EX-99.17E ANNUAL REP 7 ex17e_largecapeq-annual.txt AXP LARGE CAP EQUITY FUND-ANNUAL REPORT AXP(R) Large Cap Equity Fund Annual Report for the Period Ended July 31, 2003 AXP Large Cap Equity Fund seeks to provide shareholders with long-term growth of capital. -------------------------------------------------------------------------------- (logo) (logo) American AMERICAN Express(R) EXPRESS Funds (R) -------------------------------------------------------------------------------- Table of Contents Fund Snapshot 3 Questions & Answers with Portfolio Management 4 The Fund's Long-term Performance 7 Investments in Securities 8 Financial Statements 11 Notes to Financial Statements 14 Independent Auditors' Report 24 Federal Income Tax Information 25 Board Members and Officers 26 (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 EQUITY FUND -- 2003 ANNUAL REPORT Fund Snapshot AS OF JULY 31, 2003 PORTFOLIO MANAGER Portfolio manager Doug Chase Since 3/02 Years in industry 11 FUND OBJECTIVE This Fund seeks to provide shareholders with long-term growth of capital. Inception dates A: 3/28/02 B: 3/28/02 C: 3/28/02 Y: 3/28/02 Ticker symbols A: ALEAX B: ALEBX C: -- Y: -- Total net assets $120.9 million Number of holdings 78 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 20.2% Consumer discretionary 15.3% Financials 12.8% Technology 11.1% Consumer staples 10.2% Short-term securities 9.5% Industrials 9.3% Energy 6.8% Materials 4.5% Utilities 0.3% TOP TEN HOLDINGS Percentage of portfolio assets Pfizer (Health care products) 6.7% Citigroup (Finance companies) 3.9 Microsoft (Computer software & services) 3.5 Wyeth (Health care products) 3.5 AmerisourceBergen (Health care services) 3.4 General Electric (Multi-industry) 3.2 ConocoPhillips (Energy) 2.8 Cendant (Media) 2.8 Altria Group (Beverages & tobacco) 2.6 Procter & Gamble (Household products) 2.6 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. Fund holdings are subject to change. -------------------------------------------------------------------------------- 3 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Questions & Answers WITH PORTFOLIO MANAGEMENT AXP Large Cap Equity Fund has grown to more than $120 million in assets during its first 15 months in operation. Below, Portfolio Manager Doug Chase discusses the Fund's performance and positioning as of July 31, 2003. Q: How did the AXP Large Cap Equity Fund perform in fiscal year 2003? A: AXP Large Cap Equity Fund's Class A shares advanced 10.22%, excluding sales charge, for the 12 months ended July 31, 2003. The Fund outperformed its peers as represented by the Lipper Large-Cap Core Funds Index, which gained 8.63%. The Fund underperformed its benchmark, the Russell 1000(R) Index, which advanced 11.19% for the period. Q: What factors significantly affected performance? A: Individual stock selection added to the Fund's relative performance while sector positioning hampered results. Underweights in technology and telecommunications, which had benefited the Fund during the volatile period from July to September 2002, prevented the Fund from fully participating in the subsequent market rallies. Similarly, an overweight in health care that was advantageous early in the period had a negative impact late in 2002. In addition, the Fund had no exposure to utilities, a sector that did well in the first seven months of 2003. Strong results from select portfolio holdings helped offset the impact of sector allocations. Cendant, a leisure and travel company that was purchased in the first half of the fiscal year, was one of the Fund's strongest performers. Among other stocks that contributed to the Fund's results were pharmaceutical companies Wyeth and Pfizer, media giant AOL Time Warner, technology company Sun Microsystems and a number of financial services companies, including Citigroup. PERFORMANCE COMPARISON For the period ended July 31, 2003 12% (bar 2) (bar 1) +11.19% 10% +10.22% (bar 3) +8.63% 8% 6% 4% 2% 0% (bar 1) AXP Large Cap Equity Fund Class A (excluding sales charge) (bar 2) Russell 1000(R)Index (unmanaged) (bar 3) Lipper Large-Cap Core Funds Index (see "The Fund's Long-term Performance" for Index descriptions) 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 expenses. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. -------------------------------------------------------------------------------- 4 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Questions & Answers (begin callout quote)> The Fund emphasized media companies with strong brands and spread our investments among content providers, infrastructure companies, advertising firms and other communications companies.(end callout quote) On the negative side, Transocean, an oil service company, did not perform well for the Fund. Fannie Mae and Freddie Mac, which were added to the portfolio in the first half of the fiscal period, also proved to be a disappointment later in the year. Despite benefiting from record home refinancing volume, both stocks declined due to unfavorable sentiment stemming from Freddie Mac's accounting and regulatory problems. Q: What changes were made to the portfolio during the period? A: At the start of the fiscal year, the Fund was positioned for a continuation of the weak economic and market environments. In particular, exposure to stocks believed to be most sensitive to cyclical economic trends was reduced. Later in 2002, the Fund's overweight in health care stocks was reduced and its energy positioning increased.
