<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<FILENAME>s6359f.txt
<DESCRIPTION>AXP RESEARCH OPPORTUNITIES FUND
<TEXT>
AXP(R) Research
Opportunities Fund
2001 SEMIANNUAL REPORT
American
Express
Funds
(icon of) ruler
AXP Research Opportunities Fund seeks to provide shareholders with long-term
capital growth.
<PAGE>
The Rewards of Research
Behind every decision to buy or sell a stock is information -- in most cases,
informationgathered by a research analyst. AXPResearch Opportunities Fund is
designed to make the most of that research by investing only in Standard &
Poor's 500 stocks that carry our analysts' highest rating. The intention is to
construct a portfolio that has the potential to outperform the stock market as a
whole.
<PAGE>
CONTENTS
From the Chairman 3
From the Portfolio Managers 3
Fund Facts 5
The 10 Largest Holdings 6
Financial Statements (Fund) 7
Notes to Financial Statements (Fund) 10
Financial Statements (Portfolio) 17
Notes to Financial Statements (Portfolio) 20
Investments in Securities 23
<PAGE>
(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
The financial markets have always had their ups and downs, but in recent months
volatility has become more frequent and intense. While no one can say with
certainty what the markets will do, American Express Financial Corporation, the
Fund's investment manager, expects economic growth to continue this year,
accompanied by a modest rise in long-term interest rates. But no matter what
transpires, this is a great time to take a close look at your goals and
investments. We encourage you to:
o Consult a professional investment advisor who can help you cut through
mountains of data.
o Set financial goals that extend beyond those achievable
through the retirement plan of your employer.
o Learn as much as you can about your current investments.
The portfolio managers' letter that follows provides a review of the Fund's
investment strategies and performance. The semiannual report contains other
valuable information as well. The Fund's prospectus describes its investment
objectives and how it intends to achieve those objectives. As experienced
investors know, information is vital to making good investment decisions.
So, take a moment and decide again whether the Fund's investment objectives and
management style fit with your other investments to help you reach your
financial goals. And make it a practice on a regular basis to assess your
investment options.
On behalf of the Board,
Arne H. Carlson
(picture of) James M. Johnson, Jr.
James M. Johnson, Jr. Portfolio manager
From the Portfolio Managers
In a highly volatile six months for the stock market, the downs ultimately
outweighed the ups for AXP Research Opportunities Fund. For the first half of
the fiscal year -- August 2000 through January 2001 -- the Fund's Class A shares
lost 4.33% (excluding the sales charge).
Investors were in good spirits as the period began, which was reflected in a
sharp gain by the stock market last August. But by early September, the
possibility of a slowdown in economic growth and, therefore, a slump in
corporate profits began to create doubts about the future. The result was an
almost uninterrupted stock slide that didn't level off until late December, by
which time the market was down more than 15%. Some welcome relief came the
following month, though, as the new year brought a market rebound that ended the
period on a positive note.
(picture of) Keith Tufte
Keith Tufte Portfolio manager
TECH WRECK
As has been the case in recent years, the market's ups and downs were largely
driven by the fortunes of technology and telecommunications equipment stocks.
For the Fund, such stocks also had a major effect on performance as they
comprised the largest area of investment (about a third of the portfolio early
in the period). Some notable losers during last fall's downturn included Lucent,
Motorola, JDS Uniphase, Nortel, Cisco Systems and IBM. To stem the losses, we
decreased the tech and telecom holdings as the period progressed and shifted
more money into health care.
That strategy paid off, as health care provided strong gains in late 2000, with
Alza, Pfizer, Medtronic and HCA Healthcare among the Fund's biggest winners.
Looking at other sectors, utilities and energy were strong performers for most
of the six months, thanks to gains by Duke Power, Enron and AES. Safeway, in the
food retailing sector, and Tyco, in the industrial sector, also were up
substantially.
Given that the market seems likely to remain volatile and unforgiving toward
companies whose profits fail to meet investors' expectations, we plan to
maintain an emphasis on high-quality companies that appear likely to enjoy
consistent growth. An additional criterion is that the stock price should offer
at least reasonably good investment value. As the new fiscal year begins, that
strategy has resulted in the Fund's portfolio having an average exposure to
technology stocks, an above-average exposure to health care and financial
services stocks, and a below-average exposure to basic materials and industrial
stocks.
