AXP(R)
Large Cap
Equity
Fund
Annual Report
for the Period Ended
July 31, 2003
AXP Large Cap Equity Fund seeks to provide shareholders with long-term growth of
capital.
- --------------------------------------------------------------------------------
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
- --------------------------------------------------------------------------------
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
The Fund's Long-term Performance 7
Investments in Securities 8
Financial Statements 11
Notes to Financial Statements 14
Independent Auditors' Report 24
Federal Income Tax Information 25
Board Members and Officers 26
(logo) Dalbar
American Express(R) Funds' reports to shareholders have been awarded the
Communications Seal from Dalbar Inc., an independent financial services research
firm. The Seal recognizes communications demonstrating a level of excellence in
the industry.
- --------------------------------------------------------------------------------
2 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Fund Snapshot
AS OF JULY 31, 2003
PORTFOLIO MANAGER
Portfolio manager Doug Chase
Since 3/02
Years in industry 11
FUND OBJECTIVE
This Fund seeks to provide shareholders with long-term growth of capital.
Inception dates
A: 3/28/02 B: 3/28/02 C: 3/28/02 Y: 3/28/02
Ticker symbols
A: ALEAX B: ALEBX C: -- Y: --
Total net assets $120.9 million
Number of holdings 78
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
SECTOR COMPOSITION
Percentage of portfolio assets
(pie chart)
Health care 20.2%
Consumer discretionary 15.3%
Financials 12.8%
Technology 11.1%
Consumer staples 10.2%
Short-term securities 9.5%
Industrials 9.3%
Energy 6.8%
Materials 4.5%
Utilities 0.3%
TOP TEN HOLDINGS
Percentage of portfolio assets
Pfizer (Health care products) 6.7%
Citigroup (Finance companies) 3.9
Microsoft (Computer software & services) 3.5
Wyeth (Health care products) 3.5
AmerisourceBergen (Health care services) 3.4
General Electric (Multi-industry) 3.2
ConocoPhillips (Energy) 2.8
Cendant (Media) 2.8
Altria Group (Beverages & tobacco) 2.6
Procter & Gamble (Household products) 2.6
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
Stock prices of established companies that pay dividends may be less volatile
than the stock market as a whole.
Fund holdings are subject to change.
- --------------------------------------------------------------------------------
3 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
AXP Large Cap Equity Fund has grown to more than $120 million in assets during
its first 15 months in operation. Below, Portfolio Manager Doug Chase discusses
the Fund's performance and positioning as of July 31, 2003.
Q: How did the AXP Large Cap Equity Fund perform in fiscal year 2003?
A: AXP Large Cap Equity Fund's Class A shares advanced 10.22%, excluding sales
charge, for the 12 months ended July 31, 2003. The Fund outperformed its
peers as represented by the Lipper Large-Cap Core Funds Index, which gained
8.63%. The Fund underperformed its benchmark, the Russell 1000(R) Index,
which advanced 11.19% for the period.
Q: What factors significantly affected performance?
A: Individual stock selection added to the Fund's relative performance while
sector positioning hampered results. Underweights in technology and
telecommunications, which had benefited the Fund during the volatile period
from July to September 2002, prevented the Fund from fully participating in
the subsequent market rallies. Similarly, an overweight in health care that
was advantageous early in the period had a negative impact late in 2002. In
addition, the Fund had no exposure to utilities, a sector that did well in
the first seven months of 2003.
Strong results from select portfolio holdings helped offset the impact of
sector allocations. Cendant, a leisure and travel company that was
purchased in the first half of the fiscal year, was one of the Fund's
strongest performers. Among other stocks that contributed to the Fund's
results were pharmaceutical companies Wyeth and Pfizer, media giant AOL
Time Warner, technology company Sun Microsystems and a number of financial
services companies, including Citigroup.
PERFORMANCE COMPARISON
For the period ended July 31, 2003
12% (bar 2)
(bar 1) +11.19%
10% +10.22% (bar 3)
+8.63%
8%
6%
4%
2%
0%
(bar 1) AXP Large Cap Equity Fund Class A (excluding sales charge)
(bar 2) Russell 1000(R)Index (unmanaged)
(bar 3) Lipper Large-Cap Core Funds Index
(see "The Fund's Long-term Performance" for Index descriptions)
Past performance is no guarantee of future results. The 5.75% sales charge
applicable to Class A shares of the Fund is not reflected in the bar chart; if
reflected, returns would be lower than those shown. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
- --------------------------------------------------------------------------------
4 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Questions & Answers
(begin callout quote)> The Fund emphasized media companies with strong brands
and spread our investments among content providers, infrastructure companies,
advertising firms and other communications companies.(end callout quote)
On the negative side, Transocean, an oil service company, did not perform
well for the Fund. Fannie Mae and Freddie Mac, which were added to the
portfolio in the first half of the fiscal period, also proved to be a
disappointment later in the year. Despite benefiting from record home
refinancing volume, both stocks declined due to unfavorable sentiment
stemming from Freddie Mac's accounting and regulatory problems.
Q: What changes were made to the portfolio during the period?
