AXP(SM)
Tax-Exempt
Bond Fund
2000 SEMIANNUAL REPORT
American
Express(R)
Funds
(icon of) padlock
AXP Tax-Exempt Bond Fund seeks to provide shareholders with as much current
income exempt from federal income taxes as possible with only modest risk to
the shareholder's investments.
AMERICAN
EXPRESS
(R)
<PAGE>
Double-barreled Benefit
Most of the public facilities that we take for granted -- schools, water and
sewer systems, highways, government buildings -- are, in effect, largely funded
by loans from citizens. These loans take the form of state and local government
bonds (called "municipals"), which are bought by investors, including AXP
Tax-Exempt Bond Fund. The government gets the funding it needs, while the
bond-buyers, including Fund shareholders, get ongoing interest income. But
there's another, bigger benefit with municipals: Investors pay no federal taxes
on the income they generate and potentially no state taxes.
CONTENTS
From the Chairman.........................3
From the Portfolio Manager................3
Fund Facts................................5
The 10 Largest Holdings...................6
Financial Statements......................7
Notes to Financial Statements............10
Investments in Securities................17
<PAGE>
(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
The financial markets have always had their ups and downs, but in recent months
volatility has become more frequent and intense. While no one can say with
certainty what the markets will do, American Express Financial Corporation, the
Fund's investment manager, expects economic growth to continue this year,
accompanied by a modest rise in long-term interest rates. But no matter what
transpires, this is a great time to take a close look at your goals and
investments. We encourage you to:
o Consult a professional investment advisor who can help you cut through
mountains of data.
o Set financial goals that extend beyond those achievable
through retirement plans of your employer.
o Learn as much as you can about your current investments.
The portfolio manager's letter that follows provides a review of the Fund's
investment strategies and performance. The semiannual report contains other
valuable information as well. The Fund's prospectus describes its investment
objectives and how it intends to achieve those objectives. As experienced
investors know, information is vital to making good investment decisions.
So, take a moment and decide again whether the Fund's investment objectives and
management style fit with your other investments to help you reach your
financial goals. And make it a practice on a regular basis to assess your
investment options.
On behalf of the Board,
Arne H. Carlson
<PAGE>
(picture of) Terry L. Seierstad
Terry L. Seierstad
Portfolio Manager
From the Portfolio Manager
AXP Tax-Exempt Bond Fund's interest income was little changed during the past
six months, but rising interest rates did reduce its net asset value. As a
result, the total return (excluding the sales charge) for the Fund's Class A
shares was 0.05% during the first half of the fiscal year -- December 1999
through May 2000.
With the economy continuing to expand at a remarkably robust rate and
unemployment at a record-low level, bond investors grew increasingly concerned
that a pickup in inflation might be just around the corner. (Rising inflation
hurts bond values because it erodes the purchasing power of the interest income
that bonds generate.) Although the data showed little conclusive evidence of an
inflation spike, investors' worries were reinforced by the Federal Reserve
(Fed), which raised short-term interest rates three times during the six months
in an effort to reduce potential upward pressure on inflation. The result for
most sectors of the bond market, including municipal issues, was an overall
slump in prices. That was reflected in the Fund's net asset value, which
declined about 2.6% over the period.
FEW BUYERS
Compounding the situation, the market for municipals found little support from
buyers, either individuals or institutions. In fact, cash flow into municipal
bond mutual funds was actually negative for the six months. Fortunately, though,
the supply of bonds declined a fair amount from 1999 levels, which largely
offset the weakness in demand.
Looking specifically at the Fund, I made only modest changes during the period.
Most notable was a greater emphasis on high-quality bonds, which I believed
would fare better should the economy eventually slow down in the face of the
Fed's interest-rate increases. I also lengthened the duration slightly toward
the end of the period in anticipation of a leveling off, or perhaps a decline,
in interest rates as the year progresses. (Duration, a function of the average
maturity of the bonds in the Fund's portfolio, influences how sensitive the net
asset value is to interest-rate changes. Generally, the longer the duration, the
greater the sensitivity.)
As the second half of the fiscal year begins, we have seen some indications that
the economy may be starting to cool off a bit as the Fed's interest-rate
increases begin to take effect. Concurrently, the inflation data remain
relatively good. Therefore, should those trends remain in place, I think the
bond market, municipals included, will have reason to look forward to improving
performance in the months ahead.