AVERAGE ANNUAL TOTAL RETURNS as of July 31, 2003 Class A Class B Class C Class Y (Inception dates) (3/28/02) (3/28/02) (3/28/02) (3/28/02) NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4) NAV(5) POP(5) 1 year +10.22% +3.90% +9.27% +5.27% +9.51% +9.51% +10.46% +10.46% Since inception -7.03% -11.04% -7.85% -10.61% -7.70% -7.70% -6.87% -6.87%
(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/funds for current information. -------------------------------------------------------------------------------- 5 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Questions & Answers At the beginning of 2003, the expectation was that the economy would surprise on the upside. The Fund was overweighted energy, materials and industrial stocks in order to gain some cyclical exposure. Underweights were maintained in financial and technology stocks because the fundamentals were not as favorable as in other areas. The Fund's position in consumer discretionary stocks was increased in February and March 2003, as these stocks became more attractively priced in the midst of war-related pessimism. In particular, holdings of media companies were increased. Media stocks appeared cheap compared to where they would typically trade in a more normal environment. The Fund emphasized media companies with strong brands and spread its investments among content providers, infrastructure companies, advertising firms and other communications companies. During the latter part of the fiscal period, the Fund began to trim positions in individual stocks that had outperformed. These included AOL Time Warner, Cendant, McDonald's and McKesson, as well as both Pfizer and Wyeth. Q: How will the Fund be managed in the coming months? A: It appears as though the marketplace is experiencing somewhat of a euphoric period right now. Stock prices have been rising without a clear reason for them to do so. It seems as though a large amount of earnings growth has already been priced into many stocks, particularly in the technology and small-cap areas. Despite the potentially favorable impact of the recent tax cut, expectations for economic growth in the fourth quarter may be too high. The economy is already recovering and given that it declined just 0.2% in the recent recession, there is little case for a strong rebound. Estimates for growth in the fourth quarter are coming in at about 4%. Given the broad economic and market backdrop, as the stock market rises we may sell stocks that have shifted from inexpensive to expensive. However, we anticipate no major shifts in sector positioning. While sectors we emphasized underperformed in the past year, this potentially positions these areas of the market for a period of stronger performance in the future. -------------------------------------------------------------------------------- 6 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT The Fund's Long-term Performance This chart illustrates the total value of an assumed $10,000 investment in AXP Large Cap Equity Fund Class A shares (from 4/1/02 to 7/31/03) as compared to the performance of two widely cited performance indices, the Russell 1000(R) Index and the Lipper Large-Cap Core Funds Index. In comparing the Fund's Class A shares to these indices, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5.75%, while such charges are not reflected in the performance of the indices. Returns for the Fund include the reinvestment of any distribution paid during each period. Past performance is no guarantee of future results. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Returns do not reflect taxes payable on distributions and redemptions. Also see "Past Performance" in the Fund's current prospectus. (line chart) VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN AXP LARGE CAP EQUITY FUND $12,000 $9,000 (dotted line) Russell 1000(R) Index(1) $6,000 (dashed line) Lipper Large-Cap Core Funds Index(2) (solid line) AXP Large Cap Equity Fund Class A $3,000 4/01/02 7/02 10/02 1/03 4/03 7/03 (solid line) AXP Large Cap Equity Fund Class A $8,548 (dotted line) Russell 1000(R)Index(1) $8,911 (dashed line) Lipper Large-Cap Core Funds Index(2) $8,807 (1) The Russell 1000(R) Index, an unmanaged index, measures the performance of the 1,000 largest companies in the Russell 3000(R) Index and represents approximately 92% of the total market capitalization of the Russell 3000 Index. (2) Lipper Large-Cap Core 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. Average Annual Total Returns Class A with Sales Charge as of July 31, 2003 1 year +3.90% Since inception (3/28/02) -11.04% Results for other share classes can be found on page 5. -------------------------------------------------------------------------------- 7 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Investments in Securities AXP Large Cap Equity Fund July 31, 2003 (Percentages represent value of investments compared to net assets) Common stocks (91.1%) Issuer Shares Value(a) Aerospace & defense (2.9%) Boeing 14,400 $476,928 Lockheed Martin 12,625 660,793 Northrop Grumman 6,900 636,456 Rockwell