-----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, EKdCPWGh2En9BIcl+WJ8BujB0hsjJxYoCFiPodpjgUNdJQ2FhnNXiqZXMnlZn2nt JWv4pniQUem92/7kW/jWkg== 0000820027-03-000243.txt : 20030403 0000820027-03-000243.hdr.sgml : 20030403 20030403160807 ACCESSION NUMBER: 0000820027-03-000243 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030131 FILED AS OF DATE: 20030403 EFFECTIVENESS DATE: 20030403 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP GROWTH SERIES INC/MN CENTRAL INDEX KEY: 0000049702 IRS NUMBER: 410962638 STATE OF INCORPORATION: MN FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02111 FILM NUMBER: 03638791 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: IDS GROWTH FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AXP GROWTH FUND INC DATE OF NAME CHANGE: 20000829 N-30D 1 s6257.txt AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT AXP(R) Large Cap Value Fund 2003 SEMIANNUAL REPORT JAN. 31, 2003 AXP Large Cap Value Fund seeks to provide shareholders with long-term growth of capital. - -------------------------------------------------------------------------------- (logo) (logo) American AMERICAN Express(R) EXPRESS Funds (R) - -------------------------------------------------------------------------------- Mutual Funds Can Work for You For more than six decades, American Express(R) Funds has provided investors with attractive investment opportunities. Several of our funds helped pioneer the mutual fund industry in the 1940s. Today, with 58 publicly offered funds and nearly $64 billion* in assets, American Express Funds ranks among the largest U.S. fund families. American Express Financial Corporation, the investment manager for American Express Funds, has more than 100 years of experience as a financial services provider -- a claim few other financial firms can make. With investment management offices in Minneapolis, Boston, New York, San Diego, London, Tokyo and Singapore, we strive to provide our shareholders with the high-quality service American Express is known for worldwide. At American Express Funds, we're focused on your success. Our investment managers have the strength and experience that you can count on to help you achieve your financial goals -- now and into the future. * As of December 2002. - -------------------------------------------------------------------------------- Table of Contents From the Chairman 3 Economic and Market Update 4 Fund Snapshot 6 Questions & Answers with Portfolio Management 7 Investments in Securities 10 Financial Statements 14 Notes to Financial Statements 17 Results of Meeting of Shareholders 27 (logo) Dalbar American Express(R) Funds' reports to shareholders have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- 2 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT From the Chairman (photo of) Arne H. Carlson Arne H. Carlson Chairman of the board Dear Shareholders, The recent proposed Bush economic stimulus package and potential conflicts around the globe are capturing headlines. Negative investment returns persisted in 2002 and the investing public also had their confidence in the integrity of corporations shaken. While the scandals appear to be largely behind us, the recent past offers lessons on investing and on governance, which I would like to discuss with you. First, and importantly, we have learned that diversification is not just a concept but a key tactic investors can use to help preserve assets. We would encourage you to work closely with your financial advisor to build a diversified portfolio designed to match your current thoughts about risk and reward. A second lesson of 2002 is that we must have enhanced oversight of corporations to ensure their financial statements are accurate, their officers act in the interest of shareholders and their directors are truly independent. The Sarbanes-Oxley Act passed by Congress in August, is already having an impact in these areas. The American Express Funds Board is an independent body comprised of nine members who are nominated by the independent directors. American Express Financial Corporation is represented by three board members, however, they do not play a role on the nominating committee. In addition, the Funds auditors, KPMG LLP, are independent of American Express Financial Corporation. KPMG serves the interest of shareholders by supporting the work of the Board and certifying unbiased financial reports. Further, the Board has confidence in Ted Truscott, American Express Financial Corporation's Chief Investment Officer, and shares his enthusiasm in the management changes he has effected to improve the investment performance of all American Express funds. The focus of the Board and American Express Financial Corporation is simple; we strive for consistent, competitive investment performance. On behalf of the Board, Arne H. Carlson - -------------------------------------------------------------------------------- 3 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL 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, In spite of a mostly positive fourth quarter*, 2002 proved to be an extraordinarily challenging year for investors, with the benchmark stock indices - -- the Dow, the Nasdaq and the S&P 500 -- all registering percentage losses well into the double digits. While there were technical factors that put a damper on market performance last year, most notably, P/E ratios that are surprisingly high after three years of a bear market, it was corporate governance issues that fostered a general atmosphere of mistrust. The collapse of several large, high profile companies due to outright fraud and malfeasance has been -- and ought to be -- outrageous to the investing public. The magnitude of this wrongdoing is still shocking months after the fact. When many economic factors should have been giving investors reason for optimism, the steady drip of news about these companies sapped overall confidence. I believe there is ample evidence that conditions are not as bad as the markets seem to think. While corporate earnings have been weak, the economy grew at the respectable rate of about 3% last year, compared to 0.1% in 2001. A portion of the softness in earnings can be attributed to excess capacity added in the late `90s. KEY POINTS - -- If you are rebalancing your portfolio, we encourage moderate changes from stocks to bonds. - -- Interest rates are the lowest they have been in 40 years. - -- There is ample evidence that conditions are not as bad as the markets seem to think. - -------------------------------------------------------------------------------- 4 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Economic and Market Update Interest rates are another bright spot. They are the lowest they have been in 40 years, which has added to consumer and business purchasing power. There's no better illustration of this than the housing market, which has remained vigorous. Finally, the business productivity gains we've seen since the mid-`90s are remarkable, making products and services less expensive. The macroeconomic picture, while not ideal, is certainly positive. For these reasons, I'm cautiously optimistic about market prospects for 2003. Of course, there are still risks. Much of what happens this year will depend on external factors, such as whether or not more scandals arise and the implications of potential conflict in Iraq. In the short term, military action in Iraq would almost certainly produce an oil price spike; if that increase became severe enough for a significant period of time, it would create inflationary pressures that could endanger economic growth. In addition to stocks, some bond categories offer opportunity. Though we believe U.S. Treasuries are currently overvalued, select corporate, high-yield and municipal issues may provide competitive returns this year. Speak to your financial advisor to learn more about different asset classes. After three years of negative stock market returns, many individual investors are rebalancing portfolios with regard to risk and return. If you are repositioning, we would encourage moderate changes from stocks to bonds. The risk inherent in emotion-based repositioning is that you will go too far too fast. I encourage gradual movement across categories. Should interest rates move at all in 2003, it's likely that they'll go up, which will have a negative impact on most bonds. Continue to invest according to your individual timeframe and financial goals. As always, thank you for investing with American Express Funds. William F. Truscott * Please see portfolio manager Q&A for fiscal period economic coverage. - -------------------------------------------------------------------------------- 5 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Fund Snapshot AS OF JAN. 31, 2003 PORTFOLIO MANAGER Portfolio manager Bob Ewing, CFA Tenure/since 6/02 Years in industry 14 FUND OBJECTIVE The 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: ALVAX B: -- C: -- Y: -- Total net assets $23.4 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 SECTOR COMPOSITION Percentage of portfolio assets (pie chart) Financials 29.8% Technology and communications 13.2% Energy & utilities 12.0% Consumer Discretionary 10.7% Industrials 9.1% Health Care 8.6% Cash and equivalents 6.5% Materials 5.2% Consumer Staples 4.9% TOP TEN HOLDINGS Percentage of portfolio assets Citigroup 4.0% ConocoPhillips 2.8 Chevron Texaco 2.5 Bank of America 2.3 American Intl Group 2.0 Exxon Mobil 2.0 Verizon Communications 1.9 Wells Fargo 1.6 Freddie Mac 1.6 U.S. Bancorp 1.5 For further detail about these holdings, please refer to the section entitled "Investments in Securities." Stock prices of established companies that pay dividends may be less volatile than the stock market as a whole. Fund holdings are subject to change. - -------------------------------------------------------------------------------- 6 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Questions & Answers WITH PORTFOLIO MANAGEMENT