-----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, Jyzfcse3eCLnJRiWsE6q2hyNo5EqF4wmuERk4rqWk4M77cN768939xqDsZsIJmwH 078YQblc/3XMNUHETuBsQQ== 0000820027-03-000246.txt : 20030403 0000820027-03-000246.hdr.sgml : 20030403 20030403161004 ACCESSION NUMBER: 0000820027-03-000246 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: 03638803 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 s6456.txt AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT AXP(R) Growth Fund 2003 SEMIANNUAL REPORT JAN. 31, 2003 AXP Growth Fund seeks to provide shareholders with long-term capital growth. - -------------------------------------------------------------------------------- (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 (Portfolio) 13 Notes to Financial Statements (Portfolio) 16 Financial Statements (Fund) 19 Notes to Financial Statements (Fund) 22 Results of Meeting of Shareholders 28 (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 GROWTH 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 GROWTH 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 GROWTH 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 GROWTH FUND -- 2003 SEMIANNUAL REPORT Fund Snapshot AS OF JAN. 31, 2003 PORTFOLIO MANAGER Portfolio manager Nick Thakore Tenure/since 4/1/02 Years in industry 9 FUND OBJECTIVE For investors seeking long-term capital growth. Inception dates A: 3/1/72 B: 3/20/95 C: 6/26/00 Y: 3/20/95 Ticker symbols A: INIDX B: IGRBX C: AXGCX Y: IGRYX Total net assets $3.068 billion Number of holdings approximately 140 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) Health Care 29.0% Information Technology 18.7% Consumer Discretionary 17.0% Energy & utilities 6.6% Industrials 5.7% Consumer Staples 4.4% Financials 3.6% Materials 2.8% Other 12.2% TOP TEN HOLDINGS Percentage of portfolio assets Pfizer 5.1% Merck & Co 2.6 Johnson & Johnson 2.3 USA Interactive 2.1 eBay 2.1 Procter & Gamble 1.9 Circuit City Stores 1.9 General Electric 1.7 HCA 1.6 Wyeth 1.6 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. There are special risk considerations associated with international investing related to market, currency, political, economic and other factors. Fund holdings are subject to change. - -------------------------------------------------------------------------------- 6 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Questions & Answers WITH PORTFOLIO MANAGEMENT Q: How did AXP Growth Fund perform for the six-month period ended Jan. 31, 2003? A: AXP Growth Fund's Class A shares fell 4.98%, excluding sales charges, for the period. In a difficult market environment, the Fund outperformed both its benchmark, the Russell 1000(R) Growth Index, and its peer group, as represented by the Lipper Large-Cap Growth Funds Index, which declined 5.30% and 7.43%, respectively. The S&P 500 Index fell 5.26% for the same period. Q: What factors had a significant impact on performance? A: Market conditions and investor psychology were huge factors affecting performance during the six-month period, depressing the portfolio's returns earlier in the period and boosting returns during the market rally later in the period. However, good stock selection helped the Fund outperform both its benchmark and peer group for the six months. At the beginning of the period, the Fund's reduced emphasis on financial stocks and overweight position in the healthcare sector both helped relative performance. The financial sector had a miserable three months, while large-cap healthcare stocks fared better than most. Later in the period, some of the Fund's beaten-up technology holdings that were particularly attractive from both a growth and valuation standpoint benefited in the October-November market rally. Its below-market weight position in technology held back relative performance. (bar chart) PERFORMANCE COMPARISON For the year ended Jan. 31, 2003 0% - -1% - -2% - -3% - -4% (bar 1) - -5% -4.98% (bar 2) (bar 1) - -6% -5.30% -5.26% - -7% (bar 3) - -8% -7.43% (bar 1) AXP Growth Fund Class A (excluding sales charge) (bar 2) The Russell 1000(R) Growth Index (unmanaged)(1) (bar 3) Lipper Large-Cap Growth Funds Index(2) (bar 4) Standard & Poor's 500 Index (unmanaged)(3) (1) The Russell 1000(R) Growth Index, an unmanaged index, measures the performance of those companies among the 1,000 largest companies included in the Russell 3000(R) Index with higher price-to-book ratios and higher forecasted growth values. (2) The Lipper Large-Cap Growth 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. (3) Standard & Poor's 500 Index (S&P 500 Index), an unmanaged index of common stocks, is frequently used as a general measure of market performance. The index reflects reinvestment of all distributions and changes in market prices, but excludes brokerage commissions or other fees. However, the S&P 500 companies may be generally larger than those in which the Fund invests. 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 GROWTH FUND -- 2003 SEMIANNUAL REPORT Questions & Answers (begin callout quote) > Stocks generally remain expensive, although we anticipate attractive buying opportunities to develop in any economic environment. (end callout quote)
