------------ BEVERAGES & TOBACCO (4.0%) Coca-Cola 55,000 2,606,450 PepsiCo 30,300 1,530,150 Philip Morris 43,100 2,269,646 UST 16,100 561,246 ----------- Total 6,967,492 - ------------------------------------------------ BUILDING MATERIALS & CONSTRUCTION (0.3%) Lafarge North America 13,100 541,554 - ------------------------------------------------ CHEMICALS (1.0%) Praxair 29,532 1,709,903 - ------------------------------------------------ COMMUNICATIONS EQUIPMENT & SERVICES (1.8%) EchoStar Communications Cl A 35,400(b) 924,648 Marvell Technology Group 9,800(b,c) 300,762 Motorola 43,700 568,100 Nokia ADR Cl A 66,514(c) 1,381,496 ----------- Total 3,175,006 - ------------------------------------------------ COMPUTERS & OFFICE EQUIPMENT (14.6%) Apple Computer 37,800(b) 820,260 Cisco Systems 34,976(b) 499,108 Compaq Computer 65,800 667,212 Computer Associates Intl 66,100 1,076,108 Compuware 38,900(b) 443,849 Concord EFS 14,300(b) 429,429 Dell Computer 139,100(b) 3,434,379 EMC 102,226(b) 1,114,263 Hewlett-Packard 13,600 273,632 Intl Business Machines 53,591 5,258,349 Mercury Interactive 27,000(b) 914,760 Microsoft 129,423(b) 7,550,537 Network Associates 17,800(b) 422,216 NVIDIA 23,600(b) 1,203,836 Siebel Systems 14,111(b) 391,721 State Street 1,600 81,120 Synopsys 18,700(b) 880,770 ----------- Total 25,461,549 - ------------------------------------------------ Electronics (5.3%) Applied Materials 38,252(b) $1,662,814 Integrated Device Technology 8,700(b) 222,459 Intel 166,340 4,753,998 Texas Instruments 80,347 2,358,184 Varian Medical Systems 5,900(b) 238,242 ----------- Total 9,235,697 - ------------------------------------------------ ENERGY (1.2%) Phillips Petroleum 37,000 2,187,070 - ------------------------------------------------ ENERGY EQUIPMENT & SERVICES (2.4%) Schlumberger 36,974 2,152,257 Transocean Sedco Forex 73,900 2,069,939 ----------- Total 4,222,196 - ------------------------------------------------ FINANCIAL SERVICES (2.4%) Citigroup 84,406 3,819,372 H&R Block 8,900 449,005 ----------- Total 4,268,377 - ------------------------------------------------ FOOD (2.4%) ConAgra Foods 15,500 362,855 General Mills 40,637 1,878,649 Kellogg 10,900 376,595 Kraft Foods Cl A 22,400 875,840 Sara Lee 33,100 692,452 ----------- Total 4,186,391 - ------------------------------------------------ FURNITURE & APPLIANCES (0.3%) Mohawk Inds 8,500(b) 534,905 - ------------------------------------------------ HEALTH CARE (23.0%) Abbott Laboratories 12,700 718,185 American Home Products 55,400 3,520,670 Amgen 36,995(b) 2,144,970 Andrx Group 12,800(b) 428,160 Barr Laboratories 23,300(b) 1,590,225 Baxter Intl 42,435 2,354,294 Becton, Dickinson & Co 11,700 429,273 Biogen 15,900(b) 845,085 Biomet 47,100 1,439,376 Bristol-Myers Squibb 19,800 930,600 Forest Laboratories 16,700(b) 1,327,984 Genzyme-General Division 30,000(b) 1,331,400 Gilead Sciences 8,600(b) 605,956 Guidant 16,800(b) 697,200 Johnson & Johnson 44,700 2,722,230 MedImmune 36,945(b) 1,523,242 Medtronic 88,216 3,929,141 Merck & Co 14,800 907,684 Pfizer 283,246 11,601,755 Stryker 20,368 1,252,632 ----------- Total 40,300,062 - ------------------------------------------------ HEALTH CARE SERVICES (3.1%) AdvancePCS 32,700(b) $1,043,784 Anthem 7,600(b) 441,560 Humana 27,200(b) 356,320 McKesson HBOC 10,200 359,550 UnitedHealth Group 44,348 3,214,787 ----------- Total 5,416,001 - ------------------------------------------------ HOUSEHOLD PRODUCTS (1.7%) Gillette 61,200 2,092,428 Procter & Gamble 5,400 457,866 Unilever 7,700(c) 448,756 ----------- Total 2,999,050 - ------------------------------------------------ INDUSTRIAL EQUIPMENT & SERVICES (1.5%) Illinois Tool Works 37,000 2,721,720 - ------------------------------------------------ INSURANCE (2.9%) ACE 36,947(c) 1,621,973 American Intl Group 37,000 2,736,890 Marsh & McLennan 7,736 816,535 ----------- Total 5,175,398 - ------------------------------------------------ LEISURE TIME & ENTERTAINMENT (3.3%) AOL Time Warner 96,679(b) 2,397,638 Harley-Davidson 23,975 1,228,959 Harrah's Entertainment 11,300(b) 456,972 Intl Game Technology 8,000(b) 540,160 Viacom Cl B 25,992(b) 1,209,928 ----------- Total 5,833,657 - ------------------------------------------------ MEDIA (2.7%) Clear Channel Communications 10,942(b) 510,116 Comcast Cl A 29,200(b) 989,004 Omnicom Group 27,946 2,614,069 USA Networks 18,500(b) 546,860 ----------- Total 4,660,049 - ------------------------------------------------ METALS (1.9%) Barrick Gold 50,900(c) 918,745 Newmont Mining 74,000 1,784,880 Placer Dome 51,700(c) 600,754 ----------- Total 3,304,379 - ------------------------------------------------ MULTI-INDUSTRY CONGLOMERATES (4.5%) Cendant 75,800(b) 1,319,678 General Electric 147,844 5,691,994 Xerox 92,300 896,233 ----------- Total 7,907,905 - ------------------------------------------------ RESTAURANTS & LODGING (0.2%) Marriott Intl Cl A 10,006 394,937 - ------------------------------------------------
See accompanying notes to investments in securities. 108
ISSUER SHARES VALUE(a) RETAIL (8.1%) AutoNation 29,600(b) $369,704 AutoZone 7,500(b) 497,700 Best Buy 14,826(b) 999,272 Costco Wholesale 55,500(b) 2,289,930 Gap 66,500 796,005 Home Depot 83,909 4,195,450 Target 47,300 1,981,870 Wal-Mart Stores 48,100 2,982,681 ----------- Total 14,112,612 - ------------------------------------------------ TEXTILES & APPAREL (0.5%) Nike Cl B 15,100 888,786 - ------------------------------------------------ TRANSPORTATION (0.6%) Union Pacific 17,400 1,055,658 - ------------------------------------------------ UTILITIES -- GAS (0.2%) Kinder Morgan 10,700 438,700 - ------------------------------------------------ UTILITIES -- TELEPHONE (2.2%) AT&T 209,000 3,247,860 Nextel Communications Cl A 22,100(b) 110,279 Qwest Communications Intl l62,900 547,230 ----------- Total 3,905,369 - ------------------------------------------------ TOTAL COMMON STOCKS (Cost: $178,950,173) $168,527,410 - ------------------------------------------------ SHORT-TERM SECURITIES (6.3%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCIES (3.9%) Federal Home Loan Bank Disc Nts 04-10-02 1.73% $600,000 $598,902 05-15-02 1.74 700,000 697,463 Federal Home Loan Mtge Corp Disc Nt 04-02-02 1.74 1,000,000 998,405 Federal Natl Mtge Assn Disc Nts 03-14-02 1.70 800,000 799,506 03-21-02 1.70 1,200,000 1,198,810 03-25-02 1.71 600,000 599,288 04-24-02 1.73 2,000,000 1,994,745 ---------- Total 6,887,119 - ------------------------------------------------ COMMERCIAL PAPER (2.4%) Duke Energy 03-01-02 1.90 4,200,000 4,199,778 - ------------------------------------------------ TOTAL SHORT-TERM SECURITIES (Cost: $11,087,279) $11,086,897 - ------------------------------------------------ TOTAL INVESTMENTS IN SECURITIES (Cost: $190,037,452)(d) $179,614,307 ================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of Feb. 28, 2002, the value of foreign securities represented 3.0% of net assets. (d) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $190,037,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 4,573,000 Unrealized depreciation (14,996,000) ------------------------------------------------------------------------- Net unrealized depreciation $(10,423,000) -------------------------------------------------------------------------
109 INVESTMENTS IN SECURITIES AXP VP - INTERNATIONAL FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (94.7%)(c) ISSUER SHARES VALUE(a) AUSTRALIA (3.3%) BANKS AND SAVINGS & LOANS (1.3%) Natl Australia Bank 772,650 $14,274,550 - ------------------------------------------------ METALS (2.0%) BHP Billiton 3,591,895 21,860,261 - ------------------------------------------------ FINLAND (4.6%) COMMUNICATIONS EQUIPMENT & SERVICES (3.4%) Nokia 1,745,758 37,102,693 - ------------------------------------------------ PAPER & PACKAGING (1.2%) Stora Enso 982,410 12,746,774 - ------------------------------------------------ FRANCE (15.0%) AUTOMOTIVE & RELATED (0.8%) PSA Peugeot Citroen 188,838 8,216,250 - ------------------------------------------------ BANKS AND SAVINGS & LOANS (3.3%) BNP Paribas 549,508 26,641,942 Societe Generale Cl A 173,879 10,287,728 ----------- Total 36,929,670 - ------------------------------------------------ BUILDING MATERIALS & CONSTRUCTION (2.5%) Compagnie de Saint-Gobain 120,984 18,784,889 Lafarge 99,686 8,579,728 ----------- Total 27,364,617 - ------------------------------------------------ ENERGY (3.2%) TotalFinaElf 234,731 34,496,900 - ------------------------------------------------ HOUSEHOLD PRODUCTS (1.1%) Aventis 158,767 11,776,348 - ------------------------------------------------ LEISURE TIME & ENTERTAINMENT (1.1%) Accor 326,239 11,979,255 - ------------------------------------------------ METALS (1.0%) Arcelor 799,992(b) 11,071,893 - ------------------------------------------------ MULTI-INDUSTRY CONGLOMERATES (1.4%) Vivendi Universal 383,615 14,892,399 - ------------------------------------------------ UTILITIES -- TELEPHONE (0.6%) France Telecom 241,582 6,363,091 - ------------------------------------------------ GERMANY (6.8%) AUTOMOTIVE & RELATED (0.5%) Bayerische Motoren Werke 142,864 5,258,218 - ------------------------------------------------ BANKS AND SAVINGS & LOANS (1.2%) Deutsche Bank 212,615 12,561,192 - ------------------------------------------------ CHEMICALS (0.7%) BASF 201,882 $7,779,677 - ------------------------------------------------ COMPUTERS & OFFICE EQUIPMENT (0.8%) SAP 62,708 8,570,305 - ------------------------------------------------ INSURANCE (2.3%) Allianz 81,826 18,317,737 Muenchener Rueckversicherungs- Gesellschaft 30,777 7,494,125 ----------- Total 25,811,862 - ------------------------------------------------ UTILITIES -- ELECTRIC (1.3%) E.On 168,570 8,253,021 RWE 179,359 6,438,542 ----------- Total 14,691,563 - ------------------------------------------------ ITALY (2.0%) ENERGY ENI 1,584,124 21,705,040 - ------------------------------------------------ JAPAN (15.1%) AUTOMOTIVE & RELATED (2.8%) Honda Motor 326,600 13,056,678 Nissan Motor 937,000 6,112,468 Toyota Motor 434,000 11,091,201 ----------- Total 30,260,347 - ------------------------------------------------ BANKS AND SAVINGS & LOANS (1.5%) Mitsui Fudosan 649,000 4,820,519 Orix 144,900 11,054,953 ----------- Total 15,875,472 - ------------------------------------------------ CHEMICALS (0.2%) Shin-Etsu Chemical 69,900 2,688,542 - ------------------------------------------------ COMMUNICATIONS EQUIPMENT & SERVICES (1.0%) NTT DoCoMo 1,081 11,228,022 - ------------------------------------------------ COMPUTERS & OFFICE EQUIPMENT (0.9%) Canon 268,000 9,392,266 - ------------------------------------------------ ELECTRONICS (2.1%) Hitachi 1,850,000 11,778,068 Nintendo 67,800 10,000,912 Sharp 92,000 1,099,944 ----------- Total 22,878,924 - ------------------------------------------------ FINANCIAL SERVICES (0.6%) Nomura Holdings 554,000 6,333,794 - ------------------------------------------------ HEALTH CARE (1.5%) Takeda Chemical Inds 412,000 16,717,056 - ------------------------------------------------ HOUSEHOLD PRODUCTS (0.5%) Kao 312,000 $5,863,478 - ------------------------------------------------ INDUSTRIAL EQUIPMENT & SERVICES (0.5%) Amada 1,152,000 5,405,985 - ------------------------------------------------ MEDIA (1.0%) Sony 244,100 11,090,065 - ------------------------------------------------ MULTI-INDUSTRY CONGLOMERATES (2.2%) Fuji Photo Film 184,000 5,802,204 Mitsubishi 806,000 5,595,173 Sumitomo Chemical 3,289,000 12,263,860 ----------- Total 23,661,237 - ------------------------------------------------ TRANSPORTATION (0.3%) East Japan Railway 885 3,372,688 - ------------------------------------------------ NETHERLANDS (4.3%) ENERGY (0.9%) Royal Dutch Petroleum 180,039 9,289,520 - ------------------------------------------------ FOOD (0.9%) Unilever 173,439 10,081,665 - ------------------------------------------------ INDUSTRIAL EQUIPMENT & SERVICES (1.8%) Koninklijke (Royal) Philips Electronics 759,138 19,830,969 - ------------------------------------------------ INSURANCE (0.7%) Aegon 354,107 7,706,575 - ------------------------------------------------ PORTUGAL (0.7%) UTILITIES -- TELEPHONE Portugal Telecom 1,096,849 7,732,514 - ------------------------------------------------ SINGAPORE (0.5%) BANKS AND SAVINGS & LOANS United Overseas Bank 717,000 5,440,417 - ------------------------------------------------ SPAIN (2.9%) BANKS AND SAVINGS & LOANS (1.2%) Banco Popular Espanol 105,383 3,719,178 Banco Santander Central Hispano 1,220,169 9,731,217 ----------- Total 13,450,395 - ------------------------------------------------ UTILITIES -- TELEPHONE (1.7%) Telefonica 1,586,072(b) 18,493,923 - ------------------------------------------------ SWITZERLAND (9.8%) BANKS AND SAVINGS & LOANS (2.0%) UBS 467,685 21,636,331 - ------------------------------------------------ ELECTRONICS (0.9%) STMicroelectronics 345,298 10,235,862 - ------------------------------------------------
See accompanying notes to investments in securities. 110
ISSUER SHARES VALUE(a) FOOD (1.5%) Nestle 74,434 $16,442,385 - ------------------------------------------------ HEALTH CARE (3.3%) Novartis 532,598 20,233,349 Roche Holding 206,151 14,484,031 ----------- Total 34,717,380 - ------------------------------------------------ INSURANCE (2.1%) Converium Holding 144,481(b) 6,874,800 Swiss Reinsurance 183,281 16,479,590 ----------- Total 23,354,390 - ------------------------------------------------ UNITED KINGDOM (29.7%) BANKS AND SAVINGS & LOANS (3.8%) HBOS 797,576 8,359,153 Lloyds TSB Group 917,978 8,829,034 Royal Bank of Scotland Group 983,750 24,099,310 ----------- Total 41,287,497 - ------------------------------------------------ BEVERAGES & TOBACCO (1.5%) Gallaher Group 1,167,947 8,214,288 Imperial Tobacco Group 642,955 8,521,031 ----------- Total 16,735,319 - ------------------------------------------------ BUILDING MATERIALS & CONSTRUCTION (0.5%) Invensys 4,396,129 5,969,166 - ------------------------------------------------ COMMUNICATIONS EQUIPMENT & SERVICES (2.2%) GlaxoSmithKline 1,006,146 24,534,107 - ------------------------------------------------ ENERGY (3.8%) BP 4,250,529 35,019,578 Shell Transport & Trading 898,594 6,253,175 ----------- Total 41,272,753 - ------------------------------------------------ FINANCIAL SERVICES (0.7%) HSBC Holdings 690,673 $7,546,455 - ------------------------------------------------ FOOD (0.9%) Compass Group 1,444,902 9,850,481 - ------------------------------------------------ INSURANCE (0.9%) CGNU 978,435 9,929,466 - ------------------------------------------------ MEDIA (1.6%) British Sky Broadcasting Group 1,738,194(b) 17,652,031 - ------------------------------------------------ METALS (1.9%) Rio Tinto 1,033,107 20,778,629 - ------------------------------------------------ MULTI-INDUSTRY CONGLOMERATES (1.2%) Rentokil Initial 3,429,726 12,940,047 - ------------------------------------------------ RETAIL (4.8%) Marks & Spencer 4,298,115 22,857,981 Signet Group 5,649,630 8,570,167 Tesco 5,550,590 19,783,889 ----------- Total 51,212,037 - ------------------------------------------------ UTILITIES -- ELECTRIC (1.9%) Innogy Holdings 3,447,891 12,496,529 Natl Grid Group Place 1,234,203 8,069,293 ----------- Total 20,565,822 - ------------------------------------------------ UTILITIES -- GAS (0.7%) Centrica 2,548,296 7,641,132 - ------------------------------------------------ UTILITIES -- TELEPHONE (3.3%) Vodafone Group 19,151,797 36,230,581 - ------------------------------------------------ TOTAL COMMON STOCKS (Cost: $1,063,850,065) $1,032,778,283 - ------------------------------------------------ SHORT-TERM SECURITIES (6.6%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCIES (6.4%) Federal Home Loan Bank Disc Nts 03-22-02 1.60% $8,400,000 $8,391,639 04-19-02 1.74 23,200,000 23,142,261 Federal Home Loan Mtge Corp Disc Nts 03-12-02 1.58 14,800,000 14,792,206 04-16-02 1.73 4,100,000 4,090,740 04-16-02 1.74 4,000,000 3,990,913 Federal Natl Mtge Assn Disc Nts 04-03-02 1.67 11,000,000 10,983,108 04-17-02 1.68 4,000,000 3,991,476 ----------- Total 69,382,343 - ------------------------------------------------ COMMERCIAL PAPER (0.2%) Nordea North America 04-02-02 1.68 2,100,000 2,096,343 - ------------------------------------------------ TOTAL SHORT-TERM SECURITIES (Cost: $71,483,522) $71,478,686 - ------------------------------------------------ TOTAL INVESTMENTS IN SECURITIES (Cost: $1,135,333,587)(d) $1,104,256,969 ================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing (c) Foreign security values are stated in U.S. dollars. (d) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $1,135,334,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 37,560,000 Unrealized depreciation (68,637,000) --------------------------------------------------------------------------- Net unrealized depreciation $(31,077,000) ---------------------------------------------------------------------------