A: At the start of the fiscal year, the Fund was positioned for a continuation
of the weak economic and market environments. In particular, exposure to
stocks believed to be most sensitive to cyclical economic trends was
reduced. Later in 2002, the Fund's overweight in health care stocks was
reduced and its energy positioning increased.
AVERAGE ANNUAL TOTAL RETURNS
as of July 31, 2003
Class A Class B Class C Class Y
(Inception dates) (3/28/02) (3/28/02) (3/28/02) (3/28/02)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4) NAV(5) POP(5)
1 year +10.22% +3.90% +9.27% +5.27% +9.51% +9.51% +10.46% +10.46%
Since inception -7.03% -11.04% -7.85% -10.61% -7.70% -7.70% -6.87% -6.87%
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be worth
more or less than the original cost. The performance shown for each class of
shares will vary due to differences in sales charges and fees. Short term
performance may be higher or lower than the figures shown. Visit
americanexpress.com/funds for current information.
- --------------------------------------------------------------------------------
5 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Questions & Answers
At the beginning of 2003, the expectation was that the economy would
surprise on the upside. The Fund was overweighted energy, materials and
industrial stocks in order to gain some cyclical exposure. Underweights
were maintained in financial and technology stocks because the fundamentals
were not as favorable as in other areas. The Fund's position in consumer
discretionary stocks was increased in February and March 2003, as these
stocks became more attractively priced in the midst of war-related
pessimism. In particular, holdings of media companies were increased. Media
stocks appeared cheap compared to where they would typically trade in a
more normal environment. The Fund emphasized media companies with strong
brands and spread its investments among content providers, infrastructure
companies, advertising firms and other communications companies.
During the latter part of the fiscal period, the Fund began to trim
positions in individual stocks that had outperformed. These included AOL
Time Warner, Cendant, McDonald's and McKesson, as well as both Pfizer and
Wyeth.
Q: How will the Fund be managed in the coming months?
A: It appears as though the marketplace is experiencing somewhat of a euphoric
period right now. Stock prices have been rising without a clear reason for
them to do so. It seems as though a large amount of earnings growth has
already been priced into many stocks, particularly in the technology and
small-cap areas.
Despite the potentially favorable impact of the recent tax cut,
expectations for economic growth in the fourth quarter may be too high. The
economy is already recovering and given that it declined just 0.2% in the
recent recession, there is little case for a strong rebound. Estimates for
growth in the fourth quarter are coming in at about 4%.
Given the broad economic and market backdrop, as the stock market rises we
may sell stocks that have shifted from inexpensive to expensive. However,
we anticipate no major shifts in sector positioning. While sectors we
emphasized underperformed in the past year, this potentially positions
these areas of the market for a period of stronger performance in the
future.
- --------------------------------------------------------------------------------
6 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
The Fund's Long-term Performance
This chart illustrates the total value of an assumed $10,000 investment in AXP
Large Cap Equity Fund Class A shares (from 4/1/02 to 7/31/03) as compared to the
performance of two widely cited performance indices, the Russell 1000(R) Index
and the Lipper Large-Cap Core Funds Index. In comparing the Fund's Class A
shares to these indices, you should take into account the fact that the Fund's
performance reflects the maximum sales charge of 5.75%, while such charges are
not reflected in the performance of the indices. Returns for the Fund include
the reinvestment of any distribution paid during each period.
Past performance is no guarantee of future results. Your investment and return
values fluctuate so that your shares, when redeemed, may be worth more or less
than the original cost. Returns do not reflect taxes payable on distributions
and redemptions. Also see "Past Performance" in the Fund's current prospectus.
(line chart)
VALUE OF A HYPOTHETICAL $10,000 INVESTMENT
IN AXP LARGE CAP EQUITY FUND
$12,000
$9,000
(dotted line) Russell 1000(R) Index(1)
$6,000 (dashed line) Lipper Large-Cap Core Funds Index(2)
(solid line) AXP Large Cap Equity Fund Class A
$3,000
4/01/02 7/02 10/02 1/03 4/03 7/03
(solid line) AXP Large Cap Equity Fund Class A $8,548
(dotted line) Russell 1000(R)Index(1) $8,911
(dashed line) Lipper Large-Cap Core Funds Index(2) $8,807
(1) The Russell 1000(R) Index, an unmanaged index, measures the performance of
the 1,000 largest companies in the Russell 3000(R) Index and represents
approximately 92% of the total market capitalization of the Russell 3000
Index.
(2) Lipper Large-Cap Core Funds Index, published by Lipper Inc., includes the
30 largest funds that are generally similar to the Fund, although some
funds in the index may have somewhat different investment policies or
objectives.
Average Annual Total Returns
Class A with Sales Charge as of July 31, 2003
1 year +3.90%
Since inception (3/28/02) -11.04%
Results for other share classes can be found on page 5.