Terry L. Seierstad
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 2000 $3.74
Nov. 30, 1999 $3.84
Decrease $0.10
Distributions -- Dec. 1, 1999 - May 31, 2000
From income $0.10
From capital gains $ --
Total distribution $0.10
Total return* +0.05%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 2000 $3.74
Nov. 30, 1999 $3.84
Decrease $0.10
Distributions -- Dec. 1, 1999 - May 31, 2000
From income $0.09
From capital gains $ --
Total distribution $0.09
Total return* -0.33%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 2000 $3.73
Nov. 30, 1999 $3.83
Decrease $0.10
Distributions -- Dec. 1, 1999 - May 31, 2000
From income $0.10
From capital gains $ --
Total distribution $0.10
Total return* +0.12%**
*Returns do not include sales load. The prospectus discusses the effect of
sales charges, if any, on the various classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
<PAGE>
<TABLE>
<CAPTION>
The 10 Largest Holdings
Percent Value
(of net assets) (as of May 31, 2000)
San Antonio Texas Water Refunding Revenue Bonds
<S> <C> <C> <C>
6.40% 2007 3.13% $26,012,000
Chicago Illinois Public Building Commission
Building Revenue Bonds Chicago Board of Education
Series 1990A Escrowed to Maturity
6.50% 2018 2.83 23,534,309
New York State Urban Development Capital
Correctional Facilities Revenue Bonds 4th Series 1993
5.38% 2023 2.54 21,126,286
Georgia Municipal Electric Authority Special Obligation
Bonds Project 1 4th Crossover Series 1997X
6.50% 2020 2.52 20,971,089
King County Washington Unlimited Tax General Obligation
Bonds Issaquah School District 411 Series 1992
6.38% 2008 2.13 17,678,334
New York State Dormitory Authority State Courts
Facilities Lease Revenue Bonds Series 1993A
5.25% 2021 2.10 17,490,599
Phoenix Arizona Industrial Development Authority
Single Family Mortgage Revenue Capital Appreciation
Bonds Zero Coupon Escrowed to Maturity
6.70% 2014 1.99 16,572,660
New Jersey Turnpike Authority Revenue Bonds Series 1991C
6.50% 2005 1.97 16,398,400
Houston Texas Airport Systems
Sub Lien Revenue Bonds Series 1998C
5.00% 2028 1.67 13,909,170
Rochester Minnesota Health Care Facilities Revenue Bonds
Mayo Foundation Series 1992A
4.95% 2019 1.54 12,793,200
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
The 10 holdings listed here make up 22.42% of net assets
</TABLE>
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<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
AXP Tax-Exempt Bond Fund
May 31, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost $796,564,187) $827,831,058
Cash in bank on demand deposit 92,807
Accrued interest receivable 13,681,010
Receivable for investment securities sold 186,234
-------
Total assets 841,791,109
===========
Liabilities
Dividends payable to shareholders 843,523
Payable for investment securities purchased 9,051,400
Accrued investment management services fee 10,199
Accrued distribution fee 6,392
Accrued transfer agency fee 1,207
Accrued administrative services fee 907
Other accrued expenses 48,690
------
Total liabilities 9,962,318
---------
Net assets applicable to outstanding capital stock $831,828,791
============
Represented by
Capital stock-- $.01 par value (Note 1) $ 2,225,995
Additional paid-in capital 833,811,076
Undistributed net investment income 193,608
Accumulated net realized gain (loss) (Note 5) (35,668,759)
Unrealized appreciation (depreciation) on investments 31,266,871
----------
Total -- representing net assets applicable to outstanding capital stock $831,828,791
============
Net assets applicable to outstanding shares: Class A $795,965,712
Class B $ 35,670,473
Class Y $ 192,606
Net asset value per share of outstanding capital stock: Class A shares 213,003,857 $ 3.74
Class B shares 9,544,099 $ 3.74
Class Y shares 51,568 $ 3.73
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statement of operations AXP Tax-Exempt Bond Fund
Six months ended May 31, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Interest $27,219,514
-----------
Expenses (Note 2):
Investment management services fee 1,972,262
Distribution fee
Class A 1,049,274
Class B 184,729
Transfer agency fee 207,919
Incremental transfer agency fee
Class A 22,179
Class B 2,372
Service fee-- Class Y 98
Administrative services fees and expenses 178,505
Compensation of board members 4,837
Custodian fees 28,586
Printing and postage 26,531
Registration fees 28,785
Audit fees 18,000
Other 753
---
Total expenses 3,724,830
Earnings credits on cash balances (Note 2) (10,927)
-------
Total net expenses 3,713,903
=========
Investment income (loss) -- net 23,505,611
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (606,287)
Financial futures contracts (2,617,613)
----------
Net realized gain (loss) on investments (3,223,900)
Net change in unrealized appreciation (depreciation) on investments (19,921,775)
-----------
Net gain (loss) on investments (23,145,675)
-----------
Net increase (decrease) in net assets resulting from operations $ 359,936
=============
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
AXP Tax-Exempt Bond Fund
May 31, 2000 Nov. 30, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ 23,505,611 $ 50,438,674
Net realized gain (loss) on investments (3,223,900) (630,309)
Net change in unrealized appreciation (depreciation) on investments (19,921,775) (82,776,271)
----------- -----------
Net increase (decrease) in net assets
resulting from operations 359,936 (32,967,906)
----------- -----------
Distributions to shareholders from:
Net investment income
Class A (22,500,217) (48,693,601)
Class B (850,303) (1,749,233)
Class Y (5,406) (7,601)
------ ------
Total distributions (23,355,926) (50,450,435)
----------- -----------
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 61,703,256 77,321,566
Class B shares 5,658,740 15,967,680
Class Y shares -- 200,000
Reinvestment of distributions at net asset value
Class A shares 15,296,377 33,181,878
Class B shares 709,182 1,454,096
Class Y shares 5,389 7,401
Payments for redemptions
Class A shares (136,341,219) (137,095,959)
Class B shares (Note 2) (9,172,947) (9,400,364)
Class Y shares (10,592) --
-------
Increase (decrease) in net assets from capital share transactions (62,151,814) (18,363,702)
----------- -----------
Total increase (decrease) in net assets (85,147,804) (101,782,043)
Net assets at beginning of period 916,976,595 1,018,758,638
----------- -------------
Net assets at end of period $ 831,828,791 $ 916,976,595
============= ===============
Undistributed net investment income $ 193,608 $ 43,923
------------- ---------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
AXP Tax-Exempt Bond Fund
(Unaudited as to May 31, 2000)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AXP Tax-Exempt Bond Fund (a series of AXP Tax-Exempt Series, Inc.) is registered
under the Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. AXP Tax-Exempt 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
investment-grade bonds and other debt obligations whose interest is exempt from
federal income tax.
The Fund offers Class A, Class B 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 which may be subject to a CDSC will be offered effective June
26, 2000.
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 and liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund 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. The Fund may
write over-the-counter options where completing the obligation depends upon the
credit standing of the other party.
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
options on debt securities or futures are exercised, the Fund will realize a
gain or loss. When other options are exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts. 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.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the Fund on a
forward-commitment or when-issued basis can take place one month or more after
the transaction date. During this period, such securities are subject to market
fluctuations, and they may affect the Fund's net assets the same as owned
securities. The Fund designates cash or liquid securities at least equal to the
amount of its commitment. As of May 31, 2000, the Fund had entered into
outstanding when-issued or forward-commitments of $9,051,400.
