-----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, QfuKFRohUUIyU8u9wWci4GxmWd/aoRWEbmIZJEjsozn6rW0FrMx2Y07lgf7WJpZ/ g3RHwG4aHnQLU49lIXxjLg== 0000820027-01-500040.txt : 20010319 0000820027-01-500040.hdr.sgml : 20010319 ACCESSION NUMBER: 0000820027-01-500040 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010131 FILED AS OF DATE: 20010316 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP GROWTH SERIES INC/MN CENTRAL INDEX KEY: 0000049702 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 410329910 STATE OF INCORPORATION: MN FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-02111 FILM NUMBER: 1569737 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126712772 MAIL ADDRESS: STREET 1: 80 S. 8TH STREET CITY: MINNEAPOLIS STATE: MN ZIP: 55440 FORMER COMPANY: FORMER CONFORMED NAME: AXP GROWTH FUND INC DATE OF NAME CHANGE: 20000829 FORMER COMPANY: FORMER CONFORMED NAME: IDS GROWTH FUND INC DATE OF NAME CHANGE: 19920703 N-30D 1 s6456p.txt AXP GROWTH FUND AXP(R) Growth Fund 2001 SEMIANNUAL REPORT (icon of) ruler AXP Growth Fund seeks to provide shareholders with long-term capital growth. Going for Growth In the long run, a company's stock price usually reflects its business fortunes. Therefore, if a company thrives, its stock tends to follow suit. That's why many long-term investors, including AXP Growth Fund, focus on growth stocks -- those of companies that enjoy rising sales and profits. While there will be interruptions along the way, patient investors look forward to sharing in that same prosperity. CONTENTS From the Chairman 3 From the Portfolio Manager 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 (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 manager's 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) Lisa A. Costa Lisa A. Costa Portfolio manager From the Portfolio Manager Large-capitalization growth stocks, particularly technology-related issues, were under severe selling pressure for much of the past six months. AXP Growth Fund's performance reflected the unfavorable environment, as its Class A shares experienced a loss of 19.43% (excluding the sales charge) for the first half of the fiscal year -- August 2000 through January 2001. At the outset of the period, there was little indication of the pitfall that lay ahead. The stock market was surging, and the Fund would go on to record a gain of 9% in August, which would prove to be its best monthly result of the period. PROFIT CONCERNS But within days, concerns that a slowdown in the economy might lead to weaker corporate profits began to cast a pall over the market. Much of investors' anxiety centered on technology stocks, whose generally lofty prices required that their respective companies continue to generate exceptional profit growth. The result was a wave of selling that continued almost unabated from September through late December. Illustrating the force of the downturn, the Nasdaq Composite, a group of stocks that includes many leading technology names, declined by more than 40% during that time. January finally brought some relief in the form of a surprise interest-rate cut by the Federal Reserve, which sparked a strong market rebound that ended the period on a positive note. Because technology stocks comprised the Fund's largest area of investment (about 40% of the portfolio during the period), last fall's downturn took a substantial toll on performance. Fortunately, gains from health care and financial services stocks, which together made up about 30% of the portfolio, picked up some of the slack. Tech did pay off for the Fund in January, though, when it led the market's comeback. Taking a broader view of the period, I think it provides a clear example of the ongoing risk-reward relationship inherent in growth-stock investing: Along with greater reward comes greater risk. There are, and there will be, disappointments. That's why it's so important for investors, myself included, to think in terms of years, not weeks or months. As for what the second half of the fiscal year may hold, I think we'll see a gradually improving environment for growth stocks. The key to this outlook is the Federal Reserve's willingness to cut interest rates, which I expect to set the stage for an upturn in corporate profits and, ultimately, a better stock market. In the meantime, I plan to keep the bulk of portfolio invested in technology, health care and financial