- --------------------------------------------------------------------------------
7 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Investments in Securities
AXP Large Cap Equity Fund
July 31, 2003
(Percentages represent value of investments compared to net assets)
Common stocks (91.1%)
Issuer Shares Value(a)
Aerospace & defense (2.9%)
Boeing 14,400 $476,928
Lockheed Martin 12,625 660,793
Northrop Grumman 6,900 636,456
Rockwell Automation 18,282 472,407
United Technologies 17,468 1,314,117
Total 3,560,701
Banks and savings & loans (0.5%)
U.S. Bancorp 25,800 632,616
Beverages & tobacco (5.8%)
Altria Group 80,300 3,212,803
Anheuser-Busch 11,700 606,294
PepsiCo 65,824 3,032,512
Total 6,851,609
Broker dealers (1.8%)
J.P. Morgan Chase 16,700 585,335
Merrill Lynch 16,201 880,848
Morgan Stanley 15,500 735,320
Total 2,201,503
Building materials & construction (0.8%)
American Standard 12,100(b) 924,440
Cable (2.5%)
Comcast Cl A 33,484(b) 1,015,234
Comcast Special Cl A 33,925(b) 994,003
EchoStar Communications Cl A 26,900(b) 975,663
Total 2,984,900
Chemicals (1.8%)
Dow Chemical 42,545 1,501,839
Lyondell Chemical 48,392 724,428
Total 2,226,267
Computer hardware (4.0%)
Cisco Systems 82,500(b) 1,610,400
Dell 56,700(b) 1,909,656
Sun Microsystems 362,333(b) 1,355,125
Total 4,875,181
Computer software & services (5.4%)
Affiliated Computer Services Cl A 12,700(b) 629,285
First Data 42,965 1,622,358
Microsoft 163,500 4,316,400
Total 6,568,043
Electronics (1.8%)
Analog Devices 10,221(b) 387,887
Intel 51,200 1,277,440
Taiwan Semiconductor Mfg ADR 45,368(b,c) 453,680
Total 2,119,007
Energy (5.6%)
ChevronTexaco 8,400 605,724
ConocoPhillips 64,873 3,395,453
Exxon Mobil 78,946 2,808,899
Total 6,810,076
Energy equipment & services (1.2%)
Transocean 76,696(b) 1,500,941
Finance companies (3.9%)
Citigroup 106,408 4,767,078
Financial services (3.8%)
Capital One Financial 25,800 1,236,078
Fannie Mae 41,197 2,638,256
MBNA 33,827 754,004
Total 4,628,338
Health care products (13.7%)
Amgen 18,000(b) 1,252,440
Medtronic 44,400 2,286,600
Pfizer 242,900 8,103,145
Schering-Plough 34,900 592,602
Wyeth 93,050 4,241,219
Total 16,476,006
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
8 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Health care services (6.8%)
AmerisourceBergen 66,155 $4,173,720
Cardinal Health 56,500 3,093,375
McKesson 23,766 766,691
Select Medical 2,800(b) 78,680
Total 8,112,466
Household products (4.1%)
Avon Products 8,814 549,905
Kimberly-Clark 23,800 1,151,920
Procter & Gamble 36,458 3,203,565
Total 4,905,390
Industrial transportation (0.8%)
Expeditors Intl of Washington 12,100 410,311
United Parcel Service Cl B 9,400 592,952
Total 1,003,263
Insurance (2.8%)
ACE 7,447(c) 245,677
American Intl Group 29,294 1,880,674
Chubb 19,100 1,237,680
Total 3,364,031
Leisure time & entertainment (3.2%)
Mattel 57,900 1,124,997
Viacom Cl B 63,100(b) 2,746,112
Total 3,871,109
Machinery (1.7%)
Caterpillar 18,656 1,258,720
Illinois Tool Works 9,600 668,640
SPX 2,500(b) 117,725
Total 2,045,085
Media (5.0%)
Cendant 189,135(b) 3,394,973
Disney (Walt) 78,300 1,716,336
Scripps (EW) Cl A 4,700 389,912
Tribune 12,500 590,250
Total 6,091,471
Metals (0.8%)
Freeport McMoRan Cooper
& Gold Cl B 37,341 1,000,365
Multi-industry (3.9%)
General Electric 137,950 3,923,298
Grainger (WW) 6,289 309,419
ITT Inds 2,400 160,080
Tyco Intl 17,400(c) 323,640
Total 4,716,437
Paper & packaging (1.1%)
Avery Dennison 24,100 1,300,436
Restaurants (0.5%)
McDonald's 28,100 646,581
Retail -- general (4.1%)
Best Buy 17,700(b) 772,605
Dollar General 32,450 597,080
Home Depot 56,116 1,750,819
Wal-Mart Stores 33,400 1,867,394
Total 4,987,898
Retail -- grocery (0.5%)
Kroger 37,700(b) 639,015
Utilities -- electric (0.2%)
FirstEnergy 8,700 300,063
Total common stocks
(Cost: $104,312,349) $110,110,316
Short-term securities (9.6%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agency (6.0%)
Federal Natl Mtge Assn Disc Nts
09-17-03 0.98% $2,900,000 $2,896,506
09-17-03 1.02 2,900,000 2,896,056
10-22-03 1.00 1,500,000 1,496,481
Total 7,289,043
Commercial paper (3.6%)
Abbey Natl North America LLC
08-01-03 1.11 4,300,000 4,299,867
Total short-term securities
(Cost: $11,589,010) $11,588,910
Total investments in securities
(Cost: $115,901,359)(d) $121,699,226
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
9 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. As of July 31, 2003,
the value of foreign securities represented 0.8% of net assets.