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 and losses deferred due to "wash sale" transactions.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded by the Fund.
Dividends to shareholders
Dividends from net investment income, declared daily and payable monthly, are
reinvested in additional shares of the Fund at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last income
dividend of the calendar year.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Interest income, including level-yield amortization of premium and
discount, is accrued daily.
2. EXPENSES AND SALES CHARGES
The Fund has agreements with American Express Financial Corporation (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 0.45% to 0.35% annually.
Under an Administrative Services Agreement, the Fund pays AEFC a fee for
administrative and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.04% to 0.02% annually. A minor
portion of additional administrative service expenses paid by the Fund are
consultants' fees and fund office expenses. Under this agreement, the Fund also
pays taxes, audit and certain legal fees, registration fees for shares,
compensation of board members, corporate filing fees and any other expenses
properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The 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 Y $17.50
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 distribution 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 shares.
Under a Shareholder Service Agreement, the Fund's Class Y shares pay 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
$240,668 for Class A and $38,783 for Class B for the six months ended May 31,
2000.
During the six months ended May 31, 2000, the Fund's custodian and transfer
agency fees were reduced by $10,927 as a result of earnings credits from
overnight cash balances.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $200,023,035 and $232,664,689, respectively, for the six
months ended May 31, 2000. Realized gains and losses are determined on an
identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended May 31, 2000
Class A Class B Class Y
Sold 16,285,654 1,495,654 --
Issued for reinvested distributions 4,057,457 188,126 1,431
Redeemed (36,075,035) (2,426,493) (2,832)
----------- ---------- ------
Net increase (decrease) (15,731,924) (742,713) (1,401)
----------- ---------- ------
Year ended Nov. 30, 1999
Class A Class B Class Y
Sold 19,188,962 3,915,484 48,438
Issued for reinvested distributions 8,246,331 362,034 1,871
Redeemed (34,114,242) (2,338,072) --
----------- ---------- ----------
Net increase (decrease) (6,678,949) 1,939,446 50,309
---------- ---------- ----------
5. CAPITAL LOSS CARRYOVER
For federal income tax purposes, the Fund has a capital loss carryover of
$18,682,892 as of Nov. 30, 1999 that will expire in 2002 through 2007 if not
offset by subsequent capital gains. It is unlikely the board will authorize a
distribution of any realized capital gains until the available capital loss
carryover has been offset or expires.
6. BANK BORROWINGS
The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund
is permitted to have bank borrowings for temporary or emergency purposes to fund
shareholder redemptions. The Fund must have asset coverage for borrowings not to
exceed the aggregate of 333% of advances equal to or less than five business
days plus 367% of advances over five business days. The agreement, which enables
the Fund to participate with other American Express mutual funds, permits
borrowings up to $200 million, collectively. Interest is charged to each Fund
based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or
the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to
90 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 0.05%
per annum. The Fund had no borrowings outstanding during the period ended May
31, 2000.
<PAGE>
<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Fiscal period ended Nov. 30,
Per share income and capital changesa
Class A
2000d 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $3.84 $4.18 $4.11 $4.01 $4.06
Income from investment operations:
Net investment income (loss) .10 .21 .21 .21 .20
Net gains (losses) (both realized and unrealized) (.10) (.34) .07 .10 (.05)
Total from investment operations -- (.13) .28 .31 .15
Less distributions:
Dividends from net investment income (.10) (.21) (.21) (.21) (.20)
Net asset value, end of period $3.74 $3.84 $4.18 $4.11 $4.01
Ratios/supplemental data
Net assets, end of period (in millions) $796 $877 $984 $998 $1,067
Ratio of expenses to average daily net assetsb .82%e .77% .73% .73% .73%
Ratio of net investment income (loss)
to average daily net assets 5.38%e 5.17% 4.96% 5.19% 5.15%
Portfolio turnover rate
(excluding short-term securities) 24% 45% 18% 19% 62%
Total returnc .05% (3.22%) 6.96% 7.78% 4.01%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
c Total return does not reflect payment of a sales charge.
d Six months ended May 31, 2000 (Unaudited).
e Adjusted to an annual basis.
</TABLE>
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<TABLE>
<CAPTION>
Fiscal period ended Nov. 30,
Per share income and capital changesa
Class B Class Y
2000d 1999 1998 1997 1996 2000d 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $3.84 $4.18 $4.11 $4.01 $4.06 $3.83 $4.18 $4.11 $4.01 $4.06
Income from investment operations:
Net investment income (loss) .09 .18 .18 .18 .17 .10 .21 .21 .21 .21
Net gains (losses) (both
realized and unrealized) (.10) (.34) .07 .10 (.05) (.10) (.35) .07 .10 (.05)
Total from investment operations (.01) (.16) .25 .28 .12 -- (.14) .28 .31 .16
Less distributions:
Dividends from net investment income (.09) (.18) (.18) (.18) (.17) (.10) (.21) (.21) (.21) (.21)
Net asset value, end of period $3.74 $3.84 $4.18 $4.11 $4.01 $3.73 $3.83 $4.18 $4.11 $4.01
Ratios/supplemental data
Net assets, end of period (in millions) $36 $39 $35 $25 $20 $-- $-- $-- $-- $--
Ratio of expenses to
average daily net assetsb 1.57%e 1.53% 1.48% 1.49% 1.49% .66%e .67% .63% .60% .55%
Ratio of net investment
income (loss) to average
daily net assets 4.63%e 4.41% 4.21% 4.43% 4.40% 5.54%e 5.21% 5.05% 5.34% 5.33%
Portfolio turnover rate
(excluding short-term
securities) 24% 45% 18% 19% 62% 24% 45% 18% 19% 62%
Total returnc (.33%)(3.97%) 6.18% 6.94% 3.23% .12% (3.32%) 7.06% 7.87% 4.19%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
c Total return does not reflect payment of a sales charge.
d Six months ended May 31, 2000 (Unaudited).
e Adjusted to an annual basis.