James M. Johnson, Jr., CFA
Keith Tufte
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 2001 $6.23
July 31, 2000 $7.61
Decrease $1.38
Distributions -- Aug. 1, 2000 - Jan. 31, 2001
From income $0.90
From long-term capital gains $0.09
Total distributions $0.99
Total return* -4.33%
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 2001 $5.96
July 31, 2000 $7.36
Decrease $1.40
Distributions -- Aug. 1, 2000 - Jan. 31, 2001
From income $0.90
From long-term capital gains $0.09
Total distributions $0.99
Total return* -4.76%
Class C -- 6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 2001 $5.96
July 31, 2000 $7.36
Decrease $1.40
Distributions -- Aug. 1, 2000 - Jan. 31, 2001
From income $0.90
From long-term capital gains $0.09
Total distributions $0.99
Total return* -4.76%
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 2001 $6.27
July 31, 2000 $7.65
Decrease $1.38
Distributions -- Aug. 1, 2000 - Jan. 31, 2001
From income $0.90
From long-term capital gains $0.09
Total distributions $0.99
Total return* -4.32%
* The total return is a hypothetical investment in the Fund with all
distributions reinvested. Returns do not include sales load. The prospectus
discusses the effect of sales charges, if any, on the various classes.
<PAGE>
The 10 Largest Holdings
Percent Value
(of net assets) (as of Jan. 31, 2001)
General Electric 3.43% $25,985,400
Pfizer 2.94 22,209,284
Cisco Systems 2.76 20,908,843
AOL Time Warner 2.29 17,308,007
SBC Communications 1.99 15,046,520
Intl Business Machines 1.96 14,806,400
Verizon 1.87 14,144,130
American Intl Group 1.65 12,472,434
Viacom Cl B 1.56 11,790,720
Home Depot 1.55 11,693,320
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here make up 22.00% of net assets
<PAGE>
Financial Statements
Statement of assets and liabilities
AXP Research Opportunities Fund
Jan. 31, 2001 (Unaudited)
Assets
Investment in Aggressive Growth Portfolio (Note 1) $756,653,964
------------
Capital shares receivable 1,373
Total assets 756,655,337
-----------
Liabilities
Accrued distribution fee 11,272
Accrued service fee 1
Accrued transfer agency fee 4,038
Accrued administrative services fee 1,138
Other accrued expenses 24,356
------
Total liabilities 40,805
------
Net assets applicable to outstanding capital stock $756,614,532
============
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,236,639
Additional paid-in capital 795,098,135
Undistributed net investment income 312,948
Accumulated net realized gain (loss) (39,946,885)
Unrealized appreciation (depreciation) on investments (86,305)
-------
Total -- representing net assets applicable
to outstanding capital stock $756,614,532
============
Net assets applicable to outstanding shares
Class A $459,122,885
Class B $296,891,606
Class C $ 231,496
Class Y $ 368,545
Net asset value per share of outstanding capital stock:
Class A shares 73,718,118 $ 6.23
Class B shares 49,848,155 $ 5.96
Class C shares 38,828 $ 5.96
Class Y shares 58,782 $ 6.27
See accompanying notes to financial statements.