AVERAGE ANNUAL TOTAL RETURNS as of Jan. 31, 2003 Class A Class B Class C Class Y (Inception dates) (3/1/72) (3/20/95) (6/26/00) (3/20/95) NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4) NAV(5) POP(5) 6 months* -4.98% -10.44% -5.30% -9.09% -5.30% -6.25% -4.87% -4.87% 1 year -24.80% -29.12% -25.37% -28.36% -25.37% -25.37% -24.66% -24.66% 5 years -6.71% -7.81% -7.42% -7.58% N/A N/A -6.58% -6.58% 10 years +5.19% +4.57% N/A N/A N/A N/A N/A N/A Since inception N/A N/A +3.50% +3.50% -31.38% -31.38% +4.43% +4.43%
* 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 GROWTH FUND -- 2003 SEMIANNUAL REPORT Questions & Answers Q: What changes did you make to the portfolio during the period? A: At the beginning of the period, we identified opportunities in select companies that were down about 50% during the market pullback in the summer, but showed signs of potentially faster growth. We were looking to keep the price-to-earnings ratio of the portfolio lower than the benchmark, while owning stocks that had the potential to outpace market gains. Although the market had a miserable third quarter relative to other growth funds, this aggressive stance paid off during the six-months. Early in the period exposure to the consumer cyclical sector was increased with stocks that seemed poised to restart growth. Opportunities in the healthcare sector paid off later in the period, but a higher-than-index weighting in the energy sector did not, despite all signs pointing toward a rally in this area. Contributing to gains during the period was the selloff of the portfolio's holdings in AOL/Time Warner and Wyeth, two issues that rebounded in October and November after losses earlier in the year. AOL/Time Warner, the media company, faced management issues during the period while Wyeth, a pharmaceutical company, overcame regulatory issues related to its manufacturing operations. Q: What is your outlook and how will you position the Fund? A: A stubbornly weak economic recovery complicated by the threat of war in the Middle East and on the Korean peninsula, keeps us cautious in the near term. With this uncertainty, consumer spending has begun to weaken. Any further deterioration in consumer spending would adversely affect an economic recovery. Although sales, particularly in the auto sector, have been strong, incentives to help attract sales have weakened company profits. Stocks generally remain expensive, although we anticipate being able to find attractive buying opportunities in any economic environment. Rather than focus on the short term, we believe indentifying strong companies with solid fundamentals that are poised to take advantage of an eventual economic recovery will bode well for the Fund in the long term. - -------------------------------------------------------------------------------- 9 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Investments in Securities Growth Portfolio Jan. 31, 2003 (Unaudited) (Percentages represent value of investments compared to net assets) Common stocks (89.3%) Issuer Shares Value(a) Aerospace & defense (1.8%) Lockheed Martin 755,000 $38,542,750 United Technologies 285,000 18,120,300 Total 56,663,050 Banks and savings & loans (0.1%) Mitsubishi Tokyo Financial Group 600(c) 3,131,566 Beverages & tobacco (2.6%) Altria Group 580,000 21,964,600 Coca-Cola 900,000 36,414,000 PepsiCo 520,000 21,049,600 Total 79,428,200 Chemicals (0.6%) Dow Chemical 110,000 3,196,600 Praxair 165,000 8,999,100 RPM Intl 575,000 6,284,750 Total 18,480,450 Communications equipment & services (4.7%) EchoStar Communications Cl A 1,280,000(b) 33,216,000 Marvell Technology Group 460,000(b,c) 8,404,200 Motorola 3,700,000 29,526,000 Nokia ADR 2,350,000(c) 33,816,500 QUALCOMM 470,000(b) 17,700,200 UTStarcom 305,000(b) 5,877,350 WebMD 1,580,000(b) 14,883,600 Total 143,423,850 Computer software & services (3.8%) Automatic Data Processing 910,000 31,549,700 Microsoft 900,000(b) 42,714,000 Oracle 3,575,000(b) 43,007,250 Total 117,270,950 Computers & office equipment (4.0%) Apple Computer 1,185,000(b) 17,016,600 Cisco Systems 1,225,000(b) 16,378,250 Dell Computer 1,575,000(b) 37,579,500 First Data 900,000 30,960,000 Sanmina-SCI 820,000(b) 3,001,200 Seagate Technology 1,210,000 11,107,800 Western Digital 860,000(b) 6,837,000 Total 122,880,350 Energy (4.1%) Anadarko Petroleum 790,000 36,426,900 Apache 530,000 33,077,300 Burlington Resources 600,000 26,460,000 EnCana 