</TABLE>
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<TABLE>
<CAPTION>
Investments in Securities AXP Tax-Exempt Bond Fund
May 31, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Municipal bonds (98.2%)
Name of issuer and Coupon Principal Value(a)
title of issue(d) rate amount
Alabama (0.5%)
Jefferson County Capital Improvement
Sewer Revenue Bonds
Series 1999A (FGIC Insured)
<S> <C> <C> <C> <C> <C>
02-01-33 5.00% $5,000,000 $4,157,500
Alaska (0.6%)
North Slope Borough General Obligation Bonds
Zero Coupon Series 1994B (CGIC Insured)
06-30-04 7.05 3,000,000(b) 2,405,730
06-30-05 7.15 3,000,000(b) 2,271,240
State Housing Finance Veterans Mortgage
Corporation Collateralized Bonds Series 1990
(GNMA/FNMA Insured)
12-01-30 7.50 365,000 369,081
Total 5,046,051
Arizona (3.8%)
Maricopa County Industrial Development Authority
Multi-family Housing Revenue Bonds Series 1996A
07-01-26 6.63 2,500,000 2,593,900
Phoenix Industrial Development Authority
Refunding Revenue Bonds
Christian Care Apartments
01-01-16 6.25 2,000,000 1,779,900
Phoenix Industrial Development Authority
Single Family Mortgage
Capital Appreciation Revenue Bonds
Zero Coupon Escrowed to Maturity
12-01-14 6.70 39,000,000(b) 16,572,660
Phoenix Junior Lien Street & Highway User
Refunding Revenue Bonds Series 1992
07-01-11 6.25 10,350,000 10,660,293
Total 31,606,753
California (9.5%)
Anaheim Public Finance Authority Capital
Appreciation Improvement Revenue Bonds
Zero Coupon Series 1997C (FSA Insured)
09-01-17 5.72 9,195,000(b) 3,327,487
Bakersfield Certificates of Participation
Zero Coupon Escrowed to Maturity
04-15-21 5.25 10,500,000(b) 2,558,745
Foothill/Eastern Transportation Corridor Agency
Toll Road Revenue Bonds Series 1995A
(MBIA Insured)
01-01-35 5.00 12,000,000 10,320,119
Infrastructure & Economic Development Bank
Revenue Bonds American Center for Wine,
Foods & Arts (ACA Insured)
12-01-29 5.80 2,000,000 1,831,880
Los Angeles County Pre-refunded Certificates of
Participation
06-01-15 6.71 3,600,000 3,733,128
Orange County Certificates of Participation
Civic Center Facility Capital Appreciation
Refunding Bonds Zero Coupon (AMBAC Insured)
12-01-18 6.97 13,795,000(b) 4,579,802
Sacramento Cogeneration Authority
Pre-refunded Revenue Bonds Procter & Gamble
Series 1995
07-01-14 6.50 5,000,000 5,431,700
San Jose Redevelopment Agency Merged Area
Redevelopment Tax Allocation Bonds
Series 1993 (MBIA Insured)
08-01-24 4.75 9,000,000 7,453,980
Southern California Public Power Authority Revenue
Bonds Mead Adelanto Series 1994A
(AMBAC Insured)
07-01-20 4.88 6,590,000 5,689,542
State General Obligation Bonds
Residual Certificates Series 194
Inverse Floater (MBIA Insured)
12-01-15 7.74 8,125,000(h) 8,393,938
State Public Works Board California Community
Colleges Lease Pre-refunded Revenue Bonds
Series 1994B
03-01-19 7.00 3,900,000 4,267,458
State Public Works Board University of California
Lease Refunding Revenue Bonds
Series 1993A
06-01-14 5.50 7,275,000 7,324,470
06-01-23 5.00 6,000,000 5,189,700
Ukiah Unified School District
Mendocino County Certificates of Participation
Series 1993
09-01-10 6.00 3,790,000 3,883,613
West Covina Redevelopment Agency Community
Facilities District Special Tax Refunding Bonds
Series 1996
09-01-17 6.00 5,000,000 5,105,600
Total 79,091,162
Colorado (3.0%)
Arapahoe County Public Highway Authority Capital
Improvement Trust Fund E-470 Highway
Pre-refunded Revenue Bonds
08-31-26 7.00 5,685,000 6,296,195
Castle Rock Ranch Public Facility Improvement
Revenue Bonds Series 1996
12-01-11 6.38 5,750,000 5,886,505
E-470 Public Highway Authority
Revenue Bonds Capital Appreciation
Zero Coupon Series 2000B
(MBIA Insured)
09-01-20 6.20 6,000,000(b) 1,695,240
Edgewater Redevelopment Authority
Tax Increment Refunding Revenue Bonds
Edgewater Redevelopment Series 1999
12-01-08 5.50 3,620,000 3,345,242
State Health Facilities Authority
Hospital Improvement Refunding Revenue Bonds
Parkview Episcopal Medical Center Series 1995
09-01-16 6.00 4,000,000 3,504,120
State Health Facilities Authority
Retirement Facilities Revenue Bonds
Liberty Heights Zero Coupon
Escrowed to Maturity
07-15-22 5.54 4,925,000(b) 1,105,219
Trailmark Metropolitan District Limited General
Obligation Bonds Series 1999A
12-01-18 5.80 3,500,000 3,079,545
Total 24,912,066
Connecticut (1.0%)
State General Obligation Bonds Series 1992A
03-15-06 6.40 8,000,000 8,486,080
District of Columbia (2.7%)
District General Obligation Bonds Zero Coupon
Series 1994B (MBIA Insured)
06-01-13 6.63 23,945,000(b) 11,173,455
06-01-14 6.64 26,415,000(b) 11,529,620
Total 22,703,075
Florida (0.6%)
Duvall County Housing Authority Single Family
Mortgage Refunding Revenue Bonds
Series 1991 (FGIC Insured)
07-01-24 7.35 3,065,000 3,147,847
Hillsborough County Industrial Development
Authority Health Facilities Revenue Bonds
University Community Hospital Series 1999A