<PAGE>
Statement of operations
AXP Research Opportunities Fund
Six months ended Jan. 31, 2001 (Unaudited)
Investment income
Income:
Dividends $ 3,462,742
Interest 2,766,681
---------
Total income 6,229,423
---------
Expenses (Note 2):
Expenses allocated from Aggressive Growth Portfolio 2,568,635
Distribution fee
Class A 638,228
Class B 1,612,039
Class C 709
Transfer agency fee 678,372
Incremental transfer agency fee
Class A 47,380
Class B 48,582
Class C 31
Service fee-- Class Y 151
Administrative services fees and expenses 232,738
Compensation of board members 3,400
Printing and postage 47,840
Registration fees 56,564
Audit fees 2,875
Other 3,853
-----
Total expenses 5,941,397
Earnings credits on cash balances (Note 2) (24,922)
-------
Total net expenses 5,916,475
---------
Investment income (loss)-- net 312,948
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (15,721,946)
Futures contracts (21,367,843)
Options contracts written 84,603
------
Net realized gain (loss) on investments (37,005,186)
Net change in unrealized appreciation
(depreciation) on investments (1,433,013)
----------
Net gain (loss) on investments (38,438,199)
-----------
Net increase (decrease) in net assets resulting from operations $(38,125,251)
============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
AXP Research Opportunities Fund
Jan. 31, 2001 July 31, 2000
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 312,948 $ (2,315,065)
Net realized gain (loss) on investments (37,005,186) 124,226,458
Net change in unrealized appreciation
(depreciation) on investments (1,433,013) (60,246,113)
---------- -----------
Net increase (decrease) in net assets
resulting from operations (38,125,251) 61,665,280
----------- ----------
Distributions to shareholders from:
Net realized gain
Class A (63,540,495) (63,710,249)
Class B (42,333,113) (39,244,541)
Class C (27,210) --
Class Y (37,724) (48,595)
------- -------
Total distributions (105,938,542) (103,003,385)
------------ ------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Notes 2 and 5) 30,739,831 166,386,521
Class B shares 16,224,811 95,693,551
Class C shares 183,551 59,404
Class Y shares 107,983 104,177
Reinvestment of distributions at net asset value
Class A shares 62,626,777 60,899,683
Class B shares 41,987,967 39,015,490
Class C shares 27,210 --
Class Y shares 37,724 48,595
Payments for redemptions
Class A shares (88,152,522) (144,633,828)
Class B shares (Note 2) (39,645,344) (56,592,557)
Class C shares (Note 2) (1,902) --
Class Y shares (19,473) (235,274)
------- --------
Increase (decrease) in net assets
from capital share transactions 24,116,613 160,745,762
---------- -----------
Total increase (decrease) in net assets (119,947,180) 119,407,657
Net assets at beginning of period 876,561,712 757,154,055
----------- -----------
Net assets at end of period $ 756,614,532 $ 876,561,712
============= =============
Undistributed net investment income $ 312,948 $ --
------------- -------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
AXP Research Opportunities Fund
(Unaudited as to Jan. 31, 2001)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Growth Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. AXP Growth Series, Inc. has 10 billion authorized
shares of capital stock that can be allocated among the separate series as
designated by the board.
Class C shares of the Fund were offered to the public on June 26, 2000. Prior to
this date, American Express Financial Corporation (AEFC) purchased 260 shares of
capital stock at $7.69 per share, which represented the initial capital in Class
C.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, incremental transfer agency fee and service fee (class
specific expenses) differ among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on investments
are allocated to each class of shares based upon its relative net assets.
Investment in Aggressive Growth Portfolio
The Fund invests all of its assets in Aggressive Growth Portfolio (the
Portfolio), a series of Growth Trust (the Trust), an open-end investment company
that has the same objectives as the Fund. The Portfolio invests primarily in
equity securities of companies that comprise the S&P 500.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at the value that is equal to
the Fund's proportionate ownership interest in the Portfolio's net assets. The
percentage of the Portfolio owned by the Fund as of Jan. 31, 2001, was 99.99%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's "Notes to financial statements" (included elsewhere in this report).
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 and liabilities) that could differ from actual results.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
2. EXPENSES AND SALES CHARGES
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
The Fund has an agreement with AEFC to provide administrative services. Under an
Administrative Services Agreement, the Fund pays AEFC a fee for administration
and accounting services at a percentage of the Fund's average daily net assets
in reducing percentages from 0.06% to 0.03% annually. A minor portion of
additional administrative service expenses paid by the Fund are consultants'
fees and fund office expenses. Under this agreement, the Fund also pays 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 Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $19.00
o Class B $20.00
o Class C $19.50
o Class Y $17.00
The Fund has agreements with American Express Financial Advisors Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution, the Fund pays a distribution fee at an annual rate up
to 0.25% of the Fund's average daily net assets attributable to Class A shares
and up to 1.00% for Class B and Class C shares.