111 INVESTMENTS IN SECURITIES AXP VP - MANAGED FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (73.9%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (0.8%) Goodrich 425,000 $12,686,250 United Technologies 150,000 10,942,500 ----------- Total 23,628,750 - ------------------------------------------------ AIRLINES (0.6%) Southwest Airlines 900,000 18,999,000 - ------------------------------------------------ AUTOMOTIVE & RELATED (0.7%) Tower Automotive 1,850,000(b) 21,275,000 - ------------------------------------------------ BANKS AND SAVINGS & LOANS (4.4%) Bank of America 600,000 38,370,000 Bank One 550,000 19,712,000 U.S. Bancorp 1,300,000 27,105,000 Washington Mutual 790,000 25,698,700 Wells Fargo 250,000 11,725,000 Zions Bancorp 300,000 15,855,000 ----------- Total 138,465,700 - ------------------------------------------------ BEVERAGES & TOBACCO (1.0%) Coca-Cola 675,400 32,007,206 - ------------------------------------------------ CHEMICALS (0.3%) Waste Management 400,000 10,524,000 - ------------------------------------------------ COMMUNICATIONS EQUIPMENT & SERVICES (3.1%) Fairchild Semiconductor Intl Cl A 350,000(b) 9,012,500 JDS Uniphase 1,000,000(b) 4,850,000 Nokia ADR Cl A 2,883,400(c) 59,888,218 PhoneTel Technologies 210,600(b) 8,951 Verizon Communications 500,000 23,400,000 ----------- Total 97,159,669 - ------------------------------------------------ COMPUTERS & OFFICE EQUIPMENT (7.9%) Cisco Systems 2,702,100(b) 38,558,967 Dell Computer 675,000(b) 16,665,750 EMC 600,000(b,n) 6,540,000 Intl Business Machines 225,000 22,077,000 Intuit 450,000(b) 17,050,500 Microsoft 1,500,000(b) 87,510,000 Oracle 1,950,000(b) 32,409,000 Siebel Systems 200,000(b) 5,552,000 Solectron 1,650,000(b) 13,645,500 Sun Microsystems 1,025,000(b) 8,722,750 ----------- Total 248,731,467 - ------------------------------------------------ ELECTRONICS (3.2%) American Power Conversion 900,000(b) 11,781,000 Applied Materials 150,000(b) 6,520,500 Intel 1,550,000 44,299,000 Maxim Integrated Products 250,000(b) 11,440,000 PMC-Sierra 500,000(b,n) 7,305,000 Texas Instruments 400,000 11,740,000 Xilinx 250,000(b) 8,980,000 ----------- Total 102,065,500 - ------------------------------------------------ ENERGY (4.5%) Apache 430,000 $22,682,500 ChevronTexaco 270,000 22,798,800 Exxon Mobil 850,000 35,105,000 Grant Prideco 1,619,800(b) 20,263,698 Murphy Oil 125,000 10,772,500 Phillips Petroleum 335,000 19,801,850 Valero Energy 265,000 11,349,950 ----------- Total 142,774,298 - ------------------------------------------------ ENERGY EQUIPMENT & SERVICES (0.7%) Schlumberger 275,000 16,007,750 Transocean Sedco Forex 250,000 7,002,500 ----------- Total 23,010,250 - ------------------------------------------------ FINANCIAL SERVICES (8.1%) Capital One Financial 275,000 13,549,250 Citigroup 2,000,133 90,506,017 Fannie Mae 300,000 23,475,000 Freddie Mac 150,000 9,561,000 MBNA 1,551,800 53,816,424 Merrill Lynch 150,000 7,192,500 Morgan Stanley, Dean Witter & Co 1,150,000 56,488,000 ----------- Total 254,588,191 - ------------------------------------------------ FOOD (1.3%) Aurora Foods 6,799(b,d) 28,556 ConAgra Foods 1,225,000 28,677,250 Heinz (HJ) 275,000 11,211,750 ----------- Total 39,917,556 - ------------------------------------------------ FURNITURE & APPLIANCES (0.4%) Leggett & Platt 450,000 11,542,500 - ------------------------------------------------ HEALTH CARE (9.2%) American Home Products 450,000 28,597,500 Baxter Intl 620,000 34,397,600 Biogen 150,000(b) 7,972,500 Genentech 175,000(b) 8,260,000 Johnson & Johnson 750,000 45,675,000 Laboratory Corp America Holdings 100,000(b) 8,148,000 Pfizer 2,535,050 103,835,647 Pharmacia 985,791 40,466,721 Schering-Plough 450,000 15,520,500 ----------- Total 292,873,468 - ------------------------------------------------ HEALTH CARE SERVICES (2.0%) AmerisourceBergen 200,000 13,540,000 Cardinal Health 375,000 24,783,750 HCA 300,000 12,219,000 UnitedHealth Group 150,000 10,873,500 ----------- Total 61,416,250 - ------------------------------------------------ HOUSEHOLD PRODUCTS (1.6%) Colgate-Palmolive 175,000 $9,796,500 Gillette 325,000 11,111,750 Procter & Gamble 330,000 27,980,700 ----------- Total 48,888,950 - ------------------------------------------------ INSURANCE (5.1%) ACE 520,000(c) 22,828,000 American Intl Group 517,650 38,290,571 Berkshire Hathaway Cl A 600(b) 43,800,000 Berkshire Hathaway Cl B 15,000(b) 36,375,000 MetLife 250,000 7,970,000 Progressive 75,000 11,685,000 ----------- Total 160,948,571 - ------------------------------------------------ LEISURE TIME & ENTERTAINMENT (2.2%) AOL Time Warner 1,295,000(b) 32,116,000 Disney (Walt) 800,000 18,400,000 Viacom Cl B 425,020(b) 19,784,681 ----------- Total 70,300,681 - ------------------------------------------------ MEDIA (1.7%) Clear Channel Communications 320,000(b) 14,918,400 USA Networks 920,000(b) 27,195,200 Washington Post Cl B 20,000 11,435,600 ----------- Total 53,549,200 - ------------------------------------------------ METALS (0.5%) Martin Marietta Materials 400,000 16,700,000 - ------------------------------------------------ MISCELLANEOUS (--%) Prime Succession Holdings 87,115(b) 121,961 - ------------------------------------------------ MULTI-INDUSTRY CONGLOMERATES (3.1%) Cendant 1,108,000(b) 19,290,280 General Electric 1,475,000 56,787,500 Semiconductor HOLDRs Trust 175,000(b,m) 7,047,250 Tyco Intl 450,000(c) 13,095,000 ----------- Total 96,220,030 - ------------------------------------------------ RESTAURANTS & LODGING (1.2%) Extended Stay America 2,200,000(b) 37,136,000 - ------------------------------------------------ RETAIL (6.2%) Best Buy 140,000(b) 9,436,000 CVS 200,000 5,464,000 Home Depot 1,475,000 73,750,000 Lowe's Compaines 230,000 10,407,500 Safeway 650,000(b) 27,937,000 Wal-Mart Stores 1,100,000 68,211,000 ----------- Total 195,205,500 - ------------------------------------------------
See accompanying notes to investments in securities. 112
ISSUER SHARES VALUE(a) UTILITIES -- ELECTRIC (1.4%) Calpine 1,050,000(b) $7,717,500 Dominion Resources 450,000 26,226,000 Duke Energy 320,000 11,296,000 ----------- Total 45,239,500 - ------------------------------------------------ UTILITIES -- GAS (1.1%) Dynegy Cl A 700,000 17,899,000 El Paso 400,000 15,632,000 ----------- Total 33,531,000 - ------------------------------------------------ UTILITIES -- TELEPHONE (1.6%) Liberty Media Cl A 1,700,000(b) 21,760,000 SBC Communications 540,000 20,433,600 Vodafone AirTouch ADR 440,000(c) 8,360,000 ----------- Total 50,553,600 - ------------------------------------------------ TOTAL COMMON STOCKS (Cost: $2,187,291,750) $2,327,373,798 - ------------------------------------------------ PREFERRED STOCKS & OTHER (0.7%) ISSUER SHARES VALUE(a) Asia Pulp & Paper Warrants 1,300(b,c,d,k) $-- Century Maintenance Supply 13.25% Pay-in-kind Series C 16,485(h) 1,483,650 CSC Holdings 11.75% Cm Series H 39,159 4,043,167 Duke Energy 8.25% Cv 19,300 479,219 Ford Motor Capital Trust 6.50% Cm Cv 200,000 10,566,000 General Motors 5.25% Cv Series B 39,500 1,028,975 Intermedia Communications 13.50% Pay-in-kind Series B 898(h) 862,489 Mexico Value Rights 1,000(b) 200 Paxson Communications 13.25% Pay-in-kind 8(h) 6,746 Pegasus Satellite 12.75% Cm Pay-in-kind Series B 2,305(h) 1,382,878 Prudential Financial 6.75% Cv 12,600 684,180 XO Communications 14.00% Cm Pay-in-kind 879(h) 9 - ------------------------------------------------ TOTAL PREFERRED STOCKS & OTHER (Cost: $20,924,860) $20,537,513 - ------------------------------------------------ BONDS (32.3%) ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT GOVERNMENT OBLIGATIONS (2.9%) Federal Republic of Brazil (U.S. Dollar) 04-15-14 8.00% $2,462,820(c) $2,004,120 Resolution Funding Corp Zero Coupon 07-15-20 6.56 5,000,000(e) 1,618,400 11-30-03 3.00 13,000,000 13,033,007 11-15-16 7.50 20,000,000 24,034,400 02-15-20 8.50 25,000,000 33,273,499 U.S. Treasury Zero Coupon 11-15-21 6.26 35,000,000(e) 11,085,200 United Mexican States (U.S. Dollar) 03-12-08 8.63 4,250,000(c) 4,692,000 (U.S. Dollar) Series A 12-31-19 6.25 2,000,000(c) 1,925,000 ---------- Total 91,665,626 - ------------------------------------------------ MORTGAGE-BACKED SECURITIES (7.7%) Federal Home Loan Mtge Corp 08-01-24 8.00 1,396,238 1,489,898 11-01-25 6.50 4,150,116 4,251,836 Collateralized Mtge Obligation 02-15-16 6.00 15,479,900 15,438,778 11-15-16 5.50 14,368,000 14,265,263 01-15-17 5.50 6,425,000 6,170,768 Federal Natl Mtge Assn 06-01-10 6.50 3,206,154 3,348,117 08-01-11 8.50 1,818,951 1,935,922 04-01-14 5.50 21,492,731 21,666,266 04-01-22 8.00 1,072,398 1,147,932 04-01-23 8.50 1,365,560 1,488,425 05-01-23 6.50 1,191,037 1,221,662 05-01-24 6.00 3,664,059 3,692,756 06-01-24 9.00 777,064 856,123 02-01-25 8.50 523,732 568,809 05-01-25 8.50 593,561 644,648 09-01-25 6.50 2,622,087 2,683,888 11-01-25 7.50 2,142,020 2,250,501 03-01-26 7.00 3,365,857 3,484,118 03-01-28 6.00 10,700,385 10,709,381 04-01-28 6.00 13,710,576 13,722,103 10-01-28 6.00 13,489,163 13,500,504 10-01-28 7.00 12,630,619 13,058,617 11-01-28 6.00 20,732,103 20,749,533 03-01-29 6.50 4,472,785 4,559,429 05-01-29 6.50 14,675,899 14,959,002 08-01-29 6.50 15,178,020 15,470,809 11-01-29 6.50 10,261,909 10,459,865 03-01-31 6.00 5,000,000(l) 4,968,750 01-01-32 7.00 10,038,284(l) 10,354,393 Collateralized Mtge Obligation 03-25-24 6.50 6,014,231 6,013,863 Govt Natl Mtge Assn 12-15-08 7.00 5,304,121 5,574,864 05-15-24 7.00 9,975,656 10,383,130 ----------- Total 241,089,953 - ------------------------------------------------ AEROSPACE & DEFENSE (0.5%) Alliant Techsystems Company Guaranty 05-15-11 8.50% $1,650,000 $1,765,500 L-3 Communications Sr Sub Nts Series B 05-01-07 10.38 2,440,000 2,586,400 Northrop Grumman 03-01-06 7.00 3,750,000 3,927,233 Systems 2001 Asset Trust 09-15-13 6.66 7,665,572(d) 7,896,305 ---------- Total 16,175,438 - ------------------------------------------------ AIRLINES (1.2%) Continental Airlines Series 1974B 01-02-17 6.90 4,762,699 4,310,174 Series 1996A 10-15-13 6.94 3,902,252 3,763,996 Series 1998A 09-15-17 6.65 5,497,873 5,182,016 Delta Air Lines 09-18-11 7.11 8,000,000 8,240,797 Southwest Airlines 11-01-06 5.50 7,000,000 7,000,280 US Airways (MBIA Insured) 03-20-21 7.08 5,989,592(g) 6,119,119 Wilmington Trust Sub Nts 05-01-08 6.63 3,200,000 3,188,640 ---------- Total 37,805,022 - ------------------------------------------------ AUTOMOTIVE & RELATED (1.0%) Advance Stores Sr Sub Nts 04-15-08 10.25 335,000(d) 352,588 Aftermarket Technology Sr Sub Nts Series D 08-01-04 12.00 1,125,000 1,150,875 ArvinMeritor 03-01-12 8.75 6,150,000 6,315,312 DaimlerChrysler North America Holding Company Guaranty 01-15-12 7.30 10,000,000 10,300,840 Dana 08-15-11 9.00 1,700,000 1,556,656 Ford Motor Credit 10-28-09 7.38 5,000,000 5,053,900 06-15-10 7.88 2,000,000 2,076,820 02-01-11 7.38 4,000,000 4,033,220 Lear Company Guaranty Series B 05-15-09 8.11 1,100,000 1,135,750 ---------- Total 31,975,961 - ------------------------------------------------
See accompanying notes to investments in securities. 113
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT BANKS AND SAVINGS & LOANS (1.4%) Bank of America 05-16-05 7.88% $7,000,000 $7,721,441 Bank United Medium-term Notes Series A 03-15-09 8.00 3,500,000 3,809,785 BB&T Sub Nts 08-01-11 6.50 4,250,000 4,366,943 Capital One Bank 05-15-08 6.70 3,300,000 3,001,020 Sr Nts 06-15-05 8.25 7,000,000 6,700,029 Provident Trust Company Guaranty 04-15-28 8.29 5,500,000 4,878,302 Union Planters Bank Sub Nts 03-15-08 6.50 10,000,000 10,040,680 Union Planters Capital Company Guaranty 12-15-26 8.20 2,600,000 2,463,864 ---------- Total 42,982,064 - ------------------------------------------------ BEVERAGES & TOBACCO (0.0%) Constellation Brands Sr Sub Nts Series B 01-15-12 8.13 1,200,000 1,245,000 - ------------------------------------------------ BUILDING MATERIALS & CONSTRUCTION (0.6%) Collins & Aikman Floor Cover Sr Sub Nts 02-15-10 9.75 205,000(d) 211,663 D.R. Horton Sr Sub Nts 03-15-11 9.38 500,000 513,750 Louisiana Pacific Sr Nts 11-15-08 10.88 380,000 381,900 Sr Sub Nts 08-15-05 8.50 1,200,000 1,204,351 Masco 05-03-04 6.00 7,000,000 7,155,400 Nortek Sr Nts Series B 03-15-07 9.25 1,200,000 1,237,500 Pulte Homes Company Guaranty 08-01-11 7.88 4,000,000 4,053,216 Schuler Homes Company Guaranty 07-15-09 9.38 1,500,000 1,590,000 WCI Communities Company Guaranty 02-15-11 10.63 1,600,000 1,712,000 ---------- Total 18,059,780 - ------------------------------------------------ CHEMICALS (0.5%) Airgas Company Guaranty 10-01-11 9.13% $1,050,000 $1,102,500 Allied Waste North America Company Guaranty Series B 04-01-08 8.88 1,000,000 1,032,500 08-01-09 10.00 1,450,000 1,475,375 Equistar Chemical/Funding Company Guaranty 09-01-08 10.13 2,000,000 2,000,000 Georgia Gulf 11-15-05 7.63 500,000 510,423 IMC Global Company Guaranty Series B 06-01-08 10.88 1,010,000 1,100,900 Lyondell Chemical 12-15-08 9.50 1,455,000(d) 1,462,275 Noveon Company Guaranty Series B 02-28-11 11.00 1,200,000 1,267,500 Resolution Performance Sr Sub Nts 11-15-10 13.50 1,825,000 2,044,000 Waste Management Sr Nts 10-01-07 7.13 4,500,000 4,618,035 ---------- Total 16,613,508 - ------------------------------------------------ COMMUNICATIONS EQUIPMENT & SERVICES (1.7%) AT&T Wireless Services Sr Nts 03-01-11 7.88 7,000,000 7,277,242 Brocade Communications Cv 01-01-07 2.00 590,000(d) 501,500 Celcaribe Sr Nts 03-15-04 14.50 804,000 434,160 Cingular Wireless 12-15-31 7.13 5,000,000(d) 5,101,430 Comverse Technology Cv 12-01-05 1.50 1,000,000 760,000 Deutsche Telekom Intl Finance (U.S. Dollar) 06-15-10 8.00 8,250,000(c) 8,928,785 EchoStar DBS Sr Nts 02-01-09 9.38 1,500,000 1,541,250 Fairpoint Communications Sr Sub Nts Series B 05-01-08 9.50 1,000,000 860,000 NATG Holdings LLC/Orius Capital Company Guaranty Series B 02-01-10 12.75 825,000(b) 24,750 Nextel Communications Sr Nts 02-01-11 9.50% $1,535,000 $944,025 Price Communications Wireless Company Guaranty Series B 12-15-06 9.13 1,725,000 1,742,250 Telefonica Europe (U.S. Dollar) Company Guaranty 09-15-10 7.75 12,000,000(c) 12,917,040 Verizon Global Funding 12-01-05 6.75 5,000,000 5,307,300 12-01-10 7.25 5,000,000 5,360,950 Western Wireless Sr Sub Nts 02-01-07 10.50 500,000 420,000 ---------- Total 52,120,682 - ------------------------------------------------ COMPUTER SOFTWARE & SERVICES (--%) Extreme Networks Cv 12-01-06 3.50 520,000(d) 359,450 Wind River Systems Cv 12-15-06 3.75 240,000(d) 203,400 ---------- Total 562,850 - ------------------------------------------------ COMPUTERS & OFFICE EQUIPMENT (--%) Acxiom Cv 02-15-09 3.75 450,000(d) 465,188 Adaptec Cv 03-05-07 3.00 490,000(d) 490,000 Emulex Cv 02-01-07 1.75 150,000(d) 136,125 ---------- Total 1,091,313 - ------------------------------------------------ ELECTRONICS (0.2%) Celestica (U.S. Dollar) Zero Coupon Cv 08-01-20 3.98 2,700,000(c,e) 1,134,000 Kulicke & Soffa Inds Cv 12-15-06 4.75 530,000 516,088 RF Micro Devices Cv 08-15-05 3.75 930,000 757,950 Solectron Zero Coupon Cv 11-20-20 4.03 2,870,000(e) 1,302,262 STMicroelectronics (U.S. Dollar) Zero Coupon Cv 11-16-10 4.11 1,150,000(c,d,e) 761,875