services, the three business sectors that I believe offer the best long-term growth prospects. Lisa A. Costa Fund Facts Class A -- 6-month performance (All figures per share) Net asset value (NAV) Jan. 31, 2001 $41.33 July 31, 2000 $54.36 Decrease $13.03 Distributions -- Aug. 1, 2000 - Jan. 31, 2001 From income $ -- From long-term capital gains $ 2.20 Total distributions $ 2.20 Total return* -19.43% Class B -- 6-month performance (All figures per share) Net asset value (NAV) Jan. 31, 2001 $39.29 July 31, 2000 $52.02 Decrease $12.73 Distributions -- Aug. 1, 2000 - Jan. 31, 2001 From income $ -- From long-term capital gains $ 2.20 Total distributions $ 2.20 Total return* -19.73% Class C -- 6-month performance (All figures per share) Net asset value (NAV) Jan. 31, 2001 $39.31 July 31, 2000 $52.03 Decrease $12.72 Distributions -- Aug. 1, 2000 - Jan. 31, 2001 From income $ -- From long-term capital gains $ 2.20 Total distributions $ 2.20 Total return* -19.71% Class Y -- 6-month performance (All figures per share) Net asset value (NAV) Jan. 31, 2001 $41.69 July 31, 2000 $54.75 Decrease $13.06 Distributions -- Aug. 1, 2000 - Jan. 31, 2001 From income $ -- From long-term capital gains $ 2.20 Total distributions $ 2.20 Total return* -19.34% * 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. The 10 Largest Holdings Percent Value (of net assets) (as of Jan. 31, 2001) EMC 6.21% $562,326,000 Pfizer 5.38 487,620,000 Citigroup 4.57 414,178,000 Cisco Systems 4.42 400,581,250 Texas Instruments 3.92 354,780,000 Microsoft 3.54 320,578,125 Maxim Integrated Products 3.03 274,781,250 Merrill Lynch 2.38 215,687,500 Home Depot 2.34 212,080,000 Applied Materials 2.33 210,829,500 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 38.12% of net assets Financial Statements Statement of assets and liabilities AXP Growth Fund Jan. 31, 2001 (Unaudited) Assets Investment in Growth Portfolio (Note 1) $9,057,295,387 Captial shares receivable 210,667 ------- Total assets 9,057,506,054 ------------- Liabilities Capital shares payable 16,317 Accrued distribution fee 98,381 Accrued service fee 3,750 Accrued transfer agency fee 30,660 Accrued administrative services fee 9,155 Other accrued expenses 180,755 ------- Total liabilities 339,018 ------- Net assets applicable to outstanding capital stock $9,057,167,036 ============== Represented by Capital stock-- $.01 par value (Note 1) $ 2,215,781 Additional paid-in capital 6,389,501,583 Net operating loss (26,140,475) Accumulated net realized gain (loss) 2,099,575 Unrealized appreciation (depreciation) on investments 2,689,490,572 ------------- Total-- representing net assets applicable to outstanding capital stock $9,057,167,036 ============== Net assets applicable to outstanding shares: Class A $5,522,844,509 Class B $2,166,507,135 Class C $ 9,095,081 Class Y $1,358,720,311 Net asset value per share of outstanding capital stock: Class A shares 133,614,908 $ 41.33 Class B shares 55,141,938 $ 39.29 Class C shares 231,378 $ 39.31 Class Y shares 32,589,872 $ 41.69 See accompanying notes to financial statements. Statement of operations AXP Growth Fund Six months ended Jan. 31, 2001 (Unaudited) Investment income Income: Dividends $ 17,754,068 Interest 13,469,650 Less foreign taxes withheld (240) ---- Total income 31,223,478 ---------- Expenses (Note 2): Expenses allocated from Growth Portfolio 29,163,523 Distribution fee Class A 7,690,579 Class B 11,786,030 Class C 27,916 Transfer agency fee 4,882,716 Incremental transfer agency fee Class A 320,738 Class B 274,623 Class C 1,324 Service fee-- Class Y 729,664 Administrative services fees and expenses 1,812,324 Compensation of board members 7,775 Printing and postage 495,809 Registration fees 333,178 Audit fees 4,625 Other 14,896 ------ Total expenses 57,545,720 Earnings credits on cash balances (Note 2) (181,767) -------- Total net expenses 57,363,953 ---------- Investment income (loss)-- net (26,140,475) ----------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions 159,954,058 Options contracts written 15,722,497 ---------- Net realized gain (loss) on investments 175,676,555 Net change in unrealized appreciation (depreciation) on investments (2,297,636,746) -------------- Net gain (loss) on investments (2,121,960,191) -------------- Net increase (decrease) in net assets resulting from operations $(2,148,100,666) =============== See accompanying notes to financial statements.