Automation 18,282 472,407 United Technologies 17,468 1,314,117 Total 3,560,701 Banks and savings & loans (0.5%) U.S. Bancorp 25,800 632,616 Beverages & tobacco (5.8%) Altria Group 80,300 3,212,803 Anheuser-Busch 11,700 606,294 PepsiCo 65,824 3,032,512 Total 6,851,609 Broker dealers (1.8%) J.P. Morgan Chase 16,700 585,335 Merrill Lynch 16,201 880,848 Morgan Stanley 15,500 735,320 Total 2,201,503 Building materials & construction (0.8%) American Standard 12,100(b) 924,440 Cable (2.5%) Comcast Cl A 33,484(b) 1,015,234 Comcast Special Cl A 33,925(b) 994,003 EchoStar Communications Cl A 26,900(b) 975,663 Total 2,984,900 Chemicals (1.8%) Dow Chemical 42,545 1,501,839 Lyondell Chemical 48,392 724,428 Total 2,226,267 Computer hardware (4.0%) Cisco Systems 82,500(b) 1,610,400 Dell 56,700(b) 1,909,656 Sun Microsystems 362,333(b) 1,355,125 Total 4,875,181 Computer software & services (5.4%) Affiliated Computer Services Cl A 12,700(b) 629,285 First Data 42,965 1,622,358 Microsoft 163,500 4,316,400 Total 6,568,043 Electronics (1.8%) Analog Devices 10,221(b) 387,887 Intel 51,200 1,277,440 Taiwan Semiconductor Mfg ADR 45,368(b,c) 453,680 Total 2,119,007 Energy (5.6%) ChevronTexaco 8,400 605,724 ConocoPhillips 64,873 3,395,453 Exxon Mobil 78,946 2,808,899 Total 6,810,076 Energy equipment & services (1.2%) Transocean 76,696(b) 1,500,941 Finance companies (3.9%) Citigroup 106,408 4,767,078 Financial services (3.8%) Capital One Financial 25,800 1,236,078 Fannie Mae 41,197 2,638,256 MBNA 33,827 754,004 Total 4,628,338 Health care products (13.7%) Amgen 18,000(b) 1,252,440 Medtronic 44,400 2,286,600 Pfizer 242,900 8,103,145 Schering-Plough 34,900 592,602 Wyeth 93,050 4,241,219 Total 16,476,006 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 8 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Common stocks (continued) Issuer Shares Value(a) Health care services (6.8%) AmerisourceBergen 66,155 $4,173,720 Cardinal Health 56,500 3,093,375 McKesson 23,766 766,691 Select Medical 2,800(b) 78,680 Total 8,112,466 Household products (4.1%) Avon Products 8,814 549,905 Kimberly-Clark 23,800 1,151,920 Procter & Gamble 36,458 3,203,565 Total 4,905,390 Industrial transportation (0.8%) Expeditors Intl of Washington 12,100 410,311 United Parcel Service Cl B 9,400 592,952 Total 1,003,263 Insurance (2.8%) ACE 7,447(c) 245,677 American Intl Group 29,294 1,880,674 Chubb 19,100 1,237,680 Total 3,364,031 Leisure time & entertainment (3.2%) Mattel 57,900 1,124,997 Viacom Cl B 63,100(b) 2,746,112 Total 3,871,109 Machinery (1.7%) Caterpillar 18,656 1,258,720 Illinois Tool Works 9,600 668,640 SPX 2,500(b) 117,725 Total 2,045,085 Media (5.0%) Cendant 189,135(b) 3,394,973 Disney (Walt) 78,300 1,716,336 Scripps (EW) Cl A 4,700 389,912 Tribune 12,500 590,250 Total 6,091,471 Metals (0.8%) Freeport McMoRan Cooper & Gold Cl B 37,341 1,000,365 Multi-industry (3.9%) General Electric 137,950 3,923,298 Grainger (WW) 6,289 309,419 ITT Inds 2,400 160,080 Tyco Intl 17,400(c) 323,640 Total 4,716,437 Paper & packaging (1.1%) Avery Dennison 24,100 1,300,436 Restaurants (0.5%) McDonald's 28,100 646,581 Retail -- general (4.1%) Best Buy 17,700(b) 772,605 Dollar General 32,450 597,080 Home Depot 56,116 1,750,819 Wal-Mart Stores 33,400 1,867,394 Total 4,987,898 Retail -- grocery (0.5%) Kroger 37,700(b) 639,015 Utilities -- electric (0.2%) FirstEnergy 8,700 300,063 Total common stocks (Cost: $104,312,349) $110,110,316 Short-term securities (9.6%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agency (6.0%) Federal Natl Mtge Assn Disc Nts 09-17-03 0.98% $2,900,000 $2,896,506 09-17-03 1.02 2,900,000 2,896,056 10-22-03 1.00 1,500,000 1,496,481 Total 7,289,043 Commercial paper (3.6%) Abbey Natl North America LLC 08-01-03 1.11 4,300,000 4,299,867 Total short-term securities (Cost: $11,589,010) $11,588,910 Total investments in securities (Cost: $115,901,359)(d) $121,699,226 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 9 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of July 31, 2003, the value of foreign securities represented 0.8% of net assets. (d) At July 31, 2003, the cost of securities for federal income tax purposes was $116,840,781 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 6,230,284 Unrealized depreciation (1,371,839) ---------- Net unrealized appreciation $ 4,858,445 ----------- -------------------------------------------------------------------------------- 10 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Financial Statements