(d) At July 31, 2003, the cost of securities for federal income tax purposes
was $116,840,781 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $ 6,230,284
Unrealized depreciation (1,371,839)
----------
Net unrealized appreciation $ 4,858,445
-----------
- --------------------------------------------------------------------------------
10 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Large Cap Equity Fund
July 31, 2003
Assets
Investments in securities, at value (Note 1)
(identified cost $115,901,359) $121,699,226
Cash in bank on demand deposit 186,921
Capital shares receivable 766,524
Dividends and accrued interest receivable 120,039
Receivable for investment securities sold 1,026,697
---------
Total assets 123,799,407
-----------
Liabilities
Capital shares payable 12,526
Payable for investment securities purchased 2,758,797
Accrued investment management services fee 1,976
Accrued distribution fee 1,590
Accrued transfer agency fee 772
Accrued administrative services fee 165
Other accrued expenses 101,537
-------
Total liabilities 2,877,363
---------
Net assets applicable to outstanding capital stock $120,922,044
============
Represented by
Capital stock -- $.01 par value (Note 1) $ 267,737
Additional paid-in capital 113,970,315
Accumulated net realized gain (loss) (Note 6) 886,125
Unrealized appreciation (depreciation) on investments 5,797,867
---------
Total -- representing net assets applicable to outstanding capital stock $120,922,044
============
Net assets applicable to outstanding shares: Class A $ 83,257,409
Class B $ 35,551,265
Class C $ 2,052,118
Class Y $ 61,252
Net asset value per share of outstanding capital stock: Class A shares 18,374,049 $ 4.53
Class B shares 7,929,314 $ 4.48
Class C shares 456,827 $ 4.49
Class Y shares 13,477 $ 4.54
------ ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
11 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Statement of operations
AXP Large Cap Equity Fund
Year ended July 31, 2003
Investment income
Income:
Dividends $ 764,115
Interest 68,385
------
Total income 832,500
-------
Expenses (Note 2):
Investment management services fee 342,000
Distribution fee
Class A 94,937
Class B 171,345
Class C 9,241
Transfer agency fee 129,382
Incremental transfer agency fee
Class A 8,905
Class B 8,414
Class C 617
Service fee -- Class Y 29
Administrative services fees and expenses 27,560
Compensation of board members 4,966
Custodian fees 274,440
Printing and postage 1,370
Registration fees 81,089
Audit fees 17,000
------
Total expenses 1,171,295
Expenses waived/reimbursed by AEFC (Note 2) (333,483)
--------
837,812
Earnings credits on cash balances (Note 2) (4,492)
------
Total net expenses 833,320
-------
Investment income (loss) -- net (820)
----
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) 1,719,341
Net change in unrealized appreciation (depreciation) on investments 7,080,694
---------
Net gain (loss) on investments 8,800,035
---------
Net increase (decrease) in net assets resulting from operations $8,799,215
==========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
12 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Statements of changes in net assets
AXP Large Cap Equity Fund
For the period from
July 31, 2003 March 28, 2002* to
Year ended July 31, 2002
Operations and distributions
Investment income (loss) -- net $ (820) $ (10,970)
Net realized gain (loss) on investments 1,719,341 (805,384)
Net change in unrealized appreciation (depreciation) on investments 7,080,694 (1,281,341)
--------- ----------
Net increase (decrease) in net assets resulting from operations 8,799,215 (2,097,695)
--------- ----------
Distributions to shareholders from:
Net investment income
Class A (27,013) --
Class Y (21) --
--------- ----------
Total distributions (27,034) --
--------- ----------
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 72,641,134 11,367,703
Class B shares 31,826,112 5,967,979
Class C shares 1,776,439 241,975
Class Y shares 35,963 23,000
Reinvestment of distributions at net asset value
Class A shares 25,435 --
Class Y shares 13 --
Payments for redemptions
Class A shares (6,855,152) (434,672)
Class B shares (Note 2) (4,072,868) (181,280)
Class C shares (Note 2) (107,435) --
Class Y shares (1,872) (4,191)
------ ------
Increase (decrease) in net assets from capital share transactions 95,267,769 16,980,514
---------- ----------
Total increase (decrease) in net assets 104,039,950 14,882,819
Net assets at beginning of period (Note 1) 16,882,094 1,999,275**
---------- ---------
Net assets at end of period $120,922,044 $16,882,094
============ ===========
Undistributed net investment income $ -- $ 7
------------ -----------
* When shares became publicly available.
** Initial capital of $2,000,000 was contributed on March 21, 2002. The Fund
had a decrease in net assets resulting from operations of $725 during the
period from March 21, 2002 to March 28, 2002 (when shares became publicly
available).