Statements of changes in net assets AXP Growth Fund Jan. 31, 2001 July 31, 2000 Six months ended Year ended (Unaudited) Operations and distributions Investment income (loss)-- net $ (26,140,475) $ (40,646,714) Net realized gain (loss) on investments 175,676,555 282,481,456 Net change in unrealized appreciation (depreciation) on investments (2,297,636,746) 2,000,202,891 -------------- ------------- Net increase (decrease) in net assets resulting from operations (2,148,100,666) 2,242,037,633 -------------- ------------- Distributions to shareholders from: Net realized gain Class A (275,969,231) (87,059,276) Class B (112,811,834) (31,046,847) Class C (392,824) -- Class Y (66,854,162) (17,842,638) ----------- ----------- Total distributions (456,028,051) (135,948,761) ------------ ------------ Capital share transactions (Note 3) Proceeds from sales Class A shares (Notes 2 and 5) 1,015,387,084 2,328,546,079 Class B shares 330,235,198 766,835,307 Class C shares 10,015,454 1,181,005 Class Y shares 478,867,572 838,486,439 Reinvestment of distributions at net asset value Class A shares 267,787,154 81,857,352 Class B shares 111,917,704 30,846,821 Class C shares 391,827 -- Class Y shares 54,657,205 17,838,677 Payments for redemptions Class A shares (802,354,653) (1,719,179,723) Class B shares (Note 2) (112,719,785) (240,842,800) Class C shares (Note 2) (693,697) -- Class Y shares (349,261,540) (502,331,403) ------------ ------------ Increase (decrease) in net assets from capital share transactions 1,004,229,523 1,603,237,754 ------------- ------------- Total increase (decrease) in net assets (1,599,899,194) 3,709,326,626 Net assets at beginning of period 10,657,066,230 6,947,739,604 -------------- ------------- Net assets at end of period $ 9,057,167,036 $10,657,066,230 =============== =============== See accompanying notes to financial statements.
Notes to Financial Statements AXP Growth 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 36 shares of capital stock at $54.97 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 Growth Portfolio The Fund invests all of its assets in 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 stocks of U.S. and foreign companies that appear to offer growth opportunities. 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 0.05% to 0.02% 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 $8,110,204, $780,801 and $1,914 for Class A, Class B and Class C, respectively, 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 $181,767 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: Six months ended Jan. 31, 2001 Class A Class B Class C Class Y Sold 20,780,413 7,015,545 214,628 10,298,009 Issued for reinvested distributions 7,266,948 3,192,175 11,169 1,470,466 Redeemed (16,537,934) (2,511,418) (16,279) (7,499,336) ----------- ---------- ------- ---------- Net increase (decrease) 11,509,427 7,696,302 209,518 4,269,139 ---------- --------- ------- --------- Year ended July 31, 2000 Class A Class B Class C* Class Y Sold 46,185,191 15,828,819 21,860 16,314,629 Issued for reinvested distributions 1,627,914 638,655 -- 352,892 Redeemed (34,302,245) (4,884,036) -- (9,918,250) ----------- ---------- ------ ---------- Net increase (decrease) 13,510,860 11,583,438 21,860 6,749,271 ---------- ---------- ------ --------- * Inception date was June 26, 2000.