08-15-23 5.63 1,000,000 810,090
State Municipal Loan Council
Revenue Bonds Capital Appreciation
Zero Coupon Series 2000A (MBIA Insured)
04-01-20 6.02 4,360,000(b) 1,286,418
Total 5,244,355
Georgia (3.9%)
Americus-Sumter County Hospital Authority
Refunding Revenue Bonds South Georgia
Methodist Home for the Aging Obligated Group
Magnolia Manor Series 1999
05-15-29 6.38 2,000,000 1,676,360
Atlantic Water & Wastewater
Refunding Revenue Bonds
Series 1999A (FGIC Insured)
11-01-29 5.00 10,000,000 8,456,200
Municipal Electric Authority Special Obligation
Bonds Project 1 4th Crossover Series 1997X
(Secondary MBIA Insured)
01-01-20 6.50% $19,550,000 $20,971,089
Richmond County Development Authority
Revenue Bonds Zero Coupon
Escrowed to Maturity
12-01-21 5.74 7,880,000(b) 1,669,299
Total 32,772,948
Hawaii (0.7%)
Honolulu City & County General
Obligation Bonds Series 1992A
03-01-06 6.30 5,880,000 6,116,611
Idaho (0.4%)
State Health Facilities Authority Revenue Bonds
Bannock Regional Medical Center Series 1995
05-01-17 6.38 1,450,000 1,321,443
05-01-25 6.13 2,250,000 1,926,698
Total 3,248,141
Illinois (11.0%)
Alton Madison County Hospital Facilities
Refunding Revenue Bonds
St. Anthony's Health Center Series 1996
09-01-10 6.00 2,975,000 2,747,294
09-01-14 6.00 1,765,000 1,583,752
Chicago Capital Appreciation Unlimited General
Obligation Bonds City Colleges Zero Coupon
(FGIC Insured)
01-01-15 5.90 20,000,000(b) 8,373,800
Chicago Limited General Obligation Refunding Bonds
Series 1999A (FGIC Insured)
01-01-29 5.13 9,000,000 7,668,990
Chicago Public Building Commission Building
Revenue Bonds Chicago Board of Education
Series 1990A Escrowed to Maturity
(MBIA Insured)
01-01-18 6.50 23,500,000 23,534,309
Cook & Will Counties Township High School
District 206 Capital Appreciation Bonds
Zero Coupon Series 1994C (AMBAC Insured)
12-01-10 6.55 2,605,000(b) 1,443,847
Cook County Community Consolidated School District 21
General Obligation Bonds Capital Appreciation
Zero Coupon (FSA Insured)
12-01-19 6.03 3,140,000(b) 934,998
Cook County School District 170 Chicago Heights
Pre-refunded Capital Appreciation Bonds
Zero Coupon Series 1994C (AMBAC Insured)
12-01-09 6.50 2,155,000(b) 1,270,502
12-01-10 6.55 2,155,000(b) 1,194,430
Metropolitan Pier & Exposition Authority
Dedicated State Tax Capital Appreciation
Refunding Revenue Bonds McCormick Place
Expansion Zero Coupon Series 1993A
(FGIC Insured)
06-15-10 6.64 11,000,000(b) 6,208,180
06-15-16 6.80 9,000,000(b) 3,427,830
06-15-21 6.54 5,000,000(b) 1,361,400
Metropolitan Pier & Exposition Authority
Dedicated State Tax Capital Appreciation
Refunding Revenue Bonds McCormick Place
Expansion Zero Coupon Series 1994
(MBIA Insured)
06-15-20 5.70 3,070,000(b) 892,695
State Development Finance Authority
Pollution Control Refunding Revenue Bonds
Illinois Power Series 1991A
07-01-21 7.38 10,000,000 10,481,200
State Development Finance Authority
Regency Park Retirement Housing
Revenue Bonds Zero Coupon
Series 1991B Escrowed to Maturity
07-15-25 6.50 10,000,000(b) 1,828,000
State Development Finance Authority
Retirement Housing Revenue Bonds
Zero Coupon Escrowed to Maturity
04-15-20 7.75 13,745,000(b) 3,583,871
State Educational Facilities Authority
Pre-refunded Revenue Bonds
Columbia College
12-01-17 6.88 1,930,000 2,053,867
State Educational Facilities Authority
Revenue Bonds
Lewis University Series 1996
10-01-16 6.10 2,005,000 1,908,560
State Educational Facilities Authority
Revenue Bonds Columbia College
12-01-18 6.13 3,015,000 2,802,563
State Educational Facilities Authority
Un-refunded Revenue Bonds
Columbia College
12-01-17 6.88 830,000 842,782
State Health Facilities Authority
Refunding Revenue Bonds
Edwards Hospital Series 1993A
02-15-19 6.00 3,055,000 2,843,869
State Health Facilities Authority
Refunding Revenue Bonds
Masonic Medical Center Series 1993
10-01-19 5.50 5,000,000 4,230,050
Total 91,216,789
Indiana (1.7%)
Seymour Economic Development
Revenue Bonds
Union Camp Series 1992
07-01-12 6.25 2,870,000 2,898,901
State Transportation Finance Authority Highway
Revenue Bonds Series 1990A
06-01-15 7.25 10,000,000 11,488,100
Total 14,387,001
Iowa (0.3%)
State Finance Authority
Single Family Mortgage-backed
Securities Program Bonds
Series 1991A
07-01-16 7.25 2,085,000 2,128,472
Kentucky (0.9%)
Muhlenberg County Hospital
Refunding Revenue Bonds
Muhlenberg Community Hospital Series 1996
07-01-10 6.75 3,600,000 3,419,316
Owensboro Electric Light & Power
Refunding Revenue Bonds
Zero Coupon Series 1991B (AMBAC Insured)
01-01-15 6.65 9,125,000(b) 3,842,264
Total 7,261,580
Louisiana (2.5%)
Bastrop Industrial Development Board
Pollution Control Refunding Revenue Bonds
International Paper Series 1992A
03-01-07 6.90 6,875,000 7,120,369
New Orleans Capital Appreciation General Obligation
Refunding Revenue Bonds Zero Coupon
(AMBAC Insured)
