SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.[ ]
[ ] Post-Effective Amendment No. [ ]
(Check Appropriate Box or Boxes)
AXP Growth Series, Inc.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
(612) 330-9283
- -------------------------------------------------------------------------------
(Area Code and Telephone Number)
901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)
Leslie L. Ogg - 901 Marquette Avenue South,
- -------------------------------------------------------------------------------
(Name and Address of Agent For Service)
Suite 2810, Minneapolis MN 55402-3268
- -------------------------------------------------------------------------------
(Number and Street) (City) (State) (Zip Code)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the Registration Statement.
Title of Securities Being Registered: Common Stock
No filing fee is due because of reliance on Section 24(f) of the Investment
Company Act of 1940.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine. It is proposed that this filing will become effective on March
3, 2004.
AMERICAN EXPRESS(R) FUNDS
Principal Executive Office
901 Marquette Avenue South, Suite 2810
Minneapolis, MN 55402-3268
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
To be held ________, 2004
AXP(R) Market Advantage Series, Inc.
- AXP(R) Blue Chip Advantage Fund
AXP(R) Growth Series, Inc.
- AXP(R) Research Opportunities Fund
AXP Blue Chip Advantage Fund ("Blue Chip") and AXP Research Opportunities Fund
("Research Opportunities") (individually a "Selling Fund" and together the
"Selling Funds") will hold a special shareholders' meeting at ____.m. on
_______, 2004, at _________________, Minneapolis, MN. This will be a joint
meeting for each of the funds listed above. At the meeting, shareholders will
consider the following:
o A proposal to approve an Agreement and Plan of Reorganization (the
"Agreement") between each Selling Fund and AXP Large Cap Equity Fund
("Large Cap Equity" or the "Buying Fund"). Under this Agreement, the
Selling Fund will transfer all of its assets attributable to Classes A, B,
C and Y to the Buying Fund in exchange for corresponding Class A, B, C and
Y shares of the Buying Fund. These shares will be distributed
proportionately to you and the other shareholders of the Selling Fund. The
Buying Fund will assume the Selling Fund's liabilities.
Please take a few minutes to read the proxy statement. It discusses the proposal
in more detail. If you were a shareholder on ________, 2004, you may vote at the
meeting or any adjournment of the meeting. We hope you can attend the meeting.
For those of you who cannot attend, please vote by mail, telephone or internet.
Just follow the instructions on the enclosed proxy card. If you have questions,
please call your advisor or call client services toll free at (866) 270-3133. It
is important that you vote. The Board of Directors (the "Board") recommends that
you vote FOR the proposal. This proxy statement was first mailed to shareholders
the week of ________, 2004.
By order of the Board of Directors
Leslie L. Ogg, Secretary
________, 2004
- --------------------------------------------------------------------------------
1 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
COMBINED PROXY STATEMENT/PROSPECTUS
Dated ________, 2004
This document is a proxy statement for Blue Chip and Research Opportunities
and a prospectus for Large Cap Equity (each individually a "Fund" and
collectively the "Funds"). It contains the information you should know before
voting on the proposal. Please read it carefully and keep it for future
reference. The address of each of the Funds is 901 Marquette Avenue South,
Suite 2810, Minneapolis, MN 55402-3268. The phone number for each of the Funds
is (_____) _____-________.
The following information describes the proposed reorganization of the Selling
Fund into the Buying Fund (the "Reorganization").
How the Reorganization Will Work
o The Selling Fund will transfer all of its assets to the Buying Fund. The
Buying Fund will assume the Selling Fund's stated liabilities.
o The Buying Fund will issue shares of Classes A, B, C and Y to the Selling
Fund in an amount equal to the value of the assets of Classes A, B, C and Y
that it receives from the Selling Fund, less the liabilities it assumes.
These shares will be distributed to the Selling Fund's shareholders in
proportion to their holdings in the Selling Fund. You will not pay any
sales charge in connection with this distribution of shares.
Fund Investment Objectives
The investment objective for each of the Funds is as follows:
Selling Fund
Blue Chip: Long-term total return exceeding that of the U.S.
stock market.
Research Opportunities: Long term capital growth.
Buying Fund
Large Cap Equity: Long term growth of capital.
Please note that the Buying Fund is not a bank deposit, is not federally
insured, is not endorsed by any bank or government agency and is not guaranteed
to achieve its goal. As with all mutual funds, the Securities and Exchange
Commission (the "SEC") has not approved or disapproved these securities or
passed on the adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
- --------------------------------------------------------------------------------
2 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Where to Get More Information
The Buying Fund
Most recent prospectus, dated Sept. Accompanying, and incorporated by
29, 2003. reference into, this proxy
statement/prospectus.
- ------------------------------------- ---------------------------------------
Most recent annual report, for the Incorporated by reference into this
period ended July 31, 2003. proxy statement/prospectus. For a
copy at no charge, call toll-free (800)
862-7919 or write to the address at the
bottom of this table.
- ------------------------------------- ---------------------------------------
The Selling Fund
Blue Chip's most recent prospectus, Incorporated by reference into this
dated April 1, 2003, as proxy statement/prospectus. For a
supplemented. copy at no charge, call toll-free
(800) 862-7919 or write to the address at
the bottom of this table.
Research Opportunities' most recent
prospectus, dated Sept. 29, 2003,
as supplemented.
- ------------------------------------- ---------------------------------------
This Proxy Statement/Prospectus
SStatement of Additional Information Incorporated by reference into this
dated the same date as this proxy proxy statement/prospectus. For a
statement/prospectus. This document copy at no charge, call toll-free
contains information about both the (866) 270-3133 or write to the
Selling Fund and the Buying Fund. address at the bottom of this table.
- ------------------------------------- ---------------------------------------
To ask questions about this proxy Call toll-free (866) 270-3133 or
statement/prospectus. write to: American Express Client
Service Corporation 70100 AXP
Financial Center, Minneapolis, MN
55474.
- ------------------------------------- ---------------------------------------
Each of the Funds is subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and
files reports, proxy materials and other information with the SEC. These
reports, proxy materials and other information can be inspected and copied at
the Public Reference Room maintained by the SEC. Copies may be obtained, after
paying a duplicating fee, by electronic request at
http://www.publicinfo@sec.gov, or by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102. In addition, copies of these documents may
be viewed on-line or downloaded from the SEC's Web site at http://www.sec.gov.
- --------------------------------------------------------------------------------
3 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
TABLE OF CONTENTS
Page
Section A -- Approve or Reject the Agreement and Plan of Reorganization 5
Summary 5
How the Reorganization Will Work 5
Comparison of the Selling Fund and the Buying Fund 5
Risk Factors 7
Tax Consequences 8
Fees and Expenses 9
The Reorganization 14
Terms of the Reorganization 14
Conditions to Closing the Reorganization 14
Termination of the Agreement 15
Tax Status of the Reorganization 15
Reasons for the Proposed Reorganization and Board Deliberations 17
Boards' Determinations 19
Recommendation and Vote Required 19
Section B -- Proxy Voting and Shareholder Meeting Information 20
Section C -- Capitalization and Ownership of Fund Shares 22
Exhibits
A. Form of Agreement and Plan of Reorganization. A.1
B. Minnesota Business Corporation Act Sections 302A.471 and 302A.473. B.1
C. Management's Discussion of the Buying Fund. C.1
D. Most Recent Buying Fund Prospectus. D.1
- --------------------------------------------------------------------------------
4 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
SECTION A -- APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
This proxy statement/prospectus is being used by the Board of the Selling Fund
to solicit proxies to vote at a special meeting of shareholders. The purpose of
the meeting is to consider a proposal to approve the Agreement providing for the
Reorganization of the Selling Fund into the Buying Fund.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire proxy
statement/prospectus and the exhibits because they contain details that are not
in the summary.
How the Reorganization Will Work
o The Selling Fund will transfer all of its assets to the Buying Fund. The
Buying Fund will assume the Selling Fund's stated liabilities.
o The Buying Fund will issue shares of Classes A, B, C and Y to the Selling
Fund in an amount equal to the value of the assets of Classes A, B, C and Y
that it receives from the Selling Fund, less the liabilities it assumes.
These shares will be distributed to the Selling Fund's shareholders in
proportion to their holdings in the Selling Fund. If you already have a
Buying Fund account, shares distributed in the Reorganization will be added
to that account.
o Neither the Selling Fund nor the shareholders of the Selling Fund will pay
any sales charge in connection with the Reorganization.
o After the Reorganization is completed, current Selling Fund shareholders
will be shareholders of the Buying Fund. The Selling Fund will be
terminated.
Comparison of the Selling Fund and the Buying Fund
Both the Selling Fund and the Buying Fund:
o Are structured as a series of capital stock of an open-end management
investment company organized as a Minnesota corporation.
o Have American Express Financial Corporation ("AEFC") as an investment
adviser.
o Have the same policies for buying and selling shares and the same exchange
rights.
o Have the same distribution policies, although Blue Chip makes distributions
quarterly and the Buying Fund makes distributions annually.
o Have different classes of shares: Classes A, B, C and Y. The Buying Fund
also has Class I shares.
- --------------------------------------------------------------------------------
5 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Comparison of Investment Objectives
The investment objectives for the funds are as follows:
Selling Fund
Blue Chip: Long-term total return exceeding that of the U.S. stock
market.
Research Opportunities: Long term capital growth.
Buying Fund
Large Cap Equity: Long term growth of capital.
Comparison of Investment Strategies
Blue Chip: Under normal market conditions, at least 80% of the Fund's net assets
are invested in blue chip stocks. Blue chip stocks are issued by companies with
a market capitalization of at least $1 billion, an established management, a
history of consistent earnings and a leading position within their respective
industries. A common measure of blue chip stocks is the S&P 500 Composite Stock
Price Index (S&P 500 Index). The S&P 500 Index is an unmanaged market index used
to measure the total return of the U.S. stock market (the Fund may change this
market index from time to time). While the Fund invests in stocks included in
the S&P 500 Index, it is not an index fund.
It may own companies not included in the index, and its results will likely
differ from the index.
Research Opportunities: The Fund invests primarily in securities of companies
included in the S&P 500 Index. The Fund invests in those securities that are
believed to offer the potential for long-term growth using a proprietary
research rating system.
Large Cap Equity: Under normal market conditions, at least 80% of the fund's net
assets are invested in equity securities of companies with a market
capitalization greater than $5 billion at the time of purchase. The fund may
invest in income-producing equity securities, such as dividend paying stocks,
convertible securities and preferred stocks.
All Funds:
o Unusual Market Conditions. During weak or declining markets, each of the
Funds may invest more of its assets in money market securities. Although
investing in these securities would serve primarily to avoid losses, this
type of investing also could prevent the Fund from achieving its investment
objective. During these times, AEFC may make frequent securities trades
that could result in increased fees and expenses.
o Other Strategies. For each of the Funds, the investment adviser may invest
in other securities and may employ other investment strategies that are not
principal investment strategies. Each of the Funds may invest in money
market securities and may use derivative instruments, such as futures,
options
- --------------------------------------------------------------------------------
6 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
and forward contracts, to produce incremental earnings, to hedge existing
positions, and to increase flexibility. In addition Large Cap Equity and
Research Opportunities may invest in debt securities and foreign
securities.
Comparison of Fundamental Policies
Each Fund has substantially similar fundamental investment policies. The
fundamental policies of Research Opportunities permit concentration in either or
both the energy or utilities industries. Large Cap Equity's policies do not
permit concentration. Each of the Funds has a policy prohibiting the purchase of
more than 10% of the outstanding voting securities of an issuer. Large Cap
Equity's policy provides that up to 25% of the Fund's assets may be invested
without regard to the 10% limitation. Blue Chip and Research Opportunities each
has a policy prohibiting the making of loans to affiliates. Even though this is
not stated as a fundamental policy of Large Cap Equity, the Fund is nonetheless
subject to that restriction under the provisions of the 1940 Act. Similarly,
Large Cap Equity has a policy prohibiting the issuing of senior securities,
except as permitted under the 1940 Act. Even though this is not stated as a
fundamental policy of Blue Chip or Research Opportunities, the Funds are
nonetheless subject to that restriction under the provisions of the 1940 Act. If
shareholders of the Selling Fund approve the Reorganization, they will be
subject to the fundamental investment policies of the Buying Fund. AEFC does not
believe that the differences between the fundamental investment policies will
result in any material difference in the way the Funds are managed.
Risk Factors
The principal risks associated with an investment in the Fund are shown below.
Research Large Cap
Risk Blue Chip Opportunities Equity
Market Risk x x x
Issuer Risk x x x
Style Risk x x x
o Market Risk. The market may drop and you may lose money. Market risk may
affect a single issuer, sector of the economy, industry, or the market as a
whole. The market value of all securities may move up and down, sometimes
rapidly and unpredictably.
o Issuer Risk. The risk that an issuer, or the value of its stocks or bonds,
will perform poorly. Poor performance may be caused by poor management
decision, competitive pressures, breakthroughs in technology, reliance on
suppliers, labor problems or shortages, corporate restructurings,
fraudulent disclosures, or other factors.
- --------------------------------------------------------------------------------
7 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
o Style Risk -- Blue Chip. The objective of the Fund is to provide
shareholders with a long-term return exceeding that of the U.S.
stock market. Currently, the S&P 500 Index is the market index used
to measure total return of the U.S. stock market. However, unlike
the unmanaged index, the Fund's performance is affected by factors
such as the size of the Fund's portfolio, transaction costs,
management fees and expenses, brokerage commissions and fees, the
extent and timing of cash flows in and out of the Fund, stock
selection, sector weightings, and other such factors. As a result,
once these factors are accounted for, the Fund may underperform the
market index.
o Style Risk -- Research Opportunities. The Fund purchases growth stocks
based on the expectation that the companies will have strong growth in
earnings. The price paid often reflects an expected rate of growth. If that
growth fails to occur, the price of the stock may decline significantly and
quickly.
o Style Risk -- Large Cap Equity. The Fund's management strategy will
influence performance significantly. Large capitalization stocks as a group
could fall out of favor with the market, causing the Fund to underperform
funds that invest primarily in small or medium capitalization stocks. If
the manager's stock selection strategy does not perform as expected, the
Fund could underperform its peers.
Performance
Performance information for Class A shares of the Funds is shown below.
Table A-1
Average Annual Total Returns As of Dec. 31, 2003(a)
Since Inception
Fund 1 year 5 years 10 years inception date
Blue Chip 27.37% (2.76%) 8.52% -- --
Research Opportunities 23.95% (3.86%) -- 4.54% 8/19/1996
Large Cap Equity 27.57% -- -- .35% 3/28/2002
(a) Returns do not include the 5.75% Class A sales charges.
Tax Consequences
The Reorganization is expected to be tax-free for federal income tax purposes
and will not take place unless the Selling Fund and the Buying Fund receive a
satisfactory opinion of tax counsel, substantially to that effect. Accordingly,
no gain or loss is expected to be recognized by the Selling Fund or its
shareholders as a result of the Reorganization, and the tax basis of the shares
received by the Selling Fund's shareholders is expected to be the same in the
aggregate as the tax basis of the shareholder's Selling Fund shares. At any time
prior to the
- --------------------------------------------------------------------------------
8 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
consummation of the Reorganization, a shareholder may redeem shares. This would
likely result in recognition of gain or loss to these shareholders for federal
income tax purposes.
A substantial portion of the portfolio assets of the Selling Fund may be sold in
connection with the Reorganization. The actual tax impact of those sales will
depend on the difference between the price at which the portfolio assets are
sold and the Selling Fund's basis in the assets. Any capital gains recognized in
these sales on a net basis will be distributed to the Selling Fund's
shareholders as capital-gain dividends (to the extent of net realized long-term
capital gains distributed) and/or ordinary dividends (to the extent of net
realized short-term capital gains distributed) during or with respect to the
year of sale, and the distributions will be taxable to shareholders.
For more information about the federal income tax consequences of the
Reorganization, see the section entitled "Tax Status of the Reorganization."
FEES AND EXPENSES
The following table describes the fees and expenses that you pay if you buy and
hold shares of the Selling Fund or shares of the Buying Fund. The table also
shows pro forma expenses of the Buying Fund assuming the proposed Reorganization
had been effective during the most recent fiscal year. If shareholders approve
the Reorganization, AEFC has agreed to waive .05% of Buying Fund management fees
for a period of one year. This waiver is reflected in the pro forma tables shown
below.
- --------------------------------------------------------------------------------
9 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Table A-2
Actual and Pro Forma Fund Expenses For the Most Recent Fiscal Year
Shareholder Fees (fees paid directly from your investment)
Class A Class B Class C Class Y
Maximum sales charge (load) imposed on
purchases(a) as a percentage of offering price 5.75% none none none
Maximum deferred sales charge (load) imposed
on sales (as a percentage of offering price at
time of purchase) none(b) 5% 1%(c) none
Annual Fund operating expenses(d) (expenses that are deducted from Fund assets)
As a percentage of average daily net assets:
Class A Class B Class C Class Y
Blue Chip
Management fees(e) 0.45% 0.45% 0.45% 0.45%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00%
Other expenses(h) 0.30% 0.32% 0.34% 0.37%
Total 1.00% 1.77% 1.79% 0.82%
Research Opportunities
Management fees(f) 0.58% 0.58% 0.58% 0.58%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00%
Other expenses(h) 0.52% 0.53% 0.53% 0.60%
Total 1.35% 2.11% 2.11% 1.18%
Large Cap Equity
Management fees(g) 0.61% 0.61% 0.61% 0.61%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00%
Other expenses(h) 0.99% 1.00% 1.00% 1.06%
Total 1.85% 2.61% 2.61% 1.67%
Fee waiver/expense reimbursement 0.60% 0.60% 0.60% 0.60%
Net expenses 1.25% 2.01% 2.01% 1.07%
Large Cap Equity - Pro Forma with Blue Chip
Management fees(g) 0.60% 0.60% 0.60% 0.60%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00%
Other expenses(h) 0.38% 0.39% 0.41% 0.45%
Total 1.23% 1.99% 2.01% 1.05%
Fee waiver/expense reimbursement 0.05% 0.05% 0.05% 0.05%
Net expenses(i) 1.18% 1.94% 1.96% 1.00%
See accompanying notes to annual fund operating expenses.
- --------------------------------------------------------------------------------
10 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Table A-2 (continued)
Annual Fund operating expenses(d) (expenses that are deducted from Fund assets)
As a percentage of average daily net assets:
Class A Class B Class C Class Y
Large Cap Equity - Pro Forma with Research Opportunities
Management fees(g) 0.61% 0.61% 0.61% 0.61%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00%
Other expenses(h) 0.60% 0.62% 0.62% 0.65%
Total 1.46% 2.23% 2.23% 1.26%
Fee waiver/expense reimbursement 0.21% 0.22% 0.22% 0.19%
Net expenses(i) 1.25% 2.01% 2.01% 1.07%
Large Cap Equity - Pro Forma with Research Opportunities and Blue Chip
Management fees(g) 0.60% 0.60% 0.60% 0.60%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00%
Other expenses(h) 0.40% 0.41% 0.43% 0.47%
Total 1.25% 2.01% 2.03% 1.07%
Fee waiver/expense reimbursement 0.05% 0.05% 0.05% 0.05%
Net expenses(i) 1.20% 1.96% 1.98% 1.02%
Notes to annual fund operating expenses
(a) This charge may be reduced depending on the value of your total investments
in American Express mutual funds.
(b) For Class A purchases over $1,000,000 on which no sales charge is assessed,
a 1% sales charge applies if you sell your shares less than one year after
purchase.
(c) For Class C purchases, a 1% sales charge applies if you sell your shares
less than one year after purchase.
(d) Other expenses are based on estimated amounts for the current fiscal year.
For Research Opportunities, AEFC has agreed to waive certain fees and to
absorb certain expenses until July 31, 2004. Under this agreement, total
expenses will not exceed 1.35% for Class A, 2.11% for Class B, 2.11% for
Class C and 1.18% for Class Y. Research Opportunities is a feeder fund that
is part of a master/feeder structure. For Research Opportunities, both in
this table and the following example, fund operating expenses include
expenses charged by both the Fund and its Master Portfolio. For Large Cap
Equity, AEFC has agreed to waive certain fees and to absorb certain
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.
(e) Includes the impact of a performance incentive adjustment fee that
decreased the management fee by 0.02% for Blue Chip.
(f) Includes the impact of a performance incentive adjustment fee that
decreased the management fee by 0.07% for Research Opportunities.
(g) Includes the impact of a performance incentive adjustment fee that
increased the management fee by 0.01% for Large Cap Equity.
(h) Other expenses include an administrative services fee, a shareholder
services fee for Class Y, a transfer agency fee and other nonadvisory
expenses.
(i) Includes the impact of the .05% management fee waiver that AEFC has agreed
to put in place following shareholder approval of the Reorganization
through July 31, 2005.
- --------------------------------------------------------------------------------
11 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Example: These examples are intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. Assume you invest
$10,000 and the Fund earns a 5% annual return. The operating expenses remain the
same each year. You would pay the following expenses if you redeem all of your
shares at the end of the time periods indicated under the current arrangements
and if the proposed reorganization had been in effect.
Fund 1 year 3 years 5 years 10 years
Blue Chip
Class A(a) $671 $875 $1,097 $1,734
Class B $580(b) $857(b) $1,060(b) $1,885(c)
Class C $182 $564 $ 971 $2,110
Class Y $ 84 $262 $ 456 $1,018
Research Opportunities
Class A(a) $705 $978 $1,273 $2,110
Class B $614(b) $961(b) $1,235(b) $2,252(c)
Class C $214 $661 $1,135 $2,446
Class Y $120 $375 $ 650 $1,437
Large Cap Equity
Class A(a) $695 $1,069 $1,467 $2,578
Class B $604(b) $1,055(b) $1,433(b) $2,718(c)
Class C $204 $ 755 $1,333 $2,904
Class Y $109 $ 468 $ 852 $1,931
Large Cap Equity - Pro Forma with Blue Chip(d)
Class A(a) $688 $938 $1,208 $1,979
Class B $597(b) $920(b) $1,169(b) $2,121(c)
Class C $199 $626 $1,079 $2,338
Class Y $102 $329 $ 575 $1,283
Large Cap Equity - Pro Forma with Research Opportunities(d)
Class A(a) $695 $991 $1,309 $2,209
Class B $604(b) $976(b) $1,276(b) $2,357(c)
Class C $204 $676 $1,176 $2,552
Class Y $109 $381 $ 674 $1,511
Large Cap Equity - Pro Forma with Research Opportunities and Blue Chip(d)
Class A(a) $690 $944 $1,218 $2,000
Class B $599(b) $926(b) $1,179(b) $2,142(c)
Class C $201 $632 $1,089 $2,359
Class Y $104 $336 $ 286 $1,306
(a) Includes a 5.75% sales charge.
(b) Includes the applicable CDSC.
(c) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
(d) Includes the additional .05% management fee waiver in year 1 only.
- --------------------------------------------------------------------------------
12 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
You would pay the following expenses if you did not redeem your shares.