See accompanying notes to investments in securities. 114
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT Triquint Semiconductor Cv Sub Nts 03-01-07 4.00% $800,000 $578,000 Veeco Instruments Cv 12-21-08 4.13 660,000(d) 603,075 ---------- Total 5,653,250 - ------------------------------------------------ ENERGY (1.0%) Anadarko Finance Company Guaranty Series B 05-01-11 6.75 6,000,000 6,233,640 Calpine Canada Energy Finance (U.S. Dollar) Company Guaranty 05-01-08 8.50 4,250,000(c) 3,060,064 Conoco Funding Company Guaranty 10-15-11 6.35 7,000,000 7,227,163 Devon Energy Cv 08-15-08 4.90 575,000 565,656 El Paso Energy Partners Company Guaranty Series B 06-01-11 8.50 650,000 663,000 Forest Oil Sr Nts 06-15-08 8.00 795,000 804,938 Hanover Equipment Trust Sr Nts 09-01-08 8.50 625,000(d) 631,250 09-01-11 8.75 625,000(d) 628,125 Luscar Coal (U.S. Dollar) Sr Nts 10-15-11 9.75 1,260,000(c,d) 1,337,175 Phillips Petroleum 05-25-05 8.50 4,000,000 4,462,880 05-25-10 8.75 5,000,000 5,906,685 Westport Resources Company Guaranty 11-01-11 8.25 295,000(d) 295,738 ---------- Total 31,816,314 - ------------------------------------------------ ENERGY EQUIPMENT & SERVICES (0.2%) Global Marine 09-01-07 7.13 4,500,000 4,739,535 Key Energy Services Sr Nts 03-01-08 8.38 905,000 918,575 Nabors Inds Zero Coupon Cv 06-20-20 2.42 1,300,000(e) 827,125 ---------- Total 6,485,235 - ------------------------------------------------ FINANCIAL SERVICES (1.7%) Countrywide Home Loan Company Guaranty 06-15-04 6.85 8,000,000 8,477,568 Credit Suisse First Boston USA 01-15-12 6.50% $7,000,000 $7,141,904 E*TRADE Group Cv 02-01-07 6.00 700,000 534,618 GMAC 09-15-11 6.88 10,000,000 9,937,800 Household Finance 10-15-11 6.38 13,200,000 12,719,520 Indah Kiat Finance Mauritius (U.S. Dollar) Company Guaranty 07-01-07 10.00 535,000(b,c) 101,650 LaBranche Sr Nts 08-15-04 9.50 2,140,000 2,273,836 Sr Sub Nts 03-02-07 12.00 480,000 552,000 Morgan Stanley, Dean Witter & Co 06-15-05 7.75 7,000,000 7,658,924 Swiss Re America Holdings Cv 11-21-21 3.25 500,000(d) 465,000 Travelers Group Sr Nts 01-15-06 6.75 4,000,000 4,267,040 ---------- Total 54,129,860 - ------------------------------------------------ FOOD (0.2%) Del Monte Company Guaranty Series B 05-15-11 9.25 750,000 789,375 Kellogg Series B 04-01-11 6.60 4,000,000 4,180,880 RAB Enterprises Company Guaranty 05-01-05 10.50 985,000 344,750 ---------- Total 5,315,005 - ------------------------------------------------ FURNITURE & APPLIANCES (0.1%) Falcon Products Company Guaranty Series B 06-15-09 11.38 1,720,000 1,530,800 Interface Company Guaranty 04-01-08 7.30 1,560,000 1,427,400 Sr Nts 02-01-10 10.38 60,000(d) 62,400 ---------- Total 3,020,600 - ------------------------------------------------ HEALTH CARE (0.1%) Allergan Zero Coupon Cv 11-01-20 2.50 800,000(e) 495,000 Enzon Cv 07-01-08 4.50 510,000 441,150 Invitrogen Cv 12-15-06 2.25% $530,000(d) $456,463 Laboratory Corp of America Holdings Zero Coupon Cv 09-11-21 1.90 740,000(d,e) 520,775 Quest Diagnostic Cv 11-30-21 1.75 500,000 529,375 ---------- Total 2,442,763 - ------------------------------------------------ HEALTH CARE SERVICES (0.2%) Charles River Laboratories Cv 02-01-22 3.50 510,000(d) 502,350 Clarent Hospital Sr Nts 08-15-05 11.50 733,000(j) 733,000 Coventry Health Care Sr Nts 02-15-12 8.13 450,000(d) 461,250 Hanger Orthopedic Group Sr Nts 02-15-09 10.38 225,000(d) 231,750 Insight Healthcare Services Sr Sub Nts 11-01-11 9.88 250,000(d) 257,500 Omnicare Company Guaranty Series B 03-15-11 8.13 866,000 913,630 Paracelsus Healthcare Sr Sub Nts 08-15-06 10.00 2,000,000(b,k) -- Triad Hospitals Holdings Company Guaranty Series B 05-15-09 11.00 2,530,000 2,833,600 Vanguard Health Systems Company Guaranty 08-01-11 9.75 1,125,000 1,175,625 ---------- Total 7,108,705 - ------------------------------------------------ HOUSEHOLD PRODUCTS (--%) Revlon Consumer Products Sr Nts 12-01-05 12.00 800,000(d) 768,000 - ------------------------------------------------ INDUSTRIAL EQUIPMENT & SERVICES (0.1%) Motors & Gears Sr Nts Series D 11-15-06 10.75 1,460,000 1,379,700 Terex Company Guaranty Series D 04-01-08 8.88 1,425,000 1,439,250 ---------- Total 2,818,950 - ------------------------------------------------
See accompanying notes to investments in securities. 115
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT INSURANCE (0.8%) American General Institute Capital Company Guaranty Series A 12-01-45 7.57% $10,000,000(d) $10,610,620 American Intl Group Zero Coupon Cv 11-09-31 2.10 1,100,000(e) 675,125 Americo Life Sr Sub Nts 06-01-05 9.25 2,500,000 2,493,750 Executive Risk Capital Company Guaranty Series B 02-01-27 8.68 3,000,000 3,116,283 New England Mutual 02-15-24 7.88 2,000,000(d) 2,121,780 Principal Mutual 03-01-44 8.00 2,500,000(d) 2,408,905 Zurich Capital Trust I Company Guaranty 06-01-37 8.38 3,750,000(d) 3,776,010 ---------- Total 25,202,473 - ------------------------------------------------ LEISURE TIME & ENTERTAINMENT (0.7%) AMC Entertainment Sr Sub Nts 03-15-09 9.50 720,000 676,800 02-01-12 9.88 275,000(d) 263,313 Ameristar Casinos Company Guaranty 02-15-09 10.75 450,000 497,250 Choctaw Resort Development Enterprises Sr Nts 04-01-09 9.25 1,475,000 1,519,250 Coast Hotels & Casino Company Guaranty 04-01-09 9.50 1,925,000 2,035,688 Hammons (JQ) Hotels 1st Mtge 02-15-04 8.88 940,000 935,300 Harrahs Operating Company Guaranty 02-01-11 8.00 7,000,000 7,451,051 HMH Properties Company Guaranty Series A 08-01-05 7.88 1,700,000 1,683,000 MGM Mirage 02-06-08 6.88 1,780,000 1,710,740 Company Guaranty 06-01-07 9.75 825,000 894,094 Six Flags Sr Nts 04-01-06 9.25 1,200,000 1,257,000 02-01-10 8.88 1,200,000(d,j) 1,197,000 Station Casinos Sr Nts 02-15-08 8.38% $1,000,000 $1,032,500 United Artists Theatre Series 1995A 07-01-15 9.30 1,670,537 1,369,840 ----------- Total 22,522,826 - ------------------------------------------------ MEDIA (1.9%) Adelphia Communications Sr Nts 11-01-06 10.25 2,050,000 2,111,500 Zero Coupon Sr Nts Pay-in-kind Series B 02-15-04 3.33 475,000(e,h) 477,375 American Media Operation Sr Sub Nts 05-01-09 10.25 880,000(d) 896,500 Belo (AH) 11-01-08 8.00 1,900,000 1,971,250 Charter Communications Holdings LLC/Capital Sr Nts 10-01-09 10.75 2,000,000 2,000,000 11-15-09 9.63 565,000 542,400 01-15-10 10.25 550,000 536,250 Zero Coupon Sr Disc Nts 01-15-12 5.96 900,000(d,e) 490,500 Coaxial Communications/Phoenix Company Guaranty 08-15-06 10.00 1,000,000 1,000,000 Comcast Cable Communications 11-15-08 6.20 6,100,000 6,003,199 Sr Nts 01-30-11 6.75 3,000,000 2,991,000 Corus Entertainment (U.S. Dollar) Sr Sub Nts 03-01-12 8.75 445,000(c,d) 455,057 Cox Enterprises 06-15-09 7.38 10,000,000(d) 9,903,300 CSC Holdings Sr Nts Series B 04-01-11 7.63 550,000 535,971 Cumulus Media Company Guaranty 07-01-08 10.38 825,000 874,500 Harcourt General 08-01-27 7.20 5,000,000 4,793,750 MDC (U.S. Dollar) Sr Sub Nts 12-01-06 10.50 2,000,000(c) 1,540,000 Pegasus Media & Communications Series B 07-01-05 12.50 200,000 180,000 Quebecor Media (U.S. Dollar) Sr Nts 07-15-11 11.13 1,000,000(c) 1,075,000 Regional Independent Medical (U.S. Dollar) Sr Nts 07-01-08 10.50% $550,000(c) $566,500 Rogers Cablesystems (U.S. Dollar) Company Guaranty 12-01-07 10.00 1,500,000(c) 1,590,000 12-01-15 11.00 1,350,000(c) 1,495,125 Rogers Communications (U.S. Dollar) Sr Nts 01-15-06 9.13 173,000(c) 169,973 Salem Communication Holding Company Guaranty Series B 07-01-11 9.00 975,000 1,014,000 Sinclair Broadcast Group Sr Sub Nts 12-15-11 8.75 755,000(d) 792,750 Telemundo Holdings Zero Coupon Sr Disc Nts Series D 08-15-03 11.50 1,450,000(f) 1,341,250 Time Warner Companies 02-01-24 7.57 2,900,000 2,931,668 Time Warner Entertainment Sr Nts 07-15-33 8.38 10,000,000 11,092,499 ---------- Total 59,371,317 - ------------------------------------------------ METALS (0.1%) AK Steel Sr Nts 12-15-06 9.13 1,600,000 1,664,000 Compass Minerals Group Sr Sub Nts 08-15-11 10.00 225,000(d) 236,250 Great Lakes Carbon Company Guaranty Pay-in-kind Series B 05-15-08 10.25 265,000(h) 159,000 Imexsa Export Trust (U.S. Dollar) 05-31-03 10.13 822,568(c,d) 304,350 WCI Steel Sr Nts Series B 12-01-04 10.00 270,000 124,200 ---------- Total 2,487,800 - ------------------------------------------------ MISCELLANEOUS (0.6%) EOP Operating LP Sr Nts 07-15-11 7.00 8,000,000 8,245,832 Eott Energy Partners LP/Energy Finance Company Guaranty 10-01-09 11.00 800,000 664,000 GT Group Telecom (U.S. Dollar) 06-30-08 9.89 1,900,000(c) 1,235,000
See accompanying notes to investments in securities. 116
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT ISG Resources 04-15-08 10.00% $1,765,000 $1,562,025 Meritage Company Guaranty 06-01-11 9.75 1,615,000 1,703,825 Nationwide Credit Sr Nts Series A 01-15-08 10.25 2,500,000(b) 743,750 NSM Steel Company Guaranty 02-01-06 12.00 1,522,095(b,d) 474,589 Omega Cabinets Sr Sub Nts 06-15-07 10.50 1,980,000 2,079,000 Outsourcing Solutions Sr Sub Nts Series B 11-01-06 11.00 1,075,000 908,375 Prime Succession Holding Cv Pay-in-kind 08-29-04 14.25 61,863(h) 46,397 ---------- Total 17,662,793 - ------------------------------------------------ MULTI-INDUSTRY CONGLOMERATES (0.1%) Jordan Inds Sr Nts Series D 08-01-07 10.38 1,780,000 1,032,400 Tyco Intl Group (U.S. Dollar) 10-15-11 6.38 1,500,000(c) 1,348,463 ---------- Total 2,380,863 - ------------------------------------------------ PAPER & PACKAGING (1.0%) Abitibi-Consolidated (U.S. Dollar) 08-01-05 8.30 8,000,000(c) 8,360,239 Berry Plastics Company Guaranty Series B 07-15-07 11.00 900,000 927,000 Sr Sub Nts 04-15-04 12.25 600,000 604,500 Crown Paper Sr Sub Nts 09-01-05 11.00 1,000,000(b) 10,000 Domtar (U.S. Dollar) 10-15-11 7.88 5,100,000(c) 5,475,707 Graphic Packaging Sr Sub Nts 02-15-12 8.63 1,385,000(d) 1,433,475 Intl Paper 07-08-05 8.13 6,000,000 6,506,160 Packaging Corp of America Company Guaranty 04-01-09 9.63 1,195,000 1,317,488 Printpack Sr Sub Nts Series B 08-15-06 10.63 500,000 525,000 Quno (U.S. Dollar) Sr Nts 05-15-05 9.13% $2,500,000(c) $2,582,955 Riverwood Intl Company Guaranty 04-01-06 10.25 1,000,000 1,032,500 08-01-07 10.63 775,000 825,375 Silgan Holdings Sr Sub Deb 06-01-09 9.00 1,600,000 1,656,000 Stone Container Sr Nts 02-01-08 9.25 1,200,000 1,287,000 ---------- Total 32,543,399 - ------------------------------------------------ REAL ESTATE INVESTMENT TRUST (0.1%) MeriStar Hospitality Company Guaranty 01-15-11 9.13 1,400,000 1,393,000 MeriStar Hospitality Operating Partnership/Finance Sr Nts 06-15-09 10.50 75,000(d) 78,750 RFS Partnership LP Company Guaranty 03-01-12 9.75 350,000(d) 357,000 ---------- Total 1,828,750 - ------------------------------------------------ RESTAURANTS & LODGING (0.1%) Extended Stay America Sr Sub Nts 06-15-11 9.88 1,380,000 1,442,100 Park Place Entertainment Sr Sub Nts 05-15-11 8.13 1,550,000 1,575,188 Prime Hospitality Sr Sub Nts Series B 04-01-07 9.75 1,625,000 1,690,000 ---------- Total 4,707,288 - ------------------------------------------------ RETAIL (0.6%) Albertson's Sr Nts 02-15-11 7.50 7,000,000 7,624,379 Best Buy Cv 01-15-22 2.25 530,000(d) 504,825 Flooring America Company Guaranty 10-15-07 9.25 1,849,000(b) 1,849 Kroger Company Guaranty 03-01-08 7.45 6,075,000 6,482,815 Pathmark Stores Sr Sub Nts 02-01-12 8.75 1,300,000(d) 1,347,125 Rite Aid 01-15-07 7.13% $800,000 $532,000 Wal-Mart CRAVE Trust 07-17-06 7.00 2,694,382(d) 2,832,361 ---------- Total 19,325,354 - ------------------------------------------------ TRANSPORTATION (0.5%) Enterprise Rent-A-Car USA Finance 01-15-11 8.00 5,000,000(d) 5,328,850 Greater Beijing First Expressways (U.S. Dollar) Sr Nts 06-15-04 9.25 5,120,000(b,c) 2,508,800 Interpool 08-01-07 7.20 175,000 160,125 08-01-07 7.35 2,100,000 1,932,000 Union Pacific 01-15-11 6.65 5,300,000 5,478,637 Zhuhai Highway (U.S. Dollar) Sub Nts 07-01-08 11.50 2,500,000(b,c,d) 625,000 ---------- Total 16,033,412 - ------------------------------------------------ UTILITIES -- ELECTRIC (1.6%) Arizona Public Service 1st Mtge Sale Lease-backed Obligation 12-30-15 8.00 1,800,000 1,843,200 Cleveland Electric Illuminating 1st Mtge Series B 05-15-05 9.50 9,000,000 9,095,760 Duke Capital Sr Nts 10-01-09 7.50 4,500,000 4,886,595 Exelon Sr Nts 05-01-11 6.75 9,000,000 9,285,750 Ipalco Enterprises 11-14-11 7.63 6,000,000(d) 5,557,536 Mirant Americas Generation Sr Nts 05-01-11 8.30 8,000,000 6,800,000 NRG Energy Sr Nts 07-15-06 6.75 4,000,000 3,848,200 04-01-11 7.75 4,000,000 3,850,000 Public Service Electric & Gas 1st & Ref Mtge (AMBAC Insured) 01-01-16 6.75 2,600,000(g) 2,608,294 Salton Sea Funding Series C 05-30-10 7.84 1,325,000 1,271,232 Sithe Independence Funding Series A 12-30-13 9.00 1,500,000 1,578,945 ---------- Total 50,625,512 - ------------------------------------------------
See accompanying notes to investments in securities. 117
ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT UTILITIES-- GAS (1.0%) Columbia Energy Group Series E 11-28-10 7.32% $7,000,000 $6,531,350 Dynegy-Roseton Danskamme Company Guaranty Series A 11-08-10 7.27 7,000,000 6,478,010 El Paso Sr Nts 05-15-09 6.75 1,900,000 1,858,086 12-15-12 7.38 3,000,000 2,994,660 08-01-31 7.80 2,000,000 1,971,220 Southern Natural Gas 03-01-32 8.00 2,000,000 2,003,818 Southwest Gas 02-15-11 8.38 6,000,000 6,123,960 Williams Companies 09-01-11 7.13 2,250,000 2,071,485 ---------- Total 30,032,589 - ------------------------------------------------ UTILITIES -- TELEPHONE (1.9%) 360 Communications 04-01-09 7.60 3,000,000 3,121,500 Adelphia Business Solutions Sr Nts Series B 09-01-04 12.25 1,570,000 188,400 AT&T 11-15-11 7.30 9,000,000(d) 9,019,170 CenturyTel Sr Nts 10-15-12 7.75 4,000,000 4,078,920 Citizens Communications 08-15-08 7.63 6,000,000(d) 6,059,820 Dobson/Sygnet Communications Sr Nts 12-15-08 12.25% $1,975,000 $1,856,500 France Telecom (U.S. Dollar) 03-01-11 7.75 8,000,000(c,o) 8,371,904 03-01-31 8.50 3,500,000(c,o) 3,841,446 Sprint Capital Company Guaranty 01-30-11 7.63 2,250,000 2,175,635 Vodafone Group Company Guaranty 05-01-08 6.65 10,000,000 10,295,800 (U.S. Dollar) 02-15-10 7.75 5,000,000(c) 5,524,000 WorldCom 05-15-31 8.25 7,000,000 6,728,687 ---------- Total 61,261,782 - ------------------------------------------------ TOTAL BONDS (Cost: $1,005,062,737) $1,016,932,037 - ------------------------------------------------ SHORT-TERM SECURITIES (2.9%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCIES (2.2%) Federal Home Loan Bank Disc Nt 03-22-02 1.60% $3,100,000 $3,096,914 Federal Home Loan Mtge Corp Disc Nts 03-12-02 1.59 10,000,000 9,994,700 03-21-02 1.75 10,000,000 9,989,791 04-16-02 1.73 13,600,000 13,569,283 Federal Natl Mtge Assn Disc Nts 03-07-02 1.79 1,300,000 1,299,592 03-25-02 1.71 19,000,000 18,977,438 04-24-02 1.70 13,800,000 13,765,720 ---------- Total 70,693,438 - ------------------------------------------------ COMMERCIAL PAPER (0.7%) Commerzbank U.S. Finance 03-11-02 1.80% $8,000,000 $7,995,600 Emerson Electric 03-07-02 1.78 6,400,000(i) 6,397,785 Gannett 03-18-02 1.77 2,900,000(i) 2,897,434 Proctor & Gamble 03-18-02 1.70 2,100,000(i) 2,098,215 Salomon Smith Barney 04-11-02 1.79 2,200,000 2,195,406 ---------- Total 21,584,440 - ------------------------------------------------ TOTAL SHORT-TERM SECURITIES (Cost: $92,280,732) $92,277,878 - ------------------------------------------------ TOTAL INVESTMENTS IN SECURITIES (Cost: $3,305,560,079)(p) $3,457,121,226 ================================================