Under a Shareholder Service Agreement, the Fund pays the Distributor a fee for
service provided to shareholders by financial advisors and other servicing
agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net
assets attributable to Class Y shares.
Sales charges received by the Distributor for distributing Fund shares were
$378,646 for Class A and $124,460 for Class B for the six months ended Jan. 31,
2001.
During the six months ended Jan. 31, 2001, the Fund's transfer agency fees were
reduced by $24,922 as a result of earnings credits from overnight cash balances.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<PAGE>
<TABLE>
<CAPTION>
Six months ended Jan. 31, 2001
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Sold 4,195,382 2,311,477 26,424 17,165
Issued for reinvested distributions 10,669,040 7,469,049 4,842 6,383
Redeemed (12,071,082) (5,628,406) (260) (2,818)
----------- ---------- ---- ------
Net increase (decrease) 2,793,340 4,152,120 31,006 20,730
--------- --------- ------ ------
Year ended July 31, 2000
Class A Class B Class C* Class Y
Sold 21,031,597 12,460,910 7,822 12,602
Issued for reinvested distributions 7,628,858 5,032,734 -- 6,067
Redeemed (18,245,115) (7,378,944) -- (30,613)
----------- ---------- ----- -------
Net increase (decrease) 10,415,340 10,114,700 7,822 (11,944)
---------- ---------- ----- -------
*Inception date was June 26, 2000.
</TABLE>
<PAGE>
4. BANK BORROWINGS
The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund
is permitted to have bank borrowings for temporary or emergency purposes to fund
shareholder redemptions. The Fund must have asset coverage for borrowings not to
exceed the aggregate of 333% of advances equal to or less than five business
days plus 367% of advances over five business days. The agreement, which enables
the Fund to participate with other American Express mutual funds, permits
borrowings up to $200 million, collectively. Interest is charged to each Fund
based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or
the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to
90 days after such loan is executed. The Fund also pays a commitment fee equal
to its pro rata share of the amount of the credit facility at a rate of 0.05%
per annum. The Fund had no borrowings outstanding during the six months ended
Jan. 31, 2001.
5. FUND MERGER
As of the close of business on July 14, 2000 AXP Research Opportunities Fund
acquired the assets and assumed the identified liabilities of Strategist Special
Growth Fund.
The aggregate net assets of AXP Research Opportunities Fund immediately before
the acquisition were $946,240,117.
The merger was accomplished by a tax-free exchange of 363,505 shares of
Strategist Special Growth Fund valued at $2,013,472.
In exchange for the Strategist Special Growth Fund shares and net assets, AXP
Research Opportunities Fund issued the following number of shares:
Shares Net assets
Class A 246,489 $2,013,472
Strategist Special Growth Fund's net assets at that date consisted of capital
stock of $1,877,754 and unrealized appreciation of $135,718.
6. NEW ACCOUNTING PRONOUNCEMENT
In November 2000, the AICPA issued a revised Audit and Accounting Guide, Audits
of Investment Companies, which is effective for fiscal years beginning after
Dec. 15, 2000. Adopting the revised Guide is not expected to have a significant
impact on the Fund's financial position, results of operations or changes in its
net assets.
<PAGE>
<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Fiscal period ended July 31,
Per share income and capital changes(a)
Class A
2001(b) 2000 1999 1998 1997(c)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.61 $7.94 $6.98 $6.86 $5.00
Income from investment operations:
Net investment income (loss) .01 -- (.01) .02 .01
Net gains (losses) (both realized and unrealized) (.40) .66 1.32 .65 1.86
Total from investment operations (.39) .66 1.31 .67 1.87
Less distributions:
Distributions from realized gains (.99) (.99) (.35) (.55) (.01)
Net asset value, end of period $6.23 $7.61 $7.94 $6.98 $6.86
Ratios/supplemental data
Net assets, end of period (in millions) $459 $540 $481 $337 $205
Ratio of expenses to average daily net assets(d) 1.13%(e) 1.14% 1.12% 1.12% 1.52%(e)
Ratio of net investment income (loss)
to average daily net assets .37%(e) .02% .04% .30% .20%(e)
Portfolio turnover rate
(excluding short-term securities) 144% 160% 143% 148% 171%
Total return(f) (4.33%) 7.73% 19.21% 10.76% 37.44%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Six months ended Jan. 31, 2001 (Unaudited).