Fund 1 year 3 years 5 years 10 years
Blue Chip
Class A(a) $671 $875 $1,097 $1,734
Class B $180 $557 $ 960 $1,885(b)
Class C $182 $564 $ 971 $2,110
Class Y $ 84 $262 $ 456 $1,018
Research Opportunities
Class A(a) $705 $978 $1,273 $2,110
Class B $214 $661 $1,135 $2,252(b)
Class C $214 $661 $1,135 $2,446
Class Y $120 $375 $ 650 $1,437
Large Cap Equity
Class A(a) $695 $1,069 $1,467 $2,578
Class B $204 $ 755 $1,333 $2,718(b)
Class C $204 $ 755 $1,333 $2,904
Class Y $109 $ 468 $ 852 $1,931
Large Cap Equity - Pro Forma with Blue Chip(c)
Class A(a) $688 $938 $1,208 $1,979
Class B $197 $620 $1,069 $2,121(b)
Class C $199 $626 $1,079 $2,338
Class Y $102 $329 $ 575 $1,283
Large Cap Equity - Pro Forma with Research Opportunities(c)
Class A(a) $695 $991 $1,309 $2,209
Class B $204 $676 $1,176 $2,357(b)
Class C $204 $676 $1,176 $2,552
Class Y $109 $381 $ 674 $1,511
Large Cap Equity - Pro Forma with Research Opportunities and Blue Chip(c)
Class A(a) $690 $944 $1,218 $2,000
Class B $199 $626 $1,079 $2,142(b)
Class C $201 $632 $1,089 $2,359
Class Y $104 $336 $ 286 $1,306
(a) Includes a 5.75% sales charge.
(b) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
(c) Includes the additional .05% management fee waiver in year 1 only.
This example does not represent actual expenses, past or future. Actual expenses
may be higher or lower than those shown.
- --------------------------------------------------------------------------------
13 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
THE REORGANIZATION
Terms of the Reorganization
The Board has approved the Agreement, a copy of which is attached as Exhibit A.
The Agreement provides for Reorganization on the following terms:
o The Reorganization is scheduled to occur on the first day that the NYSE is
open for business following shareholder approval and receipt of any
necessary regulatory approvals, but may occur on any later date agreed to
by the Selling Fund and the Buying Fund.
o The Selling Fund will transfer all of its assets to the Buying Fund and, in
exchange, the Buying Fund will assume the Selling Fund's stated
liabilities.
o The Buying Fund will issue Class A, B, C and Y shares to the Selling
Fund in an amount equal to the value of the assets of Classes A, B,
C and Y that it receives from the Selling Fund, less the liabilities
assumed by the Buying Fund in the transaction. These shares will
immediately be distributed by the Selling Fund to its shareholders
in proportion to their holdings in the Selling Fund. As a result,
shareholders of the Selling Fund will become Class A, B, C or Y
shareholders of the Buying Fund.
o Neither the Selling Fund nor the shareholders of the Selling Fund will pay
any sales charge in connection with the Reorganization.
o The net asset value of the Selling Fund and the Buying Fund will be
computed as of 3:00 p.m. Central time, on the closing date.
o After the Reorganization, the Selling Fund will be terminated.
Conditions to Closing the Reorganization
The completion of the Reorganization is subject to certain conditions described
in the Agreement, including:
o The Selling Fund will have declared and paid a dividend that will
distribute all of the Fund's taxable income, if any, to the shareholders of
the Fund for the taxable years ending at or prior to the closing.
o The Funds will have received any approvals, consents or exemptions from the
SEC or any regulatory body necessary to carry out the Reorganization.
o A registration statement on Form N-14 will have been filed with the SEC and
declared effective.
o The shareholders of the Selling Fund will have approved the Agreement.
o The Selling Fund will have received an opinion of tax counsel that the
proposed Reorganization will result in no gain or loss being recognized by
any shareholder.
- --------------------------------------------------------------------------------
14 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Termination of the Agreement
The Agreement and the transactions contemplated by it may be terminated and
abandoned by resolutions of the Board of the Selling Fund or the Buying Fund at
any time prior to closing. In the event of a termination, there will be no
liability for damages on the part of either the Selling Fund or the Buying Fund
or the directors, officers or shareholders of the Selling Fund or of the Buying
Fund.
Tax Status of the Reorganization
The Reorganization is expected to be tax-free for federal income tax purposes
and will not take place unless the Selling Fund and the Buying Fund receive a
satisfactory opinion of tax counsel (which opinion will be based on certain
factual representations and certain customary assumptions), to the effect that,
on the basis of existing law under specified sections of the Internal Revenue
Code of 1986, as amended (the "Code"):
o The transfer of the Selling Fund's assets to the Buying Fund in exchange
for Class A, B, C and Y shares of the Buying Fund and the assumption of the
Selling Fund's liabilities, followed by the distribution of those Class A,
B, C and Y shares to the Selling Fund's shareholders and the termination of
the Selling Fund will be a "reorganization" within the meaning of Section
368(a)(1) of the Code, and the Selling Fund and the Buying Fund will each
be a "party to the reorganization" within the meaning of Section 368(b) of
the Code.
o Under Section 361 of the Code, no gain or loss will be recognized by the
Selling Fund upon the transfer of all of its assets to the Buying Fund or
on the distribution by the Selling Fund of Class A, B, C and Y shares of
the Buying Fund to Selling Fund shareholders in liquidation.
o Under Section 354 of the Code, the shareholders of the Selling Fund will
not recognize gain or loss upon the exchange of their Class A, B, C or Y
shares of the Selling Fund solely for Buying Fund Class A, B, C or Y shares
as part of the Reorganization.
o Under Section 358 of the Code, the aggregate basis of the Class A, B, C or
Y shares of the Buying Fund that a Selling Fund shareholder receives in the
Reorganization will be the same as the aggregate basis of the Class A, B, C
or Y shares of the Selling Fund exchanged therefore.
o Under Section 1223(1) of the Code, the tax holding period for the Class A,
B, C or Y shares of the Buying Fund that a Selling Fund shareholder
receives in the Reorganization will include the period for which he or she
held the Class A, B, C or Y shares of the Selling Fund exchanged therefore,
provided that on the date of the exchange he or she held such Selling Fund
shares as capital assets.
- --------------------------------------------------------------------------------
15 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
o Under Section 1032 of the Code, no gain or loss will be recognized by the
Buying Fund upon the receipt of the Selling Fund's assets solely in
exchange for the issuance of Buying Fund's Class A, B, C and Y shares to
the Selling Fund and the assumption of all of the Selling Fund's
liabilities by the Buying Fund.
o Under Section 362(b) of the Code, the basis in the hands of the Buying Fund
of the assets of the Selling Fund transferred to the Buying Fund will be,
in each instance, the same as the basis of those assets in the hands of the
Selling Fund immediately prior to the transfer.
o Under Section 1223(2) of the Code, the tax holding period of the assets of
the Selling Fund in the hands of the Buying Fund will include periods
during which such assets were held by the Selling Fund.
o The Buying Fund will succeed to and take into account the items of the
Selling Fund described in Section 381(c) of the Code, subject to the
conditions and limitations specified in Sections 381, 382, 383 and 384 of
the Code and Regulations thereunder.
Prior to the closing of the Reorganization, the Selling Fund will distribute to
its shareholders all of its respective net investment company taxable income, if
any, and net realized capital gains (after reduction by any available capital
loss carryforward), if any, that have not been previously distributed to
shareholders. These distributions will be taxable to shareholders.
A Fund's ability to carry forward realized capital losses of another Fund and
use them to offset future gains may be limited. First, one Fund's capital losses
cannot be used to offset non de-minimis net pre-reorganization "built-in" gains
of any other Fund for five tax years. Second, a portion of a Fund's capital
losses may become unavailable for use by another Fund to offset any gains at
all. Third, capital losses that do remain available will offset capital gains
realized after a Reorganization and thus will reduce subsequent capital gain
distributions to a broader group of shareholders than would have been the case
absent such Reorganization. Therefore, in certain circumstances, former
shareholders of a Fund may pay taxes sooner, or pay more taxes, than they would
have had the Reorganizations not occurred.
- --------------------------------------------------------------------------------
16 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
As of Feb. 29, 2004, none of the Funds had non de-minimis "built-in" gains
against which another Fund's capital losses could not be used. As of the same
date, Large Cap Equity Fund had no net realized capital losses and no net
unrealized "built-in" capital losses; Blue Chip Advantage Fund had approximately
$_______ million of net realized capital losses, including net current-year
capital losses and capital loss carryforwards, and had approximately $_______ of
net unrealized "built-in" capital losses; and Research Opportunities Fund had
approximately $_______ million of net realized capital losses, including net
current-year capital losses and capital loss carryforwards, and had no net
unrealized "built-in" capital losses. If the Reorganizations had occurred on
Feb. 29, 2004, (i) Large Cap Equity Fund and Blue Chip Advantage Fund would have
experienced no limitation of capital losses, (ii) a significant portion of
Research Opportunities Fund's capital losses would have become unavailable for
use by the Buying Fund, and (iii) the capital losses of Blue Chip Advantage Fund
would have been spread among a broader group of shareholders than would have
been the case absent the Reorganization.
This description of the federal income tax consequences of the Reorganization
does not take into account your particular facts and circumstances. Consult your
own tax adviser about the effect of state, local, foreign, and other tax laws.
Reasons for the Proposed Reorganization and Board Deliberations
The Board believes that the proposed Reorganization will be advantageous to
Selling Fund shareholders for several reasons. The Board considered the
following matters, among others, in approving the Reorganization.
o Terms and Conditions of the Reorganization. The Board considered the terms
and conditions of the Reorganization as described in the previous
paragraphs.
o Tax Consequences. The Board considered the tax-free nature of the
Reorganization.
o Continuity of Investment. The Board took into account the fact that,
following the Reorganization, shareholders of the Selling Fund will be
invested in a fund holding a similar investment securities portfolio, with
similar investment objectives, policies, and restrictions.
- --------------------------------------------------------------------------------
17 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
o Expense Ratios. The Board considered the relative expenses of the
Funds. For Research Opportunities following the Reorganization, the
expense ratio for the Buying Fund is expected to be lower than the
expense ratio of Research Opportunities. Thus, Research
Opportunities shareholders are expected to experience lower per
share fixed costs by holding shares of the Buying Fund than they
would if they continued to hold shares in Research Opportunities.
For Blue Chip, higher aggregate net assets resulting from the
Reorganization and the opportunity for net cash inflows may reduce
the risk that, if the net assets of Blue Chip fail to grow, or
diminish, its total expense ratio could rise as fixed expenses
become a larger percentage of net assets. In addition, for a period
of one year following the Reorganization, AEFC will waive a portion
of its management fee charged to the Buying Fund so that Selling
Fund shareholders are not expected to experience an increase in base
fees as a result of the Reorganization. The base fee may be
increased or decreased under the terms of the existing performance
incentive adjustment based on the Buying Fund's performance relative
to a Lipper Index.
o Economies of Scale. The Board considered the advantage of combining
Funds that share similar investment objectives, styles and holdings.
The Board believes that by combining the Funds, the shareholders
continue to have available to them a Fund with a similar investment
objective, but can at the same time take advantage of the economies
of scale associated with a larger fund. A larger fund should have an
enhanced ability to effect portfolio transactions on more favorable
terms and should have greater investment flexibility. Expenses such
as audit expenses and accounting expenses that are charged on a per
fund basis will be reduced.
o Costs. The Board considered the fact that AEFC has agreed to bear all
solicitation expenses in order to achieve shareholder approval of the
Reorganization and to bear any other costs of effecting the Reorganization.
o Dilution. The Board considered the fact that the Reorganization will not
dilute the interests of the current shareholders.
o Performance. The Board considered the relative performance records of the
funds.
o Potential Benefits to AEFC and its Affiliates. The Board also
considered the potential benefits from the Reorganization that could
be realized by AEFC and its affiliates. The Board recognized that
the potential benefits to AEFC consist principally of the
elimination of expenses incurred in duplicative efforts to
administer separate funds. For Research Opportunities, AEFC also
will benefit to the extent it no longer waives its fees. The Board
also noted, however, that shareholders of the Selling Fund will
benefit directly from any decrease in overall operating expense
ratios resulting from the proposed Reorganization.
- --------------------------------------------------------------------------------
18 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Boards' Determinations
After considering the factors described above and other relevant information, at
a meeting held on Jan. 7-8, 2004, the Selling Fund Board members, including a
majority of the independent Board members, found that participation in the
Reorganization is in the best interests of the Selling Fund and that the
interests of existing shareholders of the Fund will not be diluted as a result
of the Reorganization.
The Board of Directors of the Buying Fund approved the Agreement at a meeting
held on Jan. 7-8, 2004. The Board members considered the terms of the Agreement,
the provisions intended to avoid the dilution of shareholder interests and the
anticipated tax consequences of the Reorganization. The Board found that
participation in the Reorganization is in the best interests of the Buying Fund
and that the interests of existing shareholders of the Buying Fund will not be
diluted as a result of the Reorganization.
Recommendation and Vote Required
The Board recommends that shareholders approve the proposed Agreement. The
Agreement must be approved by a majority of the voting power of all shares
entitled to vote. If the Agreement is not approved, the Board will consider what
further action should be taken.
- --------------------------------------------------------------------------------
19 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
SECTION B -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION
Voting. You are entitled to vote based on your total dollar interest in the
Fund. Each dollar is entitled to one vote. For those of you who cannot come to
the meeting, the Board is asking permission to vote for you. The shares will be
voted as you instruct either by mail, telephone or internet. Signed proxy cards
returned without instructions will be voted in favor of all proposals.
All votes count toward a quorum, regardless of how they are voted (For, Against
or Abstain). Broker non-votes will be counted toward a quorum but not toward the
approval of any proposals. (Broker non-votes are shares for which the underlying
owner has not voted and the broker holding the shares does not have authority to
vote.)
If your shares are held in an IRA account, you have the right to instruct the
IRA Custodian how to vote those shares. The IRA Custodian will vote any shares
for which it has not received voting instructions in proportionately the same
manner -- either For, Against, or Abstain -- as other fund shareholders have
voted.
Master/Feeder Funds. Research Opportunities currently is part of a master/feeder
structure. The feeder fund seeks its investment objective by investing its
assets in a master fund with the same policies. The master fund invests in and
manages the securities. Immediately prior to the Reorganization, the Board
intends to withdraw the Fund's assets from the master fund.
Revoking Your Proxy. If your plans change and you can attend the meeting, simply
inform the Secretary at the meeting that you will be voting your shares in
person. Also, if you change your mind after you vote, you may change your vote
or revoke it by mail, telephone or internet.
Joint Proxy Statement/Simultaneous Meetings. This joint proxy statement reduces
the preparation, printing and mailing costs of sending separate proxy statements
for each Selling Fund. The meetings will be held simultaneously with each
proposal being voted on separately by shareholders of a Fund. If any shareholder
objects to the holding of simultaneous meetings, the shareholder may move for an
adjournment of his or her Fund's meeting to a time immediately after the
simultaneous meetings so that a meeting of that Fund may be held separately. If
a shareholder makes this motion, the persons named as proxies will take into
consideration the reasons for the objection in deciding whether to vote in favor
of the adjournment.
- --------------------------------------------------------------------------------
20 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Solicitation of Proxies. The Board is asking for your vote and for you to vote
as promptly as possible. AEFC will pay the expenses of the solicitation.
Supplementary solicitations may be made by mail, telephone, electronic means or
personal contact.
Shareholder Proposals. No proposals were received from shareholders. The Funds
are not required to hold regular meetings of shareholders each year. However,
meetings of shareholders are held from time to time and proposals of
shareholders that are intended to be presented at future shareholder meetings
must be submitted in writing to the Funds in reasonable time prior to the
solicitation of proxies for the meeting.
Dissenters' Right of Appraisal. Under Sections 302A.471 and 302A.473 of the
Minnesota Business Corporation Act, Selling Fund shareholders are entitled to
assert dissenters' rights in connection with the Reorganization and obtain
payment of the "fair value" of their shares, provided that they comply with the
requirements of Minnesota law. A copy of the relevant provisions is attached as
Exhibit B.
Notwithstanding the provisions of Minnesota law, the SEC has taken the position
that use of state appraisal procedures by a mutual fund would be a violation of
Rule 22c-1, the forward pricing rule, under the 1940 Act. This rule states that
no mutual fund may redeem its shares other than at net asset value next computed
after receipt of a request for redemption. It is the SEC's position that Rule
22c-1 supersedes appraisal provisions in state statutes.
In the interest of ensuring equal valuation for all shareholders, dissenters'
rights will be determined in accordance with the SEC's interpretation. As a
result, if any shareholder elects to exercise dissenters' rights under Minnesota
law, the Selling Fund intends to submit this question to a court of competent
jurisdiction. In that event, a dissenting shareholder would not receive any
payment until the end of the court proceeding.
Adjournment. In the event that not enough votes in favor of the proposal are
received by the time scheduled for the meeting, the persons named as proxies may
move for one or more adjournments of the meeting for a period of not more than
120 days in the aggregate to allow further solicitation of shareholders on the
proposal. Any adjournment requires the affirmative vote of a majority of the
voting power of the shares present at the meeting. The persons named as proxies
will vote in favor of adjournment those shares they are entitled to vote that
have voted in favor of the proposal. They will vote against any adjournment
those shares that have voted against the proposal. AEFC will pay the costs of
any additional solicitation and of any adjourned meeting.
- --------------------------------------------------------------------------------
21 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
SECTION C -- CAPITALIZATION AND OWNERSHIP OF FUND SHARES
Capitalization
The following table shows the capitalization of the Funds as of Feb. 29, 2004
and on a pro forma basis, assuming the proposed Reorganization had taken place.
Table C-1
Capitalization
Net asset value Shares
Fund Net assets per share outstanding
Blue Chip
Class A
Class B
Class C
Class Y
Research Opportunities
Class A
Class B
Class C
Class Y
Large Cap Equity
Class A
Class B
Class C
Class Y
Large Cap Equity - Pro Forma with Blue Chip
Class A
Class B
Class C
Class Y
Large Cap Equity - Pro Forma with Research Opportunities
Class A
Class B
Class C
Class Y
Large Cap Equity - Pro Forma with Research Opportunities and Blue Chip
Class A
Class B
Class C
Class Y
- --------------------------------------------------------------------------------
22 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Ownership of Fund Shares
The following table provides information on shareholders who owned more than
5% of the Fund's outstanding shares as of Feb. 29, 2004. As of Feb. 29, 2004,
officers and directors of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.
Table C-2
Ownership of Fund Shares
Number Percent Percent of shares
of shares of shares held following
Fund 5% owners held held the reorganization
Blue Chip
Class A
Class B
Class C
Class Y
Research Opportunities
Class A
Class B
Class C
Class Y
Large Cap Equity
Class A
Class B
Class C
Class Y
Large Cap Equity - Pro Forma with Blue Chip
Class A
Class B
Class C
Class Y
Large Cap Equity - Pro Forma with Research Opportunities
Class A
Class B
Class C
Class Y
Large Cap Equity - Pro Forma with Research Opportunities and Blue Chip
Class A
Class B
Class C
Class Y
- --------------------------------------------------------------------------------
23 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Exhibit A
Form of Agreement and Plan of Reorganization
This Agreement and Plan of Reorganization dated as of Jan. 8, 2004 (the
"Agreement") is between AXP Market Advantage Series, Inc. (the "Selling
Corporation"), a Minnesota corporation, on behalf of its series, AXP Blue Chip
Advantage Fund (the "Selling Fund"), and AXP Growth Series, Inc. (the "Buying
Corporation"), a Minnesota corporation, on behalf of its series, AXP Large Cap
Equity Fund (the "Buying Fund"), and American Express Financial Corporation
(solely for the purposes of Section 3c and 10 of the Agreement).
In consideration of their mutual promises, the parties agree as follows:
1. Shareholder Approval. The Selling Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the
transactions it contemplates (the "Reorganization"). The Buying Fund agrees
to furnish data and information, as reasonably requested, for the proxy
statement to be furnished to shareholders of the Selling Fund.
2. Reorganization.
a. Plan of Reorganization. The Reorganization will be a reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code"). At the Closing, the Selling Corporation will
convey all of the assets of the Selling Fund to the Buying Fund. The
Buying Fund will assume all liabilities of the Selling Fund. At the
Closing, the Buying Corporation will deliver shares of the Buying Fund,
including fractional shares, to the Selling Corporation. The number of
shares will be determined by dividing the value of the net assets of
shares of the Selling Fund, computed as described in paragraph 3(a), by
the net asset value of one share of the Buying Fund, computed as
described in paragraph 3(b). The Selling Fund will not pay a sales
charge on the receipt of Buying Fund shares in exchange for the assets
of the Selling Fund. In addition, the shareholders of the Selling Fund
will not pay a sales charge on distribution to them of shares of the
Buying Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization
and all related acts necessary to complete the Reorganization (the
"Closing") will occur on the first day on which the New York Stock
Exchange (the "NYSE") is open for business following approval of
shareholders of the Selling Fund and receipt of all necessary
regulatory approvals, or such later date as the parties may agree.
- --------------------------------------------------------------------------------
A.1 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
3. Valuation of Net Assets.
a. The net asset value of shares of the Selling Fund will be computed as
of the close of regular trading on the NYSE on the day of Closing (the
"Valuation Date") using the valuation procedures in the Buying Fund's
prospectus.
b. The net asset value per share of shares of the Buying Fund will be
determined as of the close of regular trading on the NYSE on the
Valuation Date, using the valuation procedures in the Buying Fund's
prospectus.
c. At the Closing, the Selling Fund will provide the Buying Fund with a
copy of the computation showing the valuation of the net asset value
per share of shares of the Selling Fund on the Valuation Date. The
Buying Fund will provide the Selling Fund with a copy of the
computation showing the determination of the net asset value per share
of shares of the Buying Fund on the Valuation Date. Both computations
will be certified by an officer of American Express Financial
Corporation, the investment manager.
4. Liquidation and Dissolution of the Selling Fund.
a. As soon as practicable after the Valuation Date, the Selling
Corporation will liquidate the Selling Fund and distribute shares of
the Buying Fund to the Selling Fund's shareholders of record. The
Buying Fund will establish shareholder accounts in the names of each
Selling Fund shareholder, representing the respective pro rata number
of full and fractional shares of the Buying Fund due to each
shareholder. All issued and outstanding shares of the Selling Fund will
simultaneously be cancelled on the books of the Selling Corporation.
The Buying Fund or its transfer agent will establish shareholder
accounts in accordance with instructions from the Selling Corporation.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Corporation relating to the Selling Fund will be closed and no
further transfer of shares will be made.
c. Promptly after the distribution, the Buying Fund or its transfer agent
will notify each shareholder of the Selling Fund of the number of
shares distributed to the shareholder and confirm the registration in
the shareholder's name.
d. As promptly as practicable after the liquidation of the Selling Fund,
and in no event later than twelve months from the date of the Closing,
the Selling Fund will be dissolved.
