N-30D 1 s6246c.txt AXP LARGE CAP VALUE FUND AXP(R) Large Cap Value Fund 2002 ANNUAL REPORT (Prospectus Enclosed) AXP Large Cap Value Fund seeks to provide shareholders with long-term growth of capital. (This annual report includes a prospectus that describes in detail the Fund's objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money.) -------------------------------------------------------------------------------- (logo) (logo) American AMERICAN Express(R) EXPRESS Funds (R) -------------------------------------------------------------------------------- (photo of) Arne H. Carlson From the Chairman Arne H. Carlson Chairman of the board Dear Shareholders, It is a very difficult period for investors caused by corporate management misconduct and its impact on the market as well as the economy. The integrity of corporations at large is being questioned. However, there is optimism that the resulting reforms will give Americans the kind of integrity they deserve. Many corporate leaders are strongly supportive of these reforms. We all have a right to expect financial statements to be fully accurate and business leaders to place the interests of shareholders above personal desires. Your Board is truly independent, comprised of 12 members (nominated by independent members) and three recommended by American Express Financial Corporation. These individuals come from a variety of geographic areas with the diverse skill sets necessary to oversee the operations of the Fund. Investment performance is, and remains, our primary concern. The Fund's auditors, KPMG LLP, are truly independent of American Express Financial Corporation. KPMG serves the interest of shareholders by supporting the work of the Board and certifying unbiased financial reports. The Board has confidence in Ted Truscott, American Express Financial Corporation's new Chief Investment Officer, and shares his enthusiasm in the management changes he has effected to improve the investment performance of all American Express funds. These changes include the hiring of several new portfolio managers and investment leaders and the addition of eight sub-advised funds. The focus of the Board and American Express Financial Corporation is simple; we strive for consistent, competitive investment performance. If you were a shareholder of record on September 14, you will receive a proxy statement for a shareholder meeting to be held on November 13, 2002. Please take time to consider each proposal and vote promptly. On behalf of the Board, Arne H. Carlson CONTENTS From the Chairman 2 Economic and Market Update 3 Fund Snapshot 5 Questions & Answers with Portfolio Management 6 Investments in Securities 9 Financial Statements 13 Notes to Financial Statements 16 Independent Auditors' Report 24 Board Members and Officers 25 -------------------------------------------------------------------------------- 2 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Economic and Market Update FROM CIO WILLIAM F. "TED" TRUSCOTT (photo of) William F. "Ted" Truscott William F. "Ted" Truscott Chief Investment Officer American Express Financial Corporation Dear Shareholders, Major U.S. financial markets lost ground for the three-month period ending July 31, 2002, although a late rally put them above earlier lows. The same factors that have driven markets down for most of the year so far were still in play during this period. These include concerns about the truthfulness of accounting practices and the perception that stocks remain too expensive relative to company earnings. I expect we'll need to see consistent improvement in earnings before stocks rebound significantly. If corporate revenue growth becomes apparent and widespread, it will effectively make stock valuations cheaper. Increased demand should then have a positive impact on prices. Economic fundamentals have continued to look positive despite volatility in the financial markets. Inflation and interest rates remain low, unemployment and job growth are at reasonable levels, and there are signs that business spending is beginning to pick up. In addition, a weaker dollar should help U.S. companies that export goods overseas, even though it crimps our wallets when we travel abroad. These and other factors make it highly unlikely that we will experience a so-called "double-dip" recession. I remain optimistic about the direction of the economy and believe that, eventually, markets will start paying attention to these very favorable conditions. Nevertheless, we should remember that risk still exists. For one, bonds have been experiencing their own bear market. This has created something of a credit crunch for businesses, as liquidity declines and spreads widen. Related to this has been a crisis of confidence -- the unfortunate legacy of recent corporate scandal. In some cases, investors who thought they were buying high-quality corporate bonds were actually getting riskier high-yield securities due to dishonest accounting. Everyone agrees that some type of reform is needed, but the challenge for regulators will be to discourage misleading practices without sacrificing entrepreneurial incentive. Prudent regulation will boost confidence, while misguided efforts will simply make markets less efficient. What I think all investors need to understand is that we're still working through the excess capacity and inflated demand forecasts that were created in the late `90s. This process has been painful, but it has helped to reorient expectations to levels that are more sustainable. Historically speaking, the late `90s were an aberration and will likely not be repeated soon. -------------------------------------------------------------------------------- 3 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Economic and Market Update However, a more sober outlook need not be cause for special concern. We should all ask ourselves, "Have my goals changed in the last couple of years?" For many of us, the answer will be "no." If you're saving for long-term goals like retirement, I would still advise a substantial weighting in equities for your portfolio. Over time, stocks will probably continue to outperform bonds or other investments. And if you're in retirement or getting close, you may want to invest more heavily in bonds and cash, with a smaller portion devoted to equities. See your financial advisor or retirement plan administrator