300,000(c) 9,423,000 Newfield Exploration 180,000(b) 5,952,600 Ocean Energy 480,000 8,990,400 XTO Energy 260,000 6,328,400 Total 126,658,600 Energy equipment & services (1.3%) Schlumberger 1,055,000 39,773,500 Financial services (2.7%) Citigroup 605,000 20,799,900 Fannie Mae 245,000 15,851,500 Freddie Mac 275,000 15,394,500 MBNA 445,000 7,489,350 Nomura Holdings 1,895,000(c) 22,767,175 Total 82,302,425 Food (2.0%) Campbell Soup 749,000 17,953,530 General Mills 270,000 12,131,100 Kellogg 660,000 22,044,000 Sara Lee 425,000 8,474,500 Total 60,603,130 Furniture & appliances (0.3%) Matsushita Electric Industrial 905,000(c) 8,639,528 Health care (22.4%) Abbott Laboratories 405,000 15,438,600 Alcon 67,400(b,c) 2,588,160 Allergan 230,000 13,954,100 Amgen 710,000(b) 36,181,600 Baxter Intl 810,000 22,825,800 Becton, Dickinson & Co 745,000 24,436,000 Bristol-Myers Squibb 1,100,000 25,949,000 Forest Laboratories 643,800(b) 33,316,650 Gilead Sciences 385,000(b) 13,436,500 GlaxoSmithKline ADR 530,000(c) 20,542,800 Johnson & Johnson 1,315,000 70,497,150 Lilly (Eli) 210,000 12,650,400 Medtronic 825,000 37,059,000 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 10 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Common stocks (continued) Issuer Shares Value(a) Health care (cont.) Merck & Co 1,440,000 $79,761,600 Millennium Pharmaceuticals 200,100(b) 1,480,740 Pfizer 5,265,000 159,845,400 Pharmacia 535,000 22,346,950 Schering-Plough 875,000 15,846,250 Takeda Chemical Inds 150,000(c) 5,702,851 Teva Pharmaceutical Inds ADR 510,000(c) 19,584,000 Wyeth 1,313,500 51,265,905 Total 684,709,456 Health care services (7.2%) Anthem 100,000(b) 6,208,000 Caremark Rx 2,310,000(b) 45,276,000 HCA 1,200,000 51,288,000 McKesson 1,175,000 33,405,250 UnitedHealth Group 430,000 37,797,000 Wellpoint Health Networks 615,000(b) 44,698,200 Total 218,672,450 Household products (7.0%) Avon Products 370,000 18,500,000 Clorox 405,000 15,479,100 Colgate-Palmolive 495,000 25,200,450 Gillette 1,290,000 38,571,000 Kimberly-Clark 480,000 22,233,600 Newell Rubbermaid 715,000 19,912,750 Procter & Gamble 710,000 60,754,700 UNILEVER 265,000(c) 15,028,150 Total 215,679,750 Insurance (0.9%) American Intl Group 270,000 14,612,400 Travelers Property Casualty Cl B 859,000(b) 13,967,340 Total 28,579,740 Leisure time & entertainment (1.0%) AOL Time Warner 2,000,000(b) 23,320,000 Viacom Cl B 224,750(b) 8,664,113 Total 31,984,113 Media (5.8%) eBay 870,000(b) 65,389,200 Fox Entertainment Group Cl A 315,000(b) 8,703,450 Liberty Media Cl A 950,000(b) 9,471,500 Omnicom Group 250,000 15,075,000 Tribune 265,000 12,826,000 USA Interactive 3,035,000(b) 66,800,350 Total 178,265,500 Metals (2.2%) Barrick Gold 1,430,000(c) 23,523,500 Freeport-McMoRan Copper & Gold Cl B 1,525,800(b) 28,639,266 Newmont Mining 575,000 16,646,250 Total 68,809,016 Multi-industry conglomerates (4.0%) Accenture Cl A 940,000(b,c) 15,557,000 Cendant 3,855,000(b) 42,713,400 General Electric 2,300,000 53,222,000 Tyco Intl 675,000(c) 10,806,750 Total 122,299,150 Restaurants & lodging (1.3%) McDonald's 2,855,000 40,655,200 Retail (7.4%) AutoZone 220,000(b) 14,456,200 Big Lots 299,900(b) 3,748,750 Circuit City Stores 9,989,650 59,838,003 CVS 660,000 14,929,200 Dollar General 1,125,000 12,667,500 Expedia Cl A 265,000(b) 15,900,000 Gap 524,700 7,676,361 Home Depot 1,715,000 35,843,500 Seven-Eleven Japan 105,000(c) 2,687,594 Staples 1,560,000(b) 26,785,200 Wal-Mart Stores 610,000 29,158,000 Total 223,690,308 Textiles & apparel (0.2%) Liz Claiborne 220,000 6,318,400 Utilities -- gas (1.2%) Kinder Morgan 835,000 37,666,850 Kinder Morgan Management LLC --(b) 9 Total 37,666,859 Utilities -- telephone (0.7%) Citizens Communications 1,100,000(b) 10,769,000 Nextel Communications Cl A 858,600(b) 10,835,532 Total 21,604,532 Total common stocks (Cost: $2,872,103,129) $2,738,190,073 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 11 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Options purchased (1.5%) Issuer Contracts Exercise Expiration Value(a) price date Puts Nasdaq 100 Index 98,435 $25 March 2003 $17,472,213 S&P 500 Index 6,057 875 March 2003 28,831,320 Total options purchased (Cost: $41,183,958) $46,303,533 Short-term securities (10.9%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agencies (8.2%) Federal Home Loan Mtge Corp Disc Nts 02-28-03 1.24% $18,300,000 $18,282,350 03-06-03 1.27 800,000 799,101 Federal Natl Mtge Assn Disc Nts 02-07-03 1.27 5,100,000 5,098,741 03-03-03 1.25 56,300,000 56,239,396 03-05-03 1.24 53,900,000 53,836,723 03-07-03 1.24 70,000,000 69,912,841 04-30-03 1.23 47,500,000 47,356,148 Total 251,525,300 Commercial paper (2.7%) CAFCO 02-03-03 1.33 2,200,000(d) 2,199,756 Falcon Asset Securitization 02-03-03 1.34 22,900,000(d) 22,897,443 02-27-03 1.28 28,800,000(d) 28,772,352 General Electric Capital 