- --------------------------------------------------------------------------------
A.2 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
5. Representations, Warranties and Covenants of the Buying Corporation. The
Buying Corporation represents and warrants to the Selling Fund as follows:
a. Organization, Existence, etc. The Buying Corporation is a corporation
duly organized, validly existing and in good standing under the laws of
the state of Minnesota and has the power to carry on its business as it
is now being conducted.
b. Registration as Investment Company. The Buying Fund is a series of the
Buying Corporation, registered under the Investment Company Act of 1940
(the "1940 Act") as an open-end, management investment company.
c. Capitalization. The Buying Corporation has authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share. All
of the outstanding shares have been duly authorized and are validly
issued, fully paid and non-assessable. Since the Buying Fund is engaged
in the continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
d. Financial Statements. The audited financial statements as of the end of
the last fiscal year, and the subsequent unaudited semi-annual
financial statements, if any (the "Buying Fund Financial Statements"),
fairly present the financial position of the Buying Fund, and the
results of its operations and changes in its net assets for the periods
shown.
e. Shares to be Issued Upon Reorganization. The shares to be issued in
connection with the Reorganization will be duly authorized and, at the
time of the Closing, will be validly issued, fully paid and
non-assessable.
f. Authority Relative to the Agreement. The Buying Corporation has the
power to enter into and carry out the obligations described in this
Agreement. The Agreement and the transactions contemplated by it have
been duly authorized by the Board of Directors of the Buying
Corporation and no other proceedings by the Buying Corporation or the
Buying Fund are necessary.
g. No Violation. The Buying Corporation is not in violation of its
Articles of Incorporation or By-Laws (the "Articles") or in default in
the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of,
any material contract or other instrument to which the Buying Fund is
subject. The transactions will not result in any violation of the
provisions of the Articles or any law, administrative regulation or
administrative or court decree applicable to the Buying Fund.
- --------------------------------------------------------------------------------
A.3 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
h. Liabilities. There are no liabilities of the Buying Fund other than:
o liabilities disclosed in the Buying Fund Financial
Statements,
o liabilities incurred in the ordinary course of business
subsequent to the date of the latest annual or semi-annual
financial statements, or
o liabilities previously disclosed to the Selling Fund, none of
which has been materially adverse to the business, assets or
results of operation of the Buying Fund.
i. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently pending
or, to the knowledge of the Buying Fund, threatened, that would
materially and adversely affect the Buying Fund, its financial
condition or the conduct of its business, or that would prevent or
hinder completion of the transactions contemplated by this Agreement.
The Buying Fund knows of no facts that might form the basis for the
institution of any such litigation, proceeding or investigation and the
Buying Fund is not a party to or subject to the provisions of any
order, decree or judgment.
j. Contracts. Except for contracts and agreements previously disclosed to
the Selling Corporation, the Buying Fund is not a party to or subject
to any material contract, debt instrument, plan, lease, franchise,
license or permit.
k. Taxes. The Buying Fund has qualified as a regulated investment company
under the Internal Revenue Code with respect to each taxable year since
commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Buying Fund will (i) have filed all federal and other tax returns
and reports that have been required to be filed, (ii) have paid or
provided for payment of all federal and other taxes shown to be due on
such returns or on any assessments received, (iii) have adequately
provided for all tax liabilities on its books, (iv) except as disclosed
to the Selling Fund, not have had any tax deficiency or liability
asserted against it or question with respect thereto raised, and (v)
except as disclosed to the Selling Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for
taxes in excess of those already paid.
l. Registration Statement. The Buying Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933
(the "1933 Act") relating to the shares to be issued in the
Reorganization. At the time the Registration Statement becomes
effective, at the time of the shareholders' meeting and at the Closing,
- --------------------------------------------------------------------------------
A.4 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
the Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein not misleading. However, none of the representations
and warranties in this subsection apply to statements in, or omissions
from, the Registration Statement made in reliance on information
furnished by the Selling Fund for use in the Registration Statement.
6. Representations, Warranties and Covenants of the Selling Corporation. The
Selling Corporation represents and warrants to the Buying Fund as follows:
a. Organization, Existence, etc. The Selling Corporation is a corporation
duly organized, validly existing and in good standing under the laws of
the state of Minnesota and has the power to carry on its business as it
is now being conducted.
b. Registration as Investment Company. The Selling Fund is a series of the
Selling Corporation, registered under the 1940 Act as an open-end,
management investment company.
c. Capitalization. The Selling Corporation has authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share. All
of the outstanding shares have been duly authorized and are validly
issued, fully paid and non-assessable. Since the Selling Fund is
engaged in the continuous offering and redemption of its shares, the
number of outstanding shares may vary daily.
d. Financial Statements. The audited financial statements as of the end of
the last fiscal year, and the subsequent unaudited semi-annual
financial statements, if any (the "Selling Fund Financial Statements"),
fairly present the financial position of the Selling Fund, and the
results of its operations and changes in its net assets for the periods
shown.
e. Authority Relative to the Agreement. The Selling Corporation has the
power to enter into and to carry out its obligations under this
Agreement. The Agreement and the transactions contemplated by it have
been duly authorized by the Board of Directors of the Selling
Corporation and no other proceedings by the Selling Corporation or the
Selling Fund are necessary.
f. No Violation. The Selling Corporation is not in violation of its
Articles or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion
of the transactions contemplated by it will not conflict with or
constitute a breach of, any material contract to which the Selling Fund
is subject. The transactions will not result in any violation of the
provisions of the Articles or any law, administrative regulation or
administrative or court decree applicable to the Selling Fund.
- --------------------------------------------------------------------------------
A.5 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
g. Liabilities. There are no liabilities of the Selling Fund other than:
o liabilities disclosed in the Selling Fund Financial
Statements,
o liabilities incurred in the ordinary course of business
subsequent to the date of the latest annual or semi-annual
financial statements, or
o liabilities previously disclosed to the Buying Fund, none of which
has been materially adverse to the business, assets or results of
operation of the Selling Fund.
h. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently pending
or, to the knowledge of the Selling Fund, threatened, that would
materially and adversely affect the Selling Fund, its financial
condition or the conduct of its business, or that would prevent or
hinder completion of the transactions contemplated by this Agreement.
The Selling Fund knows of no facts that might form the basis for the
institution of any such litigation, proceeding or investigation and is
not a party to or subject to the provisions of any order, decree or
judgment.
i. Contracts. Except for contracts and agreements previously disclosed to
the Buying Corporation, the Selling Fund is not a party to or subject
to any material contract, debt instrument, plan, lease, franchise,
license or permit.
j. Taxes. The Selling Fund has qualified as a regulated investment company
under the Internal Revenue Code with respect to each taxable year since
commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Selling Fund will (i) have filed all federal and other tax returns
and reports that have been required to be filed, (ii) have paid or
provided for payment of all federal and other taxes shown to be due on
such returns or on any assessments received, (iii) have adequately
provided for all tax liabilities on its books, (iv) except as disclosed
to the Buying Fund, not have had any tax deficiency or liability
asserted against it or question with respect thereto raised, and (v)
except as disclosed to the Buying Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for
taxes in excess of those already paid.
k. Fund Securities. All securities listed in the schedule of investments
of the Selling Fund as of the Closing will be owned by the Selling Fund
free and clear of any encumbrances, except as indicated in the
schedule.
l. Registration Statement. The Selling Fund will cooperate with the Buying
Fund and will furnish information relating to the Selling Corporation
and the Selling Fund required in the Registration Statement. At the
time the Registration Statement becomes effective, at
- --------------------------------------------------------------------------------
A.6 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
the time of the shareholders' meeting and at the Closing, the
Registration Statement, as it relates to the Selling Corporation or the
Selling Fund, will not contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein not misleading. However, the representations and warranties in
this subsection apply only to statements in or omissions from the
Registration Statement made in reliance upon information furnished by
the Selling Corporation or the Selling Fund for use in the Registration
Statement.
7. Conditions to Obligations of the Buying Corporation. The obligations of the
Buying Corporation with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of
all Selling Fund shares entitled to vote.
b. Representations, Warranties and Agreements. The Selling Corporation and
the Selling Fund will have complied with this Agreement and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling
Corporation will provide a certificate to the Buying Fund confirming
that, as of the Closing, the representations and warranties set forth
in Section 6 are true and correct and that there have been no material
adverse changes in the financial condition, results of operations,
business, properties or assets of the Selling Fund since the date of
its last financial statement, except as otherwise indicated in any
financial statements, certified by an officer of the Selling
Corporation, and delivered to the Buying Fund on or prior to the last
business day before the Closing.
c. Regulatory Approvals.
o The Registration Statement referred to in Section 5(l) will be
effective and no stop orders under the 1933 Act will have been
issued.
o All necessary approvals, consents and exemptions from federal and
state regulatory authorities will have been obtained.
d. Tax Opinion. The Buying Corporation will have received the opinion of
Ropes & Gray LLP dated as of the Closing, as to the federal income tax
consequences of the Reorganization to the Buying Fund and its
shareholders. For purposes of rendering their opinion, Ropes & Gray LLP
may rely, as to factual matters, upon the statements made in this
Agreement, the proxy statement which will be distributed to the
shareholders of the Selling Fund, and other written representations as
an officer of the Selling Corporation will
- --------------------------------------------------------------------------------
A.7 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
have verified as of Closing. The opinion of Ropes & Gray LLP will be to
the effect that: (i) neither the Selling Fund nor the Buying Fund will
recognize any gain or loss upon the transfer of the assets of the
Selling Fund to, and assumption of its liabilities by, the Buying Fund
in exchange for shares of the Buying Fund and upon the distribution of
the shares to the Selling Fund shareholders in exchange for their
shares of the Selling Fund; (ii) the shareholders of the Selling Fund
who receive shares of the Buying Fund in the Reorganization will not
recognize any gain or loss on the exchange of their shares of the
Selling Fund for the shares of the Buying Fund; (iii) the holding
period and the basis of the shares received by the Selling Fund
shareholders will be the same as the holding period and the basis of
the shares of the Selling Fund surrendered in the exchange; (iv) the
holding period and the basis of the assets acquired by the Buying Fund
will be the same as the holding period and the basis of the assets to
the Selling Fund immediately prior to the Reorganization.
e. Opinion of Counsel. The Buying Corporation will have received an
opinion of counsel for the Selling Corporation, dated as of the
Closing, to the effect that: (i) the Selling Corporation is a
corporation duly organized and validly existing under the laws of the
state of Minnesota; (ii) the Selling Fund is a series of the Selling
Corporation, an open-end investment company registered under the 1940
Act; (iii) this Agreement and the Reorganization have been duly
authorized and approved by all requisite action of the Selling
Corporation and the Selling Fund and this Agreement has been duly
executed by, and is a valid and binding obligation of, the Selling
Corporation.
f. Declaration of Dividend. The Selling Fund, prior to the Closing, has
declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the Selling
Fund shareholders (i) all of the excess of (x) the Selling Fund's
investment income excludable from gross income under Section 103 of the
Code over (y) the Selling Fund's deductions disallowed under Sections
265 and 171 of the Code, (ii) all of the Selling Fund's investment
company taxable income as defined in Section 852 of the Code (in each
case computed without regard to any deduction for dividends paid), and
(iii) all of the Selling Fund's net capital gain realized (after
reduction for any capital loss carryover), in each case for the current
taxable year (which will end on the Closing date) and any preceding
taxable years for which such a dividend is eligible to be made under
Section 855 of the Code.
- --------------------------------------------------------------------------------
A.8 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
8. Conditions to Obligations of the Selling Corporation. The obligations of
the Selling Corporation with respect to the Reorganization are subject to
the satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of
all Selling Fund shares entitled to vote.
b. Representations, Warranties and Agreements. The Buying Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as
of the Closing. An officer of the Buying Corporation will provide a
certificate to the Selling Fund confirming that, as of the Closing, the
representations and warranties set forth in Section 5 are true and
correct and that there have been no material adverse changes in the
financial condition, results of operations, business, properties or
assets of the Buying Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Buying Corporation, and delivered to the
Selling Fund on or prior to the last business day before the Closing.
c. Regulatory Approvals.
o The Registration Statement referred to in Section 5(l) will be
effective and no stop orders under the 1933 Act will have been
issued.
o All necessary approvals, consents and exemptions from federal and
state regulatory authorities will have been obtained.
d. Tax Opinion. The Selling Corporation will have received the opinion of
Ropes & Gray LLP dated as of the Closing, as to the federal income tax
consequences of the Reorganization to the Selling Fund and its
shareholders. For purposes of rendering their opinion, Ropes & Gray LLP
may rely, as to factual matters, upon the statements made in this
Agreement, the proxy statement which will be distributed to the
shareholders of the Selling Fund, and other written representations as
an officer of the Buying Corporation will have verified as of Closing.
The opinion of Ropes & Gray LLP will be to the effect that: (i) neither
the Selling Fund nor the Buying Fund will recognize any gain or loss
upon the transfer of the assets of the Selling Fund to, and assumption
of its liabilities by, the Buying Fund in exchange for shares of the
Buying Fund and upon the distribution of the shares to the Selling Fund
shareholders in exchange for their shares of the Selling Fund; (ii) the
shareholders of the Selling Fund who receive shares of the Buying Fund
in the Reorganization will not recognize any gain or loss on the
exchange of their shares of the Selling Fund for the shares of the
- --------------------------------------------------------------------------------
A.9 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Buying Fund; (iii) the holding period and the basis of the shares
received by the Selling Fund shareholders will be the same as the
holding period and the basis of the shares of the Selling Fund
surrendered in the exchange; (iv) the holding period and the basis of
the assets acquired by the Buying Fund will be the same as the holding
period and the basis of the assets to the Selling Fund immediately
prior to the Reorganization; and (v) the Buying Fund will succeed to
and take into account the items of the Selling Fund described in
Section 381(c) of the Code, subject to the conditions and limitations
specified in Sections 381, 382, 383, and 384 of the Code and the
regulations thereunder.
e. Opinion of Counsel. The Selling Corporation will have received the
opinion of counsel for the Buying Corporation, dated as of the Closing,
to the effect that: (i) the Buying Corporation is a corporation duly
organized and validly existing under the laws of the state of
Minnesota; (ii) the Buying Fund is a series of the Buying Corporation,
an open-end investment company registered under the 1940 Act; (iii)
this Agreement and the Reorganization have been authorized and approved
by all requisite action of the Buying Corporation and the Buying Fund
and this Agreement has been duly executed by, and is a valid and
binding obligation of, the Buying Corporation; and (iv) the shares to
be issued in the Reorganization are duly authorized and upon issuance
in accordance with this Agreement will be validly issued, fully paid
and non-assessable shares of the Buying Fund.
9. Amendment; Termination; Non-Survival of Covenants, Warranties and
Representations.
a. This Agreement may be amended in writing if authorized by the
respective Boards of Directors. The Agreement may be amended at any
time before or after approval by the shareholders of the Selling Fund,
but after shareholder approval, no amendment shall be made that
substantially changes the terms of paragraphs 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in
writing (i) any inaccuracies in the representations and warranties made
to it and (ii) compliance with any of the covenants or conditions made
for its benefit. However, neither party may waive the requirement to
obtain shareholder approval or the requirement to obtain a tax opinion.
c. The Selling Corporation may terminate this Agreement at any time prior
to the Closing by notice to the Buying Corporation if a material
condition to its performance or a material covenant of the Buying
Corporation on behalf of the Buying Fund is not fulfilled on or before
the date specified for its fulfillment or a material breach of this
Agreement is made by the Buying Corporation on behalf of the Buying
Fund and is not cured.
- --------------------------------------------------------------------------------
A.10 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
d. The Buying Corporation may terminate this Agreement at any time prior
to the Closing by notice to the Selling Corporation if a material
condition to its performance or a material covenant of the Selling
Corporation on behalf of the Selling Fund is not fulfilled on or before
the date specified for its fulfillment or a material breach of this
Agreement is made by the Selling Corporation on behalf of the Selling
Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Selling Fund, without any liability on the part of either party or its
respective directors, officers, or shareholders, on written notice to
the other party, and shall be terminated without liability as of the
close of business on Dec. 31, 2004, or a later date agreed upon by the
parties, if the Closing is not on or prior to that date.
f. The representations, warranties and covenants contained in this
Agreement, or in any document delivered in connection with this
Agreement, will survive the Reorganization.
10. Expenses. American Express Financial Corporation will pay the costs of
carrying out the provisions of this Agreement whether or not the
Reorganization is completed.
11. General.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any
other person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state
of Minnesota.
12. Indemnification.
Each party will indemnify and hold the other and its officers and directors
(each an "Indemnitee") harmless from and against any liability or other
cost and expense, in connection with the defense or disposition of any
action, suit, or other proceeding, before any court or administrative or
investigative body in which the Indemnitee may be involved as a party, with
respect to actions taken under this Agreement. However, no Indemnitee will
be indemnified against any liability or expense arising by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the Indemnitee's position.
- --------------------------------------------------------------------------------
A.11 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
AXP Market Advantage Series, Inc.
on behalf of AXP Blue Chip Advantage Fund
By _________________________________
Leslie L. Ogg
Vice President
AXP Growth Series, Inc.
on behalf of AXP Large Cap Equity Fund
By _________________________________
Leslie L. Ogg
Vice President
The undersigned is a party to this Agreement for purposes of Section 3c and 10
only.
American Express Financial Corporation
By _________________________________
Paula R. Meyer
Senior Vice President and General Manager - Mutual Funds
- --------------------------------------------------------------------------------
A.12 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Exhibit B
Minnesota Business Corporation Act Sections 302A.471 and 302A.473
Minnesota law requires that we provide you with a copy of the state law on
dissenters' rights. Notwithstanding the provisions of the law set out below, the
SEC has taken the position that use of state appraisal procedures by a
registered mutual fund such as the Fund would be a violation of Rule 22c-1, the
forward pricing rule, under the 1940 Act. As a result, if any shareholder elects
to exercise dissenters' rights under Minnesota law, the Fund intends to submit
this question to a court of competent jurisdiction. In that event, a dissenting
shareholder would not receive any payment until the end of the court proceeding.
302A.471. Rights of dissenting shareholders
Subdivision 1. Actions creating rights. A shareholder of a corporation may
dissent from, and obtain payment for the fair value of the shareholder's shares
in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects the
rights or preferences of the shares of the dissenting shareholder in that
it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption of
the shares, including a provision respecting a sinking fund for the
redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares to
acquire shares, securities other than shares, or rights to purchase
shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter, or
to cumulate votes, except as the right may be excluded or limited
through the authorization or issuance of securities of an existing or
new class or series with similar or different voting rights; except
that an amendment to the articles of an issuing public corporation that
provides that section 302A.671 does not apply to a control share
acquisition does not give rise to the right to obtain payment under
this section;
(b) A sale, lease, transfer, or other disposition of all or substantially all
of the property and assets of the corporation, but not including a
transaction permitted without shareholder approval in section 302A.661,
subdivision 1, or a disposition in dissolution described in section
302A.725, subdivision 2, or a disposition pursuant to an order of a court,
or a disposition for cash on terms requiring that all or substantially all
of the net proceeds of disposition be distributed to the shareholders in
accordance with their respective interests within one year after the date
of disposition;
- --------------------------------------------------------------------------------
B.1 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
(c) A plan of merger, whether under this chapter or under chapter 322B, to
which the corporation is a party, except as provided in subdivision 3, and
except for a plan of merger adopted under section 302A.626;
(d) A plan of exchange, whether under this chapter or under chapter 322B, to
which the corporation is a party as the corporation whose shares will be
acquired by the acquiring corporation, except as provided in subdivision 3;
or
(e) Any other corporate action taken pursuant to a shareholder vote with
respect to which the articles, the bylaws, or a resolution approved by the
board directs that dissenting shareholders may obtain payment for their
shares.
Subdivision 2. Beneficial owners.
(a) A shareholder shall not assert dissenters' rights as to less than all of
the shares registered in the name of the shareholder, unless the
shareholder dissents with respect to all the shares that are beneficially
owned by another person but registered in the name of the shareholder and
discloses the name and address of each beneficial owner on whose behalf the
shareholder dissents. In that event, the rights of the dissenter shall be
determined as if the shares as to which the shareholder has dissented and
the other shares were registered in the names of different shareholders.
(b) The beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial
owner, and shall be treated as a dissenting shareholder under the terms of
this section and section 302A.473, if the beneficial owner submits to the
corporation at the time of or before the assertion of the rights a written
consent of the shareholder.
Subdivision 3. Rights not to apply.
(a) Unless the articles, the bylaws, or a resolution approved by the board
otherwise provide, the right to obtain payment under this section does not
apply to a shareholder of (1) the surviving corporation in a merger with
respect to shares of the shareholder that are not entitled to be voted on
the merger or (2) the corporation whose shares will be acquired by the
acquiring corporation in a plan of exchange with respect to shares of the
shareholder that are not entitled to be voted on the plan of exchange and
are not exchanged in the plan of exchange.
(b) If a date is fixed according to section 302A.445, subdivision 1, for the
determination of shareholders entitled to receive notice of and to vote on
an action described in subdivision 1, only shareholders as of the date
fixed, and beneficial owners as of the date fixed who hold through
shareholders, as provided in subdivision 2, may exercise dissenters'
rights.
- --------------------------------------------------------------------------------
B.2 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Subdivision 4. Other rights. The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in subdivision 1 set aside or
rescinded, except when the corporate action is fraudulent with regard to the
complaining shareholder or the corporation.
302A.473. Procedures for asserting dissenters' rights
Subdivision 1. Definitions.
(a) For purposes of this section, the terms defined in this subdivision have
the meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action referred to in section 302A.471, subdivision 1 or the
successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a corporation
immediately before the effective date of the corporate action referred to
in section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective date of
the corporate action referred to in section 302A.471, subdivision 1, up to
and including the date of payment, calculated at the rate provided in
section 549.09 for interest on verdicts and judgments.
Subdivision 2. Notice of action. If a corporation calls a shareholder meeting at
which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.
Subdivision 3. Notice of dissent. If the proposed action must be approved by the
shareholders, a shareholder who is entitled to dissent under section 302A.471
and who wishes to exercise dissenters' rights must file with the corporation
before the vote on the proposed action a written notice of intent to demand the
fair value of the shares owned by the shareholder and must not vote the shares
in favor of the proposed action.
Subdivision 4. Notice of procedure; deposit of shares.
(a) After the proposed action has been approved by the board and, if necessary,
the shareholders, the corporation shall send to all shareholders who have
complied with subdivision 3 and to all shareholders entitled to dissent if
no shareholder vote was required, a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the
date by which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will apply
after the demand for payment is received;
- --------------------------------------------------------------------------------
B.3 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
(3) A form to be used to certify the date on which the shareholder, or the
beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and
(4) A copy of section 302A.471 and this section and a brief description of
the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting shareholder
must demand payment and deposit certificated shares or comply with any
restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all
other rights of a shareholder until the proposed action takes effect.
Subdivision 5. Payment; return of shares.
(a) After the corporate action takes effect, or after the corporation receives
a valid demand for payment, whichever is later, the corporation shall remit
to each dissenting shareholder who has complied with subdivisions 3 and 4
the amount the corporation estimates to be the fair value of the shares,
plus interest, accompanied by:
(1) The corporation's closing balance sheet and statement of income for a
fiscal year ending not more than 16 months before the effective date of
the corporate action, together with the latest available interim
financial statements;
(2) An estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and
(3) A copy of section 302A.471 and this section, and a brief description of
the procedure to be followed in demanding supplemental payment.
(b) The corporation may withhold the remittance described in paragraph (a) from
a person who was not a shareholder on the date the action dissented from
was first announced to the public or who is dissenting on behalf of a
person who was not a beneficial owner on that date. If the dissenter has
complied with subdivisions 3 and 4, the corporation shall forward to the
dissenter the materials described in paragraph (a), a statement of the
reason for withholding the remittance, and an offer to pay to the dissenter
the amount listed in the materials if the dissenter agrees to accept that
amount in full satisfaction. The dissenter may decline the offer and demand
payment under subdivision 6. Failure to do so entitled the dissenter only
to the amount offered. If the dissenter makes demand, subdivision 7 and 8
apply.