See accompanying notes to investments in securities. 118 NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. For long-term debt securities, item identified is in default as to payment of interest and/or principal. (c) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the currency indicated. As of Feb. 28, 2002, the value of foreign securities represented 6.0% of net assets. (d) 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. (e) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. (f) 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. (g) The following abbreviations are used in the portfolio security description(s) to identify the insurer of the issue: AMBAC -- American Municipal Bond Association Corporation MBIA -- Municipal Bond Investors Assurance (h) Pay-in-kind securities are securities in which the issuer makes interest or dividend payments in cash or in additional securities. The securities usually have the same terms as the original holdings. (i) 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. (j) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at Feb. 28, 2002, is as follows:
SECURITY ACQUISITION COST DATES ----------------------------------------------------------------------------------------- Clarent Hospital 11.50% Sr Nts 2005 11-19-01 $1,367,314 Six Flags* 8.88% Sr Nts 2010 01-31-02 1,195,728
* Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. (k) Negligible market value. (l) At Feb. 28, 2002, the cost of securities purchased, including interest purchased, on a when-issued basis was $15,290,084. (m) Represents ownership in Semiconductor HOLDRs Trust. The Semiconductor HOLDRs Trust holds shares of common stock issued by 20 specified companies generally considered to be involved in various segments of the semiconductor industry. (n) At Feb. 28, 2002, securities valued at $4,377,250 were held to cover open call options written as follows (see Note 8 to the financial statements):
ISSUER CONTRACTS EXERCISE PRICE EXPIRATION DATE VALUE(A) ------------------------------------------------------------------------------------------------------- EMC 1,000 $15 March 2002 $2,500 PMC-Sierra 2,250 25 March 2002 5,625 ------------------------------------------------------------------------------------------------------- Total value $8,125 -------------------------------------------------------------------------------------------------------
(o) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on Feb. 28, 2002 (p) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $3,305,560,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 427,476,000 Unrealized depreciation (275,915,000) -------------------------------------------------------------------------------------------- Net unrealized appreciation $ 151,561,000 --------------------------------------------------------------------------------------------
119 INVESTMENTS IN SECURITIES AXP VP - NEW DIMENSIONS FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (97.0%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (0.4%) United Technologies 236,000 $17,216,200 - -------------------------------------------------------------------------------- AIRLINES (1.9%) Southwest Airlines 3,387,425 71,508,542 - -------------------------------------------------------------------------------- BANKS AND SAVINGS & loans (5.0%) Bank of America 1,273,000 81,408,350 USA Education 636,600 59,044,650 Wells Fargo 1,092,700 51,247,630 -------------- Total 191,700,630 - -------------------------------------------------------------------------------- BEVERAGES & TOBACCO (3.0%) Anheuser-Busch 364,300 18,524,655 PepsiCo 196,500 9,923,250 Philip Morris 1,665,700 87,715,762 -------------- Total 116,163,667 - -------------------------------------------------------------------------------- CHEMICALS (1.0%) Air Products & Chemicals 493,900 23,954,150 Waste Management 545,800 14,359,998 -------------- Total 38,314,148 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (2.1%) Motorola 450,500 5,856,500 Nokia ADR Cl A 564,600(c) 11,726,742 Verizon Communications 1,309,700 61,293,960 -------------- Total 78,877,202 - -------------------------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (12.4%) Automatic Data Processing 1,190,200 62,735,442 Brocade Communications Systems 251,000(b) 5,514,470 Cisco Systems 3,098,100(b) 44,209,887 Dell Computer 359,000(b) 8,863,710 EMC 572,100(b) 6,235,890 Fiserv 161,500(b) 6,902,510 Intl Business Machines 1,091,500 107,097,980 Microsoft 2,182,800(b) 127,344,553 Oracle 1,455,800(b) 24,195,396 SAP ADR 181,800(c) 6,212,106 State Street 1,182,400 59,947,680 SunGard Data Systems 233,300(b) 7,201,971 VERITAS Software 210,000(b) 7,452,900 -------------- Total 473,914,495 - -------------------------------------------------------------------------------- ELECTRONICS (6.7%) Applied Materials 905,500(b) 39,362,085 Broadcom Cl A 245,000(b) 7,509,250 Intel 2,910,400 83,179,232 Maxim Integrated Products 995,700(b) 45,563,232 Taiwan Semiconductor Mfg ADR 569,700(b,c) 9,257,625 Texas Instruments 2,460,200 72,206,870 -------------- Total 257,078,294 - -------------------------------------------------------------------------------- ENERGY (5.0%) ChevronTexaco 1,000,500 84,482,220 Exxon Mobil 2,173,296 89,757,125 Murphy Oil 181,900 15,676,142 -------------- Total 189,915,487 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (0.9%) Schlumberger 613,000 35,682,730 - -------------------------------------------------------------------------------- FINANCIAL SERVICES (9.0%) Citigroup 3,460,433 156,584,593 Fannie Mae 727,500 56,926,875 MBNA 1,465,350 50,818,338 Morgan Stanley, Dean Witter & Co 1,636,480 80,383,898 -------------- Total 344,713,704 - -------------------------------------------------------------------------------- FOOD (0.4%) General Mills 363,800 16,818,474 - -------------------------------------------------------------------------------- HEALTH CARE (8.8%) Amgen 501,900(b) 29,100,162 Bristol-Myers Squibb 826,400 38,840,800 Genentech 364,100(b) 17,185,520 Johnson & Johnson 1,354,350 82,479,915 Medtronic 1,277,200 56,886,488 Pfizer 2,728,750 111,769,600 -------------- Total 336,262,485 - -------------------------------------------------------------------------------- HEALTH CARE SERVICES (5.3%) Cardinal Health 1,290,725 85,304,015 HCA 1,570,100 63,950,173 UnitedHealth Group 760,300 55,114,147 -------------- Total 204,368,335 - -------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS (1.2%) Gillette 269,000 9,197,110 Procter & Gamble 453,400 38,443,786 -------------- Total 47,640,896 - -------------------------------------------------------------------------------- INDEXES (1.3%) Nasdaq-100 Index Tracking 1,455,300(b) 49,116,375 - -------------------------------------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (2.4%) Caterpillar 909,600 50,491,896 Illinois Tool Works 545,700 40,141,692 -------------- Total 90,633,588 - -------------------------------------------------------------------------------- INSURANCE (4.2%) American Intl Group 1,382,460 102,260,566 Marsh & McLennan 561,000 59,213,550 -------------- Total 161,474,116 - -------------------------------------------------------------------------------- LEISURE TIME & ENTERTAINMENT (4.4%) AOL Time Warner 1,845,000(b) 45,756,000 Intl Game Technology 179,400(b) 12,113,088 Mattel 545,900 10,344,805 Viacom Cl B 2,182,717(b) 101,605,476 -------------- Total 169,819,369 - -------------------------------------------------------------------------------- MEDIA (2.2%) eBay 363,400(b) 18,914,970 Gannett 389,586 29,678,661 Grupo Televisa ADR 231,700(b,c) 9,986,270 USA Networks 873,100(b) 25,808,836 -------------- Total 84,388,737 - -------------------------------------------------------------------------------- METALS (0.8%) Alcoa 818,000 30,732,260 - -------------------------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (6.5%) Cendant 352,200(b) 6,131,802 General Electric 3,638,700 140,089,950 Minnesota Mining & Mfg 727,700 85,817,661 Robert Half Intl 669,000(b) 17,400,690 -------------- Total 249,440,103 - -------------------------------------------------------------------------------- PAPER & PACKAGING (0.3%) Intl Paper 237,200 10,377,500 - -------------------------------------------------------------------------------- RESTAURANTS & LODGING (1.0%) Marriott Intl Cl A 962,700 37,997,769 - -------------------------------------------------------------------------------- RETAIL (9.7%) Best Buy 272,700(b) 18,379,980 Costco Wholesale 1,368,200(b) 56,451,932 Home Depot 909,250 45,462,500 Kohl's 91,000(b,e) 6,157,970 Safeway 385,300(b) 16,560,194 Target 1,819,400 76,232,860 Wal-Mart Stores 2,183,300 135,386,433 Walgreen 436,300 17,556,712 -------------- Total 372,188,581 - -------------------------------------------------------------------------------- UTILITIES -- ELECTRIC (1.1%) Dominion Resources 727,600 42,404,528 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $3,363,956,142) $3,718,748,215 - --------------------------------------------------------------------------------
See accompanying notes to investments in securities. 120
PREFERRED STOCKS (0.6%) ISSUER SHARES VALUE(a) Duke Energy 8.25% Cv 322,500 $8,007,675 TXU 8.75% Cv 250,900 13,423,150 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost: $20,873,057) $21,430,825 - --------------------------------------------------------------------------------
OPTION PURCHASED (--%) ISSUER CONTRACTS EXERCISE EXPIRATION VALUE(a) PRICE DATE PUT Intel 1,800 $30 April 2002 $522,000 - -------------------------------------------------------------------------------- TOTAL OPTION PURCHASED (Cost: $418,248) $522,000 - --------------------------------------------------------------------------------
SHORT-TERM SECURITIES (3.6%)(e) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCIES (2.9%) Federal Home Loan Bank Disc Nts 03-06-02 1.70% $3,100,000 $3,099,179 03-15-02 1.57 9,700,000 9,693,654 04-05-02 1.74 10,000,000 9,982,473 04-12-02 1.73 500,000 498,953 Federal Home Loan Mtge Corp Disc Nts 03-14-02 1.72 14,400,000 14,390,369 04-09-02 1.71 25,500,000 25,451,550 04-23-02 1.75 11,300,000 11,270,422 Federal Natl Mtge Assn Disc Nts 03-12-02 1.65 2,100,000 2,098,843 04-03-02 1.72 2,200,000 2,196,622 04-24-02 1.73 30,000,000 29,921,178 ------------ Total 108,603,243 - -------------------------------------------------------------------------------- COMMERCIAL PAPER (0.7%) Emerson Electric 03-07-02 1.78% $6,400,000(d) $6,397,785 Gannett 03-04-02 1.78 800,000(d) 799,842 03-11-02 1.76 3,100,000(d) 3,098,333 03-18-02 1.77 5,600,000(d) 5,595,044 Salomon Smith Barney 03-18-02 1.78 4,000,000 3,996,440 03-21-02 1.78 3,600,000 3,596,262 Unilever Capital 04-18-02 1.77 4,500,000(d) 4,489,159 ----------- Total 27,972,865 - -------------------------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $136,582,084) $136,576,108 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $3,521,829,531)(f) $3,877,277,148 ================================================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of Feb. 28, 2002, the value of foreign securities represented 0.1% of net assets. (d) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board. (e) At Feb. 28, 2002, securities valued at $3,383,500 were held to cover open call options written as follows (see Note 8 to the financial statements):
ISSUER CONTRACTS EXERCISE PRICE EXPIRATION DATE VALUE(a) ---------------------------------------------------------------------------------------------------------------------------- Kohl's 500 $75 April 2002 $38,750
At Feb. 28, 2002, cash or short-term securities were designated to cover open put options written as follows (see Note 8 to the financial statements):
ISSUER CONTRACTS EXERCISE PRICE EXPIRATION DATE VALUE(a) - --------------------------------------------------------------------------------------------------------------------------------- Intl Game Technology 200 $60 April 2002 $29,000
(f) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $3,521,830,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 533,852,000 Unrealized depreciation (178,405,000) - -------------------------------------------------------------------------------- Net unrealized appreciation $ 355,447,000 - --------------------------------------------------------------------------------