Q: How did AXP Large Cap Value Fund perform for the six-month period ended Jan. 31, 2003? A: The Fund's Class A shares fell 5.24%, excluding sales charges, underperforming its benchmark, the Russell 1000(R) Value Index, which declined 4.56%. The Fund outperformed its peer group, as represented by the Lipper Large-Cap Value Funds Index, which dropped 5.58% for the six-month period ended Jan. 31, 2003. Q: What factors had a significant impact on performance? A: Favorable relative performance early in the period was followed by results that lagged the Fund's benchmark later in the period, primarily because of sector weightings. During the earlier months of the period, stocks in all styles, including value, were battered as the stock market plummeted to four-year lows. Although the period was a losing one, the Fund's exposure to healthcare stocks helped performance relative to the benchmark. An overweight in consumer staples, an underweight in telecom and good stock selection also proved beneficial. Later in the period, the market rallied with beaten-up stocks leading the way. The Fund's underweight in telecommunications hurt performance during this time, although sector weightings were generally beneficial. (bar chart) PERFORMANCE COMPARISON For the year ended Jan. 31, 2003 0% - -1% - -2% - -3% (bar 2) - -4% (bar 1) -4.56% (bar 3) - -5% -5.24% -5.58% - -6% (bar 1) AXP Large Cap Value Fund Class A (excluding sales charge) (bar 2) Russell 1000(R) Value Index (unmanaged)(1) (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. - -------------------------------------------------------------------------------- 7 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Questions & Answers (begin callout quote)> The Fund added to positions in the energy, industrials and financial sectors -- three areas that should do well in a recovering economy.(end callout quote)
TOTAL RETURNS as of Jan. 31, 2003 Class A Class B Class C Class Y (Inception dates) (6/27/02) (6/27/02) (6/27/02) (6/27/02) NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4) NAV(5) POP(5) 6 months* -5.24% -10.69% -5.63% -9.40% -5.79% -6.73% -5.22% -5.22% Since inception* -12.58% -17.61% -12.95% -16.42% -13.10% -13.97% -12.57% -12.57%
* Not annualized. (1) Excluding sales charge. (2) Returns at public offering price (POP) reflect a sales charge of 5.75%. (3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as follows: first year 5%; second and third year 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. (4) 1% CDSC applies to redemptions made within the first year of purchase. (5) Sales charge is not applicable to these shares. Shares available to institutional investors only. 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. - -------------------------------------------------------------------------------- 8 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Questions & Answers DBM and SBC Communications, the regional Bell operating company, performed well during the period. The Fund held a below market weight in both of these companies and thus experienced some relative underperformance when both stocks as well as the technology sector rallied. Q: What changes did you make to the portfolio during the period? A: The Fund was launched in June 2002 with a focus on relative value style. From the beginning, we have sought stocks of companies that offer good value relative to the overall market, their peers and even to their own histories. These companies must exhibit some potential for earnings growth. The soundest companies did not gain as much as the hardest-hit stocks did during the brief rally in October and November, when growth sectors outperformed value. Technology and telecom were among the biggest winners during this time. We captured gains as we reduced our positions in these sectors, maintaining our focus on undervalued stocks with solid fundamentals. The Fund also added to positions in the energy, industrials and financial sectors -- three areas that should do well in a recovering economy. Q: What is your outlook for the coming months and how will you position the Fund? A: With uncertainty over Iraq and North Korea, and global terrorism still a persistent threat, volatility is expected to be the norm for the first half of 2003. We prefer to focus on the long term, when some of these geopolitical events may have played out and investors become more confident in an economic recovery. As uncertainty is relieved and the economy shows a sustained recovery, company earnings should continue to improve. Potential changes to the federal tax code could also spur the economy. Companies that are positioned to benefit from a stronger economy and offer good relative value are likely to benefit over the long term. - -------------------------------------------------------------------------------- 9 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Investments in Securities AXP Large Cap Value Fund Jan. 31, 2003 (Unaudited) (Percentages represent value of investments