for more information about different types of securities and asset allocation. As always, thank you for investing with American Express Financial Advisors. William F. Truscott KEY POINTS -- Economic fundamentals remain positive. -- Credit "crunch" for business sector persists. -- Re-evaluation of personal financial goals key. -------------------------------------------------------------------------------- 4 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Fund Snapshot AS OF JULY 31, 2002 PORTFOLIO MANAGER Portfolio manager Bob Ewing Tenure/since 6/02 Years in industry 14 FUND OBJECTIVE AXP Large Cap Value Fund seeks to provide shareholders with long-term growth of capital. Inception dates A: 6/27/02 B: 6/27/02 C: 6/27/02 Y: 6/27/02 Ticker symbols A:-- B:-- C:-- Y:-- Total net assets $5.4 million Number of holdings approximately 170 STYLE MATRIX Shading within the style matrix indicates areas in which the Fund generally invests. STYLE VALUE BLEND GROWTH X LARGE MEDIUM SIZE SMALL PORTFOLIO ASSET MIX Percentage of portfolio assets (pie graph) Common stocks 90.7% Cash equivalents 9.3% TOP FIVE SECTORS Percentage of portfolio assets Banks and savings & loans 11.8% Financial services 9.8 Energy 7.9 Health care 6.8 Retail 4.7 TOP TEN HOLDINGS Percentage of portfolio assets Citigroup 3.5% ChevronTexaco 2.3 Philip Morris 2.2 Bank of America 2.1 American Intl Group 1.9 Exxon Mobil 1.6 Conoco 1.6 Wells Fargo 1.6 Freddie Mac 1.5 Verizon Communications 1.4 Fund holdings are subject to change. -------------------------------------------------------------------------------- 5 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Questions & Answers WITH PORTFOLIO MANAGEMENT Q: How did the Fund perform for the period under review? (From June 27, 2002, when the Fund's shares became publicly available, through July 31, 2002) A: We are reasonably satisfied with the Fund's relative performance so early in its operations. For the period under review, the Fund returned -7.75%, (Class A shares, excluding sales charges) slightly outperforming its peer group, the Lipper Large-Cap Value Funds Index, which returned -8.64% for the same period. The Russell 1000(R) Value Index returned -9.30% for the same time period. Q: Although the Fund is quite new, please discuss attributes to performance for the period under review, as well as any significant changes you have made to the portfolio. A: Soft corporate earnings, valuation concerns, investor cynicism and accounting questions characterized the large-cap equity market during the second quarter of 2002. As investors grappled with a myriad of concerns, the markets remained volatile and stock prices continued to move lower. For the period, the Fund's value-oriented investment process proved to be a key contributor to the Fund's performance. As we began pursuing our investment objective -- to identify stocks that are out of favor yet remain fundamentally sound with reasonable earnings growth prospects -- a somewhat conservative approach aided the Fund's performance. The Fund was positioned with low exposure to expensive technology stocks, which helped performance. (bar graph) PERFORMANCE COMPARISON For the period ended July 31, 2002 0% -2% -4% -6% (bar 1) (bar 2) (bar 3) -8% -7.75% -9.30% -8.64% -10% (bar 1) AXP Large Cap Value Fund Class A (excluding sales charge) (bar 2) Russell 1000(R) Value Index(1) (unmanaged) (bar 3) Lipper Large-Cap Value Funds Index(2) (1) The Russell 1000(R) Value Index, an unmanaged index, measures the performance of the large capitalization value portion of the Russell 1000(R) Index. The Russell 1000(R) Value Index consists of companies with lower price-to-book ratios and lower forecasted growth values. (2) The Lipper Large-Cap Value Funds Index, published by Lipper Inc., includes the 30 largest funds that are generally similar to the Fund, although some funds in the index may have somewhat different investment policies or objectives. Past performance is no guarantee of future results. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart; if reflected, returns would be lower than those shown. The performance of Class B, Class C and Class Y may vary from that shown above because of differences in sales charges and fees. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. -------------------------------------------------------------------------------- 6 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Questions & Answers (begin callout quote) > As we began pursuing our investment objective -- to identify stocks that are out of favor yet remain fundamentally sound with reasonable earnings growth prospects -- a somewhat conservative approach aided the Fund's performance. (end callout quote) In the financial sector, the Fund focused on diversified financial services companies, savings and loans companies and select bank stocks. While the Fund's holdings in bank stocks performed well, the Fund had underweighted exposure to these stocks, which detracted from performance. One of the foundations of our investment philosophy is to seek value with reasonable growth prospects; we found some attractive opportunities in the midst of the market's sell-off. We believe focusing on value stocks that offer some future growth potential can create an optimal long-term investment vehicle for our clients. TOTAL RETURNS SINCE INCEPTION as of July 31, 2002 At Net Asset Value (NAV)(1) Class A Class B Class C Class Y 1 year N/A N/A N/A N/A 5 years N/A N/A N/A N/A 10 years N/A N/A N/A N/A Total returns since inception -7.75%(2) -7.75%(2) -7.75%(2) -7.75%(2) With Sales Charge Class A Class B Class C Class Y 1 year N/A N/A N/A N/A 5 years N/A N/A N/A N/A 10 years N/A N/A N/A N/A Total returns since inception -13.06%(2) -12.37%(2) -8.68%(2) -7.75%(2) (1) Excluding sales charge. (2) Inception date was June 27, 2002. Returns are not annualized. Past performance is no guarantee of future results. Investment return and principal value will fluctuate, so that your shares, when redeemed, may be worth more or less than the original cost. The performance shown for each class of shares will vary due to differences in sales charges and fees. Short term performance may be higher or lower than the figures shown. Visit americanexpress.com for current information. -------------------------------------------------------------------------------- 7 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Questions & Answers Q: What is your outlook for the months ahead? A: Going forward, the Fund will continue to utilize a bottom-up investment process, seeking companies offering value with reasonable growth prospects. While we decreased our healthcare holdings, the Fund will remain overweighted in its exposure to the healthcare sector, specifically healthcare services, hospitals and pharmaceuticals stocks. In addition, while large-cap stocks have battled adversity recently, we believe the current investment atmosphere is turning to favor larger-cap issues. Many experts are beginning to question the strength of the economic rebound, and as these questions intensify, investors historically flock to larger, more established companies. In addition, a weakening U.S. dollar will most likely benefit large, multinational U.S. corporations as their products become more attractive in global markets. Despite negative investor sentiment, we believe attractive opportunities will present themselves in the coming months. With expectations low, we believe ample room is available for earnings surprises and stock appreciation in large-cap companies, making AXP Large Cap Value Fund a viable addition to a well-diversified investment portfolio. -------------------------------------------------------------------------------- 8 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Investments in Securities AXP Large Cap Value Fund July 31, 2002 (Percentages represent value of investments compared to net assets) Common stocks (89.9%) Issuer Shares Value(a) Aerospace & defense (1.2%) Boeing 343 $14,241 General Dynamics 148 11,976 Lockheed Martin 242 15,515 United Technologies 309 21,476 Total 63,208 Airlines (0.1%) Northwest Airlines Cl A 319(b) 2,960 Automotive & related (1.1%) Ford Motor 1,200 16,164 General Motors 403 18,759 Navistar Intl 296 7,634 Sonic Automotive 250(b) 4,995 Tower Automotive 1,300(b) 9,737 Total 57,289 Banks and savings & loans (11.6%) Bank of America 1,700 113,049 Bank of New York 416 13,320 Bank One 1,168 45,447 FleetBoston Financial 3,100 71,920 J.P. Morgan Chase 2,150 53,664 Mellon Financial 1,319 35,059 PNC Financial Services Group 1,650 69,548 U.S. Bancorp 3,150 67,379 Wachovia 1,650 59,070 Washington Mutual 562 21,024 Wells Fargo 1,650 83,919 Total 633,399 Beverages & tobacco (4.2%) Anheuser-Busch 636 32,888 Coca-Cola 349 17,429 PepsiCo 1,427 61,275 Philip Morris 2,570 118,349 Total 229,941 Building materials & construction (1.3%) Centex 431 20,666 Fleetwood Enterprises 1,086 4,507 Masco 1,206 29,186 Temple-Inland 296 15,895 Total 70,254 Chemicals (1.9%) Dow Chemical 542 15,648 du Pont (EI) de Nemours 1,472 61,691 Praxair 347 18,148 Solutia 1,322 8,276 Total 103,763 Communications equipment & services (2.3%) EchoStar Communications Cl A 367(b) 5,986 Fairchild Semiconductor Intl Cl A 230(b) 4,101 Lucent Technologies 2,200(b) 3,850 Motorola 2,250 26,100 Teradyne 450(b) 6,750 Verizon Communications 2,350 77,550 Total 124,337 Computer software & services (0.7%) Microsoft 389(b) 18,653 Oracle 1,800(b) 18,016 Total 36,669 Computers & office equipment (3.4%) Apple Computer 909(b) 13,871 Cisco Systems 1,084(b) 14,298 Computer Associates Intl 2,900 27,086 Computer Sciences 175(b) 6,475 Comverse Technology 825(b) 6,567 Dell Computer 457(b) 11,393 Hewlett-Packard 5,193 73,481 Intl Business Machines 156 10,982 SABRE Holdings Cl A 294(b) 7,797 Sun Microsystems 3,402(b) 13,336 Total 185,286 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 9 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Common stocks (continued) Issuer Shares Value(a) Electronics (1.3%) Advanced Micro Devices 570(b) $4,577 Agilent Technologies 188(b) 3,549 Amphenol Cl A 201(b) 7,568 Flextronics Intl 2,818(b,c) 22,318 Intel 800 15,032 KLA-Tencor 107(b) 4,215 Micron Technology 461(b) 8,985 Natl Semiconductor 187(b) 3,387 Total 69,631 Energy (7.9%) Burlington Resources 599 21,893 ChevronTexaco 1,670 125,249 Conoco 3,550 85,626 Exxon Mobil 2,500 91,900 FirstEnergy 889 27,337 Grant Prideco 1,022(b) 10,210 Phillips Petroleum 1,270 65,723 Total 427,938 Energy equipment & services (1.2%) Schlumberger 855 36,697 Transocean 696 17,748 Weatherford Intl 281(b) 11,397 Total 65,842 Financial services (9.7%) Allmerica Financial 666 18,182 Capital One Financial 162 5,135 CIT Group 355 7,973 Citigroup 5,650 189,501 Fannie Mae 1,017 76,163 Freddie Mac 1,329 82,332 Household Intl 282 12,033 Lehman Brothers Holdings 585 33,175 MBNA 1,146 22,221 Merrill Lynch 909 32,406 Morgan Stanley 1,178 47,532 Total 526,653 Food (1.0%) General Mills 831 34,445 Kraft Foods Cl A 508 18,796 Total 53,241 Furniture & appliances (1.3%) Black & Decker 528 24,024 Leggett & Platt 391 8,794 Maytag 376 12,457 Miller (Herman) 671 11,373 Whirlpool 253 14,515 Total 71,163 Health care (6.7%) Abbott Laboratories 876 36,275 Biomet 402 10,424 Bristol-Myers Squibb 1,515 35,496 Genzyme-General Division 860(b) 19,591 Guidant 331(b) 11,519 Johnson & Johnson 202 10,706 Merck & Co 1,018 50,493 Pfizer 2,200 71,170 Pharmacia 552 24,696 Schering-Plough 1,373 35,012 Waters 228(b) 5,178 Wyeth 1,409 56,219 Total 366,779 Health care services (2.5%) Cardinal Health 909 52,358 Caremark Rx 1,000(b) 15,700 HCA 572 26,884 McKesson 721 23,735 Universal Health Services Cl B 334(b) 15,792 Total 134,469 Household products (2.9%) Avon Products 652 30,162 Gillette 1,200 39,456 Kimberly-Clark 430 26,252 Newell Rubbermaid 335 10,077 Procter & Gamble 559 49,744 Total 155,691 Industrial equipment & services (0.9%) Caterpillar 242 10,817 Ingersoll-Rand Cl A 395(c) 15,164 Kennametal 322 10,446 Milacron 715 5,427 Parker-Hannifin 187 7,529 Total 49,383 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 10 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Common stocks (continued) Issuer Shares Value(a) Insurance (4.2%) AFLAC 608 $19,097 Allstate 1,234 46,904 American Intl Group 1,590 101,634 Hartford Financial Services Group 363 18,368 John Hancock Financial Services 162 5,362 MetLife 1,370 38,620 Total 229,985 Leisure time & entertainment (1.5%) AOL Time Warner 6,000(b) 69,000 Viacom Cl B 323(b) 12,571 Total 81,571 Media (1.8%) Clear Channel Communications 618(b) 16,099 Comcast Cl A 504(b) 10,534 Disney (Walt) 1,400 24,822 McGraw-Hill Companies 141 8,820 Tribune 174 6,943 USA Interactive 1,310(b) 28,883 Total 96,101 Metals (0.7%) Alcan 250(c) 6,950 Alcoa 635 17,177 Phelps Dodge 472 