09-01-12 6.63 6,250,000(b) 3,080,375
New Orleans Home Mortgage Authority
Special Obligation Refunding Bonds
Series 1992 Escrowed to Maturity
01-15-11 6.25 9,000,000 9,535,950
State Public Facilities Authority Revenue Bonds
Centenary College Series 1997
02-01-17 5.90 1,000,000 1,035,320
Total 20,772,014
Maryland (3.0%)
State Community Development Administration
Department of Housing & Community
Development Single Family Program Bonds
1st Series 1991
04-01-17 7.30 10,500,000 10,691,205
State Health & Higher Education Facilities Authority
Revenue Bonds Anne Arundel Medical Center
(AMBAC Insured)
07-01-23 5.00 7,000,000 6,044,920
State Health & Higher Education Facilities Authority
Revenue Bonds Frederick Memorial Hospital
Series 1993 (FGIC Insured)
07-01-28 5.00 10,000,000 8,476,700
Total 25,212,825
Massachusetts (2.2%)
Municipal Wholesale Electric Power
Supply System Pre-refunded Revenue Bonds
Series 1992B
07-01-17 6.75 10,000,000 10,534,300
State Health & Education Facilities Authority
Pre-refunded Revenue Bonds Melrose-Wakefield
Hospital Series 1992B
07-01-16 6.38 1,430,000 1,494,765
State Health & Education Facilities Authority
Refunding Revenue Bonds Caritas Christi
Obligated Group Series 1999A
07-01-15 5.70 3,000,000 2,486,190
State Turnpike Authority Metro Highway System
Revenue Bonds Series 1999A (AMBAC Insured)
01-01-39 5.00 4,530,000 3,741,780
Total 18,257,035
Michigan (2.9%)
Battle Creek Calhoun County Downtown
Development Authority Pre-refunded Bonds
Series 1994
05-01-22 7.65 3,750,000 4,126,875
Detroit Downtown Development Authority
Development Area Project 1 Junior Lien
Tax Increment Refunding Bonds Series 1996D
07-01-25 6.50 6,000,000 6,460,440
Detroit Water Supply System
Refunding Revenue Bonds
Series 1992 (FGIC Insured)
07-01-07 6.25 2,000,000 2,062,920
State Hospital Finance Authority
Refunding Revenue Bonds
Central Michigan Community Hospital
10-01-16 6.25 2,225,000 2,071,586
State Hospital Finance Authority
Refunding Revenue Bonds
Presbyterian Villages Obligated Group
Series 1995
01-01-15 6.40 1,000,000 912,860
01-01-25 6.50 1,000,000 884,850
State Hospital Finance Authority
Refunding Revenue Bonds
Presbyterian Villages Obligated Group
Series 1997
01-01-15 6.38 400,000 364,592
State Hospital Finance Authority
Refunding Revenue Bonds
Greater Detroit Sinai Hospital Series 1995
01-01-16 6.63 2,000,000 1,797,440
State Strategic Fund Limited Tax Obligation
Refunding Revenue Bonds Ford Motor
Series 1991A
02-01-06 7.10 5,000,000 5,433,300
Total 24,114,863
Minnesota (2.8%)
Austin Housing & Redevelopment Authority
Governmental Housing Gross Revenue Bonds
Courtyard Residence Series 2000A
01-01-20 7.15 650,000 648,583
Minneapolis & St. Paul Housing & Redevelopment
Authority Health Care System Series 1990A
(MBIA Insured)
08-15-05 7.40 4,500,000 4,613,715
Rochester Health Care Facilities Revenue Bonds
Mayo Foundation Series 1992A
11-15-19 4.95 15,000,000 12,793,200
St. Paul Housing & Redevelopment Authority Health
Care Facilities Revenue Bonds Regions Hospital
Series 1998
05-15-28 5.30 4,125,000 3,063,596
Washington County Housing & Redevelopment
Authority Refunding Revenue Bonds Woodbury
Multi-family Housing Series 1996
12-01-23 6.95 2,425,000 2,319,828
Total 23,438,922
Missouri (1.5%)
St. Louis Regional Convention & Sports Complex Authority
Pre-refunded Revenue Bonds Series 1991C
08-15-21 7.90 395,000 413,893
St. Louis Regional Convention & Sports Complex Authority
Refunding Revenue Bonds Series 1991C
08-15-21 7.90 8,105,000 8,778,850
State Health & Education Facilities Authority
Revenue Bonds Park College Series 1999
06-01-19 5.88 4,000,000 3,658,280
Total 12,851,023
Nevada (1.1%)
Clark County School District
Residual Certificates Series 311
Inverse Floater (FSA Insured)
06-15-12 6.68 5,000,000(h) 4,956,200
Clark County Special Improvement District 108
Local Improvement Bonds Summerline
Series 1997
02-01-12 6.50 4,440,000 4,559,702
Total 9,515,902
New Hampshire (0.1%)
State Higher Education & Health Facilities Authority
College Revenue Bonds
New Hampshire College Series 1997
01-01-27 6.38 1,000,000 901,730
New Jersey (3.9%)
New Jersey Sports & Exposition Authority
State Contract Rites Series 649R-A
Inverse Floater (MBIA Insured)
03-01-16 7.49 3,385,000(h) 3,394,309
New Jersey Sports & Exposition Authority
State Contract Rites Series 649R-B
Inverse Floater (MBIA Insured)
03-01-17 7.49 3,535,000(h) 3,519,234
New Jersey Sports & Exposition Authority
State Contract Rites Series 649R-C
Inverse Floater (MBIA Insured)
03-01-18 7.49 3,490,000(h) 3,443,269
State Transportation Trust Fund Authority
Refunding Revenue Bonds Residual Certificates
Inverse Floater Series 203 (FSA Insured)
06-15-14 8.60 5,000,000(h) 5,272,850
State Turnpike Authority Revenue Bonds Series 1991C
01-01-05 6.50 16,000,000 16,398,400
Total 32,028,062
New York (9.5%)
New York City Unlimited General Obligation