compared to net assets) Common stocks (92.3%) Issuer Shares Value(a) Aerospace & defense (2.0%) Boeing 1,861 $58,789 Lockheed Martin 2,815 143,706 Northrop Grumman 1,266 115,725 United Technologies 2,541 161,557 Total 479,777 Airlines (--%) Northwest Airlines Cl A 1,793(b) 11,242 Automotive & related (1.0%) General Motors 2,177 79,090 Navistar Intl 4,327(b) 104,151 Sonic Automotive 3,018(b) 46,779 Total 230,020 Banks and savings & loans (11.2%) Bank of America 7,690 538,684 Bank of New York 6,729 170,244 Bank One 3,861 140,965 FleetBoston Financial 6,403 167,182 J.P. Morgan Chase 9,717 226,795 Mellon Financial 6,243 142,777 PNC Financial Services Group 4,040 177,922 U.S. Bancorp 16,650 351,315 Wachovia 6,998 251,718 Washington Mutual 2,954 101,765 Wells Fargo 7,786 368,823 Total 2,638,190 Beverages & tobacco (3.8%) Altria Group 8,137 308,149 Anheuser-Busch 2,476 117,536 Coca-Cola 3,690 149,297 Pepsi Bottling Group 1,700 43,095 PepsiCo 7,015 283,967 Total 902,044 Building materials & construction (1.2%) Centex 1,777 94,039 Masco 6,515 118,508 Temple-Inland 1,642 70,967 Total 283,514 Chemicals (2.5%) Dow Chemical 4,984 144,835 du Pont (EI) de Nemours 5,139 194,614 Lyondell Chemical 5,502 70,481 Praxair 1,512 82,464 RPM Intl 4,300 46,999 Solutia 11,380 39,602 Total 578,995 Communications equipment & services (3.4%) EchoStar Communications Cl A 2,025(b) 52,549 Fairchild Semiconductor Intl Cl A 3,631(b) 39,723 Flextronics Intl 5,973(b,c) 48,142 Motorola 17,734 141,517 QUALCOMM 600(b) 22,596 Teradyne 4,817(b) 50,049 Verizon Communications 11,719 448,604 Total 803,180 Computer software & services (1.0%) Automatic Data Processing 1,650 57,206 Microsoft 2,829(b) 134,264 Network Associates 2,523(b) 38,526 Total 229,996 Computers & office equipment (2.0%) Apple Computer 8,908(b) 127,919 Cisco Systems 1,918(b) 25,644 Hewlett-Packard 12,583 219,070 Sun Microsystems 32,400(b) 100,116 Total 472,749 Electronics (0.9%) Advanced Micro Devices 5,946(b) 31,157 Micron Technology 3,780(b) 31,034 Natl Semiconductor 3,232(b) 42,662 Texas Instruments 7,104 112,954 Total 217,807 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 10 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Common stocks (continued) Issuer Shares Value(a) Energy (8.8%) Burlington Resources 3,226 $142,267 ChevronTexaco 8,895 572,838 ConocoPhillips 13,440 647,673 Exxon Mobil 13,296 454,058 FirstEnergy 4,945 154,284 Grant Prideco 9,365(b) 99,737 Total 2,070,857 Energy equipment & services (1.6%) Schlumberger 5,795 218,471 Transocean 7,101 161,690 Total 380,161 Financial services (10.7%) Capital One Financial 1,291 40,086 CIT Group 2,998 59,660 Citigroup 27,191 934,826 Fannie Mae 3,904 252,589 Freddie Mac 6,588 368,795 Household Intl 2,597 70,924 Lehman Brothers Holdings 3,092 168,607 MBNA 10,397 174,982 Merrill Lynch 5,797 203,011 Morgan Stanley 6,156 233,312 Total 2,506,792 Food (1.0%) General Mills 4,276 192,121 Kraft Foods Cl A 986 31,404 Total 223,525 Furniture & appliances (0.8%) Black & Decker 1,343 49,208 Leggett & Platt 2,188 44,198 Maytag 2,598 65,651 Miller (Herman) 1,944 34,778 Total 193,835 Health care (6.3%) Abbott Laboratories 3,577 136,355 Bristol-Myers Squibb 4,806 113,374 Laboratory Corp America Holdings 900(b) 24,075 Lilly (Eli) 1,350 81,324 Merck & Co 5,935 328,740 Pfizer 8,337 253,111 Pharmacia 1,669 69,714 Schering-Plough 10,423 188,761 Waters 1,268(b) 29,227 Wyeth 6,658 259,862 Total 1,484,543 Health care services (2.2%) Caremark Rx 5,929(b) 116,208 HCA 4,808 205,494 McKesson 5,174 147,097 Tenet Healthcare 1,732(b) 31,159 WellChoice 487(b) 11,469 Total 511,427 Household products (3.9%) Avon Products 4,053 202,650 Gillette 3,929 117,477 Intl Flavors/Fragrances 3,000 95,310 Kimberly-Clark 5,161 239,058 Newell Rubbermaid 2,661 74,109 Procter & Gamble 2,297 196,554 Total 925,158 Industrial equipment & services (0.5%) Caterpillar 1,367 60,120 Ingersoll-Rand Cl A 611(c) 23,988 Kennametal 1,175 37,201 Milacron 801 3,997 Total 125,306 Insurance (5.8%) ACE 3,038(c) 89,469 AFLAC 2,136 69,185 Allstate 5,991 210,823 American Intl Group 8,610 465,972 Hartford Financial Services Group 3,269 136,252 MetLife 4,447 119,046 Montpelier Re Holdings 1,278(b,c) 32,845 Prudential Financial 3,928 124,793 Travelers Property Casualty Cl A 4,376(b) 70,935 Travelers Property Casualty Cl B 2,379(b) 38,683 Total 1,358,003 Leisure time & entertainment (1.6%) AOL Time Warner 21,400(b) 249,524 Mattel 3,296 65,920 Viacom Cl B 1,654(b) 63,762 Total 379,206 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 11 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Common stocks (continued) Issuer Shares Value(a) Media (3.4%) Clear Channel Communications 3,435(b) $137,675 Comcast Cl A 4,114(b) 109,556 Comcast Special Cl A 2,791(b) 71,394 Disney (Walt) 9,120 159,599 Liberty Media Cl A 14,548(b) 145,043 McGraw-Hill Companies 737 43,645 Tribune 529 25,604 USA Interactive 5,151(b) 113,374 Total 805,890 Metals (0.8%) Alcan 1,352(c) 38,262 Alcoa 3,432 67,851 Phelps Dodge 2,555(b) 88,274 Total 194,387 