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
13 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Notes to Financial Statements
AXP Large Cap Equity Fund
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Growth Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. AXP Growth Series, Inc. has 10 billion authorized
shares of capital stock that can be allocated among the separate series as
designated by the board. The Fund invests primarily in equity securities of
companies with a market capitalization greater than $5 billion at the time of
purchase. On March 21, 2002, American Express Financial Corporation (AEFC)
invested $2,000,000 in the Fund which represented 394,000 shares for Class A,
2,000 shares for Class B, Class C and Class Y, respectively, which represented
the initial capital for each class at $5 per share. Shares of the Fund were
first offered to the public on March 28, 2002.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, incremental transfer agency fee and service fee (class
specific expenses) differ among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on investments
are allocated to each class of shares based upon its relative net assets.
The Fund's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
- --------------------------------------------------------------------------------
14 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
The Fund also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
- --------------------------------------------------------------------------------
15 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Futures transactions
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes. The net U.S. dollar value of foreign currency underlying
all contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates from an independent pricing service. The Fund is subject to the credit
risk that the other party will not complete its contract obligations.
- --------------------------------------------------------------------------------
16 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to shareholders. No provision for income or excise taxes
is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
On the statement of assets and liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by $27,847
and accumulated net realized gain has been decreased by $27,847.
The tax character of distributions paid for the periods indicated is as follows:
For the period from
July 31, 2003 March 28, 2002* to
Year ended July 31, 2002
Class A
Distributions paid from:
Ordinary income $27,013 $--
Long-term capital gain -- --
Class B
Distributions paid from:
Ordinary income -- --
Long-term capital gain -- --
Class C
Distributions paid from:
Ordinary income -- --
Long-term capital gain -- --
Class Y
Distributions paid from:
Ordinary income 21 --
Long-term capital gain -- --
* When shares became publicly available.
As of July 31, 2003, the components of distributable earnings on a tax basis are
as follows:
Undistributed ordinary income $1,827,826
Accumulated long-term gain (loss) $ (2,279)
Unrealized appreciation (depreciation) $4,858,445
- --------------------------------------------------------------------------------
17 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Dividends to shareholders
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including amortization of premium and discount using the effective interest
method, is accrued daily.
2. EXPENSES AND SALES CHARGES
The Fund has agreements with AEFC to manage its portfolio and provide
administrative services. Under an Investment Management Services Agreement, AEFC
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets in reducing percentages
from 0.60% to 0.48% annually. The fee may be adjusted upward or downward by a
performance incentive adjustment based on a comparison of the performance of
Class A shares of the Fund to the Lipper Large-Cap Core Funds Index. Prior to
Dec. 1, 2002, the maximum adjustment was 0.12% of the Fund's average daily net
assets after deducting 1% from the performance difference. If the performance
difference was less than 1%, the adjustment was zero. On Nov. 13, 2002,
shareholders approved modification of the performance incentive adjustment
calculation by adjusting the performance difference intervals, while retaining
the previous maximum adjustment and reducing the amount of the performance
difference for which no adjustment is made to 0.50%. The effect of the
modifications began Dec. 1, 2002. The adjustment increased the fee by $5,623 for
the year ended July 31, 2003.
Under an Administrative Services Agreement, the Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.05% to 0.02% annually. A minor
portion of additional administrative service expenses paid by the Fund are
consultants' fees and fund office expenses. Under this agreement, the Fund also
pays taxes, audit and certain legal fees, registration fees for shares,
compensation of board members, corporate filing fees and any other expenses
properly payable by the Fund and approved by the board.
- --------------------------------------------------------------------------------
18 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The incremental
transfer agency fee is the amount charged to the specific classes for the
additional expense above the fee for Class Y. The Fund pays AECSC an annual fee
per shareholder account for this service as follows:
o Class A $19.50
o Class B $20.50
o Class C $20.00
o Class Y $17.50
In addition, there is an annual closed-account fee of $5 per inactive account,
charged on a pro rata basis from the date the account becomes inactive until the
date the account is purged from the transfer agent system generally within one
year.
Under terms of a prior agreement that ended April 30, 2003, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $19 for Class
A, $20 for Class B, $19.50 for Class C and $17 for Class Y.
The Fund has agreements with American Express Financial Advisors Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution, the Fund pays a fee at an annual rate up to 0.25% of
the Fund's average daily net assets attributable to Class A shares and up to
1.00% for Class B and Class C shares.
Under a Shareholder Service Agreement, the Fund pays the Distributor a fee for
service provided to shareholders by financial advisors and other servicing
agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net
assets attributable to Class Y shares.
Sales charges received by the Distributor for distributing Fund shares were
$577,722 for Class A, $14,453 for Class B and $151 for Class C for the year
ended July 31, 2003.
For the year ended July 31, 2003, AEFC and American Express Financial Advisors
Inc. waived certain fees and expenses to 1.25% for Class A, 2.01% for Class B,
2.01% for Class C and 1.07% for Class Y. In addition, AEFC and American Express
Financial Advisors Inc. have agreed to waive certain fees and expenses until
July 31, 2004. Under this agreement, total expenses will not exceed 1.25% for
Class A, 2.01% for Class B, 2.01% for Class C and 1.07% for Class Y of the
Fund's average daily net assets.