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 Growth Fund acquired the assets and assumed the identified liabilities of Strategist Growth Fund. The aggregate net assets of AXP Growth Fund immediately before the acquisition were $11,413,475,167. The merger was accomplished by a tax-free exchange of 535,806 shares of Strategist Growth Fund valued at $33,112,239. In exchange for the Strategist Growth Fund shares and net assets, AXP Growth Fund issued the following number of shares: Shares Net assets Class A 564,295 $33,112,239 Strategist Growth Fund's net assets at that date consisted of capital stock of $11,047,368 and unrealized appreciation of $22,064,871. 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.
7. FINANCIAL HIGHLIGHTS The tables below show certain important finanicial 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 Net asset value, beginning of period $54.36 $42.14 $36.58 $35.47 $23.16 Income from investment operations: Net investment income (loss) (.08) (.14) (.03) (.07) (.05) Net gains (losses) (both realized and unrealized) (10.75) 13.14 7.29 2.14 13.04 Total from investment operations (10.83) 13.00 7.26 2.07 12.99 Less distributions: Distributions from realized gains (2.20) (.78) (1.70) (.96) (.68) Net asset value, end of period $41.33 $54.36 $42.14 $36.58 $35.47 Ratios/supplemental data Net assets, end of period (in millions) $5,523 $6,637 $4,576 $3,681 $3,215 Ratio of expenses to average daily net assets(c) .99%(d) .99% .89% .87% .97% Ratio of net investment income (loss) to average daily net assets (.37%)(d) (.30%) (.08%) (.22%) (.18%) Portfolio turnover rate (excluding short-term securities) 15% 23% 17% 28% 24% Total return(e) (19.43%) 31.01% 20.49% 6.32% 57.00% (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Six months ended Jan. 31, 2001 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge.
Fiscal period ended July 31, Per share income and capital changes(a) Class B 2001(b) 2000 1999 1998 1997 Net asset value, beginning of period $52.02 $40.65 $35.61 $34.82 $22.92 Income from investment operations: Net investment income (loss) (.24) (.46) (.28) (.29) (.22) Net gains (losses) (both realized and unrealized) (10.29) 12.61 7.02 2.04 12.80 Total from investment operations (10.53) 12.15 6.74 1.75 12.58 Less distributions: Distributions from realized gains (2.20) (.78) (1.70) (.96) (.68) Net asset value, end of period $39.29 $52.02 $40.65 $35.61 $34.82 Ratios/supplemental data Net assets, end of period (in millions) $2,167 $2,468 $1,458 $1,021 $713 Ratio of expenses to average daily net assets(c) 1.76%(d) 1.75% 1.65% 1.63% 1.74% Ratio of net investment income (loss) to average daily net assets (1.13%)(d) (1.06%) (.85%) (.97%) (.94%) Portfolio turnover rate (excluding short-term securities) 15% 23% 17% 28% 24% Total return(e) (19.73%) 30.02% 19.58% 5.52% 55.81% (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Six months ended Jan. 31, 2001 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge.
Fiscal period ended July 31, Per share income and capital changes(a) Class C 2001(b) 2000(c) Net asset value, beginning of period $52.03 $52.65 Income from investment operations: Net investment income (loss) (.24) (.04) Net gains (losses) (both realized and unrealized) (10.28) (.58) Total from investment operations (10.52) (.62) Less distributions: Distributions from realized gains (2.20) -- Net asset value, end of period $39.31 $52.03 Ratios/supplemental data Net assets, end of period (in millions) $9 $1 Ratio of expenses to average daily net assets(d) 1.76%(e) 1.75%(e) Ratio of net investment income (loss) to average daily net assets (1.10%)(e) (1.30%)(e) Portfolio turnover rate (excluding short-term securities) 15% 23% Total return(f) (19.71%) (1.18%) (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.