02-03-03 1.32 15,400,000 15,398,306 Windmill Funding 02-03-03 1.32 13,300,000(d) 13,298,537 Total 82,566,394 Total short-term securities (Cost: $334,108,105) $334,091,694 Total investments in securities (Cost: $3,247,395,192)(e) $3,118,585,300 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 6.6% of net assets. (d) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board. (e) At Jan. 31, 2003, the cost of securities for federal income tax purposes was approximately $3,247,395,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 86,262,000 Unrealized depreciation (215,072,000) ------------ Net unrealized depreciation $(128,810,000) ------------- - -------------------------------------------------------------------------------- 12 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Financial Statements
Statement of assets and liabilities Growth Portfolio Jan. 31, 2003 (Unaudited) Assets Investments in securities, at value (Note 1)* (identified cost $3,247,395,192) $3,118,585,300 Dividends and accrued interest receivable 2,679,711 Receivable for investment securities sold 284,429,067 U.S. government securities held as collateral (Note 4) 7,416,273 --------- Total assets 3,413,110,351 ------------- Liabilities Disbursements in excess of cash on demand deposit 134,726 Payable for investment securities purchased 325,622,251 Payable upon return of securities loaned (Note 4) 18,916,273 Accrued investment management services fee 47,897 Other accrued expenses 102,762 ------- Total liabilities 344,823,909 ----------- Net assets $3,068,286,442 ============== * Including securities on loan, at value (Note 4) $ 18,272,744 --------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 13 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT
Statement of operations Growth Portfolio Six months ended Jan. 31, 2003 (Unaudited) Investment income Income: Dividends $ 18,708,654 Interest 1,753,537 Fee income from securities lending -- net (Note 4) 168,114 Less foreign taxes withheld (52,725) ------- Total income 20,577,580 ---------- Expenses (Note 2): Investment management services fee 10,013,044 Compensation of board members 12,458 Custodian fees 151,045 Audit fees 14,250 Other 43,683 ------ Total expenses 10,234,480 Earnings credits on cash balances (Note 2) (249) ---- Total net expenses 10,234,231 ---------- Investment income (loss) -- net 10,343,349 ---------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) (481,539,648) Foreign currency transactions 41,862 ------ Net realized gain (loss) on investments (481,497,786) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 319,642,737 ----------- Net gain (loss) on investments and foreign currencies (161,855,049) ------------ Net increase (decrease) in net assets resulting from operations $(151,511,700) =============
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 14 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets Growth Portfolio Jan. 31, 2003 July 31, 2002 Six months ended Year ended (Unaudited) Operations Investment income (loss) -- net $ 10,343,349 $ 18,049,333 Net realized gain (loss) on investments (481,497,786) (135,571,463) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 319,642,737 (1,595,978,419) ----------- -------------- Net increase (decrease) in net assets resulting from operations (151,511,700) (1,713,500,549) ------------ -------------- Proceeds from contributions 4,482,736 1,077,212,062 Fair value of withdrawals (330,911,980) (2,162,141,355) ------------ -------------- Net contributions (withdrawals) from partners (326,429,244) (1,084,929,293) ------------ -------------- Total increase (decrease) in net assets (477,940,944) (2,798,429,842) Net assets at beginning of period 3,546,227,386 6,344,657,228 ------------- ------------- Net assets at end of period $3,068,286,442 $ 3,546,227,386 ============== ===============
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 15 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Notes to Financial Statements Growth Portfolio (Unaudited as to Jan. 31, 2003) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Growth Portfolio (the Portfolio) is a series of Growth Trust (the Trust) and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. Growth Portfolio invests primarily in stocks of U.S. and foreign companies that appear to offer growth opportunities. The Declaration of Trust permits the Trustees to issue non-transferable interests in the Portfolio. The Portfolio's significant accounting policies are summarized below: Use of estimates Preparing financial statements that conform to accounting principles generally accepted in the United States of America requires management to make estimates (e.g., on assets, 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. Option transactions To produce incremental