Pre-funded Bonds Series 1992B
10-01-17 6.75 11,125,000 11,719,186
New York City Unlimited General Obligation
Un-refunded Bonds Series 1992B
10-01-17 6.75 25,000 26,009
New York City Unlimited General Obligation Bonds
Series 2000A
05-15-24 5.50 10,000,000(g) 9,190,400
New York City Unlimited Tax General Obligation
Pre-refunded Bonds Series 1994B-1
08-15-16 7.00 8,850,000 9,581,364
State Dormitory Authority New York City University System
Consolidated 2nd Generation Resource Revenue Bonds
Series 1994A
07-01-18 5.75 5,500,000 5,420,745
State Dormitory Authority State Courts
Facilities Lease Revenue Bonds Series 1993A
05-15-21 5.25 20,000,000 17,490,599
State Mortgage Agency Homeowner Mortgage
Refunding Revenue Bonds Series 1991TT
04-01-15 7.50 4,175,000 4,299,666
State Urban Development Capital
Correctional Facilities Revenue Bonds
4th Series 1993
01-01-23 5.38 23,815,000 21,126,286
Total 78,854,255
North Carolina (2.1%)
Eastern Municipal Power Agency Power System
Revenue Bonds Series 1993D
01-01-16 5.60 6,500,000 5,786,885
Eastern Municipal Power Agency Power System
Revenue Bonds Series 1993G
12-01-16 5.75 12,750,000 11,563,358
Total 17,350,243
North Dakota (0.5%)
Ward County Health Care Facilities Refunding
Revenue Bonds Trinity Obligated Group
Series 1996B
07-01-21 6.25 4,365,000 3,868,874
Ohio (1.4%)
Akron Bath Copley Joint Township Hospital District
Revenue Bonds Summa Hospital Series 1998A
11-15-24 5.38 2,755,000 2,099,503
Carroll Water & Sewer District
Unlimited Tax General Obligation Bonds
12-01-10 6.25 895,000 893,980
Columbus Sewerage System
Refunding Revenue Bonds Series 1992
06-01-05 6.30 3,500,000 3,637,025
State Water & Air Quality Development Authority
Pollution Control Refunding Revenue Bonds
Cleveland Electric Illuminating Series 1995
08-01-25 7.70 300,000 313,779
State Water & Air Quality Development Authority
Pollution Control Refunding Revenue Bonds
Ohio Edison Series 1993A
05-15-29 5.95 5,000,000 4,413,600
Total 11,357,887
Oklahoma (0.4%)
Stillwater Medical Center Authority
Hospital Revenue Bonds Series 1997B
05-15-12 6.35 990,000 915,423
Valley View Hospital Authority
Refunding Revenue Bonds Series 1996
08-15-14 6.00 2,695,000 2,386,935
Total 3,302,358
Pennsylvania (2.9%)
Delaware County Industrial Development Authority
Pollution Control Refunding Revenue Bonds
Series 1997A
07-01-13 6.10 4,000,000 3,547,120
Northampton County Higher Education Authority
Revenue Bonds Lafayette College
(MBIA Insured)
11-01-27 5.00 14,930,000 12,671,390
Philadelphia Hospital & Higher Education Facilities
Authority Hospital Revenue Bonds
Friends Hospital Series 1993
05-01-11 6.20 2,500,000 2,314,775
Philadelphia School District Unlimited General Obligation
Bonds Series 1998A (MBIA Insured)
04-01-23 4.50 4,000,000 3,150,360
Philadelphia Unlimited General Obligation Bonds
(MBIA Insured)
05-15-25 5.00 3,000,000 2,552,520
Total 24,236,165
Puerto Rico (0.6%)
Puerto Rico Municipal Finance Agency
(U.S. Dollar) General Obligation Bonds
Inverse Floater Series 610R (FSA Insured)
08-01-13 8.35 5,000,000(c,h) 5,222,450
Rhode Island (0.2%)
Providence Special Tax Increment Obligation Bonds
Series 1996D
06-01-16 6.65 1,500,000 1,513,860
South Carolina (0.9%)
Horry County Hospital Refunding Revenue Bonds
Conway Hospital Series 1992
07-01-12 6.75 3,665,000 3,777,809
Piedmont Municipal Power Agency Electric
Refunding Revenue Bonds Series 1998A
(MBIA Insured)
01-01-25 4.75 5,000,000 4,032,000
Total 7,809,809
South Dakota (0.3%)
State Health & Educational Facilities Authority
Refunding Revenue Bonds Prairie Lakes Healthcare
04-01-22 5.65 3,000,000 2,376,930
Tennessee (0.2%)
Nashville & Davidson Counties Health & Education
Facilities Board Revenue Bonds
Zero Coupon Escrowed to Maturity
06-01-21 5.71 7,500,000(b) 1,768,350
Texas (12.5%)
Austin Utility System Capital Appreciation
Refunding Revenue Bonds Zero Coupon
(AMBAC Insured)
11-15-10 6.51 5,055,000(b) 2,797,386
Austin Utility System Capital Appreciation
Refunding Revenue Bonds Zero Coupon
Series 1992A (MBIA Insured)
11-15-10 6.60 16,000,000(b) 8,854,240
Austin Utility System Combined Utility
Refunding Revenue Bonds
Series 1992 (AMBAC Insured)
11-15-06 6.25 10,500,000 10,878,315
Harris County Health Facilities Development
Hermann Hospital Revenue Bonds (MBIA Insured)
10-01-24 6.38 8,820,000 9,304,835
Houston Airport Systems
Sub Lien Revenue Bonds
Series 1998C (FGIC Insured)
07-01-28 5.00 16,500,000 13,909,170
Houston Water & Sewer System Junior Lien
Refunding Revenue Bonds Zero Coupon
Series 1991C (AMBAC Insured)
12-01-08 6.60 8,000,000(b) 4,986,240
Katy Independent School District Limited
General Obligation Bonds Series 1998A
(Permanent School Fund Guarantee)
02-15-27 4.75 1,500,000 1,212,600
Municipal Power Agency Capital Appreciation
Refunding Revenue Bonds
Zero Coupon (AMBAC Insured)
09-01-09 6.90 18,000,000(b) 10,712,340