Fiscal period ended July 31, Per share income and capital changes(a) Class Y 2001(b) 2000 1999 1998 1997 Net asset value, beginning of period $54.75 $42.37 $36.74 $35.60 $23.21 Income from investment operations: Net investment income (loss) (.05) (.06) -- (.04) (.01) Net gains (losses) (both realized and unrealized) (10.81) 13.22 7.33 2.14 13.08 Total from investment operations (10.86) 13.16 7.33 2.10 13.07 Less distributions: Distributions from realized gains (2.20) (.78) (1.70) (.96) (.68) Net asset value, end of period $41.69 $54.75 $42.37 $36.74 $35.60 Ratios/supplemental data Net assets, end of period (in millions) $1,359 $1,551 $914 $582 $179 Ratio of expenses to average daily net assets(c) .83%(d) .83% .80% .80% .85% Ratio of net investment income (loss) to average daily net assets (.21%)(d) (.14%) --% (.12%) (.07%) Portfolio turnover rate (excluding short-term securities) 15% 23% 17% 28% 24% Total return(e) (19.34%) 31.20% 20.59% 6.40% 57.23% (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Six months ended Jan. 31, 2001 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge.
Financial Statements Statement of assets and liabilities Growth Portfolio Jan. 31, 2001 (Unaudited) Assets Investments in securities, at value (Note 1): Investment in securities of unaffiliated issuers (identified cost $6,554,435,970) $9,252,606,120 Investment in securities of affiliated issuers (identified cost $30,538,061) 21,867,503 ---------- Total investments in securities (identified cost $6,584,974,031) 9,274,473,623 Cash in bank on demand deposit 157,928 Dividends and accrued interest receivable 1,770,125 Receivable for investment securities sold 46,384,956 U.S. government securities held as collateral (Note 4) 11,366,854 ---------- Total assets 9,334,153,486 ------------- Liabilities Payable for investment securities purchased 43,302,723 Payable upon return of securities loaned (Note 4) 233,232,454 Accrued investment management services fee 133,461 Other accrued expenses 113,220 ------- Total liabilities 276,781,858 ----------- Net assets $9,057,371,628 ============== See accompanying notes to financial statements. Statement of operations Growth Portfolio Six months ended Jan. 31, 2001 (Unaudited) Investment income Income: Dividends $ 17,754,221 Interest 13,469,377 Less foreign taxes withheld (240) ---- Total income 31,223,358 ---------- Expenses (Note 2): Investment management services fee 28,752,750 Compensation of board members 12,750 Custodian fees 310,746 Audit fees 13,875 Other 84,569 ------ Total expenses 29,174,690 Earnings credits on cash balances (Note 2) (10,917) ------- Total net expenses 29,163,773 ---------- Investment income (loss)-- net 2,059,585 --------- Realized and unrealized gain (loss)-- net Net realized gain (loss) on: Security transactions (Note 3) 159,927,577 Options contracts written (Note 5) 15,722,497 ---------- Net realized gain (loss) on investments 175,650,074 Net change in unrealized appreciation (depreciation) on investments (2,297,628,456) -------------- Net gain (loss) on investments (2,121,978,382) -------------- Net increase (decrease) in net assets resulting from operations $(2,119,918,797) =============== See accompanying notes to financial statements.
Statements of changes in net assets Growth Portfolio Jan. 31, 2001 July 31, 2000 Six months ended Year ended (Unaudited) Operations Investment income (loss)-- net $ 2,059,585 $ 8,205,713 Net realized gain (loss) on investments 175,650,074 283,936,086 Net change in unrealized appreciation (depreciation) on investments (2,297,628,456) 2,008,602,545 -------------- ------------- Net increase (decrease) in net assets resulting from operations (2,119,918,797) 2,300,744,344 Net contributions (withdrawals) from partners 519,880,074 1,384,517,514 ----------- ------------- Total increase (decrease) in net assets (1,600,038,723) 3,685,261,858 Net assets at beginning of period 10,657,410,351 6,972,148,493 -------------- ------------- Net assets at end of period $ 9,057,371,628 $10,657,410,351 =============== =============== See accompanying notes to financial statements.