(c) If the corporation fails to remit payment within 60 days of the deposit of
certificates or the imposition of transfer restrictions on uncertificated
shares, it shall return all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice under
subdivision 4 and require deposit or restrict transfer at a later time.
- --------------------------------------------------------------------------------
B.4 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Subdivision 6. Supplemental payment; demand. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest, within
30 days after the corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.
Subdivision 7. Petition; determination. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after
discussion with the corporation or file in a court a petition requesting that
the court determine the fair value of the shares, plus interest. The petition
shall be filed in the county in which the registered office of the corporation
is located, except that a surviving foreign corporation that receives a demand
relating to the shares of a constituent domestic corporation shall file the
petition in the county in this state in which the last registered office of the
constituent corporation was located. The petition shall name as parties all
dissenters who have demanded payment under subdivision 6 and who have not
reached agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with a summons and copy of the petition under the
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except as otherwise
provided, the rules of civil procedures apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraisers, with powers and authorities the court deems proper, to receive
evidence on and recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the court finds
relevant, computed by any method or combination of methods that the court, in
its discretion, sees fit to use, whether or not used by the corporation or by a
dissenter. The fair value of the shares as determined by the court is binding on
all shareholders, wherever located. A dissenter is entitled to judgment in cash
for the amount by which the fair value of the shares as determined by the court,
plus interest, exceeds the amount, if any, remitted under subdivision 5, but
shall not be liable to the corporation for the amount, if any, by which the
amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair
value of the shares as determined by the court, plus interest.
- --------------------------------------------------------------------------------
B.5 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Subdivision 8. Costs; fees; expenses.
(a) The court shall determine the costs and expenses of a proceeding under
subdivision 7, including the reasonable expenses and compensation of any
appraisers appointed by the court, and shall assess those costs and
expenses against the corporation, except that the court may assess part or
all of those costs and expenses against a dissenter whose action in
demanding payment under subdivision 6 is found to be arbitrary, vexatious,
or not in good faith.
(b) If the court finds that the corporation has failed to comply substantially
with this section, the court may assess all fees and expenses of any
experts or attorneys as the court deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily,
vexatiously, or not in good faith in bringing the proceeding, and may be
awarded to a party injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an attorney
for the dissenters out of the amount awarded to the dissenters, if any.
- --------------------------------------------------------------------------------
B.6 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Exhibit C
Management's Discussion of the Buying Fund for the fiscal year ended July 31,
2003
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.
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.
- --------------------------------------------------------------------------------
C.1 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
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.
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.
(bar chart)
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.
- --------------------------------------------------------------------------------
C.2 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
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.
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.
- --------------------------------------------------------------------------------
C.3 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
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
AXP Large Cap Equity Fund Class A $ 9,425 $8,954 $7,767 $7,616 $7,302 $7,925 $8,548
Russell 1000(R) Index(1) $10,000 $9,427 $8,014 $7,788 $7,589 $8,158 $8,911
Lipper Large-Cap Core Funds Index(2) $10,000 $9,477 $8,108 $7,954 $7,665 $8,189 $8,807
4/1/02 4/02 7/02 10/02 1/03 4/03 7/03
(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%
- --------------------------------------------------------------------------------
C.4 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Exhibit D
AXP(R) LARGE CAP EQUITY FUND
Prospectus
Sept. 29, 2003
Please note that this Fund:
o is not a bank deposit
o is not federally insured
o is not endorsed by any bank or government agency
o is not guaranteed to achieve its goal
Like all mutual funds, the Securities and Exchange Commission has not approved
or disapproved these securities or passed upon the adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D.1 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Table of Contents
TAKE A CLOSER LOOK AT:
The Fund D. 3
Goal D. 3
Principal Investment Strategies D. 3
Principal Risks D. 4
Past Performance D. 4
Fees and Expenses D. 5
Investment Manager D. 7
Other Securities and
Investment Strategies D. 7
Buying and Selling Shares D. 8
Valuing Fund Shares D. 8
Investment Options D. 8
Purchasing Shares D. 10
Transactions Through Third Parties D. 12
Sales Charges D. 13
Exchanging/Selling Shares D. 16
Distributions and Taxes D. 20
Financial Highlights D. 21
Supplement dated Jan. 20, 2004 D. 25
- --------------------------------------------------------------------------------
D.2 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
The Fund
GOAL
AXP Large Cap Equity Fund (the Fund) seeks to provide shareholders with
long-term growth of capital. Because any investment involves risk, achieving
this goal cannot be guaranteed.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, at least 80% of the Fund's net assets are
invested in equity securities of companies with a market capitalization greater
than $5 billion at the time of purchase. The Fund may invest in income-producing
equity securities, such as dividend paying stocks, convertible securities and
preferred stocks. The Fund will provide shareholders with at least 60 days'
notice of any change in the 80% policy.
In pursuit of the Fund's goal, American Express Financial Corporation (AEFC),
the Fund's investment manager, chooses investments by:
o Identifying companies with:
o attractive valuations, and
o the potential for earnings growth.
o Identifying securities that AEFC believes have good potential for capital
appreciation.
o Evaluating opportunities and risks by reviewing interest rates and economic
forecasts.
o Buying a diversified portfolio of securities. AEFC may weight certain
sectors more heavily than others based on its expectations about growth and
market trends.
In evaluating whether to sell a security, AEFC considers, among other factors,
whether
o The security is overvalued relative to other potential investments.
o The security has reached AEFC's price objective.
o The company has met AEFC's earnings and/or growth expectations.
o Political, economic, or other events could affect the company's or
security's performance.
o Potential losses, due to factors such as a market down-turn, can be
minimized.
o A more attractive opportunity has been identified.
- --------------------------------------------------------------------------------
D.3 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Unusual Market Conditions
During unusual market conditions, the Fund may invest more of its assets in
money market securities. Although investing in these securities would serve
primarily to avoid losses, this type of investing could prevent the Fund from
achieving its investment objective. During these times, the Fund may trade its
portfolio securities more frequently. Frequent trading could result in increased
fees, expenses, and taxes.
PRINCIPAL RISKS
Please remember that with any mutual fund investment you may lose money.
Principal risks associated with an investment in the Fund include:
Market Risk
Style Risk
Issuer Risk
Market Risk
The market may drop and you may lose money. Market risk may affect a single
issuer, sector of the economy, industry, or the market as a whole. The market
value of all securities may move up and down, sometimes rapidly and
unpredictably.
Style Risk
The Fund's management strategy will influence performance significantly. Large
capitalization stocks as a group could fall out of favor with the market,
causing the Fund to underperform funds that invest primarily in small or medium
capitalization stocks. If the manager's stock selection strategy does not
perform as expected, the Fund could underperform its peers.
Issuer Risk
The risk that an issuer, or the value of its stocks or bonds, will perform
poorly. Poor performance may be caused by poor management decisions, competitive
pressures, breakthroughs in technology, reliance on suppliers, labor problems or
shortages, corporate restructurings, fraudulent disclosures or other factors.
PAST PERFORMANCE
The bar chart and past performance table are not presented because the Fund has
not had a full calendar year of operations. The Fund began operations on March
28, 2002.
When available, the Fund intends to compare its performance to the Russell
1000(R) Index, an unmanaged index that measures the performance of the 1,000
largest companies in the Russell 3000 Index, and represents approximately 92% of
the total market capitalization of the Russell 3000 Index.
- --------------------------------------------------------------------------------
D.4 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
The Fund also intends to compare its performance to the Lipper Large-Cap Core
Funds Index, an index published by Lipper Inc., which 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.
FEES AND EXPENSES
Fund investors pay various expenses. The table below describes the fees and
expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Class A Class B Class C Class Y
Maximum sales charge (load) imposed on purchases(a)
(as a percentage of offering price) 5.75%(b) none none none
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of purchase) none 5% 1%(c) none
Annual Fund operating expenses(d) (expenses that are deducted from Fund assets)
As a percentage of average daily net assets: Class A Class B Class C Class Y
Management fees(e) 0.61% 0.61% 0.61% 0.61%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00%
Other expenses(f) 0.99% 1.00% 1.00% 1.06%
Total 1.85% 2.61% 2.61% 1.67%
Fee waiver/expense reimbursement 0.60% 0.60% 0.60% 0.60%
Net expenses 1.25% 2.01% 2.01% 1.07%
(a) This charge may be reduced depending on the value of your total investments
in American Express mutual funds. See "Sales Charges."
(b) For Class A purchases over $1,000,000 on which no sales charge is assessed,
a 1% sales charge applies if you sell your shares less than one year after
purchase.
(c) For Class C purchases, a 1% sales charge applies if you sell your shares
less than one year after purchase.
(d) Other expenses are based on estimated amounts for the current fiscal year.
AEFC has agreed to waive certain fees and to absorb certain 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.
(e) Includes the impact of a performance incentive adjustment fee that
increased the management fee by 0.01% for the most recent fiscal year.
(f) Other expenses include an administrative services fee, a shareholder
services fee for Class Y, a transfer agency fee and other nonadvisory
expenses. Effective May 2003, the Fund's transfer agency fee increased. The
percentages above reflect the increase.
- --------------------------------------------------------------------------------
D.5 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
Assume you invest $10,000 and the Fund earns a 5% annual return each year. The
operating expenses remain the same each year. You would pay the following
expenses if you redeem all of your shares at the end of the time periods
indicated:
1 year 3 years 5 years 10 years
Class A(a) $695 $1,069 $1,467 $2,578
Class B $604 $1,055 $1,433 $2,718(b)
Class C $204 $ 755 $1,333 $2,904
Class Y $109 $ 468 $ 852 $1,931
(a) Includes a 5.75% sales charge.
(b) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
You would pay the following expenses if you did not redeem your shares:
1 year 3 years 5 years 10 years
Class A(a) $695 $1,069 $1,467 $2,578
Class B $204 $ 755 $1,333 $2,718(b)
Class C $204 $ 755 $1,333 $2,904
Class Y $109 $ 68 $ 852 $1,931
(a) Includes a 5.75% sales charge.
(b) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
These examples do not represent actual expenses, past or future. Actual expenses
may be higher or lower than those shown.
- --------------------------------------------------------------------------------
D.6 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
INVESTMENT MANAGER
Doug Chase, Portfolio Manager
o Managed the Fund since 2002.
o Joined AEFC in 2002.
o Prior to that, Analyst and Portfolio Manager at Fidelity
Investments.
o Began investment career in 1992.
o MBA, University of Michigan.
The Fund pays AEFC a fee for managing its assets. Under the Investment
Management Services Agreement, the fee for the most recent fiscal year was 0.61%
of the Fund's average daily net asstes, including an adjustment under the terms
of a performance incentive arrangement. The maximum monthly adjustment (increase
or decrease) will be 0.12% of the Fund's average net assets on an annual basis.
Under the agreement, the Fund also pays taxes, brokerage commissions, and
nonadvisory expenses. AEFC or an affiliate may make payments from its own
resources, which include profits from management fees paid by the Fund, to
compensate broker-dealers or other persons for providing distribution
assistance. AEFC, located at 200 AXP Financial Center, Minneapolis, Minnesota
55474, is a wholly-owned subsidiary of American Express Company, a financial
services company with headquarters at American Express Tower, World Financial
Center, New York, New York 10285.
The Fund operates under an order from the Securities and Exchange Commission
that permits AEFC, subject to the approval of the Board of Directors, to appoint
a subadviser or change the terms of a subadvisory agreement for the Fund without
first obtaining shareholder approval. The order permits the Fund to add or
change unaffiliated subadvisers or the fees paid to subadvisers from time to
time without the expense and delays associated with obtaining shareholder
approval of the change.
OTHER SECURITIES AND INVESTMENT STRATEGIES
The Fund may invest in other securities and may utilize other investment
strategies that are not principal investment strategies. The Fund's policies
permit investment in other instruments, such as money market securities, debt
securities and foreign securities. Additionally, the Fund may use derivative
instruments such as futures, options and forward contracts to produce
incremental earnings, to hedge existing positions and to increase flexibility.
Even though the Fund's policies permit the use of derivatives in this manner,
the portfolio manager is not required to use derivatives.
For more information on strategies and holdings, see the Fund's Statement of
Additional Information (SAI) and its annual and semiannual reports.
- --------------------------------------------------------------------------------
D.7 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Buying and Selling Shares
The public offering price for Class A shares of the Fund is the net asset value
(NAV) plus a sales charge, and for Class B, C, and Y shares, the NAV. In
addition to buying and selling shares through the Fund's distributor, American
Express Financial Advisors Inc., you may buy or sell shares through third
parties, including 401(k) plans, banks, brokers, and investment advisers. Where
authorized by the Fund, orders in good form are priced using the NAV next
determined after your order is placed with the third party. If you buy or redeem
shares through a third party, consult that firm to determine whether your order
will be priced at the time it is placed with the third party or at the time it
is placed with the Fund. The third party may charge a fee for its services.
VALUING FUND SHARES
The NAV is the value of a single share of the Fund. The NAV is determined by
dividing the value of the Fund's assets, minus any liabilities, by the number of
shares outstanding. AEFC calculates the NAV as of the close of business on the
New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day
that the NYSE is open.
The Fund's assets are valued primarily on the basis of market quotations.
Certain short-term securities are valued at amortized cost. Foreign investments
are valued in U.S. dollars.
AEFC will price a security at fair value in accordance with procedures adopted
by the Fund's Board of Directors if a reliable market quotation is not readily
available. AEFC also may use fair value if a security's value has been
materially affected by events after the close of the primary exchanges or
markets on which the security is traded and before the NAV is calculated. This
occurs most commonly with foreign securities, but may occur in other cases. The
fair value of a security is different from the quoted or published price.
INVESTMENT OPTIONS
1. Class A shares are sold to the public with a sales charge at the time of
purchase and an annual distribution (12b-1) fee of 0.25%.
2. Class B shares are sold to the public with a contingent deferred sales
charge (CDSC) and an annual distribution fee of 1.00%.
3. Class C shares are sold to the public without a sales charge at the time of
purchase and with an annual distribution fee of 1.00% (may be subject to a
CDSC).
4. Class Y shares are sold to qualifying institutional investors without a
sales charge or distribution fee. Please see the SAI for information on
eligibility to purchase Class Y shares.
- --------------------------------------------------------------------------------
D.8 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Investment options summary
The Fund offers four different classes of shares. There are differences among
the fees and expenses for each class. Not everyone is eligible to buy every
class. After determining which classes you are eligible to buy, decide which
class best suits your needs. Your financial advisor can help you with this
decision.
The following table shows the key features of each class:
Class A Class B Class C Class Y
- ------------------ ------------- -------------- ------------- ------------------
Availability Available Available to Available Limited to
to all all to all qualifying
investors. investors. investors. institutional
investors.
- ------------------ ------------- -------------- ------------- ------------------
Initial Sales Yes. No. Entire No. Entire No. Entire
Charge Payable at purchase purchase purchase price
time of price is price is is invested in
purchase. invested in invested in shares of the
Lower sales shares of shares of Fund.
charge for the Fund. the Fund.
larger
investments.
- ------------------ ------------- -------------- ------------- ------------------
Deferred Sales On Maximum 5% 1% CDSC None.
Charge purchases CDSC during applies if
over the first you sell
$1,000,000, year your shares
1% CDSC decreasing less than
applies if to 0% after one year
you sell six years. after
your shares purchase.
less than
one year
after
purchase.
- ------------------ ------------- -------------- ------------- ------------------
Distribution Yes.* Yes.* Yes.* Yes.
and/or 0.25% 1.00% 1.00% 0.10%
Shareholder
Service Fee
- ------------------ ------------- -------------- ------------- ------------------
Conversion to N/A Yes, No. No.
Class A automatically
in ninth
calendar
year of
ownership.
- ------------------ ------------- -------------- ------------- ------------------
* The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act
of 1940 that allows it to pay distribution and servicing-related expenses
for the sale of Class A, Class B and Class C shares. Because these fees are
paid out of the Fund's assets on an on-going basis, the fees may cost
long-term shareholders more than paying other types of sales charges
imposed by some mutual funds.
Should you purchase Class A, Class B or Class C shares?
If your investments in American Express mutual funds total $250,000 or more,
Class A shares may be the better option because the sales charge is reduced for
larger purchases. If you qualify for a waiver of the sales charge, Class A
shares will be the best option.
If you invest less than $250,000, consider how long you plan to hold your
shares. Class B shares have a higher annual distribution fee than Class A shares
and a CDSC for six years. Class B shares convert to Class A shares in the ninth
calendar year of ownership. Class B shares purchased through reinvested
dividends and distributions also will convert to Class A shares in the same
proportion as the other Class B shares.
- --------------------------------------------------------------------------------
D.9 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Class C shares also have a higher annual distribution fee than Class A shares.
Class C shares have no sales charge if you hold the shares for one year or
longer. Unlike Class B shares, Class C shares do not convert to Class A. As a
result, you will pay a 1% distribution fee for as long as you hold Class C
shares. If you choose a deferred sales charge option (Class B or Class C),
generally you should consider Class B shares if you intend to hold your shares
for more than six years. Consider Class C shares if you intend to hold your
shares less than six years. To help you determine what investment is best for
you, consult your financial advisor.
PURCHASING SHARES
To purchase shares through entities other than American Express Financial
Advisors Inc. (the Distributor), please consult your selling agent. The
following section explains how you can purchase shares from the Distributor.
If you do not have an existing American Express mutual fund account, you will
need to establish a brokerage account. Your financial advisor will help you fill
out and submit an application. Once your account is set up, you can choose among
several convenient ways to invest.
When you purchase, your order will be priced at the next NAV calculated after
your order is accepted by the Fund. If your application does not specify which
class of shares you are purchasing, we will assume you are investing in Class A
shares.
Important: When you open an account, you must provide your correct Taxpayer
Identification Number (TIN), which is either your Social Security or Employer
Identification number.
If you do not provide and certify the correct TIN, you could be subject to
backup withholding of 28% of taxable distributions and proceeds from certain
sales and exchanges. You also could be subject to further penalties, such as:
o a $50 penalty for each failure to supply your correct TIN,
o a civil penalty of $500 if you make a false statement that results in no
backup withholding, and
o criminal penalties for falsifying information.
You also could be subject to backup withholding, if the IRS notifies us to do
so, because you failed to report required interest or dividends on your tax
return.
- --------------------------------------------------------------------------------
D.10 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
How to determine the correct TIN
For this type of account: Use the Social Security or Employer
Identification number of:
- -------------------------------------- ----------------------------------------
Individual or joint account The individual or one of the owners
listed on the joint account
- -------------------------------------- ----------------------------------------
Custodian account of a minor The minor
(Uniform Gifts/Transfers to Minors
Act)
- -------------------------------------- ----------------------------------------
A revocable living trust The grantor-trustee (the person who puts
the money into the trust)
- -------------------------------------- ----------------------------------------
An irrevocable trust, pension trust The legal entity (not the personal
or estate representative or trustee, unless no
legal entity is designated in the
account title)
- -------------------------------------- ----------------------------------------
Sole proprietorship or single-owner The owner
LLC
- -------------------------------------- ----------------------------------------
Partnership or multi-member LLC The partnership
- -------------------------------------- ----------------------------------------
Corporate or LLC electing corporate The corporation
status on Form 8837
- -------------------------------------- ----------------------------------------
Association, club or tax-exempt The organization
organization
- -------------------------------------- ----------------------------------------
For details on TIN requirements, contact your financial advisor to obtain a copy
of federal Form W-9, "Request for Taxpayer Identification Number and
Certification." You also may obtain the form on the Internet at (www.irs.gov).
Methods of purchasing shares
By mail
Once your account has been established, send your check to:
American Express Funds
70200 AXP Financial Center
Minneapolis, MN 55474
Minimum amounts
Initial investment: $2,000*
Additional investments: $500**
Fund minimum balances: $300
Qualified minimum account balances: none
* $1,000 for tax qualified accounts.
** $100 minimum add-on for existing mutual fund accounts outside of a
brokerage account (direct at fund accounts).
If your Fund balance falls below $300, you will be asked to increase it to $300
or establish a scheduled investment plan. If you do not do so within 30 days,
your shares can be sold and the proceeds mailed to you.
- --------------------------------------------------------------------------------
D.11 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
By scheduled investment plan
Minimum amounts
Initial investment: $2,000*
Additional investments: $100**
Account balances: none (on a scheduled investment
plan with monthly payments)
If your account balance is below $2,000, you must make payments at least
monthly.
* $100 for direct at fund accounts.
** $50 minimum per payment for qualified accounts in a direct at fund account.
By wire or electronic funds transfer
Please contact your financial advisor or selling agent for specific
instructions.
Minimum wire purchase amount: $1,000 or new account minimum, as applicable.
By telephone
If you have a brokerage account, you may use the money in your account to make
initial and subsequent purchases.
To place your order, call:
(800) 872-4377 for brokerage accounts
(800) 967-4377 for wrap accounts
TRANSACTIONS THROUGH THIRD PARTIES
You may buy or sell shares through certain 401(k) plans, banks, broker-dealers,
financial advisors or other investment professionals. These organizations may
charge you a fee for this service and may have different policies. Some policy
differences may include different minimum investment amounts, exchange
privileges, fund choices and cutoff times for investments. The Fund and the
Distributor are not responsible for the failure of one of these organizations to
carry out its obligations to its customers. Some organizations may receive
compensation from the Distributor or its affiliates for shareholder
recordkeeping and similar services. Where authorized by the Fund, some
organizations may designate selected agents to accept purchase or sale orders on
the Fund's behalf. To buy or sell shares through third parties or to determine
if there are policy differences, please consult your selling agent. For other
pertinent information related to buying or selling shares, please refer to the
appropriate section in the prospectus.
- --------------------------------------------------------------------------------
D.12 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
SALES CHARGES
Class A -- initial sales charge alternative
When you purchase Class A shares, you pay a sales charge as shown in the
following table:
Sales charge as percentage of:
Total market value Public offering price* Net amount invested
Up to $49,999 5.75% 6.10%
$50,000-$99,999 4.75 4.99
$100,000-$249,999 3.50 3.63
$250,000-$499,999 2.50 2.56
$500,000-$999,999 2.00 2.04
$1,000,000 or more 0.00 0.00
* Offering price includes the sales charge.
The sales charge on Class A shares may be lower than 5.75%, based on the
combined market value of:
o your current investment in this Fund,
o your previous investment in this Fund, and
o investments you and your primary household group have made in other
American Express mutual funds that have a sales charge. (The
primary household group consists of accounts in any ownership for
spouses or domestic partners and their unmarried children under 21.
For purposes of this policy, domestic partners are individuals who
maintain a shared primary residence and have joint property or
other insurable interests.) AXP Tax-Free Money Fund and Class A
shares of AXP Cash Management Fund do not have sales charges.
Other Class A sales charge policies
o IRA purchases or other employee benefit plan purchases made through a
payroll deduction plan or through a plan sponsored by an employer,
association of employers, employee organization or other similar group, may
be added together to reduce sales charges for all shares purchased through
that plan, and
o if you intend to invest more than $50,000 over a period of 13 months, you
can reduce the sales charges in Class A by filing a letter of intent. If
purchasing shares in a brokerage account or through a third party, you must
request the reduced sales charge when you buy shares. For more details,
please contact your financial advisor or see the SAI.