Statement of assets and liabilities AXP Large Cap Equity Fund July 31, 2003 Assets Investments in securities, at value (Note 1) (identified cost $115,901,359) $121,699,226 Cash in bank on demand deposit 186,921 Capital shares receivable 766,524 Dividends and accrued interest receivable 120,039 Receivable for investment securities sold 1,026,697 --------- Total assets 123,799,407 ----------- Liabilities Capital shares payable 12,526 Payable for investment securities purchased 2,758,797 Accrued investment management services fee 1,976 Accrued distribution fee 1,590 Accrued transfer agency fee 772 Accrued administrative services fee 165 Other accrued expenses 101,537 ------- Total liabilities 2,877,363 --------- Net assets applicable to outstanding capital stock $120,922,044 ============ Represented by Capital stock -- $.01 par value (Note 1) $ 267,737 Additional paid-in capital 113,970,315 Accumulated net realized gain (loss) (Note 6) 886,125 Unrealized appreciation (depreciation) on investments 5,797,867 --------- Total -- representing net assets applicable to outstanding capital stock $120,922,044 ============ Net assets applicable to outstanding shares: Class A $ 83,257,409 Class B $ 35,551,265 Class C $ 2,052,118 Class Y $ 61,252 Net asset value per share of outstanding capital stock: Class A shares 18,374,049 $ 4.53 Class B shares 7,929,314 $ 4.48 Class C shares 456,827 $ 4.49 Class Y shares 13,477 $ 4.54 ------ ------------
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 11 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Statement of operations AXP Large Cap Equity Fund Year ended July 31, 2003 Investment income Income: Dividends $ 764,115 Interest 68,385 ------ Total income 832,500 ------- Expenses (Note 2): Investment management services fee 342,000 Distribution fee Class A 94,937 Class B 171,345 Class C 9,241 Transfer agency fee 129,382 Incremental transfer agency fee Class A 8,905 Class B 8,414 Class C 617 Service fee -- Class Y 29 Administrative services fees and expenses 27,560 Compensation of board members 4,966 Custodian fees 274,440 Printing and postage 1,370 Registration fees 81,089 Audit fees 17,000 ------ Total expenses 1,171,295 Expenses waived/reimbursed by AEFC (Note 2) (333,483) -------- 837,812 Earnings credits on cash balances (Note 2) (4,492) ------ Total net expenses 833,320 ------- Investment income (loss) -- net (820) ---- Realized and unrealized gain (loss) -- net Net realized gain (loss) on security transactions (Note 3) 1,719,341 Net change in unrealized appreciation (depreciation) on investments 7,080,694 --------- Net gain (loss) on investments 8,800,035 --------- Net increase (decrease) in net assets resulting from operations $8,799,215 ==========
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 12 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Statements of changes in net assets AXP Large Cap Equity Fund For the period from July 31, 2003 March 28, 2002* to Year ended July 31, 2002 Operations and distributions Investment income (loss) -- net $ (820) $ (10,970) Net realized gain (loss) on investments 1,719,341 (805,384) Net change in unrealized appreciation (depreciation) on investments 7,080,694 (1,281,341) --------- ---------- Net increase (decrease) in net assets resulting from operations 8,799,215 (2,097,695) --------- ---------- Distributions to shareholders from: Net investment income Class A (27,013) -- Class Y (21) -- --------- ---------- Total distributions (27,034) -- --------- ---------- Capital share transactions (Note 4) Proceeds from sales Class A shares (Note 2) 72,641,134 11,367,703 Class B shares 31,826,112 5,967,979 Class C shares 1,776,439 241,975 Class Y shares 35,963 23,000 Reinvestment of distributions at net asset value Class A shares 25,435 -- Class Y shares 13 -- Payments for redemptions Class A shares (6,855,152) (434,672) Class B shares (Note 2) (4,072,868) (181,280) Class C shares (Note 2) (107,435) -- Class Y shares (1,872) (4,191) ------ ------ Increase (decrease) in net assets from capital share transactions 95,267,769 16,980,514 ---------- ---------- Total increase (decrease) in net assets 104,039,950 14,882,819 Net assets at beginning of period (Note 1) 16,882,094 1,999,275** ---------- --------- Net assets at end of period $120,922,044 $16,882,094 ============ =========== Undistributed net investment income $ -- $ 7 ------------ -----------
* When shares became publicly available. ** Initial capital of $2,000,000 was contributed on March 21, 2002. The Fund had a decrease in net assets resulting from operations of $725 during the period from March 21, 2002 to March 28, 2002 (when shares became publicly available). See accompanying notes to financial statements. -------------------------------------------------------------------------------- 13 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Notes to Financial Statements AXP Large Cap Equity Fund 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of AXP Growth Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. AXP Growth Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the board. The Fund invests primarily in equity securities of companies with a market capitalization greater than $5 billion at the time of purchase. On March 21, 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 per share. Shares of the Fund were first offered to the public on March 28, 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. -------------------------------------------------------------------------------- 14 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT 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 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. -------------------------------------------------------------------------------- 15 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT 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. 