Notes to Financial Statements Growth Portfolio (Unaudited as to Jan. 31, 2001) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Growth Portfolio (the Portfolio) is a series of Growth Trust (the Trust) and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. Growth Portfolio invests primarily in stocks of U.S. and foreign companies that appear to offer growth opportunities. The Declaration of Trust permits the Trustees to issue non-transferable interests in the Portfolio. The Portfolio's significant accounting policies are summarized below: Use of estimates Preparing financial statements that conform to 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 an independent pricing service. Securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Option transactions To produce incremental earnings, protect gains and facilitate buying and selling of securities for investments, the Portfolio may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. The Portfolio also may buy and sell put and call options and write covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Portfolio gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Portfolio may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Portfolio pays a premium whether or not the option is exercised. The Portfolio also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Portfolio will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. Futures transactions To gain exposure to or protect itself from market changes, the Portfolio may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Portfolio also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Portfolio is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Portfolio each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Portfolio recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Portfolio may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Portfolio and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Portfolio is subject to the credit risk that the other party will not complete its contract obligations. Federal taxes For federal income tax purposes the Portfolio qualifies as a partnership and each investor in the Portfolio is treated as the owner of its proportionate share of the net assets, income, expenses and realized and unrealized gains and losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore does not pay any income dividends or capital gain distributions. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including level-yield amortization of premium and discount, is accrued daily. 2. FEES AND EXPENSES The Trust, on behalf of the Portfolio, has an Investment Management Services Agreement with AEFC to manage its portfolio. Under this agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the Portfolio's average daily net assets in reducing percentages from 0.6% to 0.48% 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 the AXP Growth Fund to the Lipper Large-Cap Growth Fund Index. The maximum adjustment is 0.12% of the Portfolio's average daily net assets after deducting 1% from the performance difference. If the performance difference is less than 1% the adjustment will be zero. The adjustment increased the fee by $2,276,418 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 $10,917 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 $2,160,757,132 and $1,455,388,193, respectively, for the six months ended Jan. 31, 2001. For the same period, the portfolio turnover rate was 15%. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with AEFC were $73,254 for the six months ended Jan. 31, 2001. 