- --------------------------------------------------------------------------------
D.13 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Waivers of the sales charge for Class A shares
Sales charges do not apply to:
o current or retired board members, officers or employees of the Fund or AEFC
or its subsidiaries, their spouses or domestic partners, children and
parents.
o current or retired American Express financial advisors, employees of
financial advisors, their spouses or domestic partners, children and
parents.
o registered representatives and other employees of brokers, dealers or other
financial institutions having a sales agreement with the Distributor,
including their spouses, domestic partners, children and parents.
o investors who have a business relationship with a newly associated
financial advisor who joined the Distributor from another
investment firm provided that (1) the purchase is made within six
months of the advisor's appointment date with the Distributor, (2)
the purchase is made with proceeds of shares sold that were
sponsored by the financial advisor's previous broker-dealer, and
(3) the proceeds are the result of a sale of an equal or greater
value where a sales load was assessed.
o qualified employee benefit plans offering participants daily access to
American Express mutual funds. Eligibility must be determined in advance.
For assistance, please contact your financial advisor. Participants in
certain qualified plans where the initial sales charge is waived may be
subject to a deferred sales charge of up to 4%.
o shareholders who have at least $1 million in American Express mutual funds.
If the investment is sold less than one year after purchase, a CDSC of 1%
will be charged. During that year, the CDSC will be waived only in the
circumstances described for waivers for Class B and Class C shares.
o purchases made within 90 days after a sale of American Express Fund shares
(up to the amount sold). Send the Fund a written request along with your
payment, indicating the date and the amount of the sale.
o purchases made:
o with dividend or capital gain distributions from this Fund or from the
same class of another American Express mutual fund,
o through or under a wrap fee product or other investment product
sponsored by the Distributor or another authorized broker-dealer,
investment advisor, bank or investment professional,
o within the University of Texas System ORP,
o within a segregated separate account offered by Nationwide
Life Insurance Company or Nationwide Life and Annuity
Insurance Company,
- --------------------------------------------------------------------------------
D.14 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
o within the University of Massachusetts After-Tax Savings
Program, or
o through or under a subsidiary of AEFC offering Personal Trust Services'
Asset-Based pricing alternative.
o shareholders whose original purchase was in a Strategist fund merged into
an American Express fund in 2000.
Class B and Class C -- contingent deferred sales charge (CDSC) alternative
For Class B, the CDSC is based on the sale amount and the number of calendar
years -- including the year of purchase -- between purchase and sale. The
following table shows how CDSC percentages on sales decline after a purchase:
If the sale is made during the: The CDSC percentage rate is:
First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%
For Class C, a 1% CDSC is charged if you sell your shares less than one year
after purchase.
For both Class B and Class C, if the amount you are selling causes the value of
your investment to fall below the cost of the shares you have purchased, the
CDSC is based on the lower of the cost of those shares purchased or market
value. Because the CDSC is imposed only on sales that reduce your total purchase
payments, you never have to pay a CDSC on any amount that represents
appreciation in the value of your shares, income earned by your shares, or
capital gains.
In addition, the CDSC on your sale, if any, will be based on your oldest
purchase payment. The CDSC on the next amount sold will be based on the next
oldest purchase payment.
Example
Assume you had invested $10,000 in Class B shares and that your investment had
appreciated in value to $12,000 after 3 1/2 years, including reinvested
dividends and capital gain distributions. You could sell up to $2,000 worth of
shares without paying a CDSC ($12,000 current value less $10,000 purchase
amount). If you sold $2,500 worth of shares, the CDSC would apply to the $500
representing part of your original purchase price. The CDSC rate would be 3%
because the sale was made during the fourth year after the purchase.
- --------------------------------------------------------------------------------
D.15 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Waivers of the sales charge for Class B and Class C shares
The CDSC will be waived on sales of shares:
o in the event of the shareholder's death,
o held in trust for an employee benefit plan, or
o held in IRAs or certain qualified plans if American Express Trust Company
is the custodian, such as Keogh plans, tax-sheltered custodial accounts or
corporate pension plans, provided that the shareholder is:
o at least 59 1/2 years old AND
o taking a retirement distribution (if the sale is part of a transfer to
an IRA or qualified plan, or a custodian-to-custodian transfer, the
CDSC will not be waived) OR
o selling under an approved substantially equal periodic payment
arrangement.
EXCHANGING/SELLING SHARES
Exchanges
You may exchange your Fund shares at no charge for shares of the same class of
any other publicly offered American Express mutual fund. Exchanges into AXP
Tax-Free Money Fund may only be made from Class A shares. For complete
information on the other fund, including fees and expenses, read that fund's
prospectus carefully. Your exchange will be priced at the next NAV calculated
after we receive your transaction request in good order.
The Fund does not permit market-timing. Do not invest in the Fund if you are a
market timer.
Excessive trading (market-timing) or other abusive short-term trading practices
may disrupt portfolio management strategies, harm performance and increase fund
expenses.
To prevent abuse or adverse effects on the Fund and its shareholders, the
Distributor and the Fund reserve the right to reject any purchase orders,
including exchanges, limit the amount, modify or discontinue the exchange
privilege, or charge a fee to any investor we believe has a history of abusive
trading or whose trading, in our judgement has been disruptive to the Fund. For
example, we may exercise these rights if exchanges are too numerous or too
large.
- --------------------------------------------------------------------------------
D.16 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Other exchange policies:
o Exchanges must be made into the same class of shares of the new fund.
o If your exchange creates a new account, it must satisfy the minimum
investment amount for new purchases.
o Once we receive your exchange request, you cannot cancel it.
o Shares of the new fund may not be used on the same day for another
exchange.
o If your shares are pledged as collateral, the exchange will be delayed
until written approval is received from the secured party.
Selling Shares
You may sell your shares at any time. The payment will be mailed within seven
days after your request is received in good order.
When you sell shares, the amount you receive may be more or less than the amount
you invested. Your sale price will be the next NAV calculated after your request
is received in good order by the Fund, minus any applicable CDSC.
You can change your mind after requesting a sale and use all or part of the
proceeds to purchase new shares in the same account from which you sold. If you
reinvest in Class A, you will purchase the new shares at NAV rather than the
offering price on the date of a new purchase. If you reinvest in Class B or
Class C, any CDSC you paid on the amount you are reinvesting also will be
reinvested. To take advantage of this option, send a written request within 90
days of the date your sale request was received and include your account number.
This privilege may be limited or withdrawn at any time and use of this option
may have tax consequences.
The Fund reserves the right to redeem in kind.
For more details and a description of other sales policies, please see the SAI.
To sell or exchange shares held with entities other than the Distributor, please
consult your selling agent. The following section explains how you can exchange
or sell shares held with the Distributor.
If you decide to sell your shares within 30 days of a telephoned-in address
change, a written request is required.
Important: If you request a sale of shares you recently purchased by a check or
money order that is not guaranteed, the Fund will wait for your check to clear.
It may take up to 10 days from the date of purchase before payment is made.
Payment may be made earlier if your bank provides evidence satisfactory to the
Fund and the Distributor that your check has cleared.
- --------------------------------------------------------------------------------
D.17 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Ways to request an exchange or sale of shares
By regular or express mail
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
Include in your letter:
o your account number
o the name of the fund(s)
o the class of shares to be exchanged or sold
o your Social Security number or Employer Identification number
o the dollar amount or number of shares you want to exchange or sell
o specific instructions regarding delivery or exchange destination
o signature(s) of registered account owner(s) (All signatures may be
required. Contact your financial advisor for more information.)
o delivery instructions, if applicable
o any paper certificates of shares you hold
Payment will be mailed to the address of record and made payable to the names
listed on the account, unless specified differently and signed by all owners.
The express mail delivery charges you pay will vary depending on domestic or
international delivery instructions.
By telephone
(800) 872-4377 for brokerage accounts
(800) 437-3133 for direct at fund accounts
(800) 967-4377 for wrap accounts
o The Fund and the Distributor will use reasonable procedures to confirm
authenticity of telephone exchange or sale requests.
o Telephone exchange and sale privileges automatically apply to all accounts
except custodial, corporate or qualified retirement accounts. You may
request that these privileges NOT apply by writing the Distributor. Each
registered owner must sign the request.
o Acting on your instructions, your financial advisor may conduct telephone
transactions on your behalf.
o Telephone privileges may be modified or discontinued at any time.
Minimum sale amount: $100
Maximum sale amount: $100,000
- --------------------------------------------------------------------------------
D.18 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
By wire
Money can be wired from your account to your bank account. Contact your
financial advisor or the Distributor at the above numbers for additional
information.
o Minimum amount: $1,000
o Pre-authorization is required.
o A service fee may be charged against your account for each wire sent.
By scheduled payout plan
o Minimum payment: $100*.
o Contact your financial advisor or the Distributor to set up regular
payments.
o Purchasing new shares while under a payout plan may be disadvantageous
because of the sales charges.
* Minimum is $50 in a direct at fund account.
Electronic transactions
The ability to initiate transactions via the internet may be unavailable or
delayed at certain times (for example, during periods of unusual market
activity). The Fund and the Distributor are not responsible for any losses
associated with unexecuted transactions. In addition, the Fund and the
Distributor are not responsible for any losses resulting from unauthorized
transactions if reasonable security measures are followed to validate the
investor's identity. The Fund may modify or discontinue electronic privileges at
any time.
- --------------------------------------------------------------------------------
D.19 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Distributions and Taxes
As a shareholder you are entitled to your share of the Fund's net income and net
gains. The Fund distributes dividends and capital gains to qualify as a
regulated investment company and to avoid paying corporate income and excise
taxes.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund's net investment income is distributed to you as dividends. Capital
gains are realized when a security is sold for a higher price than was paid for
it. Each realized capital gain or loss is long-term or short-term depending on
the length of time the Fund held the security. Realized capital gains and losses
offset each other. The Fund offsets any net realized capital gains by any
available capital loss carryovers. Net short-term capital gains are included in
net investment income. Net realized long-term capital gains, if any, are
distributed by the end of the calendar year as capital gain distributions.
REINVESTMENTS
Dividends and capital gain distributions are automatically reinvested in
additional shares in the same class of the Fund, unless:
o you request distributions in cash, or
o you direct the Fund to invest your distributions in the same class of any
publicly offered American Express mutual fund for which you have previously
opened an account.
We reinvest the distributions for you at the next calculated NAV after the
distribution is paid.
If you choose cash distributions, you will receive cash only for distributions
declared after your request has been processed.
TAXES
Distributions are subject to federal income tax and may be subject to state and
local taxes in the year they are declared. You must report distributions on your
tax returns, even if they are reinvested in additional shares.
If you buy shares shortly before the record date of a distribution, you may pay
taxes on money earned by the Fund before you were a shareholder. You will pay
the full pre-distribution price for the shares, then receive a portion of your
investment back as a distribution, which may be taxable.
For tax purposes, an exchange is considered a sale and purchase, and may result
in a gain or loss. A sale is a taxable transaction. If you sell shares for less
than their cost, the difference is a capital loss. If you sell shares for more
than their cost, the difference is a capital gain. Your gain may be short term
(for shares held for one year or less) or long term (for shares held for more
than one year).
- --------------------------------------------------------------------------------
D.20 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
If you buy Class A shares and within 91 days exchange into another fund, you may
not include the sales charge in your calculation of tax gain or loss on the sale
of the first fund you purchased. The sales charge may be included in the
calculation of your tax gain or loss on a subsequent sale of the second fund you
purchased.
Selling shares held in an IRA or qualified retirement account may subject you to
federal taxes, penalties and reporting requirements. Please consult your tax
advisor.
Important: This information is a brief and selective summary of some of the tax
rules that apply to this Fund. Because tax matters are highly individual and
complex, you should consult a qualified tax advisor.
Financial Highlights
The financial highlights tables are intended to help you understand the Fund's
financial performance. Certain information reflects financial results for a
single Fund share. The total returns in the tables represent the rate that an
investor would have earned or lost on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by KPMG LLP, whose report, along with the Fund's financial statements,
is included in the annual report which, if not included with this prospectus, is
available upon request.
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)
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
D.21 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
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)
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)
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
D.22 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
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
(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.
- --------------------------------------------------------------------------------
D.23 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
This Fund, along with the other American Express mutual funds, is distributed by
American Express Financial Advisors Inc. and can be purchased from an American
Express financial advisor or from other authorized broker-dealers or third
parties. The Funds can be found under the "Amer Express" banner in most mutual
fund quotations.
Additional information about the Fund and its investments is available in the
Fund's Statement of Additional Information (SAI), annual and semiannual reports
to shareholders. In the Fund's annual report, you will find a discussion of
market conditions and investment strategies that significantly affected the Fund
during its last fiscal year. The SAI is incorporated by reference in this
prospectus. For a free copy of the SAI, the annual report or the semiannual
report, contact your selling agent or American Express Client Service
Corporation.
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
(800) 862-7919
TTY: (800) 846-4852
Web site address:
americanexpress.com/funds
You may review and copy information about the Fund, including the SAI, at the
Securities and Exchange Commission's (Commission) Public Reference Room in
Washington, D.C. (for information about the public reference room call
1-202-942-8090). Reports and other information about the Fund are available on
the EDGAR Database on the Commission's Internet site at (http://www.sec.gov).
Copies of this information may be obtained, after paying a duplicating fee, by
electronic request at the following E-mail address: publicinfo@sec.gov, or by
writing to the Public Reference Section of the Commission, Washington, D.C.
20549-0102.
Investment Company Act File #811-2111
Ticker Symbol
Class A: ALEAX Class B:ALEBX
Class C: -- Class Y:--
- --------------------------------------------------------------------------------
(logo)
AMERICAN
EXPRESS(R)
- --------------------------------------------------------------------------------
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
S-6244-99 D (9/03)
- --------------------------------------------------------------------------------
D.24 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Prospectus Supplement -- Jan. 20, 2004*
Fund Name (Date) Prospectus Form #
AXP Blue Chip Advantage Fund (April 1, 2003) S-6025-99 V
AXP Diversified Bond Fund (Oct. 30, 2003) S-6495-99 W
AXP California Tax-Exempt Fund (Aug. 29, 2003) S-6328-99 X
AXP Core Bond Fund (Sept. 29, 2003)S-6267-99 C
AXP Discovery Fund (Sept. 29, 2003)S-6457-99 Y
AXP Diversified Equity Income Fund (Nov. 28, 2003) S-6475-99 W
AXP Emerging Markets Fund (Dec. 30, 2003) S-6354-99 L
AXP Equity Select Fund (Jan. 29, 2003) S-6426-99 W
AXP Equity Select Fund (Jan. 29, 2004) S-6426-99 X
AXP Equity Value Fund (May 30, 2003)S-6382-99 N
AXP European Equity Fund (Dec. 30, 2003) S-6006-99 F
AXP Focused Growth Fund (May 30, 2003) S-6003-99 E
AXP Global Balanced Fund (Dec. 30, 2003) S-6352-99 J
AXP Global Bond Fund (Dec. 30, 2003) S-6309-99 X
AXP Global Equity Fund (Dec. 30, 2003) S-6334-99 W
AXP Global Technology Fund (Dec. 30, 2003) S-6395-99 G
AXP Growth Dimensions Fund (Sept. 29, 2003) S-6004-99 F
AXP Growth Fund (Sept. 29, 2003) S-6455-99 X
AXP High Yield Bond Fund (July 30, 2003) S-6370-99 W
AXP High Yield Tax-Exempt Fund (Jan. 29, 2003) S-6430-99 X
AXP High Yield Tax-Exempt Fund (Jan. 29, 2004) S-6430-99 Y
AXP Income Opportunities Fund (Sept. 29, 2003) S-6266-99 C
AXP Inflation Protected Securities Fund (Jan. 12, 2004) S-6280-99 A
AXP Insured Tax-Exempt Fund (Aug. 29, 2003) S-6327-99 Y
AXP Intermediate Tax-Exempt Fund (Jan. 29, 2003) S-6355-99 K
AXP Intermediate Tax-Exempt Fund (Jan. 29, 2004) S-6355-99 L
AXP International Fund (Dec. 30, 2003) S-6140-99 Y
AXP Large Cap Equity Fund (Sept. 29, 2003) S-6244-99 D
AXP Large Cap Value Fund (Sept. 29, 2003) S-6246-99 D
AXP Limited Duration Bond Fund (Sept. 29, 2003) S-6265-99 C
AXP Managed Allocation Fund (Nov. 28, 2003) S-6141-99 X
AXP Massachusetts Tax-Exempt Fund (Aug. 29, 2003) S-6328-99 X
AXP Michigan Tax-Exempt Fund (Aug. 29, 2003) S-6328-99 X
AXP Mid Cap Value Fund (Nov. 28, 2003) S-6241-99 D
AXP Minnesota Tax-Exempt Fund (Aug. 29, 2003) S-6328-99 X
AXP Mutual (Nov. 28, 2003) S-6326-99 X
AXP New Dimensions Fund (Sept. 29, 2003) S-6440-99 W
AXP New York Tax-Exempt Fund (Aug. 29, 2003) S-6328-99 X
AXP Ohio Tax-Exempt Fund (Aug. 29, 2003) S-6328-99 X
AXP Partners Aggressive Growth Fund (July 30, 2003) S-6260-99 C
AXP Partners Fundamental Value Fund (July 30, 2003) S-6236-99 E
AXP Partners Growth Fund (July 30, 2003) S-6261-99 C
- --------------------------------------------------------------------------------
D.25 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Prospectus Supplement -- Jan. 20, 2004* (continued)
Fund Name (Date) Prospectus Form #
AXP Partners International
Aggressive Growth Fund (Dec. 30, 2003) S-6243-99 F
AXP Partners International Core Fund (Dec. 30, 2003) S-6259-99 D
AXP Partners International Select Value Fund (Dec. 30, 2003) S-6242-99 F
AXP Partners International Small Cap Fund (Dec. 30, 2003) S-6258-99 D
AXP Partners Select Value Fund (July 30, 2003) S-6240-99 D
AXP Partners Small Cap Core Fund (July 30, 2003) S-6237-99 E
AXP Partners Small Cap Growth Fund (May 30, 2003) S-6301-99 E
AXP Partners Small Cap Value Fund (July 30, 2003) S-6239-99 E
AXP Partners Value Fund (July 30, 2003) S-6238-99 E
AXP Precious Metals Fund (May 30, 2003) S-6142-99 X
AXP Progressive Fund (Nov. 28, 2003) S-6449-99 X
AXP Quantitative Large Cap Equity Fund (Sept. 29, 2003) S-6263-99 C
AXP Real Estate Fund (Jan. 6, 2004) S-6281-99 A
AXP Research Opportunities Fund (Sept. 29, 2003) S-6356-99LK
AXP Selective Fund (July 30, 2003) S-6376-99 X
AXP Short Duration U.S. Government Fund (July 30, 2003) S-6042-99 X
AXP Small Cap Advantage Fund (May 30, 2003) S-6427-99 G
AXP Small Company Index Fund (April 1, 2003) S-6357-99 L
AXP Stock Fund (Nov. 28, 2003) S-6351-99 X
AXP Strategy Aggressive Fund (May 30, 2003) S-6381-99 N
AXP Tax-Exempt Bond Fund (Jan. 29, 2003) S-6310-99 X
AXP Tax-Exempt Bond Fund (Jan. 29, 2004) S-6310-99 Y
AXP U.S. Government Mortgage Fund (July 30, 2003) S-6245-99 D
AXP Utilities Fund (Aug. 29, 2003) S-6341-99 X
For the prospectus
Under the heading "Buying and Selling Shares," the section titled "Should you
purchase Class A, Class B or Class C shares" has been revised to read as
follows:
Should you purchase Class A, Class B or Class C shares?
If your investments in American Express mutual funds total $100,000 or more,
Class A shares may be the better option because the sales charge is reduced for
larger purchases. If you qualify for a waiver of the sales charge, Class A
shares will be the best option.
If you invest less than $100,000, consider how long you plan to hold your
shares. Class B shares have a higher annual distribution fee than Class A shares
and a CDSC for six years. Class B shares convert to Class A shares in the ninth
calendar year of ownership. Class B shares purchased through reinvested
dividends and distributions also will convert to Class A shares in the same
proportion as the other Class B shares.
- --------------------------------------------------------------------------------
D.26 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
Class C shares also have a higher annual distribution fee than Class A shares.
Class C shares have no sales charge if you hold the shares for one year or
longer. Unlike Class B shares, Class C shares do not convert to Class A. As a
result, you will pay a 1% distribution fee for as long as you hold Class C
shares. If you choose a deferred sales charge option (Class B or Class C),
generally you should consider Class B shares if you intend to hold your shares
for more than six years. Consider Class C shares if you intend to hold your
shares less than six years. To help you determine what investment is best for
you, consult your financial advisor.
Under the heading "Sales Charges," the first bullet in the section titled "Other
Class A sales charge policies" has been revised to read as follows:
o IRA purchases or other employee benefit plan purchases made through a
payroll deduction plan or through a plan sponsored by an employer,
association of employers, employee organization or other similar group, may
be added together to reduce sales charges for all shares purchased through
that plan, provided that the plan uses the Distributor's group billing
services, and
S-6426-24 C (1/04)
* Valid until next prospectus update.
Destroy - Jan. 30, 2005
- --------------------------------------------------------------------------------
D.27 AMERICAN EXPRESS FUNDS -- PROXY STATEMENT
- --------------------------------------------------------------------------------
(logo)
AMERICAN
EXPRESS(R)
- --------------------------------------------------------------------------------
S-6303 A (3/04)
American PROXY
Express(R)
Funds
[FUND NAME DROP-IN]
Principal Executive Office
901 Marquette Avenue South, Suite 2810
Minneapolis, MN 55402-3268
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held ______, 2004
Your fund will hold a special shareholders' meeting at __________ on ______,
2004, at ______________________, Minneapolis, MN. You are entitled to vote at
the meeting if you were a shareholder on ________, 2004. Please read the proxy
statement. The Board recommends that you vote FOR the proposal. Please vote
immediately by mail, telephone, or internet, even if you plan to attend the
meeting. Just follow the instructions on this proxy card.
VOTE VIA THE INTERNET:
VOTE VIA THE TELEPHONE:
CONTROL NUMBER: 999 9999 999
The undersigned hereby appoints Leslie L. Ogg, ________ and
_________ or anyone of them, as proxies, with full power of
substitution, to represent and to vote all of the shares of
the undersigned at the special meeting to be held on ______,
____, and any adjournment therof.
Note: Please sign this proxy exactly as your name or names
appears hereon. Joint owners should each sign personally.
Trustees and other fiduciaries should indicate the capacity
in which they sign, and where more than one name appears, a
majority must sign. If a corporation, this signature should
be that of an authorized officer who should state his or
her title.
------------------------------------------------------------
Signature
------------------------------------------------------------
Signature of joint owner, if any
------------------------------------------------------------
Date
Please vote by filling in the appropriate box below. If you do not mark the
proposal, your Proxy will be voted FOR the proposal.