North Tollway Authority Revenue Bonds
Dallas North Tollway System (FGIC Insured)
01-01-29 4.75 9,750,000 7,834,320
Northwest Independent School District
Unlimited Tax General Obligation Capital
Appreciation Refunding Revenue Bonds Zero Coupon
Series 1997 (Permanent School Fund Guarantee)
08-15-17 6.23 3,000,000(b) 1,035,330
San Antonio Water Refunding Revenue Bonds
(FGIC Insured)
05-15-07 6.40 25,000,000 26,012,000
State Coastal Water Authority Water Conveyance
System Refunding Revenue Bonds Series 1991
Escrowed to Maturity (AMBAC Insured)
12-15-17 6.25 5,000,000 5,036,900
State Public Property Financial Corporation Lease
Revenue Bonds Mental Health Mental Retardation
Series 1996
09-01-16 6.20 1,505,000 1,358,654
Total 103,932,330
Vermont (0.7%)
University of Vermont & State Agricultural College
Revenue Bonds Series 1998 (MBIA Insured)
10-01-38 4.75 7,290,000 5,705,154
Virginia (0.4%)
Augusta County Industrial Development Authority
Refunding Revenue Bonds Augusta Hospital
Series 1993 (AMBAC Insured)
09-01-21 5.13 3,600,000 3,126,888
Washington (4.0%)
King County Housing Authority Pooled Housing
Refunding Revenue Bonds Series 1995A
03-01-26 6.80 2,500,000 2,541,475
King County Unlimited Tax General Obligation
Bonds Auburn School District 408
Series 1992A
12-01-06 6.38 8,000,000 8,440,720
King County Unlimited Tax General Obligation
Bonds Issaquah School District 411 Series 1992
12-01-08 6.38 16,675,000 17,678,334
State Public Power Supply System Nuclear Power
Project 3 Capital Appreciation Refunding Revenue
Bonds Zero Coupon Series 1989B (MBIA Insured)
07-01-13 6.61 10,360,000(b) 4,786,320
Total 33,446,849
West Virginia (0.4%)
Princeton Hospital Revenue Bonds
Community Hospital Association
Series 1999
05-01-29 6.10 4,000,000 3,263,960
Wisconsin (0.3%)
State Health & Educational Facilities Authority
Revenue Bonds Divine Savior Hospital
06-01-28 5.70 3,140,000 2,389,540
Wyoming (0.3%)
State Community Development Authority Single Family
Mortgage Bonds Series 1991B
(Federally Insured or Guaranteed Mortgage Loan)
06-01-31 7.40 2,280,000 2,334,196
Total municipal bonds
(Cost: $786,064,187) $817,331,058
Municipal notes (1.3%)
Issuer(e,f) Effective Amount Value(a)
yield payable at
maturity
Allegheny County Pennsylvania Higher Education
Building Authority Revenue Bonds
(Carnegie Mellon University) V.R.
12-01-33 4.35% $4,200,000 $4,200,000
Minneapolis & St. Paul Minnesota Housing & Redevelopment
Healthcare (Children's Hospital) V.R. Series 1995B
08-15-25 4.45 1,200,000 1,200,000
New York City General Obligation Bonds
V.R. Series 1994B
08-15-23 4.40 2,400,000 2,400,000
Pennsylvania State Turnpike
Revenue Bonds V.R. Series 1998Q
06-01-28 4.35 1,000,000 1,000,000
Roanoke Virginia Hospital Revenue Bonds
(Carilion Health System) V.R. Series 1995A
07-01-19 4.35 1,500,000 1,500,000
Valdez Alaska Marine Terminal Refunding Revenue Bonds
(Exxon Pipeline) V.R. Series 1993A
12-01-33 4.30 200,000 200,000
Total municipal notes
(Cost: $10,500,000) $10,500,000
Total investments in securities
(Cost: $796,564,187)(i) $827,831,058
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated. As of May 31, 2000,
the value of foreign securities represented 0.63% of net assets.
(d) The following abbreviations may be used in portfolio descriptions to
identify the insurer of the issue:
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(e) The following abbreviations may be used in the portfolio descriptions:
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
T.A.N. -- Tax Anticipation Note
T.R.A.N.-- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B.-- Variable Rate Demand Bond
V.R.D.N.-- Variable Rate Demand Note
(f) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parentheses, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies to
reflect current market conditions; rate shown is the effective rate on May 31,
2000.
(g) At May 31, 2000, the cost of securities purchased, including interest
purchased, on a when-issued basis was $9,051,400.
(h) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a decline
(increase) in market short-term rates. Interest rate disclosed is the rate in
effect on May 31, 2000. Inverse floaters in the aggregate represent 4.11% of the
Fund's net assets as of May 31, 2000.
(i) At May 31, 2000, the cost of securities for federal income tax purposes was
approximately $796,564,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $45,175,000
Unrealized depreciation (13,908,000)
-----------
Net unrealized appreciation $31,267,000
<PAGE>
American
Express(R)
Funds
AXP Tax-Exempt Bond Fund
200 AXP Financial Center
Minneapolis, MN 55474
TICKER SYMBOL
Class A: INTAX Class B: ITEBX Class C: N/A Class Y: N/A
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN
EXPRESS
AMERICAN
EXPRESS
S-6315 N (7/00)
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.