16,133 Total 40,260 Multi-industry conglomerates (4.4%) Cendant 3,200(b) 44,224 Emerson Electric 320 16,304 General Electric 2,300 74,059 Honeywell Intl 1,263 40,871 Manpower 195 7,344 Textron 674 26,556 Tyco Intl 1,223(c) 15,654 Xerox 2,000(b) 13,900 Total 238,912 Paper & packaging (0.5%) Bowater 255 11,625 Intl Paper 368 14,654 Total 26,279 Real estate investment trust (1.4%) Apartment Investment & Management Cl A 367 16,500 Equity Office Properties Trust 1,700 44,846 Starwood Hotels & Resorts Worldwide 584 15,009 Total 76,355 Restaurants & lodging (1.0%) McDonald's 971 24,032 Wendy's Intl 815 29,984 Total 54,016 Retail (4.6%) AutoNation 750(b) 10,118 AutoZone 241(b) 17,774 Best Buy 334(b) 10,989 BJ's Wholesale Club 403(b) 14,165 Circuit City Stores-Circuit City Group 334 5,695 Costco Wholesale 515(b) 17,958 CVS 888 25,397 Dollar General 368 6,315 Federated Dept Stores 309(b) 11,621 Home Depot 750 23,160 Perrigo 50(b) 578 Safeway 1,014(b) 28,209 Sears, Roebuck & Co 501 23,632 Staples 268(b) 4,473 Target 1,320 44,022 Wal-Mart Stores 140 6,885 Total 250,991 Textiles & apparel (0.2%) Liz Claiborne 450 12,983 Transportation (0.1%) Union Pacific 121 7,099 Utilities -- electric (2.5%) Dominion Resources 759 45,115 Duke Energy 1,650 42,059 TXU 954 41,146 Xcel Energy 997 6,939 Total 135,259 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 11 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Common stocks (continued) Issuer Shares Value(a) Utilities -- telephone (3.9%) ALLTEL 471 $19,085 AT&T 4,733 48,182 BellSouth 2,150 57,727 Davel Communications 1,300(b) 49 KT 675(c) 13,784 Liberty Media Cl A 2,600(b) 20,436 SBC Communications 1,973 54,573 Total 213,836 Total common stocks (Cost: $5,024,170) $4,891,543 Short-term security (9.2%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agency Federal Home Loan Mtge Corp Disc Nt 09-10-02 1.71% $500,000 $499,026 Total short-term security (Cost: $499,050) $499,026 Total investments in securities (Cost: $5,523,220)(d) $5,390,569 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 July 31, 2002, the value of foreign securities represented 1.4% of net assets. (d) At July 31, 2002, the cost of securities for federal income tax purposes was $5,560,828 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 79,212 Unrealized depreciation (249,471) -------- Net unrealized depreciation $(170,259) --------- -------------------------------------------------------------------------------- 12 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Financial Statements
Statement of assets and liabilities AXP Large Cap Value Fund July 31, 2002 Assets Investments in securities, at value (Note 1) (identified cost $5,523,220) $5,390,569 Cash in bank on demand deposit 356,986 Capital shares receivable 12,791 Dividends and accrued interest receivable 3,005 Receivable for investment securities sold 67,939 ------ Total assets 5,831,290 --------- Liabilities Payable for investment securities purchased 386,593 Accrued investment management services fee 86 Accrued distribution fee 64 Accrued transfer agency fee 25 Accrued administrative services fee 7 Other accrued expenses 2,295 ----- Total liabilities 389,070 ------- Net assets applicable to outstanding capital stock $5,442,220 ========== Represented by Capital stock -- $.01 par value (Note 1) $ 12,035 Additional paid-in capital 5,607,707 Undistributed net investment income 2,951 Accumulated net realized gain (loss) (Note 6) (47,822) Unrealized appreciation (depreciation) on investments (132,651) -------- Total -- representing net assets applicable to outstanding capital stock $5,442,220 ========== Net assets applicable to outstanding shares: Class A $3,967,946 Class B $1,407,563 Class C $ 54,806 Class Y $ 11,905 Net asset value per share of outstanding capital stock: Class A shares 877,336 $ 4.52 Class B shares 311,368 $ 4.52 Class C shares 12,125 $ 4.52 Class Y shares 2,632 $ 4.52 ----- ----------
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 13 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT
Statement of operations AXP Large Cap Value Fund For the period from June 27, 2002* to July 31, 2002 Investment income Income: Dividends $ 3,780 Interest 380 --- Total income 4,160 ----- Expenses (Note 2): Investment management services fee 1,827 Distribution fee Class A 632 Class B 480 Class C 26 Transfer agency fee 368 Incremental transfer agency fee Class A 25 Class B 24 Class C 2 Service fee -- Class Y 1 Administrative services fees and expenses 152 Custodian fees 5,100 Printing and postage 1,700 Registration fees 44,824 Audit fees 14,500 Other 17 -- Total expenses 69,678 Expenses waived/reimbursed by AEFC (Note 2) (65,813) ------- 3,865 Earnings credits on cash balances (Note 2) (66) --- Total net expenses 3,799 ----- Investment income (loss) -- net 361 --- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) (55,209) Futures contracts 7,326 ----- Net realized gain (loss) on investments (47,883) Net change in unrealized appreciation (depreciation) on investments (91,249) ------- Net gain (loss) on investments (139,132) -------- Net increase (decrease) in net assets resulting from operations $(138,771) ---------
* When shares became publicly available. See accompanying notes to financial statements. -------------------------------------------------------------------------------- 14 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT
Statement of changes in net assets AXP Large Cap Value Fund For the period from June 27, 2002* to July 31, 2002 Operations Investment income (loss) -- net $ 361 Net realized gain (loss) on investments (47,883) Net change in unrealized appreciation (depreciation) on investments (91,249) ------- Net increase (decrease) in net assets resulting from operations (138,771) -------- Capital share transactions (Note 4) Proceeds from sales Class A shares (Note 2) 2,213,078 Class B shares 1,424,918 Class C shares 46,247 Class Y shares 3,000 Payments for redemptions Class A shares (25,502) Class B shares (Note 2) (40,778) ------- Increase (decrease) in net assets from capital share transactions 3,620,963 --------- Total increase (decrease) in net assets 3,482,192 Net assets at beginning of period (Note 1)** 1,960,028 --------- Net assets at end of period $5,442,220 ========== Undistributed net investment income $ 2,951 ----------