PLEASE MARK VOTES AS IN THIS EXAMPLE (shade box) [X]
FOR AGAINST ABSTAIN
1. To approve an Agreement and Plan of Reorganization between the Fund and AXP
Large Cap Equity Fund. [ ] [ ] [ ]
EVERY SHAREHOLDER'S VOTE IS IMPORTANT! PLEASE SIGN, DATE AND RETURN YOUR PROXY
CARD TODAY!
Statement of Additional Information
________, 2004
AXP(R) Growth Series, Inc.
AXP Large Cap Equity Fund
This Statement of Additional Information ("SAI") consists of this cover page and
incorporates by reference the following described documents, each of which has
been previously filed and accompanies this Statement of Additional Information:
1. AXP Large Cap Equity Fund's most recent SAI, dated Sept. 29, 2003.
2. AXP Large Cap Equity Fund's most recent annual report, for the period ended
July 31, 2003.
3. AXP Blue Chip Advantage Fund's most recent SAI, dated April 1, 2003, as
supplemented.
4. AXP Research Opportunities Fund's most recent SAI, dated Sept. 29, 2003.
5. AXP Blue Chip Advantage Fund's most recent annual report, for the period
ended Jan. 31, 2003.
6. AXP Blue Chip Advantage Fund's most recent semiannual report, for the
period ended July 31, 2003.
7. AXP Research Opportunities Fund's most recent annual report, for the period
ended July 31, 2003.
This SAI is not a prospectus. It should be read in conjunction with the proxy
statement/prospectus, dated the same date as this SAI, which may be obtained by
calling (866) 270-3133 or writing American Express Client Service Corporation,
70100 AXP Financial Center, Minneapolis, MN 55474.
AXP Large Cap Equity Fund
AXP Blue Chip Advantage Fund
AXP Research Opportunities Fund
Introduction to Proposed Fund Merger
July 31, 2003
The accompanying unaudited pro forma combining statement of assets and
liabilities and the statement of operations reflect the accounts of the three
funds at and for the 12-month period ending July 31, 2003. These statements have
been derived from financial statements prepared for AXP Large Cap Equity Fund,
AXP Blue Chip Advantage Fund and AXP Research Opportunities Fund. (AXP Large Cap
Equity and AXP Research Opportunities Fund are a series of AXP Growth Series,
Inc. and AXP Blue Chip Advantage Fund is a series of AXP Market Advantage
Series, Inc.) AXP Large Cap Equity invests primarily in equity securities of
companies with a market capitalization greater than $5 billion at the time of
purchase. AXP Blue Chip Advantage Fund invests, under normal market conditions,
at least 80% of the Fund's net assets in blue chip stocks issued by companies
with a market capitalization of at least $1 billion, an established management,
a history of consistent earnings and a leading position within their respective
industries. AXP Research Opportunities Fund invests all of its assets in
Aggressive Growth Portfolio, a series of Growth Trust, an open-end investment
company that has the same objectives as the Fund. The Portfolio invests
primarily in equity securities of companies included in the Standard & Poor's
500 Composite Stock Price Index (S&P 500 Index).
Under the proposed Agreement and Plan of Reorganization, Class A shares of the
AXP Blue Chip Advantage Fund and Class A shares of the AXP Research
Opportunities Fund would be exchanged for Class A shares of the AXP Large Cap
Equity Fund. Class B shares of the AXP Blue Chip Advantage Fund and Class B
shares of the AXP Research Opportunities Fund would be exchanged for Class B
shares of the AXP Large Cap Equity Fund. Class C shares of the AXP Blue Chip
Advantage Fund and Class C shares of the AXP Research Opportunities Fund would
be exchanged for Class C shares of the AXP Large Cap Equity Fund. Class Y shares
of the AXP Blue Chip Advantage Fund and Class Y shares of the AXP Research
Opportunities Fund would be exchanged for Class Y shares of the AXP Large Cap
Equity Fund.
The pro forma combining statements have been prepared based upon the various fee
structures of the funds in existence as of July 31, 2003.
- --------------------------------------------------------------------------------
2 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
AXP Large Cap Equity Fund
AXP Blue Chip Advantage Fund
AXP Research Opportunities
Pro forma combining
Statement of assets and liabilities
AXP Blue Chip AXP Research
AXP Large Cap Advantage Opportunities Pro forma Pro forma
July 31, 2003 (Unaudited) Equity Fund Fund Fund Adjustments Combined
Assets
Investments in securities, at
cost (Note 2) $115,901,359 $ 1,610,935,271 $ -- $ 240,281,966(a) $ 1,967,118,596
------------ --------------- ------------- ------------- ---------------
Investments in securities, at
value (Note 2) $121,699,226 $ 1,591,302,646 $ -- $ 239,524,250(a) $ 1,952,526,122
Investment in Portfolio (Note 2) -- -- 240,807,347 (240,807,347)(a) --
Cash in bank on demand deposit 186,921 -- -- -- 186,921
Capital shares receivable 766,524 13,982 933 -- 781,439
Dividends and accrued interest
receivable (Note 2) 120,039 1,873,309 -- 216,895(a) 2,210,243
Receivable for investment
securities sold (Note 2) 1,026,697 43,875 -- 3,305,845(a) 4,376,417
----------- ------------- ----------- --------- -------------
Total assets 123,799,407 1,593,233,812 240,808,280 2,239,643 1,960,081,142
----------- ------------- ----------- --------- -------------
Liabilities
Disbursements in excess of cash
on demand deposit (Note 2) -- 259,515 -- 14,987(a) 274,502
Capital shares payable 12,526 96,623 31,155 -- 140,304
Payable for investment
securities purchased (Note 2) 2,758,797 -- -- 2,166,022(a) 4,924,819
Payable upon return of
securities loaned -- 11,483,400 -- -- 11,483,400
Accrued investment management
services fee (Note 2) 1,976 20,799 -- 4,290(a) 27,065
Accrued distribution fee 1,590 21,409 3,530 -- 26,529
Accrued service fee -- 343 -- -- 343
Accrued transfer agency fee 772 8,713 1,852 -- 11,337
Accrued administrative services fee 165 1,210 395 -- 1,770
Other accrued expenses (Note 2) 101,537 143,317 68,280 (747,733)(a) (434,599)
Options contracts written, at
value (Note 2) -- -- -- 31,742(a) 31,742
----------- ------------- ----------- --------- -------------
Total liabilities 2,877,363 12,035,329 105,212 1,469,308 16,487,212
----------- ------------- ----------- --------- -------------
Net assets applicable to
outstanding capital stock $120,922,044 $ 1,581,198,483 $ 240,703,068 $ 770,335 $ 1,943,593,930
============ =============== ============= ============= ===============
Represented by
Capital stock -- $.01 par value
(Note 3) $ 267,737 $ 2,301,816 $ 593,484 $ 1,141,856 $ 4,304,893
Additional paid-in capital (Note 3) 113,970,315 2,741,438,886 514,070,863 (1,141,856) 3,368,338,208
Undistributed net investment
income (Note 2) -- 277,340 338,450 770,335 1,386,125
Accumulated net realized gain (loss) 886,125 (1,142,999,728) (273,542,013) -- (1,415,655,616)
Unrealized appreciation
(depreciation) on investments 5,797,867 (19,819,831) (757,716) -- (14,779,680)
----------- ------------- ----------- --------- -------------
Total -- representing net
assets applicable to outstanding
capital stock $120,922,044 $ 1,581,198,483 $ 240,703,068 $ 770,335 $ 1,943,593,930
============ =============== ============= ============= ===============
Net assets applicable to
outstanding shares: Class A $ 83,257,409 $ 900,916,101 $ 149,101,302 $ 428,937 $ 1,133,703,749
Class B $ 35,551,265 $ 550,646,860 $ 91,325,311 $ 283,969 $ 677,807,405
Class C $ 2,052,118 $ 4,354,767 $ 275,194 $ 1,960 $ 6,684,039
Class Y $ 61,252 $ 125,280,755 $ 1,261 $ 55,469 $ 125,398,737
Shares outstanding
(Note 3): Class A shares 18,374,049 129,936,973 35,889,959 -- 250,165,970
Class B shares 7,929,314 81,567,149 23,387,745 -- 151,226,674
Class C shares 456,827 646,903 70,413 -- 1,487,999
Class Y shares 13,477 18,030,537 300 -- 27,608,635
Net asset value per
share of outstanding
capital stock: Class A $ 4.53 $ 6.93 $ 4.15 $ -- $ 4.53
Class B $ 4.48 $ 6.75 $ 3.90 $ -- $ 4.48
Class C $ 4.49 $ 6.73 $ 3.91 $ -- $ 4.49
Class Y $ 4.54 $ 6.95 $ 4.20 $ -- $ 4.54
------------ --------------- ------------- ------------- ---------------
See accompanying notes to pro forma financial statements.
- --------------------------------------------------------------------------------
3 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
AXP Large Cap Equity Fund
AXP Blue Chip Advantage Fund
AXP Research Opportunities
Pro forma combining
Statement of operations
AXP Blue Chip AXP Research
AXP Large Cap Advantage Opportunities Pro forma Pro forma
Year ended July 31, 2003 (Unaudited) Equity Fund Fund Fund Adjustments Combined
Investment income
Income:
Dividends $ 764,115 $ 28,736,204 $ 4,458,482 $ -- $ 33,958,801
Interest 68,385 598,202 100,196 -- 766,783
Fee income from securities lending -- -- 114 -- 114
---------- ------------- ------------ ----------- -------------
Total income 832,500 29,334,406 4,558,792 -- 34,725,698
---------- ------------- ------------ ----------- -------------
Expenses:
Expenses allocated from Portfolio
(Note 2) -- -- 1,543,302 (1,543,302)(a) --
Investment management services fee
(Note 2) 342,000 7,313,747 -- 1,483,704(a) 9,139,451
Distribution fee
Class A 94,937 2,250,917 392,605 -- 2,738,459
Class B 171,345 5,937,339 990,618 -- 7,099,302
Class C 9,241 41,342 2,630 -- 53,213
Transfer agency fee 129,382 4,022,018 796,870 -- 4,948,270
Incremental transfer agency fee
Class A 8,905 236,297 55,639 -- 300,841
Class B 8,414 260,375 55,748 -- 324,537
Class C 617 2,421 146 -- 3,184
Service fee -- Class Y 29 137,127 50 -- 137,206
Administrative services fees and
expenses 27,560 452,072 154,538 -- 634,170
Compensation of board members (Note 2) 4,966 24,322 8,150 (12,438)(a),(b) 25,000
Custodian fees (Note 2) 274,440 119,945 -- (44,385)(a),(c) 350,000
Printing and postage 1,370 593,727 179,445 -- 774,542
Registration fees 81,089 17,889 30,250 -- 129,228
Audit fees (Note 2) 17,000 26,500 7,000 (20,500)(a),(d) 30,000
Other -- 64,467 7,628 7,030(a) 79,125
---------- ------------- ------------ ----------- -------------
Total expenses 1,171,295 21,500,505 4,224,619 (129,891) 26,766,528
Expenses waived/reimbursed by AEFC
(Note 2) (333,483) -- -- (640,437)(e) (973,920)
---------- ------------- ------------ ----------- -------------
837,812 21,500,505 4,224,619 (770,328) 25,792,608
Earnings credits on cash balances
(Note 2) (4,492) (28,308) (4,277) (7)(a) (37,084)
---------- ------------- ------------ ----------- -------------
Total net expenses 833,320 21,472,197 4,220,342 (770,335) 25,755,524
---------- ------------- ------------ ----------- -------------
Investment income (loss) -- net (820) 7,862,209 338,450 770,335 8,970,174
---------- ------------- ------------ ----------- -------------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 1,719,341 (344,835,812) (54,095,224) -- (397,211,695)
Futures contracts -- 9,104,164 -- -- 9,104,164
Options contracts written -- 687,543 14,286 -- 701,829
---------- ------------- ------------ ----------- -------------
Net realized gain (loss) on investments 1,719,341 (335,044,105) (54,080,938) -- (387,405,702)
Net change in unrealized appreciation
(depreciation) on investments 7,080,694 422,211,953 65,030,053 -- 494,322,700
---------- ------------- ------------ ----------- -------------
Net gain (loss) on investments 8,800,035 87,167,848 10,949,115 -- 106,916,998
---------- ------------- ------------ ----------- -------------
Net increase (decrease) in net assets
resulting from operations $8,799,215 $ 95,030,057 $ 11,287,565 $ 770,335 $ 115,887,172
========== ============= ============ =========== =============
See accompanying notes to pro forma financial statements.
- --------------------------------------------------------------------------------
4 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
AXP Large Cap Equity Fund
AXP Blue Chip Advantage Fund
AXP Research Opportunities Fund
Notes to Pro Forma Financial Statements
(Unaudited as to July 31, 2003)
1. BASIS OF COMBINATION
The unaudited pro forma combining statement of assets and liabilities and the
statement of operations reflect the accounts of the three funds at and for the
12-month period ending July 31, 2003. These statements have been derived from
financial statements prepared for the AXP Large Cap Equity Fund, AXP Blue Chip
Advantage Fund and AXP Research Opportunities Fund as of July 31, 2003.
AXP Large Cap Equity Fund and AXP Research Opportunities Fund are a series of
AXP Growth Series, Inc. and AXP Blue Chip Advantage Fund is a series of AXP
Market Advantage Series, Inc. Each Fund is registered under the Investment
Company Act of 1940 (as amended) as a diversified, open-end management
investment company. The primary investments of each Fund are as follows:
AXP Large Cap Equity Fund invests primarily in equity securities of companies
with a market capitalization greater than $5 billion at the time of purchase.
AXP Blue Chip Advantage Fund invests, under normal market conditions, at least
80% of the Fund's net assets in blue chip stocks issued by companies with a
market capitalization of at least $1 billion, an established management, a
history of consistent earnings and a leading position within their respective
industries.
AXP Research Opportunities Fund invests all of its assets in Aggressive Growth
Portfolio, a series of Growth Trust, an open-end investment company that has the
same objectives as the Fund. The Portfolio invests primarily in equity
securities of companies that comprise the S&P 500 Index.
The pro forma statements give effect to the proposed transfer of the assets and
liabilities of AXP Blue Chip Advantage Fund and AXP Research Opportunities Fund
in exchange for Class A, B, C, or Y shares of AXP Large Cap Equity Fund under
generally accepted accounting principles. The pro forma statements also reflect
changes needed regarding the change in structure of AXP Research Opportunities
Fund. Finally, the pro forma statements reflect estimates for the combined AXP
Large Cap Equity Fund based on the increased asset level of the merger and
associated economies of scale.
The pro forma combining statements should be read in conjunction with the
historical financial statements of the funds incorporated by reference in the
Statement of Additional Information.
The pro forma statement of operations give effect to the proposed transaction on
the historical operations of the accounting survivor, AXP Large Cap Equity Fund,
as if the transaction had occurred at the beginning of the year presented.
2. PRO FORMA ADJUSTMENTS
(a) To reflect the adjustments needed regarding the change in structure of AXP
Research Opportunites Fund from a feeder fund presentation into a reporting
format comparable with the accounting survivor.
(b) To adjust for the change in the compensation of board members due to the
reorganization.
(c) To reflect the reduction in custodian fees due to the reorganization.
(d) To reflect the reduction in audit fees due to the reorganization.
(e) To adjust the expense reimbursement to conform with the Buying Fund
contractual arrangements and to include the impact of the .05% management
fee waiver that AEFC agreed to put in place for one year following the
merger.
- --------------------------------------------------------------------------------
5 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
3. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of additional Class
A, Class B, Class C, and Class Y shares of AXP Large Cap Equity Fund if the
reorganization were to have taken place on July 31, 2003. The pro forma number
of Class A shares outstanding of 250,165,970 consists of 198,877,726 shares
assumed to be issued to Class A shareholders of the AXP Blue Chip Advantage
Fund, plus 32,914,195 shares assumed to be issued to Class A shareholders of the
AXP Research Opportunities Fund, plus 18,374,049 Class A shares of the AXP Large
Cap Equity Fund outstanding as of July 31, 2003. The pro forma number of Class B
shares outstanding of 151,226,674 consists of 122,912,246 shares assumed to be
issued to Class B shareholders of the AXP Blue Chip Advantage Fund, plus
20,385,114 shares assumed to be issued to Class B shareholders of the AXP
Research Opportunities Fund, plus 7,929,314 Class B shares of the AXP Large Cap
Equity Fund outstanding as of July 31, 2003. The pro forma number of Class C
shares outstanding of 1,487,999 consists of 969,881 shares assumed to be issued
to Class C shareholders of the AXP Blue Chip Advantage Fund, plus 61,291 shares
assumed to be issued to Class C shareholders of the AXP Research Opportunities
Fund, plus 456,827 Class C shares of the AXP Large Cap Equity Fund outstanding
as of July 31, 2003. The pro forma number of Class Y shares outstanding of
27,608,635 consists of 27,594,880 shares assumed to be issued to Class Y
shareholders of the AXP Blue Chip Advantage Fund, plus 278 shares assumed to be
issued to Class Y shareholders of the AXP Research Opportunities Fund, plus
13,477 Class Y shares of the AXP Large Cap Equity Fund outstanding as of July
31, 2003.