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. -------------------------------------------------------------------------------- 16 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL 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 shareholders. No provision for income or excise taxes is thus required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of deferred losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. On the statement of assets and liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been increased by $27,847 and accumulated net realized gain has been decreased by $27,847. The tax character of distributions paid for the periods indicated is as follows: For the period from July 31, 2003 March 28, 2002* to Year ended July 31, 2002 Class A Distributions paid from: Ordinary income $27,013 $-- Long-term capital gain -- -- Class B Distributions paid from: Ordinary income -- -- Long-term capital gain -- -- Class C Distributions paid from: Ordinary income -- -- Long-term capital gain -- -- Class Y Distributions paid from: Ordinary income 21 -- Long-term capital gain -- -- * When shares became publicly available. As of July 31, 2003, the components of distributable earnings on a tax basis are as follows: Undistributed ordinary income $1,827,826 Accumulated long-term gain (loss) $ (2,279) Unrealized appreciation (depreciation) $4,858,445 -------------------------------------------------------------------------------- 17 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Dividends to shareholders An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including 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 Core 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 Dec. 1, 2002. The adjustment increased the fee by $5,623 for the year ended July 31, 2003. 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. -------------------------------------------------------------------------------- 18 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT 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 $19.50 o Class B $20.50 o Class C $20.00 o Class Y $17.50 In addition, there is an annual closed-account fee of $5 per inactive account, charged on a pro rata basis from the date the account becomes inactive until the date the account is purged from the transfer agent system generally within one year. Under terms of a prior agreement that ended April 30, 2003, the Fund paid a transfer agency fee at an annual rate per shareholder account of $19 for Class A, $20 for Class B, $19.50 for Class C and $17 for Class Y. 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 $577,722 for Class A, $14,453 for Class B and $151 for Class C for the year ended July 31, 2003. For the year ended July 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 1.07% for Class Y. In addition, AEFC and American Express Financial Advisors Inc. have agreed to waive certain fees and expenses until July 31, 2004. 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 year ended July 31, 2003, the Fund's custodian and transfer agency fees were reduced by $4,492 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 $155,444,808 and $69,733,311, respectively, for the year ended July 31, 2003. Realized gains and losses are determined on an identified cost basis. Brokerage clearing fees paid to brokers affiliated with AEFC were $353 for the year ended July 31, 2003. -------------------------------------------------------------------------------- 19 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
Year ended July 31, 2003 Class A Class B Class C Class Y Sold 17,273,053 7,641,133 426,869 8,203 Issued for reinvested distributions 6,391 -- -- 3 Redeemed (1,688,951) (977,921) (25,450) (400) ---------- -------- ------- ---- Net increase (decrease) 15,590,493 6,663,212 401,419 7,806 ---------- --------- ------- ----- March 28, 2002* to July 31, 2002 Class A Class B Class C Class Y Sold 2,497,491 1,308,348 53,408 4,674 Issued for reinvested distributions -- -- -- -- Redeemed (107,935) (44,246) -- (1,003) --------- --------- ------ ----- Net increase (decrease) 2,389,556 1,264,102 53,408 3,671 --------- --------- ------ -----