earnings, protect gains and facilitate buying and selling of securities for investments, the Portfolio may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. The Portfolio also may buy and sell put and call options and write covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Portfolio gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Portfolio may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Portfolio pays a premium whether or not the option is exercised. The Portfolio also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Portfolio will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. - -------------------------------------------------------------------------------- 16 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Futures transactions To gain exposure to or protect itself from market changes, the Portfolio may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Portfolio also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Portfolio is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Portfolio each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Portfolio recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Portfolio may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Portfolio and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Portfolio is subject to the credit risk that the other party will not complete its contract obligations. Federal taxes For federal income tax purposes the Portfolio qualifies as a partnership and each investor in the Portfolio is treated as the owner of its proportionate share of the net assets, income, expenses and realized and unrealized gains and losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore does not pay any income dividends or capital gain distributions. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including amortization of premium and discount using the effective interest method, is accrued daily. - -------------------------------------------------------------------------------- 17 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT 2. FEES AND EXPENSES The Trust, on behalf of the Portfolio, has an Investment Management Services Agreement with American Express Financial Corporation (AEFC) to manage its portfolio. Under an Investment Management Service Agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the Portfolio's average daily net assets in reducing percentages from 0.6% to 0.48% annually. The fee may be adjusted upward or downward by a performance incentive adjustment based on a comparison of the performance of Class A shares of AXP Growth Fund to the Lipper Large-Cap Growth Funds Index. Prior to Dec. 1, 2002, the maximum adjustment was 0.12% of the Portfolio'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 Dec. 1, 2002. The adjustment increased the fee by $451,550 for the six months ended Jan. 31, 2003. Under the agreement, the Trust also pays taxes, brokerage commissions and nonadvisory expenses, which include custodian fees, audit and certain legal fees, fidelity bond premiums, registration fees for units, office expenses, consultants' fees, compensation of trustees, corporate filing fees, expenses incurred in connection with lending securities of the Portfolio and any other expenses properly payable by the Trust or Portfolio and approved by the board. During the six months ended Jan. 31, 2003, the Portfolio's custodian fees were reduced by $249 as a result of earnings credits from overnight cash balances. The Portfolio also pays custodian fees to American Express Trust Company, an affiliate of AEFC. According to a Placement Agency Agreement, American Express Financial Advisors Inc. acts as placement agent of the Trust's units. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $4,202,554,201 and $4,819,260,758, respectively, for the six months ended Jan. 31, 2003. For the same period, the portfolio turnover rate was 138%. Realized gains and losses are determined on an identified cost basis. Brokerage clearing fees paid to brokers affiliated with AEFC were $588,733 for the six months ended Jan. 31, 2003. 4. LENDING OF PORTFOLIO SECURITIES As of Jan. 31, 2003, securities valued at $18,272,744 were on loan to brokers. For collateral, the Portfolio received $11,500,000 in cash and U.S. government securities valued at $7,416,273. Income from securities lending amounted to $168,114 for the six months ended Jan. 31, 2003. The risks to the Portfolio of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. - -------------------------------------------------------------------------------- 18 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Financial Statements