121 INVESTMENTS IN SECURITIES AXP VP - PARTNERS SMALL CAP VALUE FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (82.4%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (0.6%) Curtiss-Wright 2,700 $167,400 - -------------------------------------------------------------------------------- AUTOMOTIVE & RELATED (1.3%) Stattec Security 1,200(b) 51,324 Wescast Inds Cl A 10,500(c) 325,710 -------------- Total 377,034 - -------------------------------------------------------------------------------- BUILDING MATERIALS & CONSTRUCTION (2.5%) Alexander & Baldwin 17,800 440,728 Florida Rock Inds 2,600 108,706 Simpson Mfg 3,200(b) 172,800 -------------- Total 722,234 - -------------------------------------------------------------------------------- CHEMICALS (0.9%) Albemarle 10,700 253,697 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (1.8%) Fairchild Semiconductor Intl Cl A 1,900(b) 48,925 Peco II 33,400(b) 175,350 REMEC 8,600(b) 67,252 Somera Communications 29,200(b) 235,060 -------------- Total 526,587 - -------------------------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (2.8%) American Management Systems 5,900(b) 109,386 Answerthink 19,700(b) 96,530 Cognex 1,300(b) 30,043 Lightbridge 17,300(b) 169,194 PC-Tel 21,300(b) 171,252 Perot Systems Cl A 2,600(b) 43,810 SPSS 6,400(b) 112,576 Syntel 7,200(b) 94,680 -------------- Total 827,471 - -------------------------------------------------------------------------------- ELECTRONICS (17.1%) Advanced Power Technology 30,200(b) 332,200 American Power Conversion 51,700(b) 676,753 Analogic 5,000 200,500 Avnet 5,200 136,552 Bel Fuse Cl A 13,500 309,960 Credence Systems 38,000(b) 595,840 CyberOptics 5,200(b) 54,600 Electro Scientific Inds 5,300(b) 169,388 Electroglas 19,600(b) 302,232 Entegris 28,100(b) 289,992 KEMET 40,800(b) 664,632 Nu Horizons Electronics 20,800(b) 181,792 Park Electrochemical 12,200 308,050 Technitrol 2,200 47,916 Tektronix 8,400(b) 200,844 TriQuint Semiconductor 27,500(b) 248,875 TTM Technologies 33,700(b) 296,223 -------------- Total 5,016,349 - -------------------------------------------------------------------------------- ENERGY (3.2%) Brown (Tom) 18,000(b) 483,840 St. Mary Land & Exploration 12,700 275,590 Stone Energy 4,400(b) 162,228 -------------- Total 921,658 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (2.7%) Dril-Quip 1,200(b) 28,128 Helmerich & Payne 5,100 172,074 Patterson-UTI Energy 3,000(b) 73,410 Precision Drilling 17,800(b,c) 523,320 -------------- Total 796,932 - -------------------------------------------------------------------------------- FINANCIAL SERVICES (7.9%) Brookfield Properties 27,700(c) 506,356 Catellus Development 10,000(b) 189,000 E*TRADE Group 33,700(b) 272,970 Forest City Enterprises Cl A 10,000 396,200 Jones Lang LaSalle 7,000(b) 129,360 Southwest Securities Group 19,200 369,600 Trammell Crow 21,500(b) 258,430 Wellsford Real Properties 10,000(b) 198,500 -------------- Total 2,320,416 - -------------------------------------------------------------------------------- FURNITURE & APPLIANCES (0.6%) Thomas Inds 6,800 179,656 - -------------------------------------------------------------------------------- HEALTH CARE (4.2%) Antigenics 11,100(b) 144,744 Arrow Intl 1,000 45,730 Coherent 14,400(b) 408,672 Lexicon Genetics 12,100(b) 100,551 Theragenics 40,100(b) 355,286 VISX 10,700(b) 160,821 -------------- Total 1,215,804 - -------------------------------------------------------------------------------- HEALTH CARE SERVICES (0.1%) Celera Genomics Group-Applera 1,600(b) 32,320 - -------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS (1.4%) Energizer Holdings 13,400(b) 292,522 Ocular Sciences 4,400(b) 115,720 -------------- Total 408,242 - -------------------------------------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (4.8%) Alamo Group 9,700 144,336 Arctic Cat 800 14,280 Blyth Inds 8,100 173,097 Denison Intl ADR 12,600(b,c) 219,366 Lincoln Electric Holdings 14,300 371,371 Tecumseh Products Cl A 3,000 150,600 Trinity Inds 15,000 328,950 -------------- Total 1,402,000 - -------------------------------------------------------------------------------- INSURANCE (11.3%) AmerUs Group 9,200 314,456 Argonaut Group 4,700 94,235 Clark/Bardes 1,800(b) 45,792 CNA Surety 13,300 190,190 First American 15,000 296,850 Leucadia Natl 13,900 441,325 MONY Group 11,200 442,176 Phoenix Companies 25,000(b) 447,500 PMA Capital Cl A 12,200 248,880 ProAssurance 8,400(b) 136,500 Protective Life 7,300 226,738 Reinsurance Group of America 10,200 302,940 Stewart Information Services 5,000(b) 85,000 Trenwick Group 3,000(c) 24,600 -------------- Total 3,297,182 - -------------------------------------------------------------------------------- LEISURE TIME & ENTERTAINMENT (1.0%) Callaway Golf 9,700 180,517 Concord Camera 4,800(b) 32,832 Thor Inds 300 15,195 Topps 7,200(b) 69,048 -------------- Total 297,592 - -------------------------------------------------------------------------------- METALS (0.7%) AngloGold ADR 1,800(c) 42,300 Gold Fields ADR 17,600(c) 153,648 -------------- Total 195,948 - -------------------------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (5.1%) Brascan Cl A 35,800(c) 703,470 Cornell Companies 9,400(b) 119,286 Learning Tree Intl 500(b) 10,925 Spherion 28,300(b) 263,190 Wesco Financial 410 127,510 Woodward Governor 4,800 272,736 -------------- Total 1,497,117 - -------------------------------------------------------------------------------- PAPER & PACKAGING (0.8%) TimberWest Forest 27,500(b,c) 226,325 - -------------------------------------------------------------------------------- RESTAURANTS & LODGING (0.2%) RARE Hospitality Intl 2,700(b) 72,603 - -------------------------------------------------------------------------------- RETAIL (7.5%) Abercrombie & Fitch 1,800(b) 47,952 Big Lots 31,500 396,900 Buckle 14,000(b) 338,100 Charming Shoppes 6,800(b) 51,272 Claire's Stores 3,700 70,152 Galyan's Trading 29,400(b) 363,972 InterTAN 19,300(b,c) 230,828 Pier 1 Imports 3,300 65,901 Stein Mart 41,900(b) 384,223 Wilsons The Leather Experts 22,200(b) 250,638 -------------- Total 2,199,938 - --------------------------------------------------------------------------------
See accompanying notes to investments in securities. 122
ISSUER SHARES VALUE(a) TEXTILES & APPAREL (3.8%) Cutter & Buck 10,900(b) $75,210 Maxwell Shoes Cl A 11,800(b) 190,570 Nautica Enterprises 33,600(b) 454,608 Oakley 6,400(b) 103,552 Steven Madden 13,200(b) 198,000 Wolverine World Wide 5,000 77,400 -------------- Total 1,099,340 - -------------------------------------------------------------------------------- TRANSPORTATION (0.1%) EGL 3,900(b) 41,613 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $22,362,942) $24,095,458 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $22,362,942)(d) $24,095,458 ================================================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of Feb. 28, 2002, the value of foreign securities represented 10.1% of net assets. (d) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $22,363,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $2,101,000 Unrealized depreciation (369,000) --------------------------------------------------------------------------- Net unrealized appreciation $1,732,000 ---------------------------------------------------------------------------
123 INVESTMENTS IN SECURITIES AXP VP - S&P 500 INDEX FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (100.0%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (1.5%) Boeing 7,051 $324,064 General Dynamics 1,699 154,405 Goodrich 858 25,611 Lockheed Martin 3,709 209,225 Northrop Grumman 930 99,547 Raytheon 3,291 127,329 Rockwell Collins 1,546 35,945 Rockwell Intl 1,547 30,553 United Technologies 3,945 287,788 -------------- Total 1,294,467 - -------------------------------------------------------------------------------- AIRLINES (0.2%) AMR 1,300(b) 33,930 Delta Air Lines 1,037 35,777 Southwest Airlines 6,444 136,033 US Airways Group 573(b) 3,048 -------------- Total 208,788 - -------------------------------------------------------------------------------- AUTOMOTIVE & RELATED (1.1%) Cooper Tire & Rubber 611 11,682 Cummins 347 14,428 Dana 1,250 23,250 Delphi Automotive Systems 4,717 75,425 Eaton 583 47,071 Ford Motor 15,246 226,860 General Motors 4,677 246,946 Genuine Parts 1,458 53,261 Goodyear Tire & Rubber 1,373 37,758 Johnson Controls 735 65,239 Navistar Intl 500 21,260 PACCAR 646 46,467 Snap-On 487 16,777 TRW 1,063 53,416 Visteon 1,097 15,555 -------------- Total 955,395 - -------------------------------------------------------------------------------- BANKS AND SAVINGS & LOANS (6.7%) AmSouth Bancorporation 3,068 64,888 Bank of America 13,246 847,083 Bank of New York 6,201 233,406 Bank One 9,817 351,841 BB&T 3,815 141,193 Charter One Financial 1,892 57,630 Comerica 1,499 89,715 Fifth Third Bancorp 4,865 310,192 FleetBoston Financial 8,799 293,711 Golden West Financial 1,327 84,596 Huntington Bancshares 2,114 39,003 J.P. Morgan Chase 16,611 485,872 KeyCorp 3,565 89,410 Marshall & Ilsley 888 54,159 Mellon Financial 3,939 141,804 Natl City 5,102 145,509 Northern Trust 1,870 101,204 PNC Financial Services Group 2,392 131,416 Regions Financial 1,915 62,238 SouthTrust 2,885 72,904 SunTrust Banks 2,432 152,705 Synovus Financial 2,452 71,844 U.S. Bancorp 16,425 342,461 Union Planters 1,156 53,823 USA Education 1,320 122,430 Wachovia 11,458 380,749 Washington Mutual 8,109 263,786 Wells Fargo 14,273 669,405 Zions Bancorp 772 40,800 -------------- Total 5,895,777 - -------------------------------------------------------------------------------- BEVERAGES & TOBACCO (3.8%) Anheuser-Busch 7,445 378,578 Brown-Forman Cl B 574 39,003 Coca-Cola 20,937 992,204 Coca-Cola Enterprises 3,744 65,258 Coors (Adolph) Cl B 304 18,395 Fortune Brands 1,251 56,921 Pepsi Bottling Group 2,390 59,392 PepsiCo 14,730 743,865 Philip Morris 18,242 960,624 UST 1,392 48,525 -------------- Total 3,362,765 - -------------------------------------------------------------------------------- BUILDING MATERIALS & CONSTRUCTION (0.6%) Centex 511 29,863 Fluor 674 25,551 Georgia-Pacific 1,934 49,607 KB HOME 423 18,464 Louisiana-Pacific 879 8,869 Masco 3,864 108,463 Plum Creek Timber 1,537 47,570 Pulte Homes 496 25,762 Sherwin-Williams 1,300 34,346 Temple-Inland 415 23,111 Vulcan Materials 852 41,177 Weyerhaeuser 1,821 112,575 -------------- Total 525,358 - -------------------------------------------------------------------------------- CHEMICALS (1.5%) Air Products & Chemicals 1,914 92,829 Allied Waste Inds 1,658(b) 21,637 Dow Chemical 7,593 237,508 du Pont (EI) de Nemours 8,631 404,275 Eastman Chemical 649 28,556 Ecolab 1,076 50,389 Engelhard 1,092 31,417 Great Lakes Chemical 422 9,938 Hercules 913(b) 11,413 Millipore 401 20,932 Pall 1,028 20,067 PPG Inds 1,418 72,814 Praxair 1,354 78,397 Rohm & Haas 1,855 71,251 Sigma-Aldrich 617 28,129 Waste Management 5,286 139,075 -------------- Total 1,318,627 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (2.6%) ADC Telecommunications 6,646(b) 23,926 Andrew Corp 685(b) 11,515 AT&T Wireless Services 22,754(b) 229,588 Avaya 2,415(b) 12,920 CIENA 2,754(b) 21,371 JDS Uniphase 11,178(b) 54,213 Lucent Technologies 28,744 160,679 Motorola 18,739 243,607 Nortel Networks 26,948(c) 136,626 QUALCOMM 6,436(b) 213,997 Scientific-Atlanta 1,315 29,417 Tellabs 3,451(b) 35,407 Verizon Communications 22,854 1,069,567 -------------- Total 2,242,833 - -------------------------------------------------------------------------------- COMPUTER SOFTWARE & SERVICES (--%) Novell 3,049(b) 12,470 - -------------------------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (11.3%) Adobe Systems 1,997 72,651 Apple Computer 2,953(b) 64,080 Autodesk 461 20,362 Automatic Data Processing 5,192 273,670 BMC Software 2,056(b) 32,999 Cisco Systems 61,754(b) 881,229 Citrix Systems 1,580(b) 23,969 Compaq Computer 14,262 144,617 Computer Associates Intl 4,849 78,942 Computer Sciences 1,434(b) 68,129 Compuware 3,130(b) 35,713 Comverse Technology 1,561(b) 24,430 Concord EFS 4,241(b) 127,357 Convergys 1,448(b) 44,150 Dell Computer 21,974(b) 542,538 Deluxe 558 26,449 Electronic Data Systems 3,991 235,589 EMC 18,653(b) 203,318 Equifax 1,219 36,570 First Data 3,212 261,842 Fiserv 1,576(b) 67,358 Gateway 2,727(b) 12,544 Hewlett-Packard 16,334 328,640 Intl Business Machines 14,504 1,423,131 Intuit 1,785(b) 67,634
See accompanying notes to investments in securities. 124
ISSUER SHARES VALUE(a) Lexmark Intl Cl A 1,094(b) $54,383 Mercury Interactive 696(b) 23,580 Microsoft 45,344(b) 2,645,368 NCR 817(b) 34,151 Network Appliance 2,788(b) 44,580 NVIDIA 1,217(b) 62,079 Oracle 46,825(b) 778,231 Palm 4,782(b) 14,442 Parametric Technology 2,210(b) 16,266 PeopleSoft 2,550(b) 74,129 Pitney Bowes 2,053 85,651 QLogic 780(b) 29,055 Rational Software 1,634(b) 30,327 SABRE Holdings Cl A 1,124(b) 49,467 Sanmina-SCI 4,385(b) 44,508 Sapient 1,063(b) 4,667 Siebel Systems 3,893(b) 108,070 Solectron 6,909(b) 57,137 State Street 2,740 138,918 Sun Microsystems 27,292(b) 232,255 Unisys 2,686(b) 29,815 VERITAS Software 3,375(b) 119,779 Yahoo! 4,796(b) 69,350 -------------- Total 9,844,119 - -------------------------------------------------------------------------------- ELECTRONICS (4.4%) Advanced Micro Devices 2,861(b) 38,624 Agilent Technologies 3,878(b) 120,800 Altera 3,243(b) 61,844 American Power Conversion 1,646(b) 21,546 Analog Devices 3,046(b) 113,342 Applied Materials 6,873(b) 298,769 Applied Micro Circuits 2,511(b) 19,310 Broadcom Cl A 2,209(b) 67,706 Conexant Systems 2,145(b) 21,965 Corning 7,962 53,584 Intel 56,509 1,615,028 Jabil Circuit 1,659(b) 30,940 KLA-Tencor 1,560(b) 90,340 Linear Technology 2,665 98,152 LSI Logic 3,088(b) 46,289 Maxim Integrated Products 2,719(b) 124,421 Micron Technology 5,046(b) 162,229 Molex 1,647 48,751 Mykrolis --(b) 4 Natl Semiconductor 1,481(b) 37,247 Novellus Systems 1,206(b) 51,364 PerkinElmer 1,037 23,851 PMC-Sierra 1,389(b) 20,293 Power-One 663(b) 4,661 Symbol Technologies 1,922 16,587 Tektronix 774(b) 18,506 Teradyne 1,522(b) 51,002 Texas Instruments 14,584 428,040 Thomas & Betts 489 9,340 Vitesse Semiconductor 1,603(b) 11,253 Xilinx 2,812(b) 101,007 -------------- Total 3,806,795 - -------------------------------------------------------------------------------- ENERGY (5.9%) Amerada Hess 747 51,745 Anadarko Petroleum 2,094 109,097 Apache 1,154 60,874 Ashland 581 25,210 Burlington Resources 1,690 63,510 ChevronTexaco 8,982 758,440 Conoco 5,266 145,658 Devon Energy 1,308 57,133 EOG Resources 972 34,205 Exxon Mobil 57,591 2,378,507 FirstEnergy 2,506 91,720 Kerr-McGee 843 46,609 Marathon Oil 2,605 71,638 Occidental Petroleum 3,145 84,412 Phillips Petroleum 3,210 189,743 Royal Dutch Petroleum ADR 17,883(c) 918,650 Sunoco 661 25,462 Unocal 2,054 73,800 -------------- Total 5,186,413 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (0.9%) Baker Hughes 2,828 99,857 Halliburton 3,615 59,503 McDermott Intl 519(b) 7,432 Nabors Inds 1,186(b) 42,067 Noble Drilling 1,113(b) 39,211 Progress Energy 1,842 82,411 Reliant Energy 2,510 52,208 Rowan Companies 789(b) 14,715 Schlumberger 4,847 282,144 Transocean Sedco Forex 2,684 75,179 -------------- Total 754,727 - -------------------------------------------------------------------------------- FINANCIAL SERVICES (6.4%) American Express 11,233 409,443 Bear Stearns Companies 792 43,631 Capital One Financial 1,809 89,129 Citigroup 43,315 1,960,004 Countrywide Credit Inds 1,029 42,240 Equity Office Properties Trust 3,488 100,106 Fannie Mae 8,411 658,161 Franklin Resources 2,196 89,729 Freddie Mac 5,852 373,006 H&R Block 1,545 77,945 Household Intl 3,854 198,481 Lehman Brothers Holdings 2,007 113,396 MBNA 7,172 248,725 Merrill Lynch 7,126 341,692 MGIC Investment 902 60,542 Morgan Stanley, Dean Witter & Co 9,234 453,574 Paychex 3,151 116,429 Providian Financial 2,392 9,305 Schwab (Charles) 11,506 150,038 Stilwell Financial 1,863 42,495 T. Rowe Price Group 1,039 41,363 -------------- Total 5,619,434 - -------------------------------------------------------------------------------- FOOD (1.3%) Archer-Daniels-Midland 5,568 77,117 Campbell Soup 3,449 92,226 ConAgra Foods 4,523 105,883 General Mills 3,067 141,787 Heinz (HJ) 2,948 120,190 Hershey Foods 1,142 80,682 Kellogg 3,422 118,230 Sara Lee 6,595 137,967 SUPERVALU 1,122 29,116 Sysco 5,612 165,948 Wrigley (Wm) Jr 1,896 106,252 -------------- Total 1,175,398 - -------------------------------------------------------------------------------- FURNITURE & APPLIANCES (0.2%) Black & Decker 671 32,544 Leggett & Platt 1,654 42,424 Maytag 646 25,795 Stanley Works 718 36,209 Whirlpool 563 42,281 -------------- Total 179,253 - -------------------------------------------------------------------------------- HEALTH CARE (13.0%) Abbott Laboratories 13,071 739,165 Allergan 1,104 71,583 American Home Products 11,107 705,850 Amgen 8,803(b) 510,398 Applera-Applied Biosystem Group 1,784 40,318 Bard (CR) 430 23,392 Bausch & Lomb 451 17,129 Baxter Intl 4,971 275,791 Becton, Dickinson & Co 2,177 79,874 Biogen 1,245(b) 66,172 Biomet 2,270 69,371 Boston Scientific 3,396(b) 75,935 Bristol-Myers Squibb 16,290 765,630 Chiron 1,592(b) 69,125 Forest Laboratories 1,498(b) 119,121 Genzyme-General Division 1,787(b) 79,307 Guidant 2,566(b) 106,489 Immunex 4,586(b) 131,802 Johnson & Johnson 25,826 1,572,803 King Pharmaceuticals 2,068(b) 64,232 Lilly (Eli) 9,465 716,784 MedImmune 2,084(b) 85,923 Medtronic 10,193 453,996 Merck & Co 19,151 1,174,531 Pfizer 52,929 2,167,972 Pharmacia 10,856 445,639 Schering-Plough 12,327 425,158 St. Jude Medical 733(b) 57,394 Stryker 1,655 101,783 Waters 1,101(b) 34,406 Watson Pharmaceuticals 896(b) 26,235 Zimmer Holdings 1,632(b) 58,360 -------------- Total 11,331,668 - --------------------------------------------------------------------------------