- --------------------------------------------------------------------------------
6 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
Combined Investments in Securities
AXP Large Cap Equity Fund
July 31, 2003 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (97.6%)
Shares Shares Shares Shares Value(a) Value(a) Value(a) Value(a)
AXP Large AXP Blue Chip Aggressive AXP Large AXP Blue Chip Aggressive
Cap Equity Advantage Growth Pro Forma Cap Equity Advantage Growth Pro Forma
Issuer Fund Fund Portfolio Combined Fund Fund Portfolio Combined
Aerospace & defense (2.3%)
Boeing 14,400 -- -- 14,400 $476,928 $-- $-- $476,928
General Dynamics -- 95,500 -- 95,500 -- 7,576,970 -- 7,576,970
Goodrich -- 202,600 -- 202,600 -- 4,659,800 -- 4,659,800
Lockheed Martin 12,625 38,500 50,100 101,225 660,793 2,015,090 2,622,234 5,298,117
Northrop Grumman 6,900 32,700 18,500 58,100 636,456 3,016,248 1,706,440 5,359,144
Precision Castparts -- 173,700 -- 173,700 -- 5,601,825 -- 5,601,825
Rockwell Automation 18,282 -- -- 18,282 472,407 -- -- 472,407
Rockwell Collins -- 277,400 -- 277,400 -- 7,220,722 -- 7,220,722
United Technologies 17,468 70,500 14,700 102,668 1,314,117 5,303,715 1,105,881 7,723,713
Total 3,560,701 35,394,370 5,434,555 44,389,626
Airlines (0.1%)
Southwest Airlines -- 132,700 -- 132,700 -- 2,177,607 -- 2,177,607
Automotive & related (0.8%)
Delphi -- 567,900 -- 567,900 -- 4,770,360 -- 4,770,360
Johnson Controls -- -- 14,500 14,500 -- -- 1,400,845 1,400,845
PACCAR -- 106,700 -- 106,700 -- 8,237,240 -- 8,237,240
Snap-On -- 49,400 -- 49,400 -- 1,399,008 -- 1,399,008
Total -- 14,406,608 1,400,845 15,807,453
Banks and savings & loans (7.8%)
AmSouth Bancorporation -- 133,000 -- 133,000 -- 2,882,110 -- 2,882,110
Bank of America -- 354,100 71,800 425,900 -- 29,238,037 5,928,526 35,166,563
Charter One Financial -- 224,900 -- 224,900 -- 7,313,748 -- 7,313,748
FleetBoston Financial -- 234,600 -- 234,600 -- 7,293,714 -- 7,293,714
Golden West Financial -- 98,900 -- 98,900 -- 8,169,140 -- 8,169,140
GreenPoint Financial -- 181,400 -- 181,400 -- 9,117,164 -- 9,117,164
KeyCorp -- 114,600 47,300 161,900 -- 3,083,886 1,272,843 4,356,729
Natl City -- 223,100 -- 223,100 -- 7,351,145 -- 7,351,145
Regions Financial -- 109,000 -- 109,000 -- 3,934,900 -- 3,934,900
TCF Financial -- -- 36,100 36,100 -- -- 1,647,965 1,647,965
U.S. Bancorp 25,800 491,100 174,300 691,200 632,616 12,041,772 4,273,836 16,948,224
Wachovia -- 217,500 -- 217,500 -- 9,502,575 -- 9,502,575
Washington Mutual -- 389,100 -- 389,100 -- 15,361,668 -- 15,361,668
Wells Fargo -- 315,700 112,500 428,200 15,952,321 5,684,625 21,636,946
Total 632,616 131,242,180 18,807,795 150,682,591
Beverages & tobacco (3.3%)
Altria Group 80,300 354,300 106,900 541,500 3,212,803 14,175,543 4,277,069 21,665,415
Anheuser-Busch 11,700 -- -- 11,700 606,294 -- -- 606,294
Coca-Cola -- 393,000 -- 393,000 -- 17,673,210 -- 17,673,210
Constellation Brands -- 92,100 -- 92,100(b) -- 2,657,085 -- 2,657,085
Fortune Brands -- 25,600 -- 25,600 -- 1,423,616 -- 1,423,616
PepsiCo 65,824 263,500 85,800 415,124 3,032,512 12,139,445 3,952,806 19,124,763
Total 6,851,609 48,068,899 8,229,875 63,150,383
Broker dealers (1.7%)
J.P. Morgan Chase 16,700 410,600 -- 427,300 585,335 14,391,530 -- 14,976,865
Merrill Lynch & Co 16,201 -- 36,100 52,301 880,848 -- 1,962,757 2,843,605
Morgan Stanley 15,500 266,500 25,900 307,900 735,320 12,642,760 1,228,696 14,606,776
Total 2,201,503 27,034,290 3,191,453 32,427,246
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
7 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
Common stocks (continued)
Shares Shares Shares Shares Value(a) Value(a) Value(a) Value(a)
AXP Large AXP Blue Chip Aggressive AXP Large AXP Blue Chip Aggressive
Cap Equity Advantage Growth Pro Forma Cap Equity Advantage Growth Pro Forma
Issuer Fund Fund Portfolio Combined Fund Fund Portfolio Combined
Building materials & construction (0.3%)
American Standard 12,100 65,400 -- 77,500(b) $924,440 $4,996,560 $-- $5,921,000
Cable (0.8%)
Comcast Cl A 33,484 395,500 29,600 458,584(b) 1,015,234 11,991,560 897,472 13,904,266
Comcast Special Cl A 33,925 -- -- 33,925(b) 994,003 -- -- 994,003
EchoStar
Communications Cl A 26,900 -- -- 26,900(b) 975,663 -- -- 975,663
Total 2,984,900 11,991,560 897,472 15,873,932
Cellular telecommunications (0.5%)
AT&T Wireless Services -- 463,900 -- 463,900(b) -- 3,957,067 -- 3,957,067
Nextel Communications Cl A -- 175,900 -- 175,900(b) -- 3,211,934 -- 3,211,934
Vodafone Group ADR -- -- 89,600 89,600(c) -- -- 1,700,608 1,700,608
Total -- 7,169,001 1,700,608 8,869,609
Chemicals (0.9%)
Dow Chemical 42,545 198,300 -- 240,845 1,501,839 6,999,990 -- 8,501,829
Lyondell Chemical 48,392 -- -- 48,392 724,428 -- -- 724,428
Praxair -- 65,600 -- 65,600 -- 4,241,696 -- 4,241,696
Sigma-Aldrich -- 80,600 -- 80,600 -- 4,591,782 -- 4,591,782
Total 2,226,267 15,833,468 -- 18,059,735
Computer hardware (4.7%)
Cisco Systems 82,500 1,205,300 -- 1,287,800(b) 1,610,400 23,527,456 -- 25,137,856
Dell 56,700 509,500 88,500 654,700(b) 1,909,656 17,159,960 2,980,680 22,050,296
EMC -- 880,100 57,000 937,100(b) -- 9,364,264 606,480 9,970,744
Hewlett-Packard -- 522,900 151,400 674,300 -- 11,069,793 3,205,138 14,274,931
Lexmark Intl Cl A -- 25,400 -- 25,400(b) -- 1,629,918 -- 1,629,918
SanDisk -- 145,400 -- 145,400(b) -- 8,242,726 -- 8,242,726
Storage Technology -- 241,800 -- 241,800(b) -- 6,441,552 -- 6,441,552
Sun Microsystems 362,333 547,700 -- 910,033(b) 1,355,125 2,048,398 -- 3,403,523
Total 4,875,181 79,484,067 6,792,298 91,151,546
Computer software & services (10.6%)
Adobe Systems -- -- 37,500 37,500 -- -- 1,225,500 1,225,500
Affiliated Computer
Services Cl A 12,700 73,600 -- 86,300(b) 629,285 3,646,880 -- 4,276,165
Autodesk -- -- 110,100 110,100 -- -- 1,647,096 1,647,096
BMC Software -- 270,000 -- 270,000(b) -- 3,807,000 -- 3,807,000
Citrix Systems -- 472,600 -- 472,600(b) -- 8,577,690 -- 8,577,690
Computer Sciences -- 90,200 -- 90,200(b) -- 3,659,414 -- 3,659,414
Comverse Technology -- 203,500 -- 203,500(b) -- 3,001,625 -- 3,001,625
Convergys -- 118,900 -- 118,900(b) -- 2,005,843 -- 2,005,843
Electronic Arts -- 123,000 33,600 156,600(b) -- 10,332,000 2,822,400 13,154,400
First Data 42,965 149,100 -- 192,065 1,622,358 5,630,016 -- 7,252,374
Fiserv -- 293,000 38,200 331,200(b) -- 11,438,720 1,491,328 12,930,048
Intl Business Machines -- 373,500 43,700 417,200 -- 30,346,875 3,550,625 33,897,500
Macromedia -- 192,500 -- 192,500(b) -- 3,950,100 -- 3,950,100
Microsoft 163,500 1,889,200 405,000 2,457,700 4,316,400 49,874,880 10,692,000 64,883,280
Oracle -- 1,631,500 -- 1,631,500(b) -- 19,578,000 -- 19,578,000
Siebel Systems -- 251,800 -- 251,800(b) -- 2,361,884 -- 2,361,884
SunGard Data Systems -- 141,200 47,900 189,100(b) -- 3,705,088 1,256,896 4,961,984
Symantec -- 161,800 -- 161,800(b) -- 7,567,386 -- 7,567,386
VeriSign -- 92,900 -- 92,900(b) -- 1,240,215 -- 1,240,215
VERITAS Software -- 221,800 -- 221,800(b) -- 6,831,440 -- 6,831,440
Total 6,568,043 177,555,056 22,685,845 206,808,944
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
8 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
Common stocks (continued)
Shares Shares Shares Shares Value(a) Value(a) Value(a) Value(a)
AXP Large AXP Blue Chip Aggressive AXP Large AXP Blue Chip Aggressive
Cap Equity Advantage Growth Pro Forma Cap Equity Advantage Growth Pro Forma
Issuer Fund Fund Portfolio Combined Fund Fund Portfolio Combined
Electronics (2.5%)
Altera -- 173,300 -- 173,300(b) $-- $3,334,292 $-- $3,334,292
Analog Devices 10,221 -- -- 10,221(b) 387,887 -- -- 387,887
Applied Materials -- -- 46,500 46,500(b) -- -- 906,750 906,750
Avnet -- 147,900 -- 147,900(b) -- 2,129,760 -- 2,129,760
Flextronics Intl -- -- 113,200 113,200(b,c) -- -- 1,245,200 1,245,200
Intel 51,200 1,135,100 200,300 1,386,600 1,277,440 28,320,745 4,997,485 34,595,670
Jabil Circuit -- -- 53,500 53,500(b) -- -- 1,233,175 1,233,175
KLA-Tencor -- -- 22,900 22,900(b) -- -- 1,182,785 1,182,785
Linear Technology -- -- 24,400 24,400 -- -- 899,872 899,872
Maxim Integrated Products -- -- 17,500 17,500 -- -- 683,900 683,900
Novellus Systems -- -- 41,700 41,700(b) -- -- 1,493,277 1,493,277
Taiwan Semiconductor
Mfg ADR 45,368 -- -- 45,368(b,c) 453,680 -- -- 453,680
Total 2,119,007 33,784,797 12,642,444 48,546,248
Energy (5.1%)
Anadarko Petroleum -- 137,700 -- 137,700 -- 6,031,260 -- 6,031,260
Apache -- 68,900 23,325 92,225 -- 4,269,044 1,445,217 5,714,261
BP ADR -- -- 102,500 102,500(c) -- -- 4,258,875 4,258,875
Burlington Resources -- 108,800 -- 108,800 -- 5,023,296 -- 5,023,296
ChevronTexaco 8,400 201,100 41,900 251,400 605,724 14,501,321 3,021,409 18,128,454
ConocoPhillips 64,873 116,000 -- 180,873 3,395,453 6,071,440 -- 9,466,893
Exxon Mobil 78,946 1,113,400 -- 1,192,346 2,808,899 39,614,772 -- 42,423,671
Kerr-McGee -- 70,700 -- 70,700 -- 3,110,800 -- 3,110,800
Newfield Exploration -- 12,100 -- 12,100(b) -- 437,173 -- 437,173
Pogo Producing -- 82,500 -- 82,500 -- 3,489,750 -- 3,489,750
Sunoco -- 20,000 -- 20,000 -- 740,000 -- 740,000
Total 6,810,076 83,288,856 8,725,501 98,824,433
Energy equipment & services (0.4%)
Nabors Inds -- -- 37,400 37,400(b,c) -- -- 1,338,920 1,338,920
Schlumberger -- -- 28,700 28,700 -- -- 1,293,509 1,293,509
Transocean 76,696 126,700 -- 203,396(b) 1,500,941 2,479,519 -- 3,980,460
Weatherford Intl -- -- 33,800 33,800(b) -- -- 1,225,926 1,225,926
Total 1,500,941 2,479,519 3,858,355 7,838,815
Finance companies (2.8%)
Citigroup 106,408 934,700 185,100 1,226,208 4,767,078 41,874,560 8,292,480 54,934,118
Financial services (2.8%)
Capital One Financial 25,800 -- 41,000 66,800 1,236,078 -- 1,964,310 3,200,388
Countrywide Financial -- 147,500 -- 147,500 -- 9,854,475 -- 9,854,475
Fannie Mae 41,197 224,400 33,800 299,397 2,638,256 14,370,576 2,164,552 19,173,384
Freddie Mac -- 210,300 -- 210,300 -- 10,273,155 -- 10,273,155
MBNA 33,827 106,800 115,850 256,477 754,004 2,380,572 2,582,297 5,716,873
Radian Group -- 127,900 -- 127,900 -- 5,986,999 -- 5,986,999
Total 4,628,338 42,865,777 6,711,159 54,205,274
Food (1.2%)
ConAgra Foods -- 439,800 -- 439,800 -- 9,908,694 -- 9,908,694
Dean Foods -- 27,450 39,900 67,350(b) -- 821,579 1,194,207 2,015,786
Heinz (HJ) -- 90,200 -- 90,200 -- 3,072,212 -- 3,072,212
Kellogg -- -- 53,200 53,200 -- -- 1,826,356 1,826,356
Sara Lee -- 298,400 -- 298,400 -- 5,577,096 -- 5,577,096
Total -- 19,379,581 3,020,563 22,400,144
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
9 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
Common stocks (continued)
Shares Shares Shares Shares Value(a) Value(a) Value(a) Value(a)
AXP Large AXP Blue Chip Aggressive AXP Large AXP Blue Chip Aggressive
Cap Equity Advantage Growth Pro Forma Cap Equity Advantage Growth Pro Forma
Issuer Fund Fund Portfolio Combined Fund Fund Portfolio Combined
Health care products (12.2%)
Abbott Laboratories -- 267,800 -- 267,800 $-- $10,511,150 $-- $10,511,150
Amgen 18,000 270,900 62,100 351,000(b) 1,252,440 18,849,222 4,320,918 24,422,580
Bard (CR) -- 107,600 -- 107,600 -- 7,377,056 -- 7,377,056
Baxter Intl -- -- 71,900 71,900 -- -- 1,985,159 1,985,159
Bausch & Lomb -- 75,100 -- 75,100 -- 3,174,477 -- 3,174,477
Beckman Coulter -- 71,800 -- 71,800 -- 3,183,612 -- 3,183,612
Becton, Dickinson & Co -- 128,300 -- 128,300 -- 4,699,629 -- 4,699,629
Biogen -- 27,700 -- 27,700(b) -- 1,064,234 -- 1,064,234
Boston Scientific -- 148,600 35,700 184,300(b) -- 9,395,978 2,257,311 11,653,289
Chiron -- 34,100 -- 34,100(b) -- 1,554,960 -- 1,554,960
Genzyme - General
Division -- 38,700 -- 38,700(b) -- 1,952,028 -- 1,952,028
Guidant -- 254,800 -- 254,800 -- 12,031,656 -- 12,031,656
Johnson & Johnson -- 582,600 63,400 646,000 -- 30,172,854 3,283,486 33,456,340
Lilly (Eli) -- 109,600 -- 109,600 -- 7,216,064 -- 7,216,064
MedImmune -- 45,600 -- 45,600(b) -- 1,787,064 -- 1,787,064
Medtronic 44,400 -- 46,500 90,900 2,286,600 -- 2,394,750 4,681,350
Merck & Co -- 455,700 -- 455,700 -- 25,191,096 -- 25,191,096
Pfizer 242,900 1,368,000 220,000 1,830,900 8,103,145 45,636,479 7,339,199 61,078,823
Schering-Plough 34,900 -- -- 34,900 592,602 -- -- 592,602
St. Jude Medical -- 171,100 31,500 202,600(b) -- 9,179,515 1,689,975 10,869,490
Wyeth 93,050 79,500 -- 172,550 4,241,219 3,623,610 -- 7,864,829
Total 16,476,006 196,600,684 23,270,798 236,347,488
Health care services (4.8%)
Aetna -- 178,900 29,500 208,400 -- 11,023,818 1,817,790 12,841,608
AmerisourceBergen 66,155 -- -- 66,155 4,173,720 -- -- 4,173,720
Anthem -- 139,900 23,000 162,900(b) -- 10,563,849 1,736,730 12,300,579
Cardinal Health 56,500 154,800 28,500 239,800 3,093,375 8,475,300 1,560,375 13,129,050
Coventry Health Care -- 208,200 -- 208,200(b) -- 11,215,734 -- 11,215,734
Fisher Scientific Intl -- 98,600 -- 98,600(b) -- 3,727,080 -- 3,727,080
Humana -- 199,400 -- 199,400(b) -- 3,493,488 -- 3,493,488
McKesson 23,766 -- -- 23,766 766,691 -- -- 766,691
Oxford Health Plans -- 239,800 -- 239,800(b) -- 10,239,460 -- 10,239,460
Patterson Dental -- -- 27,100 27,100(b) -- -- 1,449,850 1,449,850
Select Medical 2,800 -- -- 2,800(b) 78,680 -- -- 78,680
UnitedHealth Group -- -- 45,800 45,800 -- -- 2,385,722 2,385,722
Universal Health
Services Cl B -- 135,100 -- 135,100(b) -- 6,923,875 -- 6,923,875
WellPoint Health Networks -- 127,800 8,600 136,400(b) -- 10,690,470 719,390 11,409,860
Total 8,112,466 76,353,074 9,669,857 94,135,397
Home building (0.1%)
KB HOME -- 47,800 -- 47,800 -- 2,705,958 -- 2,705,958
Household products (2.8%)
Avon Products 8,814 -- -- 8,814 549,905 -- -- 549,905
Colgate-Palmolive -- -- 22,100 22,100 -- -- 1,206,660 1,206,660
Energizer Holdings -- 286,800 -- 286,800(b) -- 9,822,900 -- 9,822,900
Gillette -- 417,200 -- 417,200 -- 12,833,072 -- 12,833,072
Kimberly-Clark 23,800 -- 46,900 70,700 1,151,920 -- 2,269,960 3,421,880
Procter & Gamble 36,458 221,500 35,300 293,258 3,203,565 19,463,205 3,101,811 25,768,581
Total 4,905,390 42,119,177 6,578,431 53,602,998
Industrial transportation (0.9%)
Burlington Northern
Santa Fe -- 279,400 -- 279,400 -- 7,700,264 -- 7,700,264
Expeditors Intl of
Washington 12,100 -- -- 12,100 410,311 -- -- 410,311
Union Pacific -- -- 9,900 9,900 -- -- 603,306 603,306
United Parcel
Service Cl B 9,400 141,600 -- 151,000 592,952 8,932,128 -- 9,525,080
Total 1,003,263 16,632,392 603,306 18,238,961
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
10 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
Common stocks (continued)
Shares Shares Shares Shares Value(a) Value(a) Value(a) Value(a)
AXP Large AXP Blue Chip Aggressive AXP Large AXP Blue Chip Aggressive
Cap Equity Advantage Growth Pro Forma Cap Equity Advantage Growth Pro Forma
Issuer Fund Fund Portfolio Combined Fund Fund Portfolio Combined
Insurance (4.6%)
ACE 7,447 -- -- 7,447(c) $245,677 $-- $-- $245,677
AFLAC -- -- 79,100 79,100 -- -- 2,537,528 2,537,528
Aon -- -- 47,900 47,900 -- -- 1,151,995 1,151,995
Allstate -- 161,800 -- 161,800 -- 6,153,254 -- 6,153,254
American Intl Group 29,294 446,800 -- 476,094 1,880,674 28,684,560 -- 30,565,234
Chubb 19,100 -- -- 19,100 1,237,680 -- -- 1,237,680
Fidelity Natl Financial -- 296,000 -- 296,000 -- 8,492,240 -- 8,492,240
John Hancock
Financial Services -- 120,200 -- 120,200 -- 3,924,530 -- 3,924,530
Lincoln Natl -- 68,600 34,100 102,700 -- 2,561,524 1,273,294 3,834,818
Marsh & McLennan -- 92,000 14,200 106,200 -- 4,565,040 704,604 5,269,644
MetLife -- 115,500 -- 115,500 -- 3,201,660 -- 3,201,660
Montpelier Re Holdings -- -- 40,600 40,600(b,c) -- -- 1,306,914 1,306,914
Principal Financial Group -- 67,300 36,500 103,800 -- 2,193,980 1,189,900 3,383,880
Prudential Financial -- 164,200 -- 164,200 -- 5,842,236 -- 5,842,236
St. Paul Companies -- -- 38,300 38,300 -- -- 1,347,011 1,347,011
Travelers Property
Casualty Cl B -- 194,000 -- 194,000 -- 3,131,160 -- 3,131,160
UnumProvident -- 365,600 108,400 474,000 -- 4,964,848 1,472,072 6,436,920
XL Capital Cl A -- -- 18,700 18,700(c) -- -- 1,486,650 1,486,650
Total 3,364,031 73,715,032 12,469,968 89,549,031
Leisure time & entertainment (1.7%)
AOL Time Warner -- 442,400 -- 442,400(b) -- 6,826,232 -- 6,826,232
Mattel 57,900 412,800 -- 470,700 1,124,997 8,020,704 -- 9,145,701
Viacom Cl B 63,100 239,900 93,100 396,100(b) 2,746,112 10,440,448 4,051,712 17,238,272
Total 3,871,109 25,287,384 4,051,712 33,210,205
Machinery (0.7%)
Caterpillar 18,656 -- 43,700 62,356 1,258,720 -- 2,948,439 4,207,159
Illinois Tool Works 9,600 -- 27,800 37,400 668,640 -- 1,936,270 2,604,910
Ingersoll-Rand Cl A -- 110,800 -- 110,800(c) -- 6,009,792 -- 6,009,792
SPX 2,500 -- -- 2,500(b) 117,725 -- -- 117,725
Total 2,045,085 6,009,792 4,884,709 12,939,586
Media (2.1%)
Amazon.com -- 77,900 -- 77,900(b) -- 3,249,988 -- 3,249,988
Cendant 189,135 -- 114,900 304,035(b) 3,394,973 -- 2,062,455 5,457,428
Clear Channel
Communications -- -- 58,100 58,100(b) -- -- 2,379,195 2,379,195
Disney (Walt) 78,300 -- -- 78,300 1,716,336 -- -- 1,716,336
eBay -- -- 9,200 9,200(b) -- -- 986,240 986,240
Fox Entertainment
Group Cl A -- 104,500 -- 104,500(b) -- 3,163,215 -- 3,163,215
Interpublic Group of
Companies -- 213,900 -- 213,900 -- 2,951,820 -- 2,951,820
Knight-Ridder -- -- 36,000 36,000 -- -- 2,470,680 2,470,680
McGraw-Hill Companies -- 179,600 -- 179,600 -- 10,916,088 -- 10,916,088
Scripps (EW) Cl A 4,700 -- -- 4,700 389,912 -- -- 389,912
Tribune 12,500 -- -- 12,500 590,250 -- -- 590,250
Univision
Communications Cl A -- -- 39,900 39,900(b) -- -- 1,244,880 1,244,880
Yahoo! -- 176,000 -- 176,000(b) -- 5,478,880 -- 5,478,880
Total 6,091,471 25,759,991 9,143,450 40,994,912
Metals (0.2%)
Alcoa -- -- 92,700 92,700 -- -- 2,574,279 2,574,279
Freeport McMoRan
Cooper & Gold Cl B 37,341 -- -- 37,341 1,000,365 -- -- 1,000,365
Phelps Dodge -- -- 14,300 14,300(b) -- -- 603,317 603,317
Total 1,000,365 -- 3,177,596 4,177,961
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
11 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
Common stocks (continued)
Shares Shares Shares Shares Value(a) Value(a) Value(a) Value(a)
AXP Large AXP Blue Chip Aggressive AXP Large AXP Blue Chip Aggressive
Cap Equity Advantage Growth Pro Forma Cap Equity Advantage Growth Pro Forma
Issuer Fund Fund Portfolio Combined Fund Fund Portfolio Combined
<c> <c>
Multi-industry (4.6%)
3M -- 75,000 20,800 95,800 $-- $10,515,000 $2,916,160 $13,431,160
Apollo Group Cl A -- 54,300 -- 54,300(b) -- 3,516,468 -- 3,516,468
Cooper Inds Cl A -- 143,300 -- 143,300 -- 6,352,489 -- 6,352,489
Danaher -- -- 19,700 19,700 -- -- 1,422,340 1,422,340
Emerson Electric -- 85,100 -- 85,100 -- 4,569,870 -- 4,569,870
General Electric 137,950 1,442,500 316,000 1,896,450 3,923,298 41,024,700 8,987,040 53,935,038
Grainger (WW) 6,289 -- -- 6,289 309,419 -- -- 309,419
ITT Inds 2,400 -- -- 2,400 160,080 -- -- 160,080
Pentair -- 117,200 -- 117,200 -- 4,729,020 -- 4,729,020
Tyco Intl 17,400 -- 75,500 92,900(c) 323,640 -- 1,404,300 1,727,940
Total 4,716,437 70,707,547 14,729,840 90,153,824
Paper & packaging (0.6%)
Avery Dennison 24,100 -- -- 24,100 1,300,436 -- -- 1,300,436
Intl Paper -- -- 22,000 22,000 -- -- 860,640 860,640
Pactiv -- 105,600 -- 105,600(b) -- 2,085,600 -- 2,085,600
Rayonier -- 48,450 -- 48,450 -- 1,687,514 -- 1,687,514
Sealed Air -- 122,600 -- 122,600(b) -- 5,851,698 -- 5,851,698
Total 1,300,436 9,624,812 860,640 11,785,888
Precious metals (0.1%)
Newmont Mining -- 68,800 -- 68,800 -- 2,483,680 -- 2,483,680
Real estate investment trust (0.2%)
Equity Office
Properties Trust -- 70,500 -- 70,500 -- 1,955,670 -- 1,955,670
Equity Residential -- 46,400 -- 46,400 -- 1,294,560 -- 1,294,560
Simon Property Group -- 31,600 -- 31,600 -- 1,338,260 -- 1,338,260
Total -- 4,588,490 -- 4,588,490
Restaurants (0.3%)
Darden Restaurants -- -- 77,700 77,700 -- -- 1,453,767 1,453,767
McDonald's 28,100 -- -- 28,100 646,581 -- -- 646,581
Starbucks -- 127,100 38,600 165,700(b) -- 3,473,643 1,054,938 4,528,581
Total 646,581 3,473,643 2,508,705 6,628,929
Retail -- drugstores (0.2%)
CVS -- 138,100 -- 138,100 -- 4,141,619 -- 4,141,619
Retail -- general (5.8%)
Abercrombie & Fitch -- 75,700 -- 75,700(b) -- 2,429,213 -- 2,429,213
AutoZone -- 63,500 -- 63,500(b) -- 5,287,010 -- 5,287,010
Best Buy 17,700 -- 39,950 57,650(b) 772,605 -- 1,743,818 2,516,423
Dollar General 32,450 -- -- 32,450 597,080 -- -- 597,080
Family Dollar Store -- -- 17,300 17,300 -- -- 648,923 648,923
Gap -- 257,800 -- 257,800 -- 4,637,822 -- 4,637,822
Home Depot 56,116 324,000 -- 380,116 1,750,819 10,108,800 -- 11,859,619
Limited Brands -- 237,300 -- 237,300 -- 3,965,283 -- 3,965,283
Lowe's Companies -- 205,200 65,800 271,000 -- 9,759,312 3,129,448 12,888,760
Penney (JC) -- 148,400 -- 148,400 -- 2,757,272 -- 2,757,272
Staples -- 452,800 -- 452,800(b) -- 9,119,392 -- 9,119,392
Target -- -- 50,900 50,900 -- -- 1,950,488 1,950,488
TJX Companies -- 193,500 -- 193,500 -- 3,763,575 -- 3,763,575
Wal-Mart Stores 33,400 756,100 123,800 913,300 1,867,394 42,273,551 6,921,658 51,062,603
Total 4,987,898 94,101,230 14,394,335 113,483,463
Retail -- grocery (0.7%)
Kroger 37,700 578,700 -- 616,400(b) 639,015 9,808,965 -- 10,447,980
SUPERVALU -- -- 65,800 65,800 -- -- 1,549,590 1,549,590
Winn-Dixie Stores -- 148,900 -- 148,900 -- 1,706,394 -- 1,706,394
Total 639,015 11,515,359 1,549,590 13,703,964
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
12 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
Common stocks (continued)
Shares Shares Shares Shares Value(a) Value(a) Value(a) Value(a)