Multi-industry conglomerates (4.3%) Cendant 19,300(b) 213,844 Dover 3,884 101,644 General Electric 9,973 230,776 Honeywell Intl 4,811 117,581 ITT Inds 1,213 68,122 Monsanto 514 9,072 Textron 2,980 114,909 Tyco Intl 3,516(c) 56,291 Xerox 10,719(b) 94,863 Total 1,007,102 Paper & packaging (0.7%) Bowater 2,143 87,113 Intl Paper 1,993 71,150 Total 158,263 Real estate investment trust (1.6%) Apartment Investment & Management Cl A 1,368 49,727 Equity Office Properties Trust 9,256 221,588 Starwood Hotels & Resorts Worldwide 4,884 114,530 Total 385,845 Restaurants & lodging (0.6%) McDonald's 9,199 130,994 Retail (3.4%) AutoZone 418(b) 27,467 BJ's Wholesale Club 2,135(b) 32,879 Circuit City Stores 30,660 183,653 CVS 1,335 30,198 Dollar General 11,130 125,324 Home Depot 5,093 106,444 Safeway 3,770(b) 89,349 Sears, Roebuck & Co 1,811 47,901 Staples 3,666(b) 62,945 Target 3,154 88,974 Total 795,134 Textiles & apparel (0.3%) Liz Claiborne 2,404 69,043 Utilities -- electric (1.5%) Dominion Resources 2,610 141,437 DTE Energy 872 36,554 FPL Group 1,129 65,922 PPL 1,215 42,525 Xcel Energy 5,262 57,987 Total 344,425 Utilities -- telephone (3.2%) ALLTEL 2,614 122,518 AT&T 3,747 72,992 BellSouth 9,288 211,581 Davel Communications 5,200(b) 52 KT ADR 3,651(c) 75,466 SBC Communications 10,873 265,736 Total 748,345 Total common stocks (Cost: $22,659,130) $21,645,755 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 12 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Short-term securities (6.4%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agencies Federal Home Loan Bank Disc Nt 04-04-03 1.22% $500,000 $499,000 Federal Natl Mtge Assn Disc Nts 03-19-03 1.28 500,000 499,267 04-09-03 1.24 500,000 498,917 Total short-term securities (Cost: $1,496,978) $1,497,184 Total investments in securities (Cost: $24,156,108)(d) $23,142,939 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, 2003, the value of foreign securities represented 1.6% of net assets. (d) At Jan. 31, 2003, the cost of securities for federal income tax purposes was approximately $24,156,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was Unrealized appreciation $ 296,000 Unrealized depreciation (1,309,000) ---------- Net unrealized depreciation $(1,013,000) ----------- - -------------------------------------------------------------------------------- 13 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Financial Statements
Statement of assets and liabilities AXP Large Cap Value Fund Jan. 31, 2003 (Unaudited) Assets Investments in securities, at value (Note 1) (identified cost $24,156,108) $23,142,939 Cash in bank on demand deposit 644,259 Capital shares receivable 21,712 Dividends and accrued interest receivable 26,701 Receivable for investment securities sold 24,403 ------ Total assets 23,860,014 ---------- Liabilities Payable for investment securities purchased 378,669 Accrued investment management services fee 378 Accrued distribution fee 300 Accrued transfer agency fee 93 Accrued administrative services fee 31 Other accrued expenses 33,216 ------ Total liabilities 412,687 ------- Net assets applicable to outstanding capital stock $23,447,327 =========== Represented by Capital stock -- $.01 par value (Note 1) $ 54,981 Additional paid-in capital 24,594,713 Undistributed net investment income 2,776 Accumulated net realized gain (loss) (Note 6) (191,974) Unrealized appreciation (depreciation) on investments (1,013,169) ---------- Total -- representing net assets applicable to outstanding capital stock $23,447,327 =========== Net assets applicable to outstanding shares: Class A $16,337,517 Class B $ 6,736,376 Class C $ 362,183 Class Y $ 11,251 Net asset value per share of outstanding capital stock: Class A shares 3,828,048 $ 4.27 Class B shares 1,582,310 $ 4.26 Class C shares 85,128 $ 4.25 Class Y shares 2,634 $ 4.27 ----- -----------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 14 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT
Statement of operations AXP Large Cap Value Fund Six months ended Jan. 31, 2003 (Unaudited) Investment income Income: Dividends $ 140,193 Interest 6,819 Less foreign taxes withheld (26) --- Total income 146,986 ------- Expenses (Note 2): Investment management services fee 40,896 Distribution fee Class A 11,854 Class B 19,824 Class C 844 Transfer agency fee 13,189 Incremental transfer agency fee Class A 902 Class B 900 Class C 58 Service fee -- Class Y 6 Administrative services fees and expenses 3,407 Custodian fees 77,700 Printing and postage 16,384 Registration fees 13,800 Audit fees 7,250 Other 15,048 ------ Total expenses 222,062 Expenses waived/reimbursed by AEFC (Note 2) (121,240) -------- 100,822 Earnings credits on cash balances (Note 2) (1,685) ------ Total net expenses 99,137 ------ Investment income (loss) -- net 47,849 ------ Realized and unrealized gain (loss) -- net Net realized gain (loss) on security transactions (Note 3) (144,152) Net change in unrealized appreciation (depreciation) on investments (880,518) -------- Net gain (loss) on investments (1,024,670) ---------- Net increase (decrease) in net assets resulting from operations $ (976,821) ===========