See accompanying notes to investments in securities. 125
ISSUER SHARES VALUE(a) HEALTH CARE SERVICES (1.4%) Aetna 1,206 $42,282 AmerisourceBergen 866 58,628 Cardinal Health 3,796 250,878 HCA 4,336 176,605 Health Management Associates Cl A 2,064(b) 36,430 Healthsouth 3,302(b) 39,327 Humana 1,420(b) 18,602 IMS Health 2,488 49,760 Manor Care 861(b) 16,144 McKesson HBOC 2,408 84,882 Quintiles Transnational 1,007(b) 16,726 Tenet Healthcare 2,741(b) 158,293 UnitedHealth Group 2,625 190,286 Wellpoint Health Networks 608(b) 73,945 -------------- Total 1,212,788 - -------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS (2.7%) Alberto-Culver Cl B 477 24,837 Avon Products 1,989 102,811 Clorox 1,958 85,741 Colgate-Palmolive 4,645 260,027 Gillette 8,885 303,778 Intl Flavors/Fragrances 798 27,491 Kimberly-Clark 4,422 276,817 Newell Rubbermaid 2,245 69,887 Procter & Gamble 10,908 924,890 Tupperware 489 9,868 Unilever 4,813(c) 280,502 -------------- Total 2,366,649 - -------------------------------------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (0.8%) Caterpillar 2,890 160,424 Cintas 1,429 63,290 Cooper Inds 788 27,856 Deere & Co 1,977 94,758 Illinois Tool Works 2,565 188,681 Ingersoll-Rand Cl A 1,414 70,700 Parker-Hannifin 987 49,172 Thermo Electron 1,496(b) 30,444 -------------- Total 685,325 - -------------------------------------------------------------------------------- INSURANCE (4.4%) ACE 2,185(c) 95,922 AFLAC 4,396 112,977 Allstate 6,003 210,225 Ambac Financial Group 888 55,100 American Intl Group 21,995 1,626,970 Aon 2,267 78,506 Chubb 1,430 107,450 CIGNA 1,218 109,255 Cincinnati Financial 1,360 54,686 Conseco 2,902(b) 10,883 Hartford Financial Services Group 2,064 138,288 Jefferson-Pilot 1,267 64,072 John Hancock Financial Services 2,515 96,601 Lincoln Natl 1,595 81,680 Loews 1,612 94,028 Marsh & McLennan 2,313 244,137 MBIA 1,249 73,004 MetLife 6,102 194,532 Progressive 617 96,129 SAFECO 1,075 36,496 St. Paul Companies 1,746 85,379 Torchmark 1,045 41,999 UnumProvident 2,038 57,716 XL Capital Cl A 1,117(c) 106,405 -------------- Total 3,872,440 - -------------------------------------------------------------------------------- LEISURE TIME & ENTERTAINMENT (2.8%) AOL Time Warner 37,269(b) 924,270 Brunswick 738 19,919 Carnival 4,935 134,676 Disney (Walt) 17,164 394,772 Harley-Davidson 2,549 130,662 Harrah's Entertainment 944(b) 38,175 Hasbro 1,454 20,807 Intl Game Technology 738(b) 49,830 Mattel 3,634 68,864 Viacom Cl B 14,930(b) 694,992 -------------- Total 2,476,967 - -------------------------------------------------------------------------------- MEDIA (1.7%) American Greetings Cl A 534 7,353 Clear Channel Communications 5,032(b) 234,592 Comcast Cl A 7,956(b) 269,470 Donnelley (RR) & Sons 964 27,580 Dow Jones 715 39,904 Gannett 2,230 169,881 Interpublic Group of Companies 3,179 86,469 Knight-Ridder 708 47,719 McGraw-Hill Companies 1,628 107,122 Meredith 415 16,376 Moody's 1,313 48,581 New York Times Cl A 1,276 56,016 Omnicom Group 1,565 146,390 TMP Worldwide 930(b) 25,966 Tribune 2,508 107,393 Univision Communications Cl A 1,769(b) 72,954 -------------- Total 1,463,766 - -------------------------------------------------------------------------------- Metals (0.9%) Alcan 2,702(c) 109,539 Alcoa 7,151 268,662 Allegheny Technologies 675 10,537 Avery Dennison 925 59,200 Barrick Gold 4,513(c) 81,460 Freeport-McMoRan Copper & Gold Cl B 1,212(b) 17,756 Inco 1,531(b,c) 28,523 Newmont Mining 3,298 79,548 Nucor 654 36,951 Phelps Dodge 662 25,096 Placer Dome 2,764(c) 32,118 United States Steel 750 13,290 Worthington Inds 718 10,562 -------------- Total 773,242 - -------------------------------------------------------------------------------- MISCELLANEOUS (0.1%) MeadWestvaco 1,671 58,051 - -------------------------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (8.5%) Cendant 8,263(b) 143,859 Crane 502 12,264 Danaher 1,203 80,878 Dover 1,704 67,427 Eastman Kodak 2,449 77,144 Emerson Electric 3,603 207,497 General Electric 83,580 3,217,829 Grainger (WW) 787 46,645 Honeywell Intl 6,847 261,008 ITT Inds 744 43,896 Minnesota Mining & Mfg 3,301 389,287 Robert Half Intl 1,476(b) 38,391 S&P Depositary Receipts 20,530 2,280,267 Textron 1,189 56,513 Tyco Intl 16,797(c) 488,793 Xerox 6,062 58,862 -------------- Total 7,470,560 - -------------------------------------------------------------------------------- PAPER & PACKAGING (0.3%) Ball 460 19,453 Bemis 444 25,290 Boise Cascade 488 17,544 Intl Paper 4,058 177,538 Pactiv 1,341(b) 25,519 Sealed Air 704(b) 31,666 -------------- Total 297,010 - -------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUST (0.1%) Equity Residential Properties Trust 2,280 61,446 - -------------------------------------------------------------------------------- RESTAURANTS & LODGING (0.8%) Darden Restaurants 981 41,477 Hilton Hotels 3,109 39,982 Marriott Intl Cl A 2,029 80,085 McDonald's 10,823 282,479 Starbucks 3,210(b) 73,862 Starwood Hotels & Resorts Worldwide 1,665 59,940 Tricon Global Restaurants 1,228(b) 72,612 Wendy's Intl 880 27,289 -------------- Total 677,726 - -------------------------------------------------------------------------------- RETAIL (7.3%) Albertson's 3,419 103,459 AutoZone 908(b) 60,255 Bed Bath & Beyond 2,442(b) 81,563 Best Buy 1,775(b) 119,635 Big Lots 958 12,071
See accompanying notes to investments in securities. 126
ISSUER SHARES VALUE(a) Circuit City Stores-Circuit City Group 1,754 $31,362 Costco Wholesale 3,808(b) 157,118 CVS 3,290 89,883 Dillard's Cl A 704 14,150 Dollar General 2,783 41,049 Family Dollar Stores 1,451 47,651 Federated Dept Stores 1,622(b) 67,978 Gap 7,261 86,914 Home Depot 19,729 986,451 Kohl's 2,820(b) 190,829 Kroger 6,763(b) 149,800 Limited 3,608 64,980 Lowe's Companies 6,519 294,985 May Dept Stores 2,519 92,296 Nordstrom 1,131 28,795 Office Depot 2,584(b) 49,122 Penney (JC) 2,221 43,398 RadioShack 1,509 41,407 Safeway 4,226(b) 181,633 Sears, Roebuck & Co 2,716 142,807 Staples 3,886(b) 76,438 Target 7,601 318,482 Tiffany 1,229 40,323 TJX Companies 2,296 87,179 Toys "R" Us 1,671(b) 29,761 Wal-Mart Stores 37,525 2,326,926 Walgreen 8,589 345,621 Winn-Dixie Stores 1,183 19,815 -------------- Total 6,424,136 - -------------------------------------------------------------------------------- TEXTILES & APPAREL (0.3%) Jones Apparel Group 1,056(b) 37,657 Liz Claiborne 885 26,824 Nike Cl B 2,262 133,141 Reebok Intl 495(b) 13,702 VF 934 39,275 -------------- Total 250,599 - -------------------------------------------------------------------------------- TRANSPORTATION (0.6%) Burlington Northern Santa Fe 3,256 94,489 CSX 1,795 67,743 FedEx 2,510(b) 145,229 Norfolk Southern 3,246 77,222 Ryder System 510 14,331 Union Pacific 2,092 126,922 -------------- Total 525,936 - -------------------------------------------------------------------------------- UTILITIES -- ELECTRIC (2.1%) AES 4,487(b) 23,153 Allegheny Energy 1,052 36,368 Ameren 1,158 47,327 American Electric Power 2,713 118,965 Calpine 2,570(b) 18,890 Cinergy 1,339 42,580 CMS Energy 1,119 24,394 Consolidated Edison 1,787 72,910 Constellation Energy Group 1,378 39,797 Dominion Resources 2,215 129,090 DTE Energy 1,369 56,704 Duke Energy 6,535 230,685 Edison Intl 2,743(b) 43,339 Entergy 1,861 76,822 Exelon 2,702 133,155 FPL Group 1,481 78,656 Mirant 3,372(b) 29,269 PG&E 3,260(b) 69,145 Pinnacle West Capital 712 28,879 PPL 1,233 40,208 Public Service Enterprise Group 1,747 73,671 Sempra Energy 1,744 38,926 Southern Co 5,853 148,665 Teco Energy 1,174 29,327 TXU 2,232 113,542 Xcel Energy 3,089 73,055 -------------- Total 1,817,522 - -------------------------------------------------------------------------------- UTILITIES -- GAS (0.5%) Dynegy Cl A 2,954 75,533 El Paso 4,297 167,926 KeySpan 1,170 37,499 Kinder Morgan 940 38,540 NICOR 377 15,777 NiSource 1,741 36,544 Peoples Energy 298 11,071 Williams Companies 4,339 67,038 -------------- Total 449,928 - -------------------------------------------------------------------------------- UTILITIES -- TELEPHONE (3.3%) ALLTEL 2,614 145,469 AT&T 29,787 462,890 BellSouth 15,803 612,524 CenturyTel 1,188 39,442 Citizens Communications 2,357(b) 21,472 Nextel Communications Cl A 6,721(b) 33,538 Qwest Communications Intl 14,017 121,948 SBC Communications 28,302 1,070,947 Sprint (FON Group) 7,469 105,238 Sprint (PCS Group) 8,299(b) 76,766 WorldCom-WorldCom Group 24,832(b) 186,737 -------------- Total 2,876,971 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $98,339,591) $87,475,349 - --------------------------------------------------------------------------------
SHORT-TERM SECURITY (0.6%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCY Federal Home Loan Mtge Corp Disc Nt 04-02-02 1.74% $500,000 $499,203 - -------------------------------------------------------------------------------- TOTAL SHORT-TERM SECURITY (Cost: $499,227) $499,203 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $98,838,818)(d) $87,974,552 ================================================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of Feb. 28, 2002, the value of foreign securities represented 2.6% of net assets. (d) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $98,839,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 4,047,000 Unrealized depreciation (14,911,000) --------------------------------------------------------------------------- Net unrealized depreciation $(10,864,000) ---------------------------------------------------------------------------
127 INVESTMENTS IN SECURITIES AXP VP - SMALL CAP ADVANTAGE FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (96.5%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (0.7%) Alliant Techsystems 3,100(b) $291,121 Herley Inds 2,600(b) 48,074 Titan 3,700(b) 66,600 --------- Total 405,795 - --------------------------------------------------------------- AIRLINES (0.7%) AirTran Holdings 26,900(b) 177,809 Atlantic Coast Airlines Holdings 8,500(b) 232,390 --------- Total 410,199 - --------------------------------------------------------------- AUTOMOTIVE & RELATED (1.5%) Aftermarket Technology 4,600(b) 71,990 BorgWarner 4,800 288,720 Dura Automotive Systems Cl A 16,346(b) 204,325 Smith (AO) 5,960 136,782 Sonic Automotive 7,400(b) 194,472 --------- Total 896,289 - --------------------------------------------------------------- BANKS AND SAVINGS & LOANS (8.6%) Anchor BanCorp Wisconsin 5,800 111,070 Area Bancshares 4,300 87,247 Arrow Financial 2,400 68,714 BankAtlantic Bancorp Cl A 13,837 158,157 BankUnited Financial Cl A 5,600(b) 85,400 Boston Private Financial Holdings 3,226 73,843 Cathay Bancorp 1,900 123,976 Coastal Bancorp 2,530 79,695 Commercial Federal 4,400 110,000 Dime Community Bancshares 8,389 245,798 Downey Financial 2,300 109,204 East West Bancorp 5,800 167,910 First Bancorp 6,860 191,394 First Essex Bancorp 727 20,349 First Midwest Bancorp 6,611 189,405 First Source 4,074 86,980 FirstFed Financial 7,643(b) 201,775 Flagstar Bancorp 7,200 169,920 Greater Bay Bancorp 6,800 216,580 Independence Community Bank 7,300 200,750 Independent Bank 13,282 336,237 Irwin Financial 4,394 72,062 Local Financial 8,100(b) 125,793 MAF Bancorp 2,843 90,976 Mississippi Valley Bancshares 2,326 92,575 New York Community Bancorp 5,600 164,304 Quaker City Bancorp 1,900(b) 59,850 R & G Financial Cl B 7,231(c) 151,851 Republic Bancorp 12,540 155,496 Sandy Springs Bancorp 6,315 197,281 Seacoast Banking of Florida 2,041 91,335 Staten Island Bancorp 12,200 $226,310 Sterling Bancorp 5,600 167,160 Sterling Financial 3,300 62,700 W Holding 4,550(c) 75,303 Wintrust Financial 6,600 214,962 --------- Total 4,982,362 - --------------------------------------------------------------- BEVERAGES & TOBACCO (0.5%) Constellation Brands 2,230(b) 121,201 Standard Commercial 10,150 189,805 --------- Total 311,006 - --------------------------------------------------------------- BUILDING MATERIALS & CONSTRUCTION (3.2%) Building Materials Holding 9,100(b) 140,140 EMCOR Group 3,834(b) 202,397 Encore Wire 8,297(b) 102,053 Louisiana-Pacific 14,631 147,627 M.D.C. Holdings 7,830 343,659 NCI Building Systems 5,300(b) 111,989 NVR 1,300(b) 379,924 Ryland Group 3,200 285,856 Watts Inds Cl A 9,600 152,160 --------- Total 1,865,805 - --------------------------------------------------------------- CHEMICALS (2.5%) Airgas 11,694(b) 205,814 Cambrex 3,050 126,240 Ferro 7,260 194,278 Fuller (HB) 6,800 181,424 Georgia Gulf 3,803 91,310 OM Group 3,600 240,480 RPM/Ohio 10,700 178,690 Schulman (A) 7,100 129,788 Stericycle 1,800(b) 116,118 --------- Total 1,464,142 - --------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (3.0%) AirGate PCS 3,074(b) 28,219 Arris Group 14,728(b) 124,893 Commonwealth Telephone Enterprises 4,600(b) 173,329 General Communication Cl A 10,870(b) 97,721 Inter-Tel 9,500 156,750 Leap Wireless Intl 17,661(b) 83,183 Management Network Group 8,300(b) 39,923 MetaSolv 8,900(b) 54,023 Orbital Sciences 18,200(b) 104,832 Plantronics 7,790(b) 155,800 Powerwave Technologies 8,200(b) 106,846 Proxim 15,954(b) 60,785 REMEC 11,883(b) 92,925 SeaChange Intl 5,751(b) $117,493 Somera Communications 7,800(b) 62,790 Telular 6,800(b) 45,832 Terayon Communication Systems 9,600(b) 56,736 Tollgrade Communications 2,600(b) 55,770 UbiquiTel 16,563(b) 25,341 US Unwired Cl A 12,520(b) 59,345 Witness Systems 4,500(b) 58,590 --------- Total 1,761,126 - --------------------------------------------------------------- COMPUTER SOFTWARE & SERVICES (2.5%) Actuate 22,446(b) 112,454 BARRA 3,150(b) 170,730 Borland Software 3,700(b) 50,801 Edwards (JD) & Co 8,500(b) 124,525 HNC Software 9,000(b) 126,720 Hyperion Solutions 4,600(b) 99,176 JDA Software Group 4,300(b) 113,735 Legato Systems 5,200(b) 50,180 Manhattan Associates 5,850(b) 175,792 MCSI 4,000(b) 40,800 MRO Software 850(b) 15,853 NetIQ 5,400(b) 117,180 Novell 34,900(b) 142,741 Pomeroy Computer Resources 4,400(b) 61,776 SERENA Software 5,300(b) 85,224 --------- Total 1,487,687 - --------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (7.0%) Adaptec 7,100(b) 80,940 Alloy 8,300(b) 125,737 ANSYS 5,800(b) 130,790 Aspen Technology 8,573(b) 133,739 Aware 11,200(b) 71,904 Black Box 2,900(b) 136,300 CACI Intl Cl A 2,800(b) 95,060 Ciber 9,100(b) 78,442 Cognizant Technology Solutions 4,600(b) 163,116 Computer Network Technology 13,000(b) 158,080 Concurrent Computer 5,600(b) 56,056 DiamondCluster Intl Cl A 7,300(b) 80,081 Digital River 5,800(b) 65,770 Documentum 3,100(b) 55,273 Engineered Support Systems 5,076 203,039 FactSet Research Systems 2,600 89,102 Global Payments 4,800 146,736 Inforte 4,100(b) 38,335
See accompanying notes to investments in securities. 128