* When shares became publicly available. 5. BANK BORROWINGS The Fund has a revolving credit agreement with a syndicate of banks headed by 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 year ended July 31, 2003. 6. CAPITAL LOSS CARRY-OVER For federal income tax purposes, the Fund has a capital loss carry-over of $2,279 as of July 31, 2003, that will expire in 2012 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. -------------------------------------------------------------------------------- 20 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL 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 2002(b) Net asset value, beginning of period $4.11 $5.00 Income from investment operations: Net investment income (loss) .01 -- Net gains (losses) (both realized and unrealized) .41 (.89) Total from investment operations .42 (.89) Net asset value, end of period $4.53 $4.11 Ratios/supplemental data Net assets, end of period (in millions) $83 $11 Ratio of expenses to average daily net assets(c),(e) 1.25% 1.25%(d) Ratio of net investment income (loss) to average daily net assets .24% (.11%)(d) Portfolio turnover rate (excluding short-term securities) 135% 88% Total return(i) 10.22% (17.80%)(j) Class B Per share income and capital changes(a) Fiscal period ended July 31, 2003 2002(b) Net asset value, beginning of period $4.10 $5.00 Income from investment operations: Net investment income (loss) (.01) (.01) Net gains (losses) (both realized and unrealized) .39 (.89) Total from investment operations .38 (.90) Net asset value, end of period $4.48 $4.10 Ratios/supplemental data Net assets, end of period (in millions) $36 $5 Ratio of expenses to average daily net assets(c),(f) 2.01% 2.01%(d) Ratio of net investment income (loss) to average daily net assets (.52%) (.86%)(d) Portfolio turnover rate (excluding short-term securities) 135% 88% Total return(i) 9.27% (18.00%)(j)
See accompanying notes to financial highlights. -------------------------------------------------------------------------------- 21 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Class C Per share income and capital changes(a) Fiscal period ended July 31, 2003 2002(b) Net asset value, beginning of period $4.10 $5.00 Income from investment operations: Net investment income (loss) (.01) (.01) Net gains (losses) (both realized and unrealized) .40 (.89) Total from investment operations .39 (.90) Net asset value, end of period $4.49 $4.10 Ratios/supplemental data Net assets, end of period (in millions) $2 $-- Ratio of expenses to average daily net assets(c),(g) 2.01% 2.01%(d) Ratio of net investment income (loss) to average daily net assets (.53%) (.92%)(d) Portfolio turnover rate (excluding short-term securities) 135% 88% Total return(i) 9.51% (18.00%)(j) Class Y Per share income and capital changes(a) Fiscal period ended July 31, 2003 2002(b) Net asset value, beginning of period $4.11 $5.00 Income from investment operations: Net investment income (loss) .01 -- Net gains (losses) (both realized and unrealized) .42 (.89) Total from investment operations .43 (.89) Net asset value, end of period $4.54 $4.11 Ratios/supplemental data Net assets, end of period (in millions) $-- $-- Ratio of expenses to average daily net assets(c),(h) 1.07% 1.07%(d) Ratio of net investment income (loss) to average daily net assets .45% .09%(d) Portfolio turnover rate (excluding short-term securities) 135% 88% Total return(i) 10.46% (17.80%)(j) Notes to financial highlights
See accompanying notes to financial highlights. -------------------------------------------------------------------------------- 22 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Notes to financial highlights (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from March 28, 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 1.84% and 5.12% for the periods ended July 31, 2003 and 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 2.60% and 5.88% for the periods ended July 31, 2003 and 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 2.60% and 5.88% for the periods ended July 31, 2003 and 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 1.66% and 4.94% for the periods ended July 31, 2003 and 2002, respectively. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. -------------------------------------------------------------------------------- 23 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Independent Auditors' Report THE BOARD AND SHAREHOLDERS AXP GROWTH SERIES, INC. We have audited the accompanying statement of assets and liabilities, including the schedule of investments in securities, of AXP Large Cap Equity Fund (a series of AXP Growth Series, Inc.) as of July 31, 2003, the related statement of operations for the year then ended and the statements of changes in net assets and the financial highlights for the year ended July 31, 2003, and for the period from March 28, 2002 (when shares became publicly available) to July 31, 2002. These financial statements and the financial highlights are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2003, by correspondence with the custodian and brokers or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AXP Large Cap Equity Fund as of July 31, 2003, and the results of its operations, changes in its net assets and the financial highlights for each of the periods stated in the first paragraph above, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Minneapolis, Minnesota September 12, 2003 -------------------------------------------------------------------------------- 24 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Federal Income Tax Information (UNAUDITED) The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below are reported to you on Form 1099-DIV, Dividends and Distributions. Shareholders should consult a tax advisor on