* When shares became publicly available. ** Initial capital of $2,000,000 was contributed on June 20, 2002. The Fund had a decrease in net assets resulting from operations of $39,972 during the period from June 20, 2002 to June 27, 2002 (when shares became publicly available). See accompanying notes to financial statements. -------------------------------------------------------------------------------- 15 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Notes to Financial Statements AXP Large Cap Value Fund 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. The Fund invests primarily in equity securities of companies with a market capitalization greater than $5 billion at the time of purchase. On June 20, 2002, American Express Financial Corporation (AEFC) invested $2,000,000 in the Fund which represented 394,000 shares for Class A, 2,000 shares for Class B, Class C and Class Y, respectively, which represented the initial capital for each class at $5.00 per share. Shares of the Fund were first offered to the public on June 27, 2002. 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. The Fund'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, liabilities and contingent assets and liabilities) that could differ from actual results. Valuation of securities All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. 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. -------------------------------------------------------------------------------- 16 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Option transactions To produce incremental earnings, protect gains, and facilitate buying and selling of securities for investments, the Fund 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 Fund 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 Fund gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Fund 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 Fund pays a premium whether or not the option is exercised. The Fund 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 Fund 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 Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Fund 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 Fund 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 Fund 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 Fund 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. -------------------------------------------------------------------------------- 17 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT The Fund may enter into forward foreign currency exchange contracts for operational purposes. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Fund is subject to the credit risk that the other party will not complete its contract obligations. 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 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. On the statement of assets and liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been increased by $1,160 and accumulated net realized loss has been decreased by $61 resulting in a net reclassification adjustment to decrease paid-in capital by $1,221. The tax character of distributions paid for the period indicated is as follows: For the period from June 27, 2002* to July 31, 2002 Class A Distributions paid from: Ordinary income $-- Long-term capital gain -- Class B Distributions paid from: Ordinary income -- Long-term capital gain -- Class C Distributions paid from: Ordinary income -- Long-term capital gain -- Class Y Distributions paid from: Ordinary income -- Long-term capital gain -- * When shares became publicly available. As of July 31, 2002, the components of distributable earnings on a tax basis are as follows: Undistributed ordinary income $ 2,922 Accumulated gain (loss) $ (10,185) Unrealized appreciation (depreciation) $(170,259) -------------------------------------------------------------------------------- 18 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT 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. 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. EXPENSES AND SALES CHARGES The Fund has agreements with AEFC to manage its portfolio and provide administrative services. Under an Investment Management Services Agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the Fund's average daily net assets in reducing percentages from 0.60% 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 Fund to the Lipper Large-Cap Value Funds Index. The maximum adjustment is 0.12% of the Fund's average daily net assets after deducting 1% from the performance difference. If the performance difference is less than 1% the adjustment will be zero. The first adjustment will be made on January 1, 2003 and will cover the six-month period beginning July 1, 2002. 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 incremental transfer agency fee is the amount charged to the specific classes for the additional expense above the fee for Class Y. 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. -------------------------------------------------------------------------------- 19 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Sales charges received by the Distributor for distributing Fund shares were $8,538 for Class A for the period ended July 31, 2002. AEFC and American Express Financial Advisors Inc. have agreed to waive certain fees and to absorb certain expenses until July 31, 2003. Under this agreement, total expenses will not exceed 1.25% for Class A, 2.01% for Class B, 2.01% for Class C and 1.07% for Class Y of the Fund's average daily net assets. In addition, for the period ended July 31, 2002, AEFC and American Express Financial Advisors Inc. further voluntarily agreed to waive certain fees and reimburse expenses to 1.19% for Class A shares, 1.95% for Class B shares, 1.95% for Class C shares and 1.01% for Class Y shares. During the period ended July 31, 2002, the Fund's custodian and transfer agency fees were reduced by $66 as a result of earnings credits from overnight cash balances. The Fund also pays custodian fees to American Express Trust Company, an affiliate of AEFC. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $3,449,253 and $323,238 respectively, for the period ended July 31, 2002. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with AEFC were $9 for the period ended July 31, 2002. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the period from June 27, 2002* to July 31, 2002 are as follows:
June 27, 2002* to July 31, 2002 Class A Class B Class C Class Y Sold 489,221 318,593 10,125 632 Issued for reinvested distributions -- -- -- -- Redeemed (5,885) (9,225) -- -- ------- ------- ------ --- Net increase (decrease) 483,336 309,368 10,125 632 ------- ------- ------ ---
* When shares became publicly available. 5. 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 period ended July 31, 2002. -------------------------------------------------------------------------------- 20 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT 6. CAPITAL LOSS CARRY-OVER For federal income tax purposes, the Fund has a capital loss carry-over of $10,185 as of July 31, 2002, that will expire in 2010 if not offset by capital gains. It is unlikely the board will authorize a distribution of any net realized capital gains until the available capital loss carry-over has been offset or expires. 7. FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating the Fund's results. Class A Per share income and capital changes(a) Fiscal period ended July 31, 2002(b) Net asset value, beginning of period $4.90 Income from investment operations: Net investment income (loss) -- Net gains (losses) (both realized and unrealized) (.38) Total from investment operations (.38) Net asset value, end of period $4.52 Ratios/supplemental data Net assets, end of period (in millions) $4 Ratio of expenses to average daily net assets(c,e) 1.19%(d) Ratio of net investment income (loss) to average daily net assets .23%(d) Portfolio turnover rate (excluding short-term securities) 9% Total return(i) (7.75%) Class B Per share income and capital changes(a) Fiscal period ended July 31, 2002(b) Net asset value, beginning of period $4.90 Income from investment operations: Net investment income (loss) -- Net gains (losses) (both realized and unrealized) (.38) Total from investment operations (.38) Net asset value, end of period $4.52 Ratios/supplemental data Net assets, end of period (in millions) $1 Ratio of expenses to average daily net assets(c, f) 1.95%(d) Ratio of net investment income (loss) to average daily net assets (.49%)(d) Portfolio turnover rate (excluding short-term securities) 9% Total return(i) (7.75%) See accompanying notes to financial highlights. -------------------------------------------------------------------------------- 21 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Class C Per share income and capital changes(a) Fiscal period ended July 31, 2002(b) Net asset value, beginning of period $4.90 Income from investment operations: Net investment income (loss) -- Net gains (losses) (both realized and unrealized) (.38) Total from investment operations (.38) Net asset value, end of period $4.52 Ratios/supplemental data Net assets, end of period (in millions) $-- Ratio of expenses to average daily net assets(c, g) 1.95%(d) Ratio of net investment income (loss) to average daily net assets (.45%)(d) Portfolio turnover rate (excluding short-term securities) 9% Total return(i) (7.75%) Class Y Per share income and capital changes(a) Fiscal period ended July 31, 2002(b) Net asset value, beginning of period $4.90 Income from investment operations: Net investment income (loss) -- Net gains (losses) (both realized and unrealized) (.38) Total from investment operations (.38) Net asset value, end of period $4.52 Ratios/supplemental data Net assets, end of period (in millions) $-- Ratio of expenses to average daily net assets(c, h) 1.01%(d) Ratio of net investment income (loss) to average daily net assets .31%(d) Portfolio turnover rate (excluding short-term securities) 9% Total return(i) (7.75%) See accompanying notes to financial highlights. -------------------------------------------------------------------------------- 22 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Notes to financial highlights (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from June 27, 2002 (when shares became publicly available) to July 31, 2002. (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) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratio of expenses for Class A would have been 20.50% for the period ended July 31, 2002. (f) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratio of expenses for Class B would have been 21.26% for the period ended July 31, 2002. (g) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratio of expenses for Class C would have been 21.26% for the period ended July 31, 2002. (h) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratio of expenses for Class Y would have been 20.32% for the period ended July 31, 2002. (i) Total return does not reflect payment of a sales charge. -------------------------------------------------------------------------------- 23 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Independent Auditors' Report THE BOARD AND SHAREHOLDERS AXP GROWTH SERIES, INC. We have audited the accompanying statement of assets and liabilities, including the schedule of investments in securities, of AXP Large Cap Value Fund (a series of AXP Growth Series, Inc.) as of July 31, 2002, the related statements of operations, changes in net assets and the financial highlights for the period from June 27, 2002 (when shares became publicly available) to July 31, 2002. These financial statements and the financial highlights are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2002, by correspondence with the custodian and brokers or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AXP Large Cap Value Fund as of July 31, 2002, and the results of its operations, changes in its net assets and the financial highlights for the period stated in the first paragraph above, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Minneapolis, Minnesota September 6, 2002 -------------------------------------------------------------------------------- 24 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT Board Members and Officers Shareholders elect a board that oversees the Fund's operations. The board appoints officers who are responsible for day-to-day business decisions based on policies set by the board. The following is a list of the Fund's board members. Each member oversees 15 Master Trust portfolios and 78 American Express mutual funds. Board members serve until the next regular shareholders' meeting or until he or she reaches the mandatory retirement age established by the board.