During the year ended July 31, 2003, the Fund's custodian and transfer agency
fees were reduced by $4,492 as a result of earnings credits from overnight cash
balances. The Fund also pays custodian fees to American Express Trust Company,
an affiliate of AEFC.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $155,444,808 and $69,733,311, respectively, for the year
ended July 31, 2003. Realized gains and losses are determined on an identified
cost basis.
Brokerage clearing fees paid to brokers affiliated with AEFC were $353 for the
year ended July 31, 2003.
- --------------------------------------------------------------------------------
19 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Year ended July 31, 2003
Class A Class B Class C Class Y
Sold 17,273,053 7,641,133 426,869 8,203
Issued for reinvested distributions 6,391 -- -- 3
Redeemed (1,688,951) (977,921) (25,450) (400)
---------- -------- ------- ----
Net increase (decrease) 15,590,493 6,663,212 401,419 7,806
---------- --------- ------- -----
March 28, 2002* to July 31, 2002
Class A Class B Class C Class Y
Sold 2,497,491 1,308,348 53,408 4,674
Issued for reinvested distributions -- -- -- --
Redeemed (107,935) (44,246) -- (1,003)
--------- --------- ------ -----
Net increase (decrease) 2,389,556 1,264,102 53,408 3,671
--------- --------- ------ -----
* When shares became publicly available.
5. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The agreement
went into effect Sept. 24, 2002. The Fund must maintain asset coverage for
borrowings of at least 300%. The agreement, which enables the Fund to
participate with other American Express mutual funds, permits borrowings up to
$500 million, collectively. Interest is charged to each Fund based on its
borrowings at a rate equal to either the LIBOR plus 0.50%, the IBOR plus 0.50%
or the higher of the Federal Funds Rate plus 0.25% and the Prime Lending Rate.
Borrowings are payable within 60 days after such loan is executed. The Fund also
pays a commitment fee equal to its pro rata share of the amount of the credit
facility at a rate of 0.09% per annum. Prior to this agreement, the Fund had a
revolving credit agreement that permitted borrowings up to $200 million with
U.S. Bank, N.A. The Fund had no borrowings outstanding during the year ended
July 31, 2003.
6. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund has a capital loss carry-over of
$2,279 as of July 31, 2003, that will expire in 2012 if not offset by capital
gains. It is unlikely the board will authorize a distribution of any net
realized capital gains until the available capital loss carry-over has been
offset or expires.
- --------------------------------------------------------------------------------
20 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
7. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Class A
Per share income and capital changes(a)
Fiscal period ended July 31, 2003 2002(b)
Net asset value, beginning of period $4.11 $5.00
Income from investment operations:
Net investment income (loss) .01 --
Net gains (losses) (both realized and unrealized) .41 (.89)
Total from investment operations .42 (.89)
Net asset value, end of period $4.53 $4.11
Ratios/supplemental data
Net assets, end of period (in millions) $83 $11
Ratio of expenses to average daily net assets(c),(e) 1.25% 1.25%(d)
Ratio of net investment income (loss) to average daily net assets .24% (.11%)(d)
Portfolio turnover rate (excluding short-term securities) 135% 88%
Total return(i) 10.22% (17.80%)(j)
Class B
Per share income and capital changes(a)
Fiscal period ended July 31, 2003 2002(b)
Net asset value, beginning of period $4.10 $5.00
Income from investment operations:
Net investment income (loss) (.01) (.01)
Net gains (losses) (both realized and unrealized) .39 (.89)
Total from investment operations .38 (.90)
Net asset value, end of period $4.48 $4.10
Ratios/supplemental data
Net assets, end of period (in millions) $36 $5
Ratio of expenses to average daily net assets(c),(f) 2.01% 2.01%(d)
Ratio of net investment income (loss) to average daily net assets (.52%) (.86%)(d)
Portfolio turnover rate (excluding short-term securities) 135% 88%
Total return(i) 9.27% (18.00%)(j)
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
21 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended July 31, 2003 2002(b)
Net asset value, beginning of period $4.10 $5.00
Income from investment operations:
Net investment income (loss) (.01) (.01)
Net gains (losses) (both realized and unrealized) .40 (.89)
Total from investment operations .39 (.90)
Net asset value, end of period $4.49 $4.10
Ratios/supplemental data
Net assets, end of period (in millions) $2 $--
Ratio of expenses to average daily net assets(c),(g) 2.01% 2.01%(d)
Ratio of net investment income (loss) to average daily net assets (.53%) (.92%)(d)
Portfolio turnover rate (excluding short-term securities) 135% 88%
Total return(i) 9.51% (18.00%)(j)
Class Y
Per share income and capital changes(a)
Fiscal period ended July 31, 2003 2002(b)
Net asset value, beginning of period $4.11 $5.00
Income from investment operations:
Net investment income (loss) .01 --
Net gains (losses) (both realized and unrealized) .42 (.89)
Total from investment operations .43 (.89)
Net asset value, end of period $4.54 $4.11
Ratios/supplemental data
Net assets, end of period (in millions) $-- $--
Ratio of expenses to average daily net assets(c),(h) 1.07% 1.07%(d)
Ratio of net investment income (loss) to average daily net assets .45% .09%(d)
Portfolio turnover rate (excluding short-term securities) 135% 88%
Total return(i) 10.46% (17.80%)(j)
Notes to financial highlights
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
22 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Notes to financial highlights
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from March 28, 2002 (when shares became publicly available)
to July 31, 2002.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class A would have been 1.84% and 5.12%
for the periods ended July 31, 2003 and 2002, respectively.