AXP Large AXP Blue Chip Aggressive AXP Large AXP Blue Chip Aggressive
Cap Equity Advantage Growth Pro Forma Cap Equity Advantage Growth Pro Forma
Issuer Fund Fund Portfolio Combined Fund Fund Portfolio Combined
Telecom equipment & services (0.3%)
Corning -- 206,700 140,500 347,200(b) $-- $1,682,538 $1,143,670 $2,826,208
JDS Uniphase -- 244,000 -- 244,000(b) -- 734,440 -- 734,440
Lucent Technologies -- 710,700 -- 710,700(b) -- 1,250,832 -- 1,250,832
Nokia ADR -- -- 104,600 104,600(c) -- -- 1,600,380 1,600,380
Total -- 3,667,810 2,744,050 6,411,860
Textiles & apparel (0.7%)
Jones Apparel Group -- 270,400 -- 270,400(b) -- 7,828,080 -- 7,828,080
Liz Claiborne -- 146,400 -- 146,400 -- 5,040,552 -- 5,040,552
Total -- 12,868,632 -- 12,868,632
Utilities -- electric (2.2%)
AES -- 93,100 -- 93,100(b) -- 585,599 -- 585,599
Ameren -- 32,800 -- 32,800 -- 1,369,728 -- 1,369,728
American Electric Power -- 75,600 -- 75,600 -- 2,121,336 -- 2,121,336
Calpine -- 64,600 -- 64,600(b) -- 368,866 -- 368,866
CenterPoint Energy -- 52,100 -- 52,100 -- 420,447 -- 420,447
Cinergy -- 35,500 -- 35,500 -- 1,207,710 -- 1,207,710
Consolidated Edison -- 42,400 -- 42,400 -- 1,683,704 -- 1,683,704
Dominion Resources -- 56,500 44,400 100,900 -- 3,395,650 2,668,440 6,064,090
DTE Energy -- 34,500 -- 34,500 -- 1,231,995 -- 1,231,995
Duke Energy -- 166,500 -- 166,500 -- 2,922,075 -- 2,922,075
Entergy -- 42,900 -- 42,900 -- 2,209,779 -- 2,209,779
Exelon -- 59,500 35,100 94,600 -- 3,419,465 2,017,197 5,436,662
FirstEnergy 8,700 57,900 -- 66,600 300,063 1,996,971 -- 2,297,034
FPL Group -- 35,100 -- 35,100 -- 2,164,617 -- 2,164,617
Mirant -- 69,300 -- 69,300(b) -- 14,207 -- 14,207
PG&E -- 84,200 -- 84,200(b) -- 1,806,090 -- 1,806,090
PPL -- 34,300 -- 34,300 -- 1,357,937 -- 1,357,937
Progress Energy -- 46,100 -- 46,100 -- 1,878,114 -- 1,878,114
Public Service
Enterprise Group -- 44,100 28,200 72,300 -- 1,797,075 1,149,150 2,946,225
Southern Co -- 130,300 -- 130,300 -- 3,705,732 -- 3,705,732
TXU -- 66,800 -- 66,800 -- 1,347,356 -- 1,347,356
Total 300,063 37,004,453 5,834,787 43,139,303
Utilities -- natural gas (0.3%)
Dynegy Cl A -- 63,600 -- 63,600(b) -- 201,612 -- 201,612
El Paso -- 102,600 -- 102,600 -- 722,304 -- 722,304
KeySpan -- 26,800 -- 26,800 -- 904,500 -- 904,500
Kinder Morgan -- 20,900 -- 20,900 -- 1,118,150 -- 1,118,150
Nicor -- 7,500 -- 7,500 -- 272,100 -- 272,100
NiSource -- 42,600 -- 42,600 -- 822,180 -- 822,180
Peoples Energy -- 6,100 -- 6,100 -- 250,039 -- 250,039
Sempra Energy -- 35,300 -- 35,300 -- 982,399 -- 982,399
Williams Companies -- 88,500 -- 88,500 -- 561,975 -- 561,975
Total -- 5,835,259 -- 5,835,259
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
13 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
Common stocks (continued)
Shares Shares Shares Shares Value(a) Value(a) Value(a) Value(a)
AXP Large AXP Blue Chip Aggressive AXP Large AXP Blue Chip Aggressive
Cap Equity Advantage Growth Pro Forma Cap Equity Advantage Growth Pro Forma
Issuer Fund Fund Portfolio Combined Fund Fund Portfolio Combined
Utilities -- telephone (2.7%)
ALLTEL -- 53,300 -- 53,300 $-- $2,493,907 $-- $2,493,907
AT&T -- 132,000 -- 132,000 -- 2,806,320 -- 2,806,320
BellSouth -- 318,700 31,900 350,600 -- 8,117,289 812,493 8,929,782
CenturyTel -- 24,400 -- 24,400 -- 836,676 -- 836,676
Citizens Communications -- 48,300 -- 48,300(b) -- 572,355 -- 572,355
Qwest Communications Intl -- 290,500 -- 290,500(b) -- 1,159,095 -- 1,159,095
SBC Communications -- 568,600 -- 568,600 -- 13,282,496 -- 13,282,496
Sprint (FON Group) -- 153,200 -- 153,200 -- 2,163,184 -- 2,163,184
Sprint (PCS Group) -- 171,000 -- 171,000(b) -- 1,051,650 -- 1,051,650
Verizon Communications -- 468,500 106,700 575,200 -- 16,331,910 3,719,562 20,051,472
Total -- 48,814,882 4,532,055 53,346,937
Total common stocks
(Cost: $1,911,127,642) $110,110,316 $1,553,037,656 $233,395,077 $1,896,543,049
Short-term securities (2.9%)
Annualized Amount Amount Amount
yield on date payable payable payable
of purchase at maturity at maturity at maturity Value(a) Value(a) Value(a) Value(a)
AXP Large AXP Blue Chip Aggressive AXP Large AXP Blue Chip Aggressive
Cap Equity Advantage Growth Cap Equity Advantage Growth Pro Forma
Issuer Fund Fund Portfolio Fund Fund Portfolio Combined
U.S. government agency (1.1%)
Federal Natl Mtge Assn Disc Nts
09/17/03 0.98% $2,900,000 $-- $-- $2,896,506 $-- $-- $2,896,506
09/17/03 1.02 2,900,000 -- -- 2,896,056 -- -- 2,896,056
09/26/03 1.02 -- 10,000,000 -- -- 9,983,320 -- 9,983,320
09/30/03 1.04 -- -- 1,800,000 -- -- 1,796,940 1,796,940
10/01/03 0.97 -- -- 1,000,000 -- -- 998,255 998,255
10/15/03 1.00 -- -- 800,000 -- -- 798,283 798,283
10/22/03 1.00 1,500,000 -- 500,000 1,496,481 -- 498,827 1,995,308
10/29/03 1.06 -- -- 800,000 -- -- 797,963 797,963
Total 7,289,043 9,983,320 4,890,268 22,162,631
Commercial paper (1.8%)
Abbey Natl North America LLC
08/01/03 1.11 4,300,000 10,300,000 -- 4,299,867 10,299,682 -- 14,599,549
Barton Capital
08/01/03 1.12 -- -- 1,300,000 -- -- 1,299,960 1,299,960
CAFCO
08/25/03 1.03 -- 5,000,000 -- -- 4,996,424 -- 4,996,424
Charta LLC
08/22/03 1.03 -- 5,000,000 -- -- 4,996,853 -- 4,996,853
HBOS Treasury Services
09/18/03 1.03 -- 8,000,000 -- -- 7,988,711 -- 7,988,711
Total 4,299,867 28,281,670 1,299,960 33,881,497
Total short-term securities
(Cost: $56,046,062) $11,588,910 $38,264,990 $6,190,228 $56,044,128
Total investments in securities (prior to pro forma adjustments)
(Cost: $1,967,173,704)(d) $121,699,226 $1,591,302,646 $239,585,305 $1,952,587,177
Pro forma adjustments(e) -- -- (61,055) (61,055)
Total investments in securities (after pro forma adjustments)
(Cost: $1,967,118,596)(e) $121,699,226 $1,591,302,646 $239,524,250 $1,952,526,122
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
14 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
Notes to combined investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements in the annual report.
(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 1.1% of net assets.
(d) At July 31, 2003, the approximate cost of securities for federal income tax
purposes and the approximate aggregate gross unrealized appreciation and
depreciation based on that cost was:
AXP Large Cap AXP Blue Chip Aggressive Pro forma Pro forma
Equity Fund Advantage Fund Growth Portfolio adjustments(e) Combined
Cost of securities for federal income
tax purposes: $116,841,000 $1,610,935,000 $241,649,000 $(55,000) $1,969,370,000
Unrealized appreciation $ 6,230,000 $ 148,377,000 $ 15,971,000 $ -- $ 170,578,000
Unrealized depreciation (1,372,000) (168,009,000) (18,035,000) (6,000) (187,422,000)
----------- ------------- ------------ ------- --------------
Net unrealized appreciation/depreciation $ 4,858,000 $ (19,632,000) $ (2,064,000) $ (6,000) $ (16,844,000)
------------ -------------- ------------ -------- --------------
(e) To reflect the portion of the Aggressive Growth Portfolio net assets not
owned by AXP Research Opportunities Fund. (Cost decreased $55,108).
- --------------------------------------------------------------------------------
15 -- AXP Growth Series, Inc. -- AXP Large Cap Equity Fund
S-6303-20 A (3/04)
PART C. OTHER INFORMATION
Item 15. Indemnification
The Articles of Incorporation of the registrant provide that the Fund shall
indemnify any person who was or is a party or is threatened to be made a party,
by reason of the fact that she or he is or was a director, officer, employee or
agent of the Fund, or is or was serving at the request of the Fund as a
director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may purchase
liability insurance and advance legal expenses, all to the fullest extent
permitted by the laws of the State of Minnesota, as now existing or hereafter
amended. The By-laws of the registrant provide that present or former directors
or officers of the Fund made or threatened to be made a party to or involved
(including as a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by the Minnesota
Business Corporation Act, all as more fully set forth in the By-laws filed as an
exhibit to this registration statement.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Any indemnification hereunder shall not be exclusive of any other rights of
indemnification to which the directors, officers, employees or agents might
otherwise be entitled. No indemnification shall be made in violation of the
Investment Company Act of 1940.
Item 16. Exhibits.
(1)(a) Articles of Incorporation, as amended November 10, 1988, filed as
Exhibit 1 to Post-Effective Amendment No. 38 to Registration Statement
No. 2-38355, are incorporated by reference.
(1)(b) Articles of Amendment to the Articles of Incorporation, dated
June 16, 1999, filed electronically as Exhibit (a)(2) to
Post-Effective Amendment No. 67 to Registration Statement No. 2-38355,
are incorporated by reference.
(1)(c) Articles of Amendment to the Articles of Incorporation, dated
November 14, 2002, filed electronically as Exhibit (a)(3) to
Post-Effective Amendment No. 74 to Registration Statement No. 2-38355,
is incorporated by reference.
(2) By-laws, as amended January 11, 2001 filed electronically as
Exhibit (b) to Post-Effective Amendment No. 67 to Registration
Statement No. 2-38355, are incorporated by reference.
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization is included herein as
Exhibit A of this Registration Statement.
(5) Not applicable.
(6)(a) Investment Management Services Agreement dated January 10, 2002,
between Registrant, on behalf of AXP Large Cap Equity Fund, and
American Express Financial Corporation filed electronically as Exhibit
(d)(4) to Post-Effective Amendment No. 69 to Registration Statement
No. 2-38355 filed on or about March 21, 2002 is incorporated by
reference.
(6)(b) Amendment to Investment Management Services Agreement dated June 3,
2002, between Registrant, on behalf of AXP Large Cap Equity Fund, and
American Express Financial Corporation filed electronically as
Exhibit (d)(7) to Post-Effective Amendment No. 71 to Registration
Statement No. 2-38355, is incorporated by reference.
(6)(c) Investment Management Services Agreement, dated December 1, 2002,
between Registrant on behalf of AXP Large Cap Equity Fund and AXP
Large Cap Value Fund and American Express Financial Corporation,
filed electronically as Exhibit (d)(11) to Post-Effective Amendment
No. 74 to Registration Statement No. 2-38355, is incorporated by
reference.
(7) Distribution Agreement dated January 10, 2002, between Registrant,
on behalf of AXP Large Cap Equity Fund, and American Express Financial
Advisors, Inc. filed electronically as Exhibit (e)(2) to
Post-Effective Amendment No. 69 to Registration Statement No. 2-38355
filed on or about March 21, 2002 is incorporated by reference.
(8) All employees are eligible to participate in a profit sharing plan.
Entry into the plan is Jan. 1 or July 1. The Registrant contributes
each year an amount up to 15 percent of their annual salaries, the
maximum deductible amount permitted under Section 404(a) of the
Internal Revenue Code.
(9)(a) Custodian Agreement dated January 10, 2002, between Registrant, on
behalf of AXP Large Cap Equity Fund, and American Express Trust
Company filed electronically as Exhibit (g)(7) to Post-Effective
Amendment No. 69 to Registration Statement No. 2-38355 filed on or
about March 21, 2002 is incorporated by reference.
(9)(b) Custodian Agreement dated May 13, 1999 between American Express Trust
Company and The Bank of New York is incorporated by reference to
Exhibit (g)(3) to IDS Precious Metals Fund, Inc. Post-Effective
Amendment No. 33, File No. 2-93745 filed on or about May 24, 1999.
(9)(c) Custodian Agreement First Amendment between American Express Trust
Company and The Bank of New York, dated December 1, 2000, filed
electronically as Exhibit (g)(4) to AXP Precious Metals Fund, Inc.
Post-Effective Amendment No. 37 to Registration Statement No. 2-93745,
filed on or about May 28, 2002 is incorporated by reference.
(9)(d) Custodian Agreement Second Amendment between American Express Trust
Company and The Bank of New York, dated June 7, 2001, filed
electronically as Exhibit (g)(5) to AXP Precious Metals Fund, Inc.
Post-Effective Amendment No. 37 to Registration Statement No. 2-93745,
filed on or about May 28, 2002 is incorporated by reference.
(9)(e) Custodian Agreement Amendment between American Express Trust
Company and The Bank of New York, dated January 31, 2002, filed
electronically as Exhibit (g)(6) to AXP Precious Metals Fund, Inc.
Post-Effective Amendment No. 37 to Registration Statement No. 2-93745,
filed on or about May 28, 2002 is incorporated by reference.
(9)(f) Custodian Agreement Amendment between American Express Trust
Company and The Bank of New York, dated April 29, 2003, filed
electronically as Exhibit (g)(8) to AXP Partners Series, Inc.
Post-Effective Amendment No. 7 to Registration Statement No.
333-57852, filed on or about May 22, 2003, is incorporated by
reference.
(10)(a) Plan and Agreement of Distribution For Class C Shares dated January
10, 2002, between Registrant on behalf of AXP Large Cap Equity Fund,
and American Express Financial Advisors, Inc. filed electronically as
Exhibit (m)(4) to Post-Effective Amendment No. 69 to Registration
Statement No. 2-38355, filed on or about March 21, 2002 is
incorporated by reference.
(10)(b) Rule 18f-3 Plan dated March 9, 2000, as Exhibit (n) to AXP Bond Fund
Inc.'s Post-Effective Amendment No. 51 to Registration Statement File
No. 2-51586, filed on or about June 26, 2000, is incorporated by
reference.
(11) Opinion and Consent of Counsel as to the legality of the securities
being registered is filed electronically herewith.
(12) Tax opinion to be filed by amendment.
(13)(a) Administrative Services Agreement dated January 10, 2002, between
Registrant, on behalf of AXP Large Cap Equity Fund, and American
Express Financial Corporation filed electronically as Exhibit (h)(12)
to Post-Effective Amendment No. 69 to Registration Statement No.
2-38355 filed on or about March 21, 2002 is incorporated by reference.
(13)(b) Amendment to Administrative Services Agreement dated June 3, 2002,
between AXP Growth Series, Inc. on behalf of AXP Large Cap Equity Fund
and American Express Financial Corporation filed electronically as
Exhibit (h)(7) to Post-Effective Amendment No. 71 to Registration
Statement No. 2-38355, is incorporated by reference.
(13)(c) License Agreement, dated June 17, 1999, between the American Express
Funds and American Express Company, filed electronically on or about
September 23, 1999 as Exhibit (h)(4) to AXP Stock Fund, Inc.'s
Post-Effective Amendment No. 98 to Registration Statement No. 2-11358,
is incorporated by reference.
(13)(d) Class Y Shareholder Service Agreement dated January 10, 2002,
between Registrant, on behalf of AXP Large Cap Equity Fund, and
American Express Financial Advisors Inc. filed electronically as
Exhibit (h)(13) to Post-Effective Amendment No. 69 to Registration
Statement No. 2-38355, filed on or about March 21, 2002 is
incorporated by reference.
(13)(e) Transfer Agency Agreement, dated May 1, 2003 between Registrant on
behalf of AXP Growth Fund, AXP Large Cap Equity Fund, AXP Large Cap
Value Fund, AXP Quantitative Large Cap Equity Fund and AXP Research
Opportunities Fund and American Express Client Service Corporation,
filed electronically as Exhibit (h)(20) to Post-Effective Amendment
No. 75 to Registration Statement No. 2-38355, is incorporated by
reference.
(13)(f) Class I Shares Transfer Agency Agreement between the American Express
Funds and American Express Client Service Corporation, dated Nov. 13,
2003, filed electronically on or about Nov. 25, 2003 as Exhibit
(h)(9), is incorporated by reference to AXP Stock Series, Inc.
Post-Effective Amendment No. 105 to Registration Statement No.
2-11358.
(14) Independent Auditors' Consent to be filed by amendment.
(15) Financial Statements: Not Applicable.
(16)(a) Directors' Power of Attorney to sign Amendments to this Registration
Statement, dated January 7, 2004, is filed electronically herewith as
Exhibit (16)(a).
(16)(b) Officers' Power of Attorney to sign Amendments to this Registration
Statement, dated Jan. 9, 2002, filed electronically as Exhibit (q)(2)
to Post-Effective Amendment No. 69 to Registration Statement No.
2-38355, filed on or about March 21, 2002 is incorporated by
reference.
(16)(c) Officers' Power of Attorney to sign Amendments to this Registration
Statement, dated Sept. 17, 2002, filed electronically as Exhibit
(q)(3) to Post-Effective Amendment No. 72 to Registration Statement
No. 2-38355, filed on or about Sept. 27, 2002 is incorporated by
reference.
(17)(a) Code of Ethics adopted under Rule 17j-1 for Registrant filed
electronically on or about March 30, 2000 as Exhibit (p)(1) to AXP
Market Advantage Series, Inc.'s Post-Effective Amendment No. 24 to
Registration Statement No. 33-30770 is incorporated by reference.
(17)(b) Code of Ethics adopted under Rule 17j-1 for Registrant's investment
adviser and principal underwriter, dated January 2, 2004, filed
electronically on or about January 12, 2004, as Exhibit (p)(2) to AXP
Discovery Series, Inc.'s Post-Effective Amendment No. 47 to
Registration Statement No. 2-72174 is incorporated by reference.
(17)(c) Prospectus, dated Sept. 29, 2003, for AXP Large Cap Equity Fund is
filed electronically herewith.
(17)(d) Statement of Additional Information, dated Sept. 29, 2003, for AXP
Large Cap Equity Fund is filed electronically herewith.
(17)(e) Annual Report, dated Sept. 29, 2003 for the period ended July 31,
2003, for AXP Large Cap Equity Fund to be filed by amendment.
(17)(f) Prospectus, dated April 1, 2003, for AXP Blue Chip Advantage Fund is
filed electronically herewith.
(17)(g) Statement of Additional Information, dated April 1, 2003, for AXP Blue
Chip Advantage Fund is filed electronically herewith.
(17)(h) Annual Report, dated April 1, 2003 for the period ended Jan. 31, 2003,
for AXP Blue Chip Advantage Fund to be filed by amendment.
(17)(i) Semiannual Report, dated July 31, 2003 for the same period ended, for
AXP Blue Chip Advantage Fund to be filed by amendment.
(17)(j) Prospectus, dated Sept. 29, 2003, for AXP Research Opportunities Fund
is filed electronically herewith.
(17)(k) Statement of Additional Information, dated Sept. 29, 2003, for AXP
Research Opportunities Fund is filed electronically herewith.
(17)(l) Annual Report, dated Sept. 29, 2003 for the period ended July 31,
2003, for AXP Research Opportunities Fund to be filed by amendment.
(17)(m) Prospectus Supplement, dated Jan. 20, 2004, for AXP Large Cap Equity
Fund, AXP Blue Chip Advantage Fund and AXP Research Opportunities Fund
is filed electronically herewith.
(17)(n) Prospectus Supplement, dated Nov. 19, 2003, for AXP Blue Chip
Advantage Fund and AXP Research Opportunities Fund is filed
electronically herewith.
(17)(o) Prospectus Supplement, dated Sept. 4, 2003 for AXP Blue Chip Advantage
Fund is filed electronically herewith.
(17)(p) Prospectus and Statement of Additional Information Supplement, dated
May 28, 2003 for AXP Blue Chip Advantage Fund is filed electronically
herewith.
(17)(q) Statement of Additional Information Supplement, dated May 1, 2003, for
AXP Blue Chip Advantage Fund is filed electronically herewith.
Item 17. Undertakings.
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act, the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act,
each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
(3) The Registrant undertakes to file by Post-Effective Amendment an
Opinion of Counsel supporting the tax consequences of the proposed
reorganization within a reasonable time after receipt of such opinion.
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the city of
Minneapolis, and State of Minnesota on the 2nd day of February, 2004.
AXP GROWTH SERIES, INC.
By /s/ Paula R. Meyer
----------------------
Paula R. Meyer, President
By /s/ Jeffrey P. Fox
---------------------
Jeffrey P. Fox, Treasurer
As required by the Securities Act of 1933, this Registration Statement has been
signed below by the following persons in the capacities indicated on the 2nd
day of February, 2004.
Signature Capacity
/s/ Arne H. Carlson* Chair of the Board
- ---------------------
Arne H. Carlson
/s/ Philip J. Carroll, Jr.* Director
- ----------------------------
Philip J. Carroll, Jr.
/s/ Livio D. DeSimone* Director
- -----------------------
Livio D. DeSimone
/s/ Barbara H. Fraser* Director
- ------------------------
Barbara H. Fraser
/s/ Heinz F. Hutter* Director
- ----------------------
Heinz F. Hutter
/s/ Anne P. Jones* Director
- -------------------
Anne P. Jones
/s/ Stephen R. Lewis, Jr.* Director
- -----------------------------
Stephen R. Lewis, Jr.
/s/ Alan G. Quasha*
- ---------------------- Director
Alan G. Quasha
Signature Capacity
/s/ Stephen W. Roszell* Director
- -------------------------
Stephen W. Roszell
/s/ Alan K. Simpson* Director
- ---------------------
Alan K. Simpson
/s/ Alison Taunton-Rigby* Director
- ---------------------------
Alison Taunton-Rigby
/s/ William F. Truscott* Director
- -------------------------
William F. Truscott
* Signed pursuant to Directors' Power of Attorney, dated January 7, 2004,
filed electronically herewith as Exhibit (16)(a) to this Registration
Statement, by:
/s/ Leslie L. Ogg
- -----------------
Leslie L. Ogg