Statement of assets and liabilities AXP Growth Fund Jan. 31, 2003 (Unaudited) Assets Investment in Portfolio (Note 1) $ 3,068,249,382 Capital shares receivable 238,532 ------- Total assets 3,068,487,914 ------------- Liabilities Capital shares payable 172,236 Accrued distribution fee 33,921 Accrued service fee 957 Accrued transfer agency fee 18,749 Accrued administrative services fee 3,739 Other accrued expenses 383,647 ------- Total liabilities 613,249 ------- Net assets applicable to outstanding capital stock $ 3,067,874,665 =============== Represented by Capital stock -- $.01 par value (Note 1) $ 1,568,487 Additional paid-in capital 4,806,745,257 Net operating loss (2,420,597) Accumulated net realized gain (loss) (Note 5) (1,609,221,697) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (128,796,785) ------------ Total -- representing net assets applicable to outstanding capital stock $ 3,067,874,665 =============== Net assets applicable to outstanding shares: Class A $ 1,955,452,144 Class B $ 751,926,851 Class C $ 7,677,016 Class Y $ 352,818,654 Net asset value per share of outstanding capital stock: Class A shares 98,438,189 $ 19.86 Class B shares 40,447,987 $ 18.59 Class C shares 412,956 $ 18.59 Class Y shares 17,549,608 $ 20.10 ---------- ---------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 19 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT
Statement of operations AXP Growth Fund Six months ended Jan. 31, 2003 (Unaudited) Investment income Income: Dividends $ 18,708,438 Interest 1,753,087 Fee income from securities lending -- net 168,112 Less foreign taxes withheld (52,724) ------- Total income 20,576,913 ---------- Expenses (Note 2): Expenses allocated from Portfolio 10,234,113 Distribution fee Class A 2,638,148 Class B 4,035,332 Class C 37,400 Transfer agency fee 4,092,884 Incremental transfer agency fee Class A 267,019 Class B 226,628 Class C 3,002 Service fee -- Class Y 213,947 Administrative services fees and expenses 748,327 Compensation of board members 8,467 Printing and postage 453,413 Registration fees 48,914 Audit fees 4,750 Other 17,009 ------ Total expenses 23,029,353 Earnings credits on cash balances (Note 2) (31,843) ------- Total net expenses 22,997,510 ---------- Investment income (loss) -- net (2,420,597) ========== Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (481,534,982) Foreign currency transactions 41,862 ------ Net realized gain (loss) on investments (481,493,120) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 319,639,976 ----------- Net gain (loss) on investments and foreign currencies (161,853,144) ------------ Net increase (decrease) in net assets resulting from operations $(164,273,741) =============
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 20 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets AXP Growth Fund Jan. 31, 2003 July 31, 2002 Six months ended Year ended (Unaudited) Operations and distributions Investment income (loss) -- net $ (2,420,597) $ (15,399,917) Net realized gain (loss) on investments (481,493,120) (135,569,398) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 319,639,976 (1,595,964,275) ----------- -------------- Net increase (decrease) in net assets resulting from operations (164,273,741) (1,746,933,590) ------------ -------------- Distributions to shareholders from: Net realized gain Class A -- (2,135,273) Class B -- (888,287) Class C -- (5,132) Class Y -- (580,590) Tax return of capital Class A -- (529,673) Class B -- (220,504) Class C -- (1,506) Class Y -- (143,905) ------ -------- Total distributions -- (4,504,870) ------ ---------- Capital share transactions (Note 3) Proceeds from sales Class A shares (Note 2) 91,740,446 1,467,991,732 Class B shares 46,829,473 130,290,043 Class C shares 1,824,340 4,063,109 Class Y shares 75,754,350 423,221,812 Reinvestment of distributions at net asset value Class A shares -- 2,597,294 Class B shares -- 1,098,608 Class C shares -- 6,584 Class Y shares -- 724,495 Payments for redemptions Class A shares (245,379,390) (2,050,219,864) Class B shares (Note 2) (96,274,916) (369,829,910) Class C shares (Note 2) (941,182) (2,689,402) Class Y shares (187,126,768) (653,772,011) ------------ ------------ Increase (decrease) in net assets from capital share transactions (313,573,647) (1,046,517,510) ------------ -------------- Total increase (decrease) in net assets (477,847,388) (2,797,955,970) Net assets at beginning of period 3,545,722,053 6,343,678,023 ------------- ------------- Net assets at end of period $3,067,874,665 $ 3,545,722,053 ============== ===============