ISSUER SHARES VALUE(a) Inrange Technologies Cl B 6,030(b) $55,416 Intermagnetics General 8,141(b) 190,743 ITXC 8,100(b) 42,930 JNI 9,300(b) 65,658 Kronos 3,400(b) 152,218 McData Cl B 2,117(b) 33,872 Mercury Computer Systems 2,700(b) 86,562 Merix 7,760(b) 126,100 Netegrity 9,614(b) 118,637 NetScout Systems 9,800(b) 88,200 Pegasus Solutions 9,800(b) 157,388 Planar Systems 7,360(b) 150,586 Rainbow Technologies 10,000(b) 75,500 Read-Rite 15,400(b) 43,582 Register.com 8,600(b) 75,852 Secure Computing 6,100(b) 92,903 Stellent 5,704(b) 85,503 Systems & Computer Technology 5,000(b) 64,050 THQ 4,100(b) 184,746 Varian 3,700(b) 126,207 Western Digital 28,800(b) 167,328 --------- Total 4,092,481 - --------------------------------------------------------------- ELECTRONICS (8.0%) Actel 6,351(b) 113,873 Aeroflex 7,974(b) 78,544 Alpha Inds 7,040(b) 108,486 Anixter Intl 4,800(b) 124,176 August Technology 8,550(b) 68,828 Axcelis Technologies 7,850(b) 95,849 AXT 9,277(b) 83,400 Brooks Automation 2,940(b) 128,684 C&D Technologies 7,968 158,563 Cirrus Logic 5,800(b) 89,494 Elantec Semiconductor 4,097(b) 125,450 Electro Scientific Inds 1,934(b) 61,811 Entegris 24,623(b) 254,108 ESS Technology 7,900(b) 164,636 Esterline Technologies 7,400(b) 147,260 Exar 7,200(b) 132,048 Harman Intl Inds 4,938 231,098 Helix Technology 4,034 74,306 Integrated Circuit Systems 2,800(b) 51,828 Integrated Electrical Services 15,600(b) 67,860 Itron 4,100(b) 103,115 Microsemi 2,826(b) 38,123 Microtune 7,670(b) 87,515 Moog Cl A 4,414(b) 126,682 Newport 6,650 125,752 Oak Technology 11,400(b) 160,170 Park Electrochemical 6,051 152,788 Photronics 4,568(b) 131,970 Pioneer-Standard Electronics 7,400 88,578 Plexus 3,080(b) 66,251 Rudolph Technologies 3,326(b) 123,395 SBS Technologies 8,200(b) 115,866 Technitrol 5,241 114,149 Therma-Wave 8,586(b) $97,022 Three-Five Systems 7,386(b) 96,092 TranSwitch 28,400(b) 81,508 TriQuint Semiconductor 10,300(b) 93,215 TTM Technologies 4,700(b) 41,313 Varian Medical Systems 3,808(b) 153,767 Veeco Instruments 4,500(b) 112,545 Zoran 3,500(b) 126,385 --------- Total 4,596,503 - --------------------------------------------------------------- ENERGY (1.1%) Brown (Tom) 4,800(b) 129,024 Chesapeake Energy 32,300(b) 202,521 FuelCell Energy 4,100(b) 62,566 Pogo Producing 1,900 51,300 Vintage Petroleum 6,786 71,253 XTO Energy 6,800 128,112 --------- Total 644,776 - --------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (2.5%) Grey Wolf 57,000(b) 184,680 Headwaters 14,674(b) 197,806 Holly 5,900 110,920 Key Energy Services 26,040(b) 239,046 Lone Star Technologies 4,534(b) 73,768 Patterson-UTI Energy 3,450(b) 84,422 Powell Inds 3,700(b) 75,961 Range Resources 24,900(b) 115,785 Remington Oil & Gas 10,993(b) 194,686 SEACOR SMIT 3,700(b) 160,913 --------- Total 1,437,987 - --------------------------------------------------------------- FINANCIAL SERVICES (2.6%) Affiliated Managers Group 3,400(b) 226,542 BOK Financial 4,600 146,786 Doral Financial 3,400 116,756 Federal Agricultural Mtge Cl C 5,964(b) 260,866 Financial Federal 3,100(b) 91,605 Jefferies Group 5,700 247,209 Metris Companies 4,400 71,632 Raymond James Financial 8,200 260,760 W.P. Stewart 4,234(c) 114,741 --------- Total 1,536,897 - --------------------------------------------------------------- FOOD (2.0%) American Italian Pasta Cl A 5,500(b) 247,665 Dean Foods 2,000(b) 143,340 Fresh Del Monte Produce 15,770(c) 275,186 Green Mountain Coffee 4,800(b) 87,744 Nash Finch 6,700 191,754 Performance Food Group 6,350(b) 236,792 --------- Total 1,182,481 - --------------------------------------------------------------- FURNITURE & APPLIANCES (0.9%) Bassett Furniture Inds 3,500 60,200 Briggs & Stratton 4,900 231,035 Ethan Allen Interiors 2,200 89,166 Salton 7,000(b) 141,400 --------- Total 521,801 - --------------------------------------------------------------- HEALTH CARE (7.2%) Advanced Tissue Sciences 21,000(b) $77,280 Array BioPharma 10,000(b) 102,800 CardioDynamics Intl 12,200(b) 57,096 Cell Therapeutics 5,700(b) 125,913 Cooper Companies 4,643 219,567 Cubist Pharmaceuticals 1,600(b) 22,544 Diagnostic Products 6,700 240,195 Diversa 6,100(b) 65,331 Emisphere Technologies 3,600(b) 55,944 First Horizon Pharmaceutical 6,450(b) 133,773 Harvard Bioscience 12,600(b) 101,304 ILEX Oncology 5,200(b) 77,636 Integra LifeSciencesHoldings 4,734(b) 133,025 InterMune 2,400(b) 87,144 Interneuron Pharmaceuticals 7,900(b) 64,385 Isis Pharmaceuticals 7,200(b) 105,624 Lumenis 4,440(b,c) 32,412 Mentor 7,600 250,800 Nabi 10,200(b) 56,304 Neurocrine Biosciences 3,400(b) 120,666 Noven Pharmaceuticals 10,000(b) 209,100 NPS Pharmaceuticals 4,000(b) 119,400 Priority Healthcare Cl B 3,200(b) 79,200 Regeneron Pharmaceuticals 4,300(b) 97,653 Respironics 6,950(b) 204,330 SangStat Medical 5,500(b) 116,050 Scios 6,350(b) 126,937 Serologicals 8,960(b) 135,027 SRI/Surgical Express 5,410(b) 86,560 STERIS 5,700(b) 116,964 Techne 3,264(b) 96,419 Telik 8,000(b) 81,200 Theragenics 9,800(b) 86,828 Titan Pharmaceuticals 12,200(b) 79,300 Transgenomic 9,450(b) 75,600 Trimeris 2,100(b) 80,220 Versicor 2,700(b) 48,870 Wilson Greatbatch Technologies 3,400(b) 87,856 Zoll Medical 2,200(b) 76,560 --------- Total 4,133,817 - --------------------------------------------------------------- HEALTH CARE SERVICES (3.3%) AmeriPath 8,326(b) 225,468 Apria Healthcare Group 8,700(b) 187,833 ArQule 6,560(b) 81,344 Cell Genesys 7,668(b) 115,480 Gene Logic 6,000(b) 97,020 LifePoint Hospitals 6,950(b) 228,238 Magellan Health Services 18,270(b) 96,831 MedCath 4,300(b) 75,035 Mid Atlantic Medical Services 11,100(b) 295,371 Pediatrix Medical Group 5,100(b) 197,115 Stewart Enterprises Cl A 15,300(b) 84,456 U.S. Physical Therapy 11,200(b) 168,560 XOMA 11,300(b) 90,852 --------- Total 1,943,603 - ---------------------------------------------------------------
See accompanying notes to investments in securities. 129
ISSUER SHARES VALUE(a) HOUSEHOLD PRODUCTS (1.0%) Direct Focus 6,700(b) $201,000 JAKKS Pacific 7,660(b) 144,008 Ocular Sciences 4,300(b) 113,090 UniFirst 6,000 134,340 ----------- Total 592,438 - -------------------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (3.7%) AGCO 8,673 194,796 Albany Intl Cl A 6,660 179,287 Clarcor 7,300 205,276 CoorsTek 4,493(b) 127,377 Donaldson 5,100 184,365 FLIR Systems 2,700(b) 147,231 Gardner Denver 6,340(b) 125,595 Manitowoc 6,968 252,241 Modine Mfg 6,717 181,292 Nordson 5,600 152,488 Roper Inds 3,800 177,650 Terex 7,194(b) 146,614 UNOVA 16,900(b) 96,837 ----------- Total 2,171,049 - ------------------------------------------------------------- INSURANCE (2.9%) AmerUs Group 9,000 307,620 Brown & Brown 4,800 167,856 Commerce Group 4,100 152,479 First American 9,300 184,047 Philadelphia Consolidated Holding 3,900(b) 160,368 Scottish Annuity & Life Holdings 12,477(c) 198,384 StanCorp Financial Group 6,700 360,795 Triad Guaranty 4,317(b) 178,033 ----------- Total 1,709,582 - ------------------------------------------------------------- LEISURE TIME & ENTERTAINMENT (2.8%) Acclaim Entertainment 17,900(b) 68,736 Activision 3,450(b) 98,532 Ameristar Casinos 3,300(b) 83,193 Argosy Gaming 6,700(b) 230,815 Aztar 6,364(b) 146,054 Boyd Gaming 15,800(b) 175,380 Crestline Capital 6,100(b) 188,490 GTECH Holdings 5,900(b) 314,705 Handleman 8,237(b) 85,665 Penn Natl Gaming 2,400(b) 85,560 Topps 19,081(b) 182,987 ----------- Total 1,660,117 - ------------------------------------------------------------- MEDIA (2.9%) 4 Kids Entertainment 6,800(b) 111,180 Consolidated Graphics 7,814(b) 145,497 Emmis Communications Cl A 11,700(b) 313,793 Harland (John H) 6,000 160,920 Information Resources 10,400(b) 90,896 Insight Communications 6,700(b) 140,700 Journal Register 10,800(b) 209,520 Price Communications 7,300(b) $133,590 R.H. Donnelley 10,100(b) 290,779 Scholastic 2,104(b) 105,516 ----------- Total 1,702,391 - ------------------------------------------------------------- METALS (1.4%) Carpenter Technology 4,751 114,214 Century Aluminum 12,800 142,592 Reliance Steel & Aluminum 9,990 259,740 RTI Intl Metals 10,811(b) 106,488 Titanium Metals 7,700(b) 28,721 Worthington Inds 11,694 172,019 ----------- Total 823,774 - ------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (4.1%) Ameron Intl 1,200 79,380 Applied Films 1,750(b) 50,418 Corinthian Colleges 6,200(b) 284,084 Corporate Executive Board 3,600(b) 113,436 Electronics for Imaging 6,900(b) 133,860 FTI Consulting 8,500(b) 274,210 Gladstone Capital 6,600 113,520 Griffon 7,900(b) 148,915 IKON Office Solutions 31,500 422,099 ITT Educational Services 4,900(b) 215,845 Labor Ready 6,000(b) 29,100 Learning Tree Intl 4,234(b) 92,513 MPS Group 28,200(b) 185,838 ProQuest 2,500(b) 90,000 YORK Intl 4,800 168,000 ----------- Total 2,401,218 - ------------------------------------------------------------- PAPER & PACKAGING (1.8%) Caraustar Inds 2,900 25,288 Crown Cork & Seal 24,100(b) 138,093 Ivex Packaging 8,750(b) 192,413 Owens-Illinois 13,200(b) 193,776 Rayonier 3,500 177,030 Rock-Tenn Cl A 5,600 109,088 Silgan Holdings 6,600(b) 202,884 ----------- Total 1,038,572 - ------------------------------------------------------------- REAL ESTATE INVESTMENT TRUST (3.3%) Annaly Mtge Management 15,600 254,280 CBL & Associates Properties 3,600 123,300 Developers Diversified Realty 7,500 151,575 Essex Property Trust 3,500 165,900 FBR Asset Investment 6,400 175,232 Gables Residential Trust 6,500 194,610 Healthcare Realty Trust 4,000 114,000 Pan Pacific Retail Properties 5,200 156,728 SL Green Realty 6,200 197,904 Thornburg Mortgage 8,400 166,320 United Dominion Realty Trust 16,300 229,830 ----------- Total 1,929,679 - ------------------------------------------------------------- RESTAURANTS & LODGING (2.0%) CBRL Group 8,900 $273,141 Cheesecake Factory (The) 4,462(b) 152,199 Landry's Restaurants 5,900 150,981 P.F. Chang's China Bistro 2,800(b) 165,004 Panera Bread Cl A 2,300(b) 118,772 RARE Hospitality Intl 6,034(b) 162,254 Ryan's Family Steak Houses 7,400(b) 166,426 ----------- Total 1,188,777 - ------------------------------------------------------------- RETAIL (6.1%) AnnTaylor Stores 3,600(b) 148,176 Checkpoint Systems 9,400(b) 131,600 Circuit City Stores-CarMax Group 2,186(b) 58,454 Copart 7,300(b) 126,947 Daisytek Intl 6,900(b) 100,671 Deb Shops 4,743 113,879 DELiA's Cl A 8,400(b) 59,388 Duane Reade 5,853(b) 183,199 Gart Sports 7,560(b) 197,316 Group 1 Automotive 5,600(b) 210,168 Hancock Fabrics 9,000 153,540 Michaels Stores 6,300(b) 187,740 Movie Gallery 10,600(b) 140,344 NBTY 10,500(b) 155,820 Pacific Sunwear of California 6,300(b) 154,476 Pathmark Stores 4,526(b) 107,538 Petsmart 11,900(b) 127,211 Phillips-Van Heusen 11,044 160,028 Pier 1 Imports 16,900 337,492 ShopKo Stores 5,411(b) 76,295 Too 7,300(b) 226,008 Tweeter Home Entertainment Group 5,339(b) 90,763 Wet Seal Cl A 6,558(b) 215,365 Zale 2,704(b) 118,246 ----------- Total 3,580,664 - ------------------------------------------------------------- TEXTILES & APPAREL (0.3%) Chico's FAS 1,675(b) 56,682 Maxwell Shoes Cl A 8,500(b) 137,275 ----------- Total 193,957 - ------------------------------------------------------------- TRANSPORTATION (2.1%) Arkansas Best 6,650(b) 178,353 ArvinMeritor 6,500 183,235 Forward Air 5,000(b) 140,650 Genesee & Wyoming Cl A 4,950(b) 153,450 Heartland Express 10,013(b) 225,593 Hunt (JB) Transport Services 5,800(b) 136,126 Landstar System 2,391(b) 196,731 P.A.M. Transportation Services 300(b) 6,000 ----------- Total 1,220,138 - -------------------------------------------------------------
See accompanying notes to investments in securities. 130
ISSUER SHARES VALUE(a) UTILITIES -- ELECTRIC (2.2%) Cleco 12,500 $270,001 El Paso Electric 15,604(b) 224,073 Hawaiian Electric Inds 4,800 205,632 PNM Resources 8,100 218,214 UIL Holdings 3,217 176,838 Unisource Energy 11,468 203,442 ----------- Total 1,298,200 - ------------------------------------------------------------- UTILITIES-- GAS (2.1%) Energen 9,186 207,052 Kirby 6,000(b) 182,700 New Jersey Resources 2,626 119,719 ONEOK 13,300 242,592 UGI 9,826 283,972 Western Gas Resources 5,900 189,154 ----------- Total 1,225,189 - ------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $56,242,024) $56,410,502 - ------------------------------------------------------------- SHORT-TERM SECURITIES (3.9%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCIES Federal Home Loan Bank Disc Nt 05-01-02 1.76% $500,000 $498,493 Federal Home Loan Mtge Corp Disc Nts 03-12-02 1.59 600,000 599,682 03-19-02 1.69 500,000 499,555 03-26-02 1.74 500,000 499,372 Federal Natl Mtge Assn Disc Nt 03-12-02 1.65 200,000 199,890 - ------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $2,297,100) $2,296,992 - ------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $58,539,124)(d) $58,707,494 =============================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of Feb. 28, 2002, the value of foreign securities represented 1.4% of net assets. (d) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $58,539,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 5,552,000 Unrealized depreciation (5,384,000) -------------------------------------------------------- Net unrealized appreciation $ 168,000 --------------------------------------------------------
131 INVESTMENTS IN SECURITIES AXP VP - STOCK FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (87.3%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (5.2%) Boeing 1,450 $66,642 Lockheed Martin 818 46,143 Northrop Grumman 409 43,779 Raytheon 614 23,756 ---------- Total 180,320 - ------------------------------------------------------------- AIRLINES (0.7%) Southwest Airlines 1,072 22,630 BANKS AND SAVINGS & LOANS (3.1%) Bank of America 563 36,004 Comerica 300 17,955 U.S. Bancorp 1,419 29,586 Wells Fargo 500 23,450 ---------- Total 106,995 - ------------------------------------------------------------- BEVERAGES & TOBACCO (1.8%) Anheuser-Busch 1,235 62,800 - ------------------------------------------------------------- BUILDING MATERIALS & CONSTRUCTION (1.1%) Weyerhaeuser 613 37,896 - ------------------------------------------------------------- CHEMICALS (2.0%) Dow Chemical 1,227 38,381 Rohm & Haas 800 30,728 ---------- Total 69,109 - ------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (1.3%) Motorola 2,258 29,354 Nokia ADR Cl A 715(c) 14,851 ---------- Total 44,205 - ------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (6.6%) Cisco Systems 2,050(b) 29,254 Compaq Computer 1,150 11,661 Intl Business Machines 271 26,591 Microsoft 1,450(b) 84,592 Oracle 1,817(b) 30,198 SAP ADR 919(c) 31,401 Sun Microsystems 2,050(b) 17,446 ---------- Total 231,143 - ------------------------------------------------------------- ELECTRONICS (4.4%) Analog Devices 511(b) 19,014 Flextronics Intl 1,016(b,c) 14,569 Intel 2,050 58,589 KLA-Tencor 715(b) 41,406 Texas Instruments 633 18,579 ---------- Total 152,157 - ------------------------------------------------------------- ENERGY (3.4%) Conoco 1,750 $48,405 Exxon Mobil 1,642 67,815 ---------- Total 116,220 - ------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (1.4%) Transocean Sedco Forex 920 25,769 Weatherford Intl 522(b) 24,064 ---------- Total 49,833 - ------------------------------------------------------------- FINANCIAL SERVICES (1.5%) Citigroup 694 31,404 Paychex 511 18,881 ---------- Total 50,285 - ------------------------------------------------------------- FOOD (3.5%) ConAgra Foods 1,165 27,273 General Mills 722 33,378 Kraft Foods Cl A 716 27,996 Tyson Foods Cl A 2,568 33,358 ---------- Total 122,005 - ------------------------------------------------------------- HEALTH CARE (17.7%) Abbott Laboratories 818 46,258 American Home Products 1,044 66,346 Baxter Intl 1,418 78,670 Biogen 409(b) 21,738 Genentech 628(b) 29,642 IDEC Pharmaceuticals 409(b) 25,693 Johnson & Johnson 1,044 63,580 Laboratory Corp America Holdings 204(b) 16,622 MedImmune 944(b) 38,921 Medtronic 1,044 46,500 Pfizer 1,823 74,670 Pharmacia 1,044 42,856 Schering-Plough 920 31,731 Stryker 500 30,750 ---------- Total 613,977 - ------------------------------------------------------------- HOUSEHOLD PRODUCTS (3.3%) Colgate-Palmolive 460 25,751 Gillette 1,324 45,268 Procter & Gamble 522 44,260 ---------- Total 115,279 - ------------------------------------------------------------- INDUSTRIAL EQUIPMENT & SERVICES (2.3%) Caterpillar 1,419 78,769 - ------------------------------------------------------------- INSURANCE (2.4%) American Intl Group 616 45,566 Lincoln Natl 715 36,615 ---------- Total 82,181 - ------------------------------------------------------------- LEISURE TIME & ENTERTAINMENT (1.0%) Mattel 1,750 $33,163 - ------------------------------------------------------------- MEDIA (6.3%) Clear Channel Communications 400(b) 18,648 Gannett 400 30,472 McGraw-Hill Companies 1,331 87,579 USA Networks 2,750(b) 81,290 ---------- Total 217,989 - ------------------------------------------------------------- METALS (2.0%) Alcoa 1,850 69,505 - ------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (5.6%) General Electric 3,150 121,274 Minnesota Mining & Mfg 613 72,291 ---------- Total 193,565 - ------------------------------------------------------------- PAPER & PACKAGING (1.6%) Intl Paper 1,244 54,425 - ------------------------------------------------------------- RETAIL (4.8%) Home Depot 971 48,550 Wal-Mart Stores 1,441 89,357 Walgreen 722 29,053 ---------- Total 166,960 - ------------------------------------------------------------- TRANSPORTATION (1.3%) Union Pacific 715 43,379 - ------------------------------------------------------------- UTILITIES -- ELECTRIC (3.1%) Allegheny Energy 818 28,278 Dominion Resources 716 41,729 Xcel Energy 1,554 36,752 ---------- Total 106,759 - ------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $2,975,619) $3,021,549 - ------------------------------------------------------------- SHORT-TERM SECURITY (14.4%) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCY Federal Home Loan Mtge Corp Disc Nt 03-19-02 1.74% $500,000 $499,542 - ------------------------------------------------------------- TOTAL SHORT-TERM SECURITY (Cost: $499,566) $499,542 - ------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $3,475,185)(d) $3,521,091 =============================================================