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 15 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets AXP Large Cap Value Fund Jan. 31, 2003 For the period from Six months ended June 27, 2002* to (Unaudited) July 31, 2002 Operations and distributions Investment income (loss) -- net $ 47,849 $ 361 Net realized gain (loss) on investments (144,152) (47,883) Net change in unrealized appreciation (depreciation) on investments (880,518) (91,249) -------- ------- Net increase (decrease) in net assets resulting from operations (976,821) (138,771) -------- -------- Distributions to shareholders from: Net investment income Class A (40,188) -- Class B (7,258) -- Class C (539) -- Class Y (39) -- -------- -------- Total distributions (48,024) -- -------- -------- Capital share transactions (Note 4) Proceeds from sales Class A shares (Note 2) 13,412,085 2,213,078 Class B shares 5,978,380 1,424,918 Class C shares 323,263 46,247 Class Y shares -- 3,000 Reinvestment of distributions at net asset value Class A shares 34,677 -- Class B shares 7,125 -- Class C shares 514 -- Class Y shares 9 -- Payments for redemptions Class A shares (381,712) (25,502) Class B shares (Note 2) (342,978) (40,778) Class C shares (Note 2) (1,411) -- -------- -------- Increase (decrease) in net assets from capital share transactions 19,029,952 3,620,963 ---------- --------- Total increase (decrease) in net assets 18,005,107 3,482,192 Net assets at beginning of period (Note 1) 5,442,220 1,960,028** --------- --------- Net assets at end of period $23,447,327 $5,442,220 =========== ========== Undistributed net investment income $ 2,776 $ 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. - -------------------------------------------------------------------------------- 16 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Notes to Financial Statements AXP Large Cap Value Fund (Unaudited as to Jan. 31, 2003) 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. - -------------------------------------------------------------------------------- 17 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL 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. - -------------------------------------------------------------------------------- 18 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL 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. 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 amortization of premium and discount using the effective interest method, 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. Prior to Dec. 1, 2002, the maximum adjustment was 0.12% of the Fund's average daily net assets after deducting 1% from the performance difference. If the performance difference was less than 1%, the adjustment was zero. On Nov. 13, 2002, shareholders approved modification of the performance incentive adjustment calculation by adjusting the performance difference intervals, while retaining the previous maximum adjustment and reducing the amount of the performance difference for which no adjustment is made to 0.50%. The effect of the modifications began on Dec. 1, 2002. The first adjustment was made on January 1, 2003 and covered the six-month period beginning July 1, 2002. The adjustment increased the fee by $11 for the six months ended Jan. 31, 2003. - -------------------------------------------------------------------------------- 19 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT 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 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 $62,464 for Class A and $2,534 for Class B for the six months ended Jan. 31, 2003. For the six months ended Jan. 31, 2003, AEFC and American Express Financial Advisors Inc. waived certain fees and expenses to 1.25% for Class A, 2.01% for Class B, 2.01% for Class C and 1.06% for Class Y. In addition, AEFC and American Express Financial Advisors Inc. have agreed to waive certain fees and 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. During the six months ended Jan. 31, 2003, the Fund's custodian and transfer agency fees were reduced by $1,685 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 $22,584,387 and $4,805,275 respectively, for the six months ended Jan. 31, 2003. Realized gains and losses are determined on an identified cost basis. Brokerage clearing fees paid to brokers affiliated with AEFC were $1,152 for the six months ended Jan. 31, 2003. - -------------------------------------------------------------------------------- 20 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows: Six months ended Jan. 31, 2003 Class A Class B Class C Class Y Sold 3,030,581 1,349,424 73,214 -- Issued for reinvested distributions 7,863 1,619 117 2 Redeemed (87,732) (80,101) (328) -- --------- --------- ------ ---- Net increase (decrease) 2,950,712 1,270,942 73,003 2 --------- --------- ------ ---- 