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 21 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Notes to Financial Statements AXP Growth 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 offers Class A, Class B, Class C and Class Y shares. o Class A shares are sold with a front-end sales charge. o Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth calendar year of ownership. o Class C shares may be subject to a CDSC. o Class Y shares have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend and liquidation rights. The distribution fee, incremental transfer agency fee and service fee (class specific expenses) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. Investment in Growth Portfolio The Fund invests all of its assets in Growth Portfolio (the Portfolio), a series of Growth Trust (the Trust), an open-end investment company that has the same objectives as the Fund. The Portfolio invests primarily in stocks of U.S. and foreign companies that appear to offer growth opportunities. The Fund records daily its share of the Portfolio's income, expenses and realized and unrealized gains and losses. The financial statements of the Portfolio are included elsewhere in this report and should be read in conjunction with the Fund's financial statements. The Fund records its investment in the Portfolio at the value that is equal to the Fund's proportionate ownership interest in the Portfolio's net assets. The percentage of the Portfolio owned by the Fund as of Jan. 31, 2003 was 99.99%. Valuation of securities held by the Portfolio is discussed in Note 1 of the Portfolio's "Notes to financial statements" (included elsewhere in this report). Use of estimates Preparing financial statements that conform to accounting principles generally accepted in the United States of America requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. - -------------------------------------------------------------------------------- 22 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Federal taxes The Fund's policy is to comply with all sections of the Internal Revenue Code that apply to regulated investment companies and to distribute substantially all of its taxable income to the shareholders. No provision for income or excise taxes is thus required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of deferred losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. Dividends to shareholders An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. 2. EXPENSES AND SALES CHARGES In addition to the expenses allocated from the Portfolio, the Fund accrues its own expenses as follows: The Fund has an agreement with AEFC to provide administrative services. Under an Administrative Services Agreement, the Fund pays AEFC a fee for administrative and accounting services at a percentage of the Fund's average daily net assets in reducing percentages 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. - -------------------------------------------------------------------------------- 23 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT 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 $1,851,504 for Class A, $496,266 for Class B and $1,422 for Class C for the six months ended Jan. 31, 2003. During the six months ended Jan. 31, 2003, the Fund's transfer agency fees were reduced by $31,843 as a result of earnings credits from overnight cash balances. 3. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
Six months ended Jan. 31, 2003 Class A Class B Class C Class Y Sold 4,447,493 2,421,277 94,590 3,647,048 Issued for reinvested distributions -- -- -- -- Redeemed (12,013,431) (5,041,005) (48,847) (8,867,116) ----------- ---------- ------- ---------- Net increase (decrease) (7,565,938) (2,619,728) 45,743 (5,220,068) ---------- ---------- ------ ---------- Year ended July 31, 2002 Class A Class B Class C Class Y Sold 58,268,502 5,484,859 172,227 16,631,804 Issued for reinvested distributions 97,106 43,514 271 26,813 Redeemed (82,106,853) (16,191,810) (118,208) (26,379,833) ----------- ----------- -------- ----------- Net increase (decrease) (23,741,245) (10,663,437) 54,290 (9,721,216) ----------- ----------- ------ ----------
4. 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. 5. CAPITAL LOSS CARRY-OVER For federal income tax purposes, the Fund has a capital loss carry-over of $948,750,770 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. - -------------------------------------------------------------------------------- 24 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT 6. 