(c) Inception date was Aug. 19, 1996.
(d) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal period ended July 31,
Per share income and capital changes(a)
Class B
2001(b) 2000 1999 1998 1997(c)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.36 $7.76 $6.88 $6.82 $5.00
Income from investment operations:
Net investment income (loss) (.01) (.05) (.02) (.02) (.02)
Net gains (losses) (both realized and unrealized) (.40) .64 1.25 .63 1.85
Total from investment operations (.41) .59 1.23 .61 1.83
Less distributions:
Distributions from realized gains (.99) (.99) (.35) (.55) (.01)
Net asset value, end of period $5.96 $7.36 $7.76 $6.88 $6.82
Ratios/supplemental data
Net assets, end of period (in millions) $297 $336 $276 $184 $96
Ratio of expenses to average daily net assets(d) 1.89%(e) 1.91% 1.88% 1.88% 2.25%(e)
Ratio of net investment income (loss)
to average daily net assets (.39%)(e) (.73%) (.72%) (.46%) (.53%)(e)
Portfolio turnover rate
(excluding short-term securities) 144% 160% 143% 148% 171%
Total return(f) (4.76%) 7.03% 18.31% 9.92% 36.48%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Six months ended Jan. 31, 2001 (Unaudited).
(c) Inception date was Aug. 19, 1996.
(d) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
Fiscal period ended July 31,
Per share income and capital changes(a)
Class C
2001(b) 2000(c)
Net asset value, beginning of period $7.36 $7.50
Income from investment operations:
Net investment income (loss) -- .02
Net gains (losses) (both realized and unrealized) (.41) (.16)
Total from investment operations (.41) (.14)
Less distributions:
Distributions from realized gains (.99) --
Net asset value, end of period $5.96 $7.36
Ratios/supplemental data
Net assets, end of period (in millions) $-- $--
Ratio of expenses to average daily net assets(d) 1.89%(e) 1.91%(e)
Ratio of net investment income (loss)
to average daily net assets (.25%)(e) (.50%)(e)
Portfolio turnover rate
(excluding short-term securities) 144% 160%
Total return(f) (4.76%) (1.87%)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Six months ended Jan. 31, 2001 (Unaudited).
(c) Inception date was June 26, 2000.
(d) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
<PAGE>
<TABLE>
<CAPTION>
Fiscal period ended July 31,
Per share income and capital changes(a)
Class Y
2001(b) 2000 1999 1998 1997(c)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.65 $7.96 $7.01 $6.88 $5.00
Income from investment operations:
Net investment income (loss) .02 .01 -- .03 .01
Net gains (losses) (both realized and unrealized) (.41) .67 1.32 .65 1.88
Total from investment operations (.39) .68 1.32 .68 1.89
Less distributions:
Dividends from net investment income -- -- (.02) -- --
Distributions from realized gains (.99) (.99) (.35) (.55) (.01)
Total distributions (.99) (.99) (.37) (.55) (.01)
Net asset value, end of period $6.27 $7.65 $7.96 $7.01 $6.88
Ratios/supplemental data
Net assets, end of period (in millions) $-- $-- $-- $-- $--
Ratio of expenses to average daily net assets(d) .97%(e) .97% 1.02% .87% 1.45%(e)
Ratio of net investment income (loss)
to average daily net assets .55%(e) .17% .12% .40% .33%(e)
Portfolio turnover rate
(excluding short-term securities) 144% 160% 143% 148% 171%
Total return(f) (4.32%) 7.99% 19.34% 10.93% 37.66%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Six months ended Jan. 31, 2001 (Unaudited).
(c) Inception date was Aug. 19, 1996.
(d) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
Financial Statements
Statement of assets and liabilities
Aggressive Growth Portfolio
Jan. 31, 2001 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $753,561,554) $751,807,272
Dividends receivable 572,076
Receivable for investment securities sold 40,332,356
----------
Total assets 792,711,704
-----------
Liabilities
Disbursements in excess of cash on demand deposit 93,309
Payable for investment securities purchased 35,844,558
Accrued investment management services fee 12,946
Other accrued expenses 16,613
------
Total liabilities 35,967,426
----------
Net assets $756,744,278
============
See accompanying notes to financial statements.