4. LENDING OF PORTFOLIO SECURITIES As of Jan. 31, 2001, securities valued at $228,670,049 were on loan to brokers. For collateral, the Portfolio received $221,865,600 in cash and U.S. government securities valued at $11,366,854. Income from securities lending amounted to $704,395 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. 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 10,000 $ 6,625,000 Opened 15,000 12,344,721 Closed (15,000) (10,625,000) Exercised (3,096) (2,622,224) Expired (6,904) (5,722,497) ------ ---------- Balance Jan. 31, 2001 -- $ -- ------ ----------- See "Summary of significant accounting policies." 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. Investments in Securities Growth Portfolio Jan. 31, 2001 (Unaudited) (Percentages represent value of investments compared to net assets) Common stocks (95.9%) Issuer Shares Value(a) Airlines (1.6%) Southwest Airlines 4,500,000 $140,985,000 Banks and savings & loans (4.7%) Bank One 500,000 19,600,000 Firstar 2,000,000 47,200,000 FleetBoston Financial 4,100,000 177,694,000 Zions Bancorp 3,182,600 177,827,775 Total 422,321,775 Communications equipment & services (5.8%) Brocade Communications Systems 450,000(b) 40,640,625 Corning 1,400,000 79,394,000 Finisar 2,000,000(b) 72,750,000 JDS Uniphase 1,900,000(b) 104,143,750 MasTec 1,143,100(b,g) 21,867,503 Nokia ADR Cl A 4,046,900(c) 139,011,015 Sycamore Networks 2,000,000(b) 70,500,000 Total 528,306,893 Computer software & services (7.2%) Akamai Technologies 2,600,000(b,e) 75,562,500 Microsoft 5,250,000(b) 320,578,125 Siebel Systems 1,275,000(b) 84,548,438 VeriSign 1,000,000(b) 73,500,000 VERITAS Software 1,000,000(b) 94,875,000 Total 649,064,063 Computers & office equipment (19.4%) AOL Time Warner 2,985,000(b) 156,891,600 Avici Systems 1,000,000(b,e) 35,500,000 Cisco Systems 10,700,000(b) 400,581,250 Commerce One 3,050,000(b) 93,215,625 EMC 7,400,000(b) 562,326,000 Extreme Networks 1,200,000(b) 57,150,000 Intl Business Machines 1,700,000 190,400,000 Rational Software 1,000,000(b) 51,937,500 Redback Networks 800,000(b) 38,300,000 Sanmina 600,000(b) 29,175,004 Solectron 2,766,000(b) 110,225,100 Yahoo! 1,000,000(b) 37,312,500 Total 1,763,014,579 Electronics (16.6%) Applied Materials 4,190,400(b) 210,829,500 Broadcom Cl A 1,200,000(b) 131,925,000 Intel 5,000,000 185,000,000 Maxim Integrated Products 4,500,000(b) 274,781,250 PMC-Sierra 1,000,000(b) 75,562,500 STMicroelectronics 3,000,000(c,e) 141,660,000 Symbol Technologies 3,000,000 141,900,000 Texas Instruments 8,100,000 354,780,000 Total 1,516,438,250 Energy (1.6%) Anadarko Petroleum 2,500,000 142,250,000 Energy equipment & services (3.1%) Halliburton 3,800,000 156,522,000 Schlumberger 1,600,000 122,880,000 Total 279,402,000 Financial services (9.6%) Citigroup 7,400,000 414,178,000 Merrill Lynch 2,975,000 215,687,500 Providian Financial 3,000,000 175,050,000 Schwab (Charles) 2,348,700 62,029,166 Total 866,944,666 Furniture & appliances (0.8%) Ethan Allen Interiors 1,921,000 70,635,170 Health care (14.3%) Affymetrix 253,600(b) 16,896,100 ALZA 1,260,000(b) 52,164,000 Amgen 2,000,000(b) 140,625,000 Genentech 2,895,400(b) 171,552,450 Guidant 1,500,000(b) 74,250,000 Immunex 700,000(b) 21,437,500 MedImmune 615,000(b) 24,446,250 Medtronic 3,000,000 162,000,000 Pfizer 10,800,000 487,620,000 Schering-Plough 2,800,000 141,120,000 Total 1,292,111,300 Health care services (0.2%) Appler-Celera Genomics Group 400,000(b) 19,600,000 Insurance (1.0%) Marsh & McLennan 850,000 91,927,500 Leisure time & entertainment (1.5%) Harley-Davidson 3,000,000 136,170,000 Media (1.5%) Sony ADR 1,800,000(c) $132,390,000 Multi-industry conglomerates (1.6%) Tyco Intl 2,400,000(c) 147,840,000 Restaurants & lodging (1.5%) Marriott Intl Cl A 3,000,000 138,480,000 Retail (3.6%) Home Depot 4,400,000 212,080,000 RadioShack 2,000,000 110,080,000 Total 322,160,000 Utilities -- telephone (0.3%) Sprint (PCS Group) 1,000,000(b,e) 30,500,000 Total common stocks (Cost: $5,995,764,603) $8,690,541,196