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(f) 2002 2001 2000 1999 Net asset value, beginning of period $20.88 $29.68 $ 54.36 $42.14 $36.58 Income from investment operations: Net investment income (loss) -- (.04) (.14) (.14) (.03) Net gains (losses) (both realized and unrealized) (1.02) (8.74) (22.34) 13.14 7.29 Total from investment operations (1.02) (8.78) (22.48) 13.00 7.26 Less distributions: Distributions from realized gains -- (.02) (2.20) (.78) (1.70) Net asset value, end of period $19.86 $20.88 $ 29.68 $54.36 $42.14 Ratios/supplemental data Net assets, end of period (in millions) $1,955 $2,213 $3,851 $6,637 $4,576 Ratio of expenses to average daily net assets(c) 1.21%(d) .99% .99% .99% .89% Ratio of net investment income (loss) to average daily net assets .02%(d) (.15%) (.34%) (.30%) (.08%) Portfolio turnover rate (excluding short-term securities) 138% 225% 41% 23% 17% Total return(e) (4.98%)(g) (29.59%) (42.14%) 31.01% 20.49% Class B Per share income and capital changes(a) Fiscal period ended July 31, 2003(f) 2002 2001 2000 1999 Net asset value, beginning of period $19.61 $28.11 $ 52.02 $40.65 $35.61 Income from investment operations: Net investment income (loss) (.08) (.25) (.42) (.46) (.28) Net gains (losses) (both realized and unrealized) (.94) (8.23) (21.29) 12.61 7.02 Total from investment operations (1.02) (8.48) (21.71) 12.15 6.74 Less distributions: Distributions from realized gains -- (.02) (2.20) (.78) (1.70) Net asset value, end of period $18.59 $19.61 $ 28.11 $52.02 $40.65 Ratios/supplemental data Net assets, end of period (in millions) $752 $845 $1,510 $2,468 $1,458 Ratio of expenses to average daily net assets(c) 1.99%(d) 1.77% 1.75% 1.75% 1.65% Ratio of net investment income (loss) to average daily net assets (.76%)(d) (.93%) (1.11%) (1.06%) (.85%) Portfolio turnover rate (excluding short-term securities) 138% 225% 41% 23% 17% Total return(e) (5.30%)(g) (30.18%) (42.57%) 30.02% 19.58%
See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- 25 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT
Class C Per share income and capital changes(a) Fiscal period ended July 31, 2003(f) 2002 2001 2000(b) Net asset value, beginning of period $19.62 $28.12 $ 52.03 $52.65 Income from investment operations: Net investment income (loss) (.07) (.21) (.42) (.04) Net gains (losses) (both realized and unrealized) (.96) (8.27) (21.29) (.58) Total from investment operations (1.03) (8.48) (21.71) (.62) Less distributions: Distributions from realized gains -- (.02) (2.20) -- Net asset value, end of period $18.59 $19.62 $ 28.12 $52.03 Ratios/supplemental data Net assets, end of period (in millions) $8 $7 $9 $1 Ratio of expenses to average daily net assets(c) 2.01%(d) 1.80% 1.75% 1.75%(d) Ratio of net investment income (loss) to average daily net assets (.78%)(d) (.96%) (1.10%) (1.30%)(d) Portfolio turnover rate (excluding short-term securities) 138% 225% 41% 23% Total return(e) (5.30%)(g) (30.17%) (42.56%) (1.18%)(g)
Class Y Per share income and capital changes(a) Fiscal period ended July 31, 2003(f) 2002 2001 2000 1999 Net asset value, beginning of period $21.11 $29.96 $ 54.75 $42.37 $36.74 Income from investment operations: Net investment income (loss) .02 -- (.07) (.06) -- Net gains (losses) (both realized and unrealized) (1.03) (8.83) (22.52) 13.22 7.33 Total from investment operations (1.01) (8.83) (22.59) 13.16 7.33 Less distributions: Distributions from realized gains -- (.02) (2.20) (.78) (1.70) Net asset value, end of period $20.10 $21.11 $ 29.96 $54.75 $42.37 Ratios/supplemental data Net assets, end of period (in millions) $353 $481 $974 $1,551 $914 Ratio of expenses to average daily net assets(c) 1.03%(d) .82% .83% .83% .80% Ratio of net investment income (loss) to average daily net assets .20%(d) .02% (.18%) (.14%) --% Portfolio turnover rate (excluding short-term securities) 138% 225% 41% 23% 17% Total return(e) (4.87%)(g) (29.48%) (42.04%) 31.20% 20.59%
See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- 26 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Notes to financial highlights (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Inception date was June 26, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge. (f) Six months ended Jan. 31, 2003 (Unaudited). (g) Not annualized. - -------------------------------------------------------------------------------- 27 -- AXP GROWTH FUND -- 2003 SEMIANNUAL REPORT Results of Meeting of Shareholders AXP GROWTH 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 - -------------------------------------------------------------------------------- 28 -- AXP GROWTH 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 3 To approve a policy authorizing American Express Financial Corporation, subject to Board approval, to retain and replace subadvisers, or to modify subadvisory agreements, without shareholder approval. Shares Voted "For" Shares Voted "Against" Abstentions Broker Non-Votes 91,594,183.882 10,794,945.503 3,027,271.539 4,381,082.000 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 90,506,862.032 10,718,195.735 4,191,343.157 4,381,082.000 * Denotes Registrant-wide proposals and voting results. - -------------------------------------------------------------------------------- 29 -- AXP GROWTH 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 Growth 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-6456 T (4/03) -----END PRIVACY-ENHANCED MESSAGE-----