<PAGE>
Statement of operations
Aggressive Growth Portfolio
Six months ended Jan. 31, 2001 (Unaudited)
Investment income
Income:
Dividends $ 3,463,132
Interest 2,771,718
---------
Total income 6,234,850
---------
Expenses (Note 2):
Investment management services fee 2,512,936
Compensation of board members 3,750
Custodian fees 39,560
Audit fees 8,625
Other 8,653
-----
Total expenses 2,573,524
Earnings credits on cash balances (Note 2) (4,600)
------
Total net expenses 2,568,924
---------
Investment income (loss)-- net 3,665,926
---------
Realized and unrealized gain (loss)-- net
Net realized gain (loss) on:
Security transactions (Note 3) (15,725,087)
Futures contracts (21,370,394)
Options contracts written (Note 5) 84,613
------
Net realized gain (loss) on investments (37,010,868)
Net change in unrealized appreciation
(depreciation) on investments (1,431,697)
----------
Net gain (loss) on investments (38,442,565)
-----------
Net increase (decrease) in net assets resulting from operations $(34,776,639)
============
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
Aggressive Growth Portfolio
Jan. 31, 2001 July 31, 2000
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss)-- net $ 3,665,926 $ 4,657,284
Net realized gain (loss) on investments (37,010,868) 124,551,441
Net change in unrealized appreciation
(depreciation) on investments (1,431,697) (60,287,301)
---------- -----------
Net increase (decrease) in net assets
resulting from operations (34,776,639) 68,921,424
Net contributions (withdrawals) from partners (85,284,691) 48,785,614
----------- ----------
Total increase (decrease) in net assets (120,061,330) 117,707,038
Net assets at beginning of period 876,805,608 759,098,570
----------- -----------
Net assets at end of period $ 756,744,278 $876,805,608
============= ============
See accompanying notes to financial statements.
<PAGE>
Notes to Financial Statements
Aggressive Growth Portfolio
(Unaudited as to Jan. 31, 2001)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Aggressive Growth Portfolio (the Portfolio) is a series of Growth Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. Aggressive Growth
Portfolio invests primarily in equity securities of companies that comprise the
S&P 500. The Declaration of Trust permits the Trustees to issue non-transferable
interests in the Portfolio.
The Portfolio's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets and liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete its contract obligations.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with AEFC to manage its portfolio. Under this agreement, AEFC
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.65% to 0.5% annually. The fee may be adjusted upward or
downward by a performance incentive adjustment based on a comparison of the
performance of Class A shares of AXP Research Opportunities Fund to the Lipper
Large-Cap Core Index. The maximum adjustment is 0.12% of the Portfolio's average
daily net assets after deducting 1% from the performance difference. If the
performance difference is less than 1%, the adjustment will be zero. The
adjustment decreased the fee by $89,978 for the six months ended Jan. 31, 2001.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
During the six months ended Jan. 31, 2001, the Portfolio's custodian fees were
reduced by $4,600 as a result of earnings credits from overnight cash balances.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
According to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $1,064,557,103 and $1,131,722,902 respectively, for the
six months ended Jan. 31, 2001. For the same period, the portfolio turnover rate
was 144%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $31,761 for the
six months ended Jan. 31, 2001.
Income from securities lending amounted to $19 for the six months ended Jan. 31,
2001. The risks to the Portfolio of securities lending are that the borrower may
not provide additional collateral when required or return the securities when
due.
4. STOCK INDEX FUTURES CONTRACTS
As of Jan. 31, 2001, investments in securities included securities valued at
$9,276,569 that were pledged as collateral to cover initial margin deposits on
241 open purchase contracts. The market value of the open purchase contracts as
of Jan. 31, 2001 was $82,717,225 with a net unrealized gain of $1,667,938.