See accompanying notes to investments in securities. 132 NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of Feb. 28, 2002, the value of foreign securities represented 1.8% of net assets. (d) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $3,475,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 149,000 Unrealized depreciation (103,000) ------------------------------------------------------------------- Net unrealized appreciation $ 46,000 -------------------------------------------------------------------
133 INVESTMENTS IN SECURITIES AXP VP - STRATEGY AGGRESSIVE FUND FEB. 28, 2002 (UNAUDITED) (PERCENTAGES REPRESENT VALUE OF INVESTMENTS COMPARED TO NET ASSETS)
COMMON STOCKS (94.1%) ISSUER SHARES VALUE(a) AIRLINES (0.6%) Northwest Airlines Cl A 521,400(b) $8,311,116 BANKS AND SAVINGS & LOANS (2.2%) Alliance Data Systems 554,800(b) 11,761,760 TCF Financial 416,400 21,402,960 ------------- Total 33,164,720 - ------------------------------------------------------------- CHEMICALS (0.4%) Cabot Microelectronics 120,500(b) 6,632,320 - ------------------------------------------------------------- COMMUNICATIONS EQUIPMENT & SERVICES (2.1%) Brocade Communications Systems 640,600(b) 14,073,982 Equinix 157,294(b,f) 176,956 Fairchild Semiconductor Intl Cl A 481,100(b) 12,388,325 Finisar 643,800(b) 3,927,180 ------------- Total 30,566,443 - ------------------------------------------------------------- COMPUTERS & OFFICE EQUIPMENT (24.8%) Adobe Systems 717,100 26,088,097 Affiliated Computer Services Cl A 392,600(b) 19,202,066 BEA Systems 708,500(b) 9,005,035 BISYS Group 710,200(b) 22,357,096 BMC Software 542,600(b) 8,708,730 Cadence Design Systems 272,700(b) 5,767,605 Check Point Software Technologies 530,500(b,c) 14,811,560 Citrix Systems 408,300(b) 6,193,911 Compaq Computer 815,600 8,270,184 Comverse Technology 387,700(b) 6,067,505 Concord EFS 290,500(b) 8,723,715 Convergys 464,400(b) 14,159,556 DST Systems 109,400(b) 4,560,886 Electronic Arts 414,600(b) 22,313,772 Emulex 564,000(b) 18,307,440 Fiserv 557,100(b) 23,810,454 Intuit 432,200(b) 16,376,058 Manugistics Group 1,534,400(b) 19,885,824 McData Cl B 397,600(b) 6,361,600 Mercury Interactive 376,000(b) 12,738,880 Network Appliance 1,122,000(b) 17,940,780 PeopleSoft 803,100(b) 23,346,117 Rational Software 592,200(b) 10,991,232 Sungard Data Systems 661,800(b) 20,429,766 Symantec 327,400(b) 11,806,044 Synopsys 82,700(b) 3,895,170 VERITAS Software 216,700(b) 7,690,683 ------------- Total 369,809,766 - ------------------------------------------------------------- ELECTRONICS (15.3%) Altera 1,173,100(b) $22,371,017 Applied Materials 433,100(b) 18,826,857 Broadcom Cl A 604,900(b) 18,540,185 Flextronics Intl 329,000(b,c) 4,717,860 Integrated Device Technology 274,000(b) 7,006,180 Lam Research 555,000(b) 12,010,200 LTX 408,100(b) 8,814,960 Maxim Integrated Products 301,700(b) 13,805,792 Micrel 530,200(b) 10,646,416 Microchip Technology 660,700(b) 22,582,726 Novellus Systems 518,300(b) 22,074,397 RF Micro Devices 937,500(b) 14,662,500 Taiwan Semiconductor Mfg ADR 510,000(b,c) 8,287,500 Teradyne 448,400(b) 15,025,884 Xilinx 776,400(b) 27,888,288 ------------- Total 227,260,762 - ------------------------------------------------------------- ENERGY (0.6%) Oil Service HOLDRs Trust 148,600(k) 9,228,060 - ------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (0.5%) Transocean Sedco Forex 272,500 7,632,725 - ------------------------------------------------------------- FINANCIAL SERVICES (1.3%) Metris Companies 365,300(g) 5,947,084 Paychex 327,695 12,108,330 ------------- Total 18,055,414 - ------------------------------------------------------------- HEALTH CARE (21.6%) Allergan 231,800 15,029,912 Biogen 348,100(b) 18,501,515 Biomet 517,600 15,817,856 Boston Scientific 325,500(b) 7,278,180 Forest Laboratories 127,500(b) 10,138,800 Genzyme-General Division 490,900(b) 21,786,142 Gilead Sciences 212,200(b) 14,951,612 Guidant 545,300(b) 22,629,950 ICOS 335,150(b) 14,377,935 IDEC Pharmaceuticals 437,900(b) 27,508,878 Invitrogen 501,300(b) 22,879,332 Laboratory Corp America Holdings 167,700(b) 13,664,196 MedImmune 777,700(b) 32,064,571 Quest Diagnostics 334,500(b) 23,719,395 St. Jude Medical 290,400(b) 22,738,320 Stryker 433,000 26,629,500 Waters 373,100(b) 11,659,375 ------------- Total 321,375,469 - ------------------------------------------------------------- HEALTH CARE SERVICES (5.6%) Caremark Rx 1,169,900(b) $20,414,755 Charles River Laboratories Intl 311,900(b) 9,250,954 Community Health Systems 375,200(b) 8,366,960 Covance 454,100(b) 8,060,275 Cytyc 335,800(b) 7,877,868 First Health Group 299,900(b) 6,891,702 LifePoint Hospitals 229,500(b) 7,536,780 OSI Pharmaceuticals 188,400(b) 7,168,620 Pharmaceutical HOLDRs Trust 76,500(i) 7,460,280 ------------- Total 83,028,194 - ------------------------------------------------------------- INDEXES (0.5%) S&P Mid-Cap 400 Depositary Receipts 80,300 7,431,765 - ------------------------------------------------------------- INSURANCE (3.0%) ACE 260,600(c) 11,440,340 Everest Re Group 265,600(c) 19,348,960 XL Capital Cl A 141,900(c) 13,517,394 ------------- Total 44,306,694 - ------------------------------------------------------------- MEDIA (3.4%) Scholastic 195,200(b) 9,789,280 Univision Communications Cl A 256,700(b) 10,586,308 USA Networks 565,000(b) 16,701,400 Westwood One 382,800(b) 13,692,756 ------------- Total 50,769,744 - ------------------------------------------------------------- METALS (0.8%) Martin Marietta Materials 274,200 11,447,850 - ------------------------------------------------------------- MISCELLANEOUS (0.3%) Intersil 189,400(b) 5,185,772 Knowledge Mechanics Group 1,723,572(b) 1,293 ------------- Total 5,187,065 - ------------------------------------------------------------- MULTI-INDUSTRY CONGLOMERATES (1.5%) Corporate Executive Board 240,100(b) 7,565,551 Semiconductor HOLDRs Trust 368,200(j) 14,827,414 ------------- Total 22,392,965 - ------------------------------------------------------------- RESTAURANTS & LODGING (3.8%) Krispy Kreme Doughnuts 405,000(b) 14,976,900 Park Place Entertainment 419,900(b) 4,102,423 Starbucks 1,112,600(b) 25,600,926 Wendy's Intl 380,000 11,783,800 ------------- Total 56,464,049 - -------------------------------------------------------------
See accompanying notes to investments in securities. 134
ISSUER SHARES VALUE(a) RETAIL (5.0%) Best Buy 170,000(b) $11,458,000 BJ's Wholesale Club 375,600(b) 15,455,940 Dollar Tree Stores 253,800(b) 8,131,752 Family Dollar Stores 602,000 19,769,680 GameStop 300,000(b) 5,730,000 Kohl's 191,600(b) 12,965,572 PETCO Animal Supplies 70,850(b) 1,434,713 ------------- Total 74,945,657 - ------------------------------------------------------------- TEXTILES & APPAREL (0.6%) Chico's FAS 247,600(b) 8,378,784 - ------------------------------------------------------------- TRANSPORTATION (0.5%) C.H. Robinson Worldwide 237,900 6,922,890 - ------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $1,450,110,595) $1,403,312,452 - ------------------------------------------------------------- PREFERRED STOCKS & OTHER (4.3%)(b) ISSUER SHARES VALUE(a) Adaytum Software Series E 691,463(f) $4,335,472 Warrants 13,376(d,f) -- Agiliti Cv Series C 1,850,000(f) 1,572,500 Aurgin Systems 2,440,000(f) 2 Avasta Series B 1,016,226(f) 1,361,743 Avasta E-Services Warrants 508,114(f) 1 Bluestream Ventures LP 9,500,000(e,f) 8,346,624 Calient Network 2,076,124(f) 3,971,626 Covia Technologies Cv Series E 1,596,148(f) 1,714,263 Dia Dexus Cv Series C 1,113,979(f) 8,633,337 Equinix Cv 110,931 138,664 Evoice Cv Series D 3,317,874(f) $1,520,061 Fibrogen Cv Series E 1,559,020(f) 7,000,000 Marketsoft Cv 762,295(f) 3,720,000 Mars Cv Series D 2,619,048(f) 2,619,048 Series G 3,332,000(f) 3,332,000 Nobex Series E 2,800,000(f) 6,999,999 Paxonet Communications 921,985(f) 1,299,999 Portera Series G 1,616,419(f) 840,538 SignalSoft Cv Series E 1,064,874(f) 1,715,512 Therox Series H 921,580(f) 4,239,269 Vcommerce Cv Series C 884,120(f) 1,069,785 - ------------------------------------------------------------- TOTAL PREFERRED STOCKS & OTHER (Cost: $116,885,807) $64,430,443 - ------------------------------------------------------------- BONDS (0.3%) ISSUER COUPON PRINCIPAL VALUE(a) RATE AMOUNT Equinix Sr Nts 12-01-07 13.00% $13,800,000 $4,312,500 Mars Cv 05-24-02 12.00 550,000(f) 550,000 - ------------------------------------------------------------- TOTAL BONDS (Cost: $14,342,940) $4,862,500 - ------------------------------------------------------------- OPTIONS PURCHASED (0.1%) ISSUER CONTRACTS EXERCISE EXPIRATION VALUE(a) PRICE DATE CALLS King Pharmaceuticals 5,000 $35 July 2002 $875,000 USA Education 1,250 95 July 2002 593,750 - ------------------------------------------------------------- TOTAL OPTIONS PURCHASED (Cost: $1,753,750) $1,468,750 - ------------------------------------------------------------- SHORT-TERM SECURITIES (7.9%)(g) ISSUER ANNUALIZED AMOUNT VALUE(a) YIELD ON DATE PAYABLE AT OF PURCHASE MATURITY U.S. GOVERNMENT AGENCIES (6.2%) Federal Home Loan Bank Disc Nt 03-15-02 1.57% $25,000,000 $24,983,645 Federal Home Loan Mtge Corp Disc Nts 03-12-02 1.59 15,000,000 14,992,050 04-09-02 1.72 9,600,000 9,581,654 04-16-02 1.74 7,200,000 7,183,644 Federal Natl Mtge Assn Disc Nts 03-12-02 1.65 26,500,000 26,485,402 03-14-02 1.70 9,700,000 9,694,016 04-24-02 1.70 700,000 698,261 -------------- Total 93,618,672 - -------------------------------------------------------------- COMMERCIAL PAPER (1.7%) Barclays U.S. Funding 04-09-02 1.78 9,700,000 9,680,816 Emerson Electric 04-08-02 1.78 3,100,000 3,094,022 Nordea North America 04-02-02 1.68 2,200,000 2,196,168 Procter & Gamble 03-18-02 1.70 3,400,000(h) 3,397,110 Salomon Smith Barney 03-18-02 1.78 6,300,000 6,294,393 -------------- Total 24,662,509 - -------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $118,286,613) $118,281,181 - -------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $1,701,379,705)(l) $1,592,355,326 ==============================================================
See accompanying notes to investments in securities. 135 NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of Feb. 28, 2002, the value of foreign securities represented 4.8% of net assets. (d) Negligible market value. (e) The share amount for Limited Liability Companies (LLC) or Limited Partnerships (LP) represents capital contributions. At Feb. 28, 2002, the amount of capital committed to the LLC or LP for future investment was $4,750,000. (f) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at Feb. 28, 2002, is as follows:
SECURITY ACQUISITION COST DATES - ---------------------------------------------------------------------------- Adaytum Software Series E 09-15-00 thru 05-10-01 $ 4,335,473 Warrants 05-10-01 -- Agiliti Cv Series C 11-14-00 5,550,000 Aurgin Systems 12-16-99 6,002,400 Avasta Series B 11-09-00 5,573,492 Avasta-E Services Warrants 11-08-00 1 Bluestream Ventures LP 06-28-00 thru 06-28-01 9,500,000 Calient Network 12-06-00 14,999,996 Covia Technologies Cv Series E 08-16-00 3,999,947 Dia Dexus Cv Series C 04-03-00 8,633,337 Equinix Cv 02-04-02 2,343,932 Evoice Cv Series D 11-27-00 3,720,000 Fibrogen Cv Series E 05-17-00 7,000,000 Marketsoft Cv 12-11-00 3,720,000 Mars 12% Cv 2002 08-22-01 550,000 Cv Series D 06-16-00 5,500,001 Series G 12-01-99 7,000,000 Nobex Series E 05-04-99 7,000,000 Paxonet Communications 04-23-01 2,599,998 Portera Series G 11-10-00 5,415,004 SignalSoft Cv Series E 12-15-99 thru 02-27-01 6,304,054 Therox Series H 09-05-00 4,239,268 Vcommerce Cv Series C 07-21-00 4,119,999
(g) At Feb. 28, 2002, securities valued at $4,884,000 were held to cover open call options written as follows (see Note 8 to the financial statements):
ISSUER CONTRACTS EXERCISE PRICE EXPIRATION DATE VALUE(a) - ----------------------------------------------------------------------------- Metris Companies 3,000 $20 April 2002 $202,500
At Feb. 28, 2002, cash or short-term securities were designated to cover open put options written as follows (see Note 8 to the financial statements):
ISSUER CONTRACTS EXERCISE PRICE EXPIRATION DATE VALUE(a) - ------------------------------------------------------------------------------ Metris Companies 3,000 $15 April 2002 $375,000
136 (h) 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. (i) Represents ownership in Pharmaceutical HOLDRs Trust. The Pharmaceutical HOLDRs Trust holds shares of common stock issued by 18 specified companies generally considered to be involved in various segments of the pharmaceutical industry. (j) Represents ownership in Semiconductor HOLDRs Trust. The Semiconductor HOLDRs Trust holds shares of common stock issued by 20 specified companies generally considered to be involved in various segments of the semiconductor industry. (k) Represents ownership in Oil Service HOLDRs Trust. The Oil Service HOLDRs Trust holds shares of common stock issued by 18 specified companies generally considered to be involved in various segments of the oil service industry. (l) At Feb. 28, 2002, the cost of securities for federal income tax purposes was approximately $1,701,380,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 84,749,000 Unrealized depreciation (193,774,000) ----------------------------------------------------------------- Net unrealized depreciation $(109,025,000) -----------------------------------------------------------------
137 [AMERICAN EXPRESS LOGO(R)] AMERICAN EXPRESS VARIABLE PORTFOLIO FUNDS 70100 AXP FINANCIAL CENTER MINNEAPOLIS, MN 55474 S-6462 U (4/02) -----END PRIVACY-ENHANCED MESSAGE-----