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 Deutsche Bank, whereby the Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The agreement went into effect Sept. 24, 2002. The Fund must maintain asset coverage for borrowings of at least 300%. The agreement, which enables the Fund to participate with other American Express mutual funds, permits borrowings up to $500 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime Lending Rate. Borrowings are payable within 60 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 0.09% per annum. Prior to this agreement, the Fund had a revolving credit agreement that permitted borrowings up to $200 million with U.S. Bank, N.A. The Fund had no borrowings outstanding during the six months ended Jan. 31, 2003. 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. - -------------------------------------------------------------------------------- 21 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT 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, 2003(j) 2002(b) Net asset value, beginning of period $4.52 $4.90 Income from investment operations: Net investment income (loss) .01 -- Net gains (losses) (both realized and unrealized) (.25) (.38) Total from investment operations (.24) (.38) Less distributions: Dividends from net investment income (.01) -- Net asset value, end of period $4.27 $4.52 Ratios/supplemental data Net assets, end of period (in millions) $16 $4 Ratio of expenses to average daily net assets(c),(e) 1.25%(d) 1.19%(d) Ratio of net investment income (loss) to average daily net assets .93%(d) .23%(d) Portfolio turnover rate (excluding short-term securities) 38% 9% Total return(i) (5.24%)(k) (7.75%)(k) See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- 22 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Class B Per share income and capital changes(a) Fiscal period ended July 31, 2003(j) 2002(b) Net asset value, beginning of period $4.52 $4.90 Income from investment operations: Net investment income (loss) .01 -- Net gains (losses) (both realized and unrealized) (.26) (.38) Total from investment operations (.25) (.38) Less distributions: Dividends from net investment income (.01) -- Net asset value, end of period $4.26 $4.52 Ratios/supplemental data Net assets, end of period (in millions) $7 $1 Ratio of expenses to average daily net assets(c),(f) 2.01%(d) 1.95%(d) Ratio of net investment income (loss) to average daily net assets .17%(d) (.49%)(d) Portfolio turnover rate (excluding short-term securities) 38% 9% Total return(i) (5.63%)(k) (7.75%)(k) See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- 23 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Class C Per share income and capital changes(a) Fiscal period ended July 31, 2003(j) 2002(b) Net asset value, beginning of period $4.52 $4.90 Income from investment operations: Net investment income (loss) .01 -- Net gains (losses) (both realized and unrealized) (.27) (.38) Total from investment operations (.26) (.38) Less distributions: Dividends from net investment income (.01) -- Net asset value, end of period $4.25 $4.52 Ratios/supplemental data Net assets, end of period (in millions) $-- $-- Ratio of expenses to average daily net assets(c),(g) 2.01%(d) 1.95%(d) Ratio of net investment income (loss) to average daily net assets .16%(d) (.45%)(d) Portfolio turnover rate (excluding short-term securities) 38% 9% Total return(i) (5.79%)(k) (7.75%)(k) See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- 24 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Class Y Per share income and capital changes(a) Fiscal period ended July 31, 2003(j) 2002(b) Net asset value, beginning of period $4.52 $4.90 Income from investment operations: Net investment income (loss) .01 -- Net gains (losses) (both realized and unrealized) (.25) (.38) Total from investment operations (.24) (.38) Less distributions: Dividends from net investment income (.01) -- Net asset value, end of period $4.27 $4.52 Ratios/supplemental data Net assets, end of period (in millions) $-- $-- Ratio of expenses to average daily net assets(c),(h) 1.06%(d) 1.01%(d) Ratio of net investment income (loss) to average daily net assets 1.17%(d) .31%(d) Portfolio turnover rate (excluding short-term securities) 38% 9% Total return(i) (5.22%)(k) (7.75%)(k) See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- 25 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL 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 waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class A would have been 3.02% and 20.50% for the periods ended Jan. 31, 2003 and July 31, 2002, respectively. (f) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class B would have been 3.79% and 21.26% for the periods ended Jan. 31, 2003 and July 31, 2002, respectively. (g) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class C would have been 3.79% and 21.26% for the periods ended Jan. 31, 2003 and July 31, 2002, respectively. (h) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class