AXP(SM)
Intermediate
Tax-Exempt Fund
2000 SEMIANNUAL REPORT
American
Express(R)
Funds
(icon of) padlock
AXPIntermediate Tax-Exempt Fund seeks to provide shareholders with a high level
of current income exempt from federal taxes.
AMERICAN
EXPRESS
(R)
<PAGE>
Why Suffer From a `Lack of Interest'?
If you're looking for a higher yield than a typical tax-free money market fund
with less price volatility than a typical tax-exempt bond fund, this fund is
designed for you. Its yield is generally free from federal taxes, but not
necessarily state and local 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 Fittig
Terry Fittig
Portfolio Manager
From the Portfolio Manager
AXP Intermediate Tax-Exempt Fund's interest income was little changed over the
past six months, although a rise in interest rates penalized its overall
performance. For the first half of the fiscal year -- December 1999 through May
2000 -- the total return (excluding the sales charge) for the Fund's Class A
shares was 0.82%.
Despite ongoing reports of generally low inflation, a continuation of strong
economic growth in the U.S. kept fixed-income investors on edge throughout the
period. Their concern about potentially higher inflation was reinforced by the
Federal Reserve, which raised short-term interest rates three times during the
period -- in February, March and May.
RATES UP, PRICES DOWN
The result was higher intermediate-term interest rates and lower bond prices.
While the trend did drag down the Fund's net asset value, because of the rise in
interest rates, the Fund was able to add some new, higher-yielding issues that
ultimately enhanced its income payments to shareholders.
Looking at other factors, demand for municipal bonds was down, a condition that
was reflected by weak cash flows into municipal bond mutual funds. Fortunately,
the supply of new bonds also declined, mitigating the downturn in demand.
As for the structure of the portfolio, because I expected interest rates to move
up, I kept a shorter-than-normal duration. (Duration, a function of the average
maturity of the bonds in the portfolio, affects how sensitive the Fund's value
is to changes in interest rates. Generally, the longer the duration, the greater
the sensitivity.) As a result, the decline in the net asset value was smaller
than it might have been.
With the second half of the fiscal year underway, it appears that the economy
continues to have considerable strength. Therefore, unless we soon see signs of
a meaningful slowdown, I think the Federal Reserve is likely to push interest
rates somewhat higher to reduce the risk of a run-up in inflation. Given that
outlook, I plan, at least for the near term, to stay with the conservative
investment approach -- a relatively short duration and an emphasis on
higher-quality bonds -- that I employed during recent months.
Terry Fettig
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<CAPTION>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
<S> <C> <C> <C>
May 31, 2000 $4.97
Nov. 30, 1999 $5.02
Decrease $0.05
Distributions -- Dec. 1, 1999 - May 31, 2000
From income $0.09
From capital gains $ --
Total distributions $0.09
Total return* +0.82%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 2000 $4.96
Nov. 30, 1999 $5.02
Decrease $0.06
Distributions -- Dec. 1, 1999 - May 31, 2000
From income $0.07
From capital gains $ --
Total distributions $0.07
Total return* +0.24%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 2000 $4.95
Nov. 30, 1999 $5.01
Decrease $0.06
Distributions -- Dec. 1, 1999 - May 31, 2000
From income $0.10
From capital gains $ --
Total distributions $0.10
Total return* +0.73%**
*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.
</TABLE>
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<CAPTION>
The 10 Largest Holdings
Percent Value
(of net assets) (as of May 31, 2000)
New York City Pre-refunded General Obligation Bonds
Series 1992C-1
<S> <C> <C> <C>
7.50% 2019 2.46% $1,066,669
Clark County Nevada Sanitation District
Pre-refunded General Obligation Sewer Bonds
Series 1993A
6.75% 2009 2.40 1,043,990
Washington State Refunded General Obligation Bonds
Series 1991B
6.70% 2016 2.35 1,019,470
Indiana State Bank Refunding Revenue Bonds
Series 2000A
5.50% 2002 2.31 1,004,860
Wisconsin State Pre-refunded General Obligation Revenue Bonds
Series 1993A
5.20% 2006 2.31 1,004,160
District of Columbia University Revenue Bonds
George Washington University Series 1999A
5.25% 2003 2.31 1,002,310
Michigan State Building Authority Lease Revenue Bonds
Series 1997II
5.00% 2001 2.31 1,002,079
Du Page & Will Counties Illinois Community School District 204
General Obligation Refunding Bonds Indian Prairie
4.95% 2001 2.30 1,000,210
Columbus Ohio General Obligation Bonds Series 1999-2
5.00% 2003 2.30 999,700
Montgomery County Maryland General Obligation Bonds
Series 1998A
4.88% 2003 2.30 996,870
Note: Investment income from certain securities may be subject to the
Alternative Minimum Tax (A.M.T.). For further detail about these holdings,
please refer to the section entitled "Investments in Securities."
(icon of) pie chart
The 10 holdings listed here make up 23.35% of net assets
</TABLE>
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<CAPTION>
Financial Statements
Statement of assets and liabilities
AXP Intermediate Tax-Exempt Fund
May 31, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost $43,559,277) $42,798,363
Accrued interest receivable 617,765
Receivable for investment securities sold 76,838
------
Total assets 43,492,966
Liabilities
Dividends payable to shareholders 30,032
Disbursement in excess of cash on demand deposit 13,822
Accrued investment management services fee 528
Accrued distribution fee 492
Accrued transfer agency fee 67
Accrued administrative services fee 47
Other accrued expenses 37,934
------
Total liabilities 82,922
------
Net assets applicable to outstanding capital stock $43,410,044
===========
Represented by
Capital stock-- $.01 par value (Note 1) $ 87,426
Additional paid-in capital 44,122,007
Excess of distributions over net investment income (4)
Accumulated net realized gain (loss) (38,471)
Unrealized appreciation (depreciation) on investments (760,914)
--------
Total -- representing net assets applicable to outstanding capital stock $43,410,044
===========
Net assets applicable to outstanding shares: Class A $33,666,926
Class B $ 9,741,984
Class Y $ 1,134
Net asset value per share of outstanding capital stock: Class A shares 6,780,214 $ 4.97
Class B shares 1,962,158 $ 4.96
Class Y shares 229 $ 4.95
See accompanying notes to financial statements.