(f) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class B would have been 2.60% and 5.88%
for the periods ended July 31, 2003 and 2002, respectively.
(g) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class C would have been 2.60% and 5.88%
for the periods ended July 31, 2003 and 2002, respectively.
(h) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class Y would have been 1.66% and 4.94%
for the periods ended July 31, 2003 and 2002, respectively.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
- --------------------------------------------------------------------------------
23 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Independent Auditors' Report
THE BOARD AND SHAREHOLDERS
AXP GROWTH SERIES, INC.
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of AXP Large Cap Equity Fund (a
series of AXP Growth Series, Inc.) as of July 31, 2003, the related statement of
operations for the year then ended and the statements of changes in net assets
and the financial highlights for the year ended July 31, 2003, and for the
period from March 28, 2002 (when shares became publicly available) to July 31,
2002. These financial statements and the financial highlights are the
responsibility of fund management. Our responsibility is to express an opinion
on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2003, by correspondence with the custodian and
brokers or by other appropriate auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AXP
Large Cap Equity Fund as of July 31, 2003, and the results of its operations,
changes in its net assets and the financial highlights for each of the periods
stated in the first paragraph above, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
September 12, 2003
- --------------------------------------------------------------------------------
24 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Federal Income Tax Information
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
AXP Large Cap Equity Fund
Fiscal year ended July 31, 2003
Class A
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals (effective for
distributions made after Jan. 1, 2003) 0.00%
Dividends Received Deduction for corporations 38.07%
Payable date Per share
Dec. 19, 2002 $0.00351
Class Y
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals (effective for
distributions made after Jan. 1, 2003) 0.00%
Dividends Received Deduction for corporations 38.07%
Payable date Per share
Dec. 19, 2002 $0.00365
- --------------------------------------------------------------------------------
25 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Board Members and Officers
Shareholders elect a board that oversees the Fund's operations. The board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the board.
The following is a list of the Fund's board members. Each member oversees 15
Master Trust portfolios and 83 American Express mutual funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the board.
Independent Board Members
Name, address, age Position held Principal occupation during past Other directorships
with Fund and five years
length of service
- ---------------------------------- ------------------ ------------------------------------- ---------------------------------
Arne H. Carlson Board member Chair, Board Services Corporation
901 S. Marquette Ave. since 1999 (provides administrative services
Minneapolis, MN 55402 to boards). Former Governor of
Age 68 Minnesota
- ---------------------------------- ------------------ ------------------------------------- ---------------------------------
Philip J. Carroll, Jr. Board member Retired Chairman and CEO, Fluor Scottish Power PLC, Vulcan
901 S. Marquette Ave. since 2002 Corporation (engineering and Materials Company, Inc.
Minneapolis, MN 55402 construction) since 1998 (construction
Age 65 materials/chemicals)
- ---------------------------------- ------------------ ------------------------------------- ---------------------------------
Livio D. DeSimone Board member Retired Chair of the Board and Cargill, Incorporated
30 Seventh Street East since 2001 Chief Executive Officer, Minnesota (commodity merchants and
Suite 3050 Mining and Manufacturing (3M) processors), General Mills,
St. Paul, MN 55101-4901 Inc. (consumer foods), Vulcan
Age 69 Materials Company (construction
materials/ chemicals), Milliken
& Company (textiles and
chemicals), and Nexia
Biotechnologies, Inc.
- ---------------------------------- ------------------ ------------------------------------- ---------------------------------
Heinz F. Hutter* Board member Retired President and Chief
901 S. Marquette Ave. since 1994 Operating Officer, Cargill,
Minneapolis, MN 55402 Incorporated (commodity merchants
Age 74 and processors)
- ---------------------------------- ------------------ ------------------------------------- ---------------------------------
Anne P. Jones Board member Attorney and Consultant
901 S. Marquette Ave. since 1985
Minneapolis, MN 55402
Age 68
- ---------------------------------- ------------------ ------------------------------------- ---------------------------------
Stephen R. Lewis, Jr.** Board member Retired President and Professor of Valmont Industries, Inc.
901 S. Marquette Ave. since 2002 Economics, Carleton College (manufactures irrigation
Minneapolis, MN 55402 systems)
Age 64
- ---------------------------------- ------------------ ------------------------------------- ---------------------------------
Alan G. Quasha Board member President, Quadrant Management, Compagnie Financiere Richemont
901 S. Marquette Ave. since 2002 Inc. (management of private AG (luxury goods), Harken
Minneapolis, MN 55402 equities) Energy Corporation (oil and gas
Age 53 exploration) and SIRIT Inc.