5. OPTIONS CONTRACTS WRITTEN
Contracts and premium amounts associated with options contracts written are as
follows:
Six months ended Jan. 31, 2001
Calls
Contracts Premium
Balance July 31, 2000 -- $ --
Opened 900 118,125
Closed (900) (118,125)
---- --------
Balance Jan. 31, 2001 -- $ --
---- --------
6. NEW ACCOUNTING PRONOUNCEMENT
In November 2000, the AICPA issued a revised Audit and Accounting Guide, Audits
of Investment Companies, which is effective for fiscal years beginning after
Dec. 15, 2000. Adopting the revised Guide is not expected to have a significant
impact on the Portfolio's financial position, results of operations or changes
in its net assets.
<PAGE>
Investments in Securities
Aggressive Growth Portfolio
Jan. 31, 2001 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (88.7%)
Issuer Shares Value(a)
Airlines (0.7%)
AMR 138,400(b) $5,410,056
Banks and savings & loans (6.8%)
Bank of America 185,100 9,962,082
Firstar 416,300 9,824,680
FleetBoston Financial 233,100 10,102,554
Mellon Financial 103,100 4,804,460
Washington Mutual 145,400 7,015,550
Wells Fargo 193,900 9,987,789
Total 51,697,115
Beverages & tobacco (2.2%)
Anheuser-Busch 132,700 5,753,872
Philip Morris 163,900 7,211,600
UST 131,400 3,350,700
Total 16,316,172
Chemicals (0.6%)
Du Pont (EI) de Nemours 95,400 4,169,934
Communications equipment & services (2.3%)
Corning 189,200 10,729,532
JDS Uniphase 56,600(b) 3,102,388
Lucent Technologies 196,300 3,651,180
Total 17,483,100
Computer software & services (0.5%)
Siebel Systems 52,700(b) 3,494,669
Computers & office equipment (13.4%)
AOL Time Warner 329,300(b) 17,308,007
Cisco Systems 558,500(b) 20,908,843
Compaq Computer 229,200 5,434,332
Computer Sciences 106,600(b) 6,886,360
EMC 132,200(b) 10,045,878
First Data 84,500 5,138,445
Intl Business Machines 132,200 14,806,400
Juniper Networks 17,300(b,e) 1,845,694
Sanmina 181,900(b) 8,844,888
Solectron 270,700(b) 10,787,395
Total 102,006,242
Electronics (5.5%)
Applied Materials 149,200(b) 7,506,625
Celestica 16,100(b,c) 1,063,405
Linear Technology 119,100 7,458,638
Maxim Integrated Products 114,400(b) 6,985,550
Novellus Systems 36,300(b) 1,756,013
Texas Instruments 228,300 9,999,539
Xilinx 132,000(b) 7,128,000
Total 41,897,770
Energy (3.4%)
BP Amoco ADR 167,400(c) 8,621,100
Chevron 116,600 9,710,448
Kerr-McGee 109,900 7,106,134
Total 25,437,682
Energy equipment & services (2.9%)
Halliburton 225,400 9,284,226
Rowan Companies 148,600(b) 4,056,780
Transocean Sedco Forex 188,900 8,585,505
Total 21,926,511
Financial services (7.0%)
Capital One Financial 65,200 4,108,904
Countrywide Credit Inds 74,900 3,610,929
Fannie Mae 123,400 9,153,812
Lehman Brothers Holdings 131,100(e) 10,786,908
MBNA 291,400 10,545,766
Merrill Lynch 89,300 6,474,250
Providian Financial 142,800 8,332,380
Total 53,012,949
Food (1.5%)
Heinz (HJ) 162,800 7,129,012
SUPERVALU 287,600(e) 3,853,840
Total 10,982,852
Health care (12.8%)
Allergan 108,300 8,853,525
ALZA 95,900(b) 3,970,260
Amgen 140,400(b) 9,871,875
Baxter Intl 106,500 9,359,220
Biomet 125,300 4,221,044
Guidant 162,200(b) 8,028,900
King Pharmaceuticals 196,500(b) 8,903,415
Pfizer 491,900 22,209,284
Pharmacia 193,800 10,856,676
Schering-Plough 207,700(e) 10,468,080
Total 96,742,279
Health care services (1.2%)
HCA-The Healthcare 138,100 5,166,321
Tenet Healthcare 83,500 3,642,270
Total 8,808,591
Insurance (2.9%)
American Intl Group 146,700 12,472,434
Marsh & McLennan 88,700 9,592,905