Independent Board Members Name, Position held with Principal occupations Other directorships address, Registrant and length of during past five years age service -------------------------------------- ------------------------------ --------------------------- ---------------------------- H. Brewster Atwater, Jr. Board member since 1996 Retired chair and chief 4900 IDS Tower executive officer, Minneapolis, MN 55402 General Mills, Inc. Born in 1931 (consumer foods) -------------------------------------- ------------------------------ --------------------------- ---------------------------- Arne H. Carlson Chair of the Board since 1999 Chair, Board Services 901 S. Marquette Ave. Corporation (provides Minneapolis, MN 55402 administrative services Born in 1934 to boards), former Governor of Minnesota -------------------------------------- ------------------------------ --------------------------- ---------------------------- Lynne V. Cheney Board member since 1994 Distinguished Fellow, AEI The Reader's Digest American Enterprise Institute Association Inc. for Public Policy Research (AEI) 1150 17th St., N.W. Washington, D.C. 20036 Born in 1941 -------------------------------------- ------------------------------ --------------------------- ---------------------------- Livio D. DeSimone Board member since 2001 Retired chair of the Cargill, Incorporated 30 Seventh Street East board and chief executive (commodity merchants and Suite 3050 officer, Minnesota Mining processors), Target St. Paul, MN 55101-4901 and Manufacturing (3M) Corporation (department Born in 1936 stores), General Mills, Inc. (consumer foods), Vulcan Materials Company (construction materials/chemicals), Milliken & Company (textiles and chemicals) and Nexia Biotechnologies, Inc. -------------------------------------- ------------------------------ --------------------------- ---------------------------- Ira D. Hall Board member since 2001 Private investor; Imagistics International, Texaco, Inc. formerly with Texaco Inc. (office equipment), 2000 Westchester Avenue Inc., treasurer, Reynolds & Reynolds White Plains, NY 10650 1999-2001 and general Company (information Born in 1944 manager, alliance services), TECO Energy, management operations, Inc. (energy holding 1998-1999. Prior to that, company), The Williams director, International Companies, Inc. (energy Operations IBM Corp. distribution company) -------------------------------------- ------------------------------ --------------------------- ---------------------------- Heinz F. Hutter Board member since 1994 Retired president and P.O. Box 2187 chief operating officer, Minneapolis, MN 55402 Cargill, Incorporated Born in 1929 (commodity merchants and processors) -------------------------------------- ------------------------------ --------------------------- ---------------------------- Anne P. Jones Board member since 1985 Attorney and consultant Motorola, Inc. 5716 Bent Branch Rd. (electronics) Bethesda, MD 20816 Born in 1935 -------------------------------------- ------------------------------ --------------------------- ----------------------------
-------------------------------------------------------------------------------- 25 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT
Independent Board Members (continued) Name, Position held with Principal occupations Other directorships address, Registrant and length of during past five years age service -------------------------------------- ------------------------------ --------------------------- ---------------------------- Stephen R. Lewis, Jr. Board member since 2002 Retired president and 901 S. Marquette Ave. professor of economics, Minneapolis, MN 55402 Carleton College Born in 1939 -------------------------------------- ------------------------------ --------------------------- ---------------------------- William R. Pearce Board member since 1980 RII Weyerhaeuser World 2050 One Financial Plaza Timberfund, L.P. Minneapolis, MN 55402 (develops timber Born in 1927 resources) - management committee; former chair, American Express Funds -------------------------------------- ------------------------------ --------------------------- ---------------------------- Alan G. Quasha Board member since 2002 President, Quadrant Compagnie Financiere 720 Fifth Avenue Management, Inc. Richemont AG (luxury goods) New York, NY 10019 (management of private Born in 1949 equities) -------------------------------------- ------------------------------ --------------------------- ---------------------------- Alan K. Simpson Board member since 1997 Former three-term United Biogen, Inc. 1201 Sunshine Ave. States Senator for Wyoming (bio-pharmaceuticals) Cody, WY 82414 Born in 1931 -------------------------------------- ------------------------------ --------------------------- ---------------------------- C. Angus Wurtele Board member since 1994 Retired chair of the Bemis Corporation 4900 IDS Tower board and chief executive (packaging) Minneapolis, MN 55402 officer, The Valspar Born in 1934 Corporation -------------------------------------- ------------------------------ --------------------------- ---------------------------- Board Members Affiliated with American Express Financial Corporation (AEFC) Name, Position held with Principal occupations Other directorships address, Registrant and length of during past five years age service -------------------------------------- ------------------------------ --------------------------- ---------------------------- David R. Hubers Board member since 1993 Retired chief executive Chronimed Inc. (specialty 50643 AXP Financial Center officer and director of pharmaceutical Minneapolis, MN 55474 