Y would have been 2.71% and 20.32% for the periods ended Jan. 31, 2003 and July 31, 2002, respectively. (i) Total return does not reflect payment of a sales charge. (j) Six months ended Jan. 31, 2003 (Unaudited). (k) Not annualized. - -------------------------------------------------------------------------------- 26 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Results of Meeting of Shareholders AXP LARGE CAP VALUE FUND REGULAR MEETING OF SHAREHOLDERS HELD ON NOVEMBER 13, 2002 (UNAUDITED) A brief description of each proposal voted upon at the meeting and the number of votes cast for, against or withheld, as well as the number of abstentions and broker non-votes as to each proposal is set forth below. Proposal 1 To elect the thirteen nominees specified below as Board members*. Shares Voted "For" Shares Withholding Authority to Vote Arne H. Carlson 161,067,509.378 8,777,289.897 Philip J. Carroll, Jr. 161,696,909.389 8,147,889.886 Livio D. DeSimone 161,363,098.318 8,481,700.957 Barbara H. Fraser 161,749,782.777 8,095,016.498 Ira D. Hall 161,624,688.292 8,220,110.983 Heinz F. Hutter 161,223,353.993 8,621,445.282 Anne P. Jones 161,454,050.036 8,390,749.239 Stephen R. Lewis, Jr. 161,977,476.287 7,867,322.988 Alan G. Quasha 161,843,920.313 8,000,878.962 Stephen W. Roszell 161,838,277.012 8,006,522.263 Alan K. Simpson 160,863,762.643 8,981,036.632 Alison Taunton-Rigby 161,799,304.848 8,045,494.427 William F. Truscott 161,815,746.539 8,029,052.736 - -------------------------------------------------------------------------------- 27 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Proposal 2 To Amend the Articles of Incorporation/Declaration of Trust*: 2(a). To allow one vote/dollar instead of one vote/share. Shares Voted "For" Shares Voted "Against" Abstentions Broker Non-Votes 141,057,904.638 17,507,272.377 4,873,844.260 6,405,778.000 Proposal 4 To approve changes to the Investment Management Services Agreement: 4(b). To modify the performance incentive adjustment calculation. Shares Voted "For" Shares Voted "Against" Abstentions Broker Non-Votes 815,391.569 84,937.514 18,872.483 147,121.000 * Denotes Registrant-wide proposals and voting results. - -------------------------------------------------------------------------------- 28 -- AXP LARGE CAP VALUE FUND -- 2003 SEMIANNUAL REPORT Contact Information and Services Internet Receive 24-hour access to your account information at www.americanexpress.com. Client Service Receive fund performance, fund prices, account values, recent account transactions, and make account inquiries by calling American Express Financial Advisors at (800) 862-7919 or TTY: (800) 846-4852. Telephone Transaction Service For sales and exchange, dividend payments, or reinvestments and automatic payment arrangement contact American Express Financial Advisors at (888) 723-8476. Find an American Express Financial Advisor If you are an existing American Express Financial Advisors client who has recently moved and would like to speak with a new advisor, please call your local Client Service Coordinator at (800) 803-6284. - -------------------------------------------------------------------------------- American Express(R) Funds provide investment opportunities for shareholders, all in one place. We've been managing mutual funds for over 60 years. Today, our family of funds includes 58 publicly offered funds in all style categories: growth, blend, value, and income. Our broad selection of funds allows you to build a portfolio diversified across various asset classes. Growth Funds Typically, growth investing seeks to invest in companies with the greatest earnings growth potential. Blend Funds Blend is often regarded as an investment style that incorporates both growth and value considerations in the stock selection process. Value Funds A value investment approach generally seeks to invest in undervalued stocks that are temporarily out of favor. Income/Tax-Exempt Income Funds Involves investing primarily in fixed income securities with the goal of maximizing income and often, but not always, capital appreciation. American Express(R) Funds For more complete information about our funds, including fees and expenses, please call (800) 862-7919 for prospectuses. Read them carefully before you invest. 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 Large Cap Equity Fund AXP Managed Allocation Fund AXP Mid Cap Index Fund AXP Partners International Core Fund AXP Partners International Small Cap 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 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 Core Fund AXP Partners International Select Value Fund AXP Partners International Small Cap 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 Core Fund AXP Partners International Select Value Fund AXP Partners International Small Cap 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. (4/03) 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-6257 A (4/03) -----END PRIVACY-ENHANCED MESSAGE-----