Bonds (2.0%) Issuer Coupon Principal Value(a) rate amount U.S. government obligation & agency Resolution Funding Corp Zero Coupon 07-15-20 5.93% $400,000,000(f) $124,032,000 10-15-20 6.03 185,000,000(f) 56,508,250 Total bonds (Cost: $185,730,346) $180,540,250 Short-term securities (4.5%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agencies (3.2%) Federal Home Loan Bank Disc Nts 02-09-01 6.36% $6,400,000 $6,389,506 03-02-01 6.31 27,200,000 27,049,006 03-16-01 5.55 300,000 297,913 03-16-01 5.60 3,300,000 3,277,574 03-21-01 5.45 20,000,000 19,852,726 Federal Home Loan Mtge Corp Disc Nts 02-20-01 6.18 9,700,000 9,666,804 02-27-01 5.67 50,000,000 49,788,120 02-27-01 6.19 38,000,000 37,824,438 03-13-01 5.55 15,000,000 14,905,699 03-27-01 5.37 25,000,000 24,796,423 Federal Natl Mtge Assn Disc Nts 02-22-01 6.14% $9,600,000 $9,563,507 03-01-01 6.22 25,500,000 25,365,331 03-22-01 5.49 30,000,000 29,772,915 04-19-01 5.24 25,000,000 24,719,417 Total 283,269,379 Commercial paper (1.3%) ABN Amro 07-18-01 5.30 6,300,000 6,144,768 Alabama Power 04-12-01 5.58 3,600,000 3,561,163 Alcoa 02-07-01 5.76 4,200,000 4,195,304 02-20-01 6.43 3,800,000 3,786,235 Charta 02-01-01 5.78 6,000,000(d) 5,999,037 Commerzbank U.S. Finance 03-27-01 5.53 5,500,000 5,453,953 Gateway Fuel 02-01-01 6.48 2,900,000 2,899,478 Johnson & Johnson 03-05-01 6.24 7,400,000(d) 7,356,586 Kimberly-Clark 02-26-01 5.80 11,400,000(d) 11,352,410 Natl Rural Utilities 02-20-01 5.68 8,000,000 7,974,844 SBC Communications 02-02-01 6.51 4,200,000(d) 4,198,481 Sheffield Receivables 02-05-01 6.55 6,300,000(d) 6,294,224 Student Loan Mtge Assn Disc Nt 03-01-01 5.54 28,100,000 27,975,047 Target 03-09-01 5.56 7,400,000 7,357,941 Toyota Motor Credit 02-08-01 6.45 8,900,000(d) 8,887,263 02-13-01 5.77 6,700,000 6,686,064 Total 120,122,798 Total short-term securities (Cost: $403,479,082) $403,392,177 Total investments in securities (Cost: $6,584,974,031)(h) $9,274,473,623 See accompanying notes to investments in securities.
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 6.19% of net assets. (d) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board. (e) Security is partially or fully on loan. See Note 4 to the financial statements. (f) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. (g) Investments representing 5% or more of the outstanding voting securities of the issuer. Transactions with companies that are or were affiliates during the six months ended Jan. 31, 2001 are as follows: Issuer Beginning Purchase Sales Ending Dividend Value(a) cost cost cost cost income MasTec* $66,123,100 $-- $35,585,039 $30,538,061 $-- $21,867,503 * Issuer was not an affiliate for the entire period ended Jan. 31, 2001. (h) At Jan. 31, 2001, the cost of securities for federal income tax purposes was approximately $6,584,974,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $3,529,685,000 Unrealized depreciation (840,185,000) ------------ Net unrealized appreciation $2,689,500,000 -------------- American Express Funds AXP Growth Fund 70100 AXP Financial Center Minneapolis, MN 55474 TICKER SYMBOL Class A: INIDX Class B: IGRBX Class C: AXGCK Class Y: IGRYX PRSRT STD AUTO U.S. POSTAGE PAID AMERICAN EXPRESS S-6456 P (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. -----END PRIVACY-ENHANCED MESSAGE-----