AEFC distribution), RTW Inc. Born in 1943 (manages workers compensation programs), Lawson Software, Inc. (technology based business applications) -------------------------------------- ------------------------------ --------------------------- ---------------------------- John R. Thomas Board member since 1987, Senior vice president - 50652 AXP Financial Center president since 1997 information and Minneapolis, MN 55474 technology of AEFC Born in 1937 -------------------------------------- ------------------------------ --------------------------- ---------------------------- William F. Truscott Board member since 2001, Senior vice president - 53600 AXP Financial Center vice president since 2002 chief investment officer Minneapolis, MN 55474 of AEFC; former chief Born in 1960 investment officer and managing director, Zurich Scudder Investments -------------------------------------- ------------------------------ --------------------------- ----------------------------
-------------------------------------------------------------------------------- 26 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT The board has appointed officers who are responsible for day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the board. In addition to Mr. Thomas, who is president, and Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers Name, Position held with Principal occupations Other directorships address, Registrant and length of during past five years age service -------------------------------------- ------------------------------ --------------------------- ---------------------------- Jeffrey P. Fox Treasurer since 2002 Vice president - 50005 AXP Financial Center investment accounting, Minneapolis, MN 55474 AEFC, since 2002; vice Born in 1955 president - finance, American Express Company, 2000-2002; vice president - corporate controller, AEFC, 1996-2000 -------------------------------------- ------------------------------ --------------------------- ---------------------------- Leslie L. Ogg Vice president, general President of Board 901 S. Marquette Ave. counsel and secretary since Services Corporation Minneapolis, MN 55402 1978 Born in 1938 -------------------------------------- ------------------------------ --------------------------- ---------------------------- Stephen W. Roszell Vice president since 2002 Senior vice president - 50239 AXP Financial Center institutional group of Minneapolis, MN 55474 AEFC Born in 1949 -------------------------------------- ------------------------------ --------------------------- ----------------------------
The SAI has additional information about the Fund's directors and is available, without charge, upon request by calling (800) 862-7919. -------------------------------------------------------------------------------- 27 -- AXP LARGE CAP VALUE FUND -- 2002 ANNUAL REPORT American Express(R) Funds Growth Funds AXP(R) Emerging Markets Fund AXP Equity Select Fund AXP Focused Growth Fund AXP Global Growth Fund AXP Growth Fund AXP Growth Dimensions Fund AXP New Dimensions Fund(R) AXP Partners International Aggressive Growth Fund AXP Partners Small Cap Growth Fund AXP Strategy Aggressive Fund Blend Funds AXP Blue Chip Advantage Fund AXP Discovery Fund* AXP European Equity Fund AXP Global Balanced Fund AXP International Fund AXP International Equity Index Fund AXP Large Cap Equity Fund AXP Managed Allocation Fund AXP Mid Cap Index Fund AXP Nasdaq 100 Index(R) Fund AXP Partners Small Cap Core Fund AXP Research Opportunities Fund AXP S&P 500 Index Fund AXP Small Cap Advantage Fund AXP Small Company Index Fund AXP Stock Fund AXP Total Stock Market Index Fund Value Funds AXP Diversified Equity Income Fund AXP Equity Value Fund AXP Large Cap Value Fund AXP Mid Cap Value Fund AXP Mutual AXP Partners Fundamental Value Fund AXP Partners International Select Value Fund AXP Partners Select Value Fund AXP Partners Small Cap Value Fund AXP Partners Value Fund AXP Progressive Fund* Income/Tax-Exempt Income Funds AXP Bond Fund AXP Cash Management Fund** AXP Extra Income Fund AXP Federal Income Fund AXP Global Bond Fund AXP High Yield Tax-Exempt Fund AXP Insured Tax-Exempt Fund AXP Intermediate Tax-Exempt Fund AXP Selective Fund AXP State Tax-Exempt Funds AXP Tax-Exempt Bond Fund AXP Tax-Free Money Fund** AXP U.S. Government Mortgage Fund Sector Funds AXP Global Technology Fund AXP Precious Metals Fund AXP Utilities Fund These funds are also listed in the categories above. AXP(R) Partners Funds AXP Partners Fundamental Value Fund AXP Partners International Aggressive Growth Fund AXP Partners International Select Value Fund AXP Partners Select Value Fund AXP Partners Small Cap Core Fund AXP Partners Small Cap Growth Fund AXP Partners Small Cap Value Fund AXP Partners Value Fund International Funds AXP Emerging Markets Fund AXP European Equity Fund AXP Global Balanced Fund AXP Global Bond Fund AXP Global Growth Fund AXP International Fund AXP Partners International Aggressive Growth Fund AXP Partners International Select Value Fund * Closed to new investors. ** An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. For more complete information about our funds, including fees and expenses, please call (800) 862-7919 for prospectuses. Read them carefully before you invest. (9/02) AXP Large Cap Value Fund 70100 AXP Financial Center Minneapolis, MN 55474 americanexpress.com -------------------------------------------------------------------------------- (logo) (logo) American AMERICAN Express(R) EXPRESS Funds (R) -------------------------------------------------------------------------------- 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. S-6246 C (9/02)