(radio frequency identification
technology)
- ---------------------------------- ------------------ ------------------------------------- ---------------------------------
* Interested person of AXP Partners International Aggressive Growth Fund and
AXP Partners Aggressive Growth Fund by reason of being a security holder of
J P Morgan Chase & Co., which has a 45% interest in American Century
Companies, Inc., the parent company of the subadviser of two of the AXP
Partners Funds, American Century Investment Management, Inc.
** Interested person of AXP Partners International Aggressive Growth Fund by
reason of being a security holder of FleetBoston Financial Corporation,
parent company of Liberty Wanger Asset Management, L.P., one of the fund's
subadvisers.
- --------------------------------------------------------------------------------
26 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
Independent Board Members (continued)
Name, address, age Position held Principal occupation during past Other directorships
with Fund and five years
length of service
- --------------------------------- ------------------- ------------------------------------- ---------------------------------
Alan K. Simpson Board member Former three-term United States Biogen, Inc.
1201 Sunshine Ave. since 1997 Senator for Wyoming (biopharmaceuticals)
Cody, WY 82414
Age 71
- --------------------------------- ------------------- ------------------------------------- ---------------------------------
Alison Taunton-Rigby Board member President, Forester Biotech since
901 S. Marquette Ave. since 2002 2000. Former President and CEO,
Minneapolis, MN 55402 Aquila Biopharmaceuticals, Inc.
Age 59
- --------------------------------- ------------------- ------------------------------------- ---------------------------------
Board Members Affiliated with AEFC***
Name, address, age Position held Principal occupation during past Other directorships
with Fund and five years
length of service
- --------------------------------- ------------------- ------------------------------------- ---------------------------------
Barbara H. Fraser Board member Executive Vice President - AEFA
1546 AXP Financial Center since 2002 Products and Corporate Marketing of
Minneapolis, MN 55474 AEFC since 2002. President -
Age 53 Travelers Check Group, American
Express Company, 2001-2002.
Management Consultant, Reuters,
2000-2001. Managing Director -
International Investments, Citibank
Global, 1999-2000. Chairman and
CEO, Citicorp Investment Services
and Citigroup Insurance Group,
U.S., 1998-1999
- --------------------------------- ------------------- ------------------------------------- ---------------------------------
Stephen W. Roszell Board member Senior Vice President -
50238 AXP Financial Center since 2002, Vice Institutional Group of AEFC
Minneapolis, MN 55474 President since
Age 54 2002
- --------------------------------- ------------------- ------------------------------------- ---------------------------------
William F. Truscott Board member Senior Vice President - Chief
53600 AXP Financial Center since 2001, Vice Investment Officer of AEFC since
Minneapolis, MN 55474 President since 2001. Former Chief Investment
Age 42 2002 Officer and Managing Director,
Zurich Scudder Investments
- --------------------------------- ------------------- ------------------------------------- ---------------------------------
*** Interested person by reason of being an officer, director and/or employee of
AEFC.
- --------------------------------------------------------------------------------
27 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
The board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the board. In addition to Mr. Roszell, who is vice president, and
Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers
Name, address, age Position held Principal occupation during past Other directorships
with Fund and five years
length of service
- --------------------------------- ------------------- ------------------------------------- ---------------------------------
Jeffrey P. Fox Treasurer since Vice President - Investment
50005 AXP Financial Center 2002 Accounting, AEFC, since 2002; Vice
Minneapolis, MN 55474 President - Finance, American
Age 48 Express Company, 2000-2002; Vice
President - Corporate Controller,
AEFC, 1996-2000
- --------------------------------- ------------------- ------------------------------------- ---------------------------------
Paula R. Meyer President since Senior Vice President and General
596 AXP Financial Center 2002 Manager - Mutual Funds, AEFC, since
Minneapolis, MN 55474 2002; Vice President and Managing
Age 49 Director - American Express Funds,
AEFC, 2000-2002; Vice President,
AEFC, 1998-2000
- --------------------------------- ------------------- ------------------------------------- ---------------------------------
Leslie L. Ogg Vice President, President of Board Services
901 S. Marquette Ave. General Counsel, Corporation
Minneapolis, MN 55402 and Secretary
Age 64 since 1978
- --------------------------------- ------------------- ------------------------------------- ---------------------------------
The SAI has additional information about the Fund's directors and is available,
without charge, upon request by calling (800) 862-7919.
- --------------------------------------------------------------------------------
28 -- AXP LARGE CAP EQUITY FUND -- 2003 ANNUAL REPORT
The policies and procedures that the Fund uses to determine how to vote proxies
relating to portfolio securities can be found in the Fund's Statement of
Additional Information (SAI) which is available (i) without charge, upon
request, by calling toll-free (800) 862-7919; (ii) on the American Express
Company Web site at americanexpress.com/funds; and (iii) on the Securities and
Exchange Commission Web site at http://www.sec.gov.
- --------------------------------------------------------------------------------
(logo)
AMERICAN
EXPRESS(R)
- --------------------------------------------------------------------------------
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and is
not a broker-dealer.