Total 22,065,339
Leisure time & entertainment (1.6%)
Viacom Cl B 213,600(b) 11,790,720
Media (2.8%)
Clear Channel Communications 140,300(b) 9,148,963
Deluxe 122,900 2,579,671
Infinity Broadcasting Cl A 201,000(b) 6,582,750
Univision Communications Cl A 67,000(b) 2,856,210
Total 21,167,594
Miscellaneous (1.0%)
Convergys 163,900(b) 7,786,889
Multi-industry conglomerates (5.4%)
General Electric 564,900 25,985,400
Robert Half Intl 134,300(b) 3,592,525
Tyco Intl 187,600(c) 11,556,160
Total 41,134,085
Retail (8.5%)
Best Buy 111,200(b) 5,537,760
Federated Dept Stores 167,200(b) 7,450,432
Gap 179,100 5,838,660
Home Depot 242,600 11,693,320
Kohl's 120,800(b) 8,576,800
Kroger 379,700(b) 9,321,635
May Department Stores 178,400 6,948,680
Safeway 175,500(b) 8,892,585
Total 64,259,872
Utilities -- electric (0.3%)
Exelon 31,500 1,906,065
Utilities -- gas (0.3%)
El Paso Energy 38,745 2,437,062
Utilities -- telephone (5.2%)
BellSouth 243,000 10,242,450
SBC Communications 311,200 15,046,520
Verizon 257,400 14,144,130
Total 39,433,100
Total common stocks
(Cost: $673,108,006) $671,366,648
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (10.6%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (5.7%)
Federal Home Loan Bank Disc Nts
<S> <C> <C> <C> <C> <C>
03-02-01 6.31% $100,000 $99,445
03-21-01 5.45 7,000,000 6,948,454
Federal Home Loan Mtge Corp Disc Nts
03-06-01 5.55 4,600,000 4,576,018
03-27-01 5.37 30,000,000 29,755,708
Federal Natl Mtge Assn Disc Nt
03-05-01 5.50 2,100,000 2,089,470
Total 43,469,095
Commercial paper (4.9%)
Caterpillar
02-09-01 6.46 7,200,000(d) 7,188,390
Commerzbank U.S. Finance
03-08-01 5.51 3,400,000 3,381,368
CXC
02-07-01 6.51 4,800,000(d) 4,793,933
General Electric Capital
02-06-01 6.54 5,100,000 5,094,407
Merrill Lynch
03-12-01 5.53 3,600,000 3,578,000
Natl Rural Utilities
02-16-01 5.68 1,600,000 1,595,968
Paccar Financial
04-18-01 5.54 4,100,000 4,052,031
Salomon Smith Barney
02-14-01 6.48 1,900,000 1,895,160
Toyota Motor Credit
02-08-01 6.45 5,400,000(d) 5,392,272
Total 36,971,529
Total short-term securities
(Cost: $80,453,548) $80,440,624
Total investments in securities
(Cost: $753,561,554)(f) $751,807,272
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. As of Jan. 31, 2001, the
value of foreign securities represented 2.81% of net assets.
(d) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other "accredited investors." This security has been determined to be
liquid under guidelines established by the board.
(e) Partially pledged as initial margin deposit on the following open stock
index futures contracts (see Note 4 to the financial statements):
Type of security Contracts
Purchase contracts
S&P 500 Index, March 2001 241
(f) At Jan. 31, 2001, the cost of securities for federal income tax purposes
was approximately $753,562,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 39,491,000
Unrealized depreciation (41,246,000)
-----------
Net unrealized depreciation $ (1,755,000)
------------
<PAGE>
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN
EXPRESS
American
Express
Funds
AXP Research Opportunities Fund
70100 AXP Financial Center
Minneapolis, MN 55474
TICKER SYMBOL
Class A: IRDAX Class B: IROBX
Class C: N/A Class Y: N/A
S-6359 F (3/01)
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD.
American Express Company is separate from American Express Financial Advisors
Inc. and is not a broker-dealer.
</TEXT>
</DOCUMENT>