how to report distributions for state and local tax purposes. AXP Large Cap Equity Fund Fiscal year ended July 31, 2003 Class A Income distributions -- taxable as dividend income: Qualified Dividend Income for individuals (effective for distributions made after Jan. 1, 2003) 0.00% Dividends Received Deduction for corporations 38.07% Payable date Per share Dec. 19, 2002 $0.00351 Class Y Income distributions -- taxable as dividend income: Qualified Dividend Income for individuals (effective for distributions made after Jan. 1, 2003) 0.00% Dividends Received Deduction for corporations 38.07% Payable date Per share Dec. 19, 2002 $0.00365 -------------------------------------------------------------------------------- 25 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT Board Members and Officers Shareholders elect a board that oversees the Fund's operations. The board appoints officers who are responsible for day-to-day business decisions based on policies set by the board. The following is a list of the Fund's board members. Each member oversees 15 Master Trust portfolios and 83 American Express mutual funds. Board members serve until the next regular shareholders' meeting or until he or she reaches the mandatory retirement age established by the board.
Independent Board Members Name, address, age Position held Principal occupation during past Other directorships with Fund and five years length of service ---------------------------------- ------------------ ------------------------------------- --------------------------------- Arne H. Carlson Board member Chair, Board Services Corporation 901 S. Marquette Ave. since 1999 (provides administrative services Minneapolis, MN 55402 to boards). Former Governor of Age 68 Minnesota ---------------------------------- ------------------ ------------------------------------- --------------------------------- Philip J. Carroll, Jr. Board member Retired Chairman and CEO, Fluor Scottish Power PLC, Vulcan 901 S. Marquette Ave. since 2002 Corporation (engineering and Materials Company, Inc. Minneapolis, MN 55402 construction) since 1998 (construction Age 65 materials/chemicals) ---------------------------------- ------------------ ------------------------------------- --------------------------------- Livio D. DeSimone Board member Retired Chair of the Board and Cargill, Incorporated 30 Seventh Street East since 2001 Chief Executive Officer, Minnesota (commodity merchants and Suite 3050 Mining and Manufacturing (3M) processors), General Mills, St. Paul, MN 55101-4901 Inc. (consumer foods), Vulcan Age 69 Materials Company (construction materials/ chemicals), Milliken & Company (textiles and chemicals), and Nexia Biotechnologies, Inc. ---------------------------------- ------------------ ------------------------------------- --------------------------------- Heinz F. Hutter* Board member Retired President and Chief 901 S. Marquette Ave. since 1994 Operating Officer, Cargill, Minneapolis, MN 55402 Incorporated (commodity merchants Age 74 and processors) ---------------------------------- ------------------ ------------------------------------- --------------------------------- Anne P. Jones Board member Attorney and Consultant 901 S. Marquette Ave. since 1985 Minneapolis, MN 55402 Age 68 ---------------------------------- ------------------ ------------------------------------- --------------------------------- Stephen R. Lewis, Jr.** Board member Retired President and Professor of Valmont Industries, Inc. 901 S. Marquette Ave. since 2002 Economics, Carleton College (manufactures irrigation Minneapolis, MN 55402 systems) Age 64 ---------------------------------- ------------------ ------------------------------------- --------------------------------- Alan G. Quasha Board member President, Quadrant Management, Compagnie Financiere Richemont 901 S. Marquette Ave. since 2002 Inc. (management of private AG (luxury goods), Harken Minneapolis, MN 55402 equities) Energy Corporation (oil and gas Age 53 exploration) and SIRIT Inc. (radio frequency identification technology) ---------------------------------- ------------------ ------------------------------------- ---------------------------------
* Interested person of AXP Partners International Aggressive Growth Fund and AXP Partners Aggressive Growth Fund by reason of being a security holder of J P Morgan Chase & Co., which has a 45% interest in American Century Companies, Inc., the parent company of the subadviser of two of the AXP Partners Funds, American Century Investment Management, Inc. ** Interested person of AXP Partners International Aggressive Growth Fund by reason of being a security holder of FleetBoston Financial Corporation, parent company of Liberty Wanger Asset Management, L.P., one of the fund's subadvisers. -------------------------------------------------------------------------------- 26 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Independent Board Members (continued) Name, address, age Position held Principal occupation during past Other directorships with Fund and five years length of service --------------------------------- ------------------- ------------------------------------- --------------------------------- Alan K. Simpson Board member Former three-term United States Biogen, Inc. 1201 Sunshine Ave. since 1997 Senator for Wyoming (biopharmaceuticals) Cody, WY 82414 Age 71 --------------------------------- ------------------- ------------------------------------- --------------------------------- Alison Taunton-Rigby Board member President, Forester Biotech since 901 S. Marquette Ave. since 2002 2000. Former President and CEO, Minneapolis, MN 55402 Aquila Biopharmaceuticals, Inc. Age 59 --------------------------------- ------------------- ------------------------------------- --------------------------------- Board Members Affiliated with AEFC*** Name, address, age Position held Principal occupation during past Other directorships with Fund and five years length of service --------------------------------- ------------------- ------------------------------------- --------------------------------- Barbara H. Fraser Board member Executive Vice President - AEFA 1546 AXP Financial Center since 2002 Products and Corporate Marketing of Minneapolis, MN 55474 AEFC since 2002. President - Age 53 Travelers Check Group, American Express Company, 2001-2002. Management Consultant, Reuters, 2000-2001. Managing Director - International Investments, Citibank Global, 1999-2000. Chairman and CEO, Citicorp Investment Services and Citigroup Insurance Group, U.S., 1998-1999 --------------------------------- ------------------- ------------------------------------- --------------------------------- Stephen W. Roszell Board member Senior Vice President - 50238 AXP Financial Center since 2002, Vice Institutional Group of AEFC Minneapolis, MN 55474 President since Age 54 2002 --------------------------------- ------------------- ------------------------------------- --------------------------------- William F. Truscott Board member Senior Vice President - Chief 53600 AXP Financial Center since 2001, Vice Investment Officer of AEFC since Minneapolis, MN 55474 President since 2001. Former Chief Investment Age 42 2002 Officer and Managing Director, Zurich Scudder Investments --------------------------------- ------------------- ------------------------------------- ---------------------------------
*** Interested person by reason of being an officer, director and/or employee of AEFC. -------------------------------------------------------------------------------- 27 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT The board has appointed officers who are responsible for day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the board. In addition to Mr. Roszell, who is vice president, and Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers Name, address, age Position held Principal occupation during past Other directorships with Fund and five years length of service --------------------------------- ------------------- ------------------------------------- --------------------------------- Jeffrey P. Fox Treasurer since Vice President - Investment 50005 AXP Financial Center 2002 Accounting, AEFC, since 2002; Vice Minneapolis, MN 55474 President - Finance, American Age 48 Express Company, 2000-2002; Vice President - Corporate Controller, AEFC, 1996-2000 --------------------------------- ------------------- ------------------------------------- --------------------------------- Paula R. Meyer President since Senior Vice President and General 596 AXP Financial Center 2002 Manager - Mutual Funds, AEFC, since Minneapolis, MN 55474 2002; Vice President and Managing Age 49 Director - American Express Funds, AEFC, 2000-2002; Vice President, AEFC, 1998-2000 --------------------------------- ------------------- ------------------------------------- --------------------------------- Leslie L. Ogg Vice President, President of Board Services 901 S. Marquette Ave. General Counsel, Corporation Minneapolis, MN 55402 and Secretary Age 64 since 1978 --------------------------------- ------------------- ------------------------------------- ---------------------------------
The SAI has additional information about the Fund's directors and is available, without charge, upon request by calling (800) 862-7919. -------------------------------------------------------------------------------- 28 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT The policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities can be found in the Fund's Statement of Additional Information (SAI) which is available (i) without charge, upon request, by calling toll-free (800) 862-7919; (ii) on the American Express Company Web site at americanexpress.com/funds; and (iii) on the Securities and Exchange Commission Web site at http://www.sec.gov. -------------------------------------------------------------------------------- (logo) AMERICAN EXPRESS(R) -------------------------------------------------------------------------------- American Express Funds 70100 AXP Financial Center Minneapolis, MN 55474 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.