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<CAPTION>
Statement of operations
AXP Intermediate Tax-Exempt Fund
Six months ended May 31, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Interest $1,079,834
----------
Expenses (Note 2): Investment management services fee 105,750
Distribution fee
Class A 46,446
Class B 49,211
Transfer agency fee 11,566
Incremental transfer agency fee
Class A 953
Class B 552
Administrative services fees and expenses 8,860
Compensation of board members 3,901
Custodian fees 3,820
Printing and postage 1,212
Registration fees 22,726
Audit fees 7,375
Other 410
---
Total expenses 262,782
Earnings credits on cash balances (Note 2) (1,579)
------
Total net expenses 261,203
-------
Investment income (loss) -- net 818,631
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) (16,776)
Net change in unrealized appreciation (depreciation) on investments (495,930)
--------
Net gain (loss) on investments (512,706)
--------
Net increase (decrease) in net assets resulting from operations $ 305,925
==========
See accompanying notes to financial statements.
</TABLE>
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<CAPTION>
Statements of changes in net assets
AXP Intermediate Tax-Exempt Fund
May 31, 2000 Nov. 30, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 818,631 $ 1,147,211
Net realized gain (loss) on security transactions (16,776) 16,737
Net change in unrealized appreciation (depreciation)
on investments (495,930) (771,094)
-------- --------
Net increase (decrease) in net assets
resulting from operations 305,925 392,854
------- -------
Distributions to shareholders from:
Net investment income
Class A (677,147) (911,802)
Class B (142,236) (237,666)
Class Y (22) (44)
--- ---
Total distributions (819,405) (1,149,512)
-------- ----------
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 28,868,566 23,083,141
Class B shares 4,159,607 5,504,477
Reinvestment of distributions at net asset value
Class A shares 532,095 686,510
Class B shares 121,044 213,690
Class Y shares 22 44
Payments for redemptions
Class A shares (24,237,391) (14,944,355)
Class B shares (Note 2) (3,375,893) (3,608,039)
---------- ----------
Increase (decrease) in net assets from capital
share transactions 6,068,050 10,935,468
========= ==========
Total increase (decrease) in net assets 5,554,570 10,178,810
Net assets at beginning of period 37,855,474 27,676,664
========== ==========
Net assets at end of period $ 43,410,044 $ 37,855,474
============ ============
Undistributed (excess of distributions over)
net investment income $ (4) $ 770
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
AXP Intermediate Tax-Exempt Fund
(Unaudited as to May 31, 2000)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AXP Intermediate Tax-Exempt 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 bonds and other debt obligations.
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 write over-the-counter
options 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
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.
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, when
available, 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
administration 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
$101,567 for Class A and $12,332 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 $1,579 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 $13,382,386 and $3,571,517, 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 5,772,606 833,154 --
Issued for reinvested distributions 106,749 24,291 4
Redeemed (4,858,059) (677,089) --
---------- -------- --------
Net increase (decrease) 1,021,296 180,356 4
Year ended Nov. 30, 1999
Class A Class B Class Y
Sold 4,539,072 1,080,474 --
Issued for reinvested distributions 135,012 42,053 9
Redeemed (2,934,808) (707,032) --
---------- -------- --------
Net increase (decrease) 1,739,276 415,495 9
5. CAPITAL LOSS CARRYOVER
For federal income tax purposes, the Fund has a capital loss carryover of
$21,695 as of Nov. 30, 1999, that if not offset by subsequent capital gains,
will expire in 2005. It is unlikely the board will authorize a distribution of
any net realized gain for the Fund until its 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 six months ended
May 31, 2000.
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<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
<S> <C> <C> <C> <C> <C>
2000b 1999 1998 1997 1996c
Net asset value, beginning of period $5.02 $5.14 $5.09 $5.04 $5.00
Income from investment operations:
Net investment income (loss) .09 .19 .19 .18 --
Net gains (losses)
(both realized and unrealized) (.05) (.12) .05 .05 .04
Total from investment operations .04 .07 .24 .23 .04
Less distributions:
Dividends from net investment income (.09) (.19) (.19) (.18) --
Net asset value, end of period $4.97 $5.02 $5.14 $5.09 $5.04
Ratios/supplemental data
Net assets, end of period
(in millions) $34 $29 $21 $17 $2
Ratio of expenses to average
daily net assetsd .96%f .90%e .92%e .93%e .90%e,f
Ratio of net investment income (loss)
to average daily net assets 3.63%f 3.78% 3.76% 3.60% 3.19%f
Portfolio turnover rate
(excluding short-term securities) 9% 9% 7% 24% --%
Total returng .82% 1.44% 4.85% 4.44% .96%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended May 31, 2000 (Unaudited).
c Inception date was Nov. 13, 1996.
d Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
e AEFC voluntarily limited total operating expenses, net of earnings
credits, for the Fund. Had AEFC not done so, the annual ratios of expenses
would have been 1.02%, 0.96%, 1.49% and 48.94%, for the periods ended 1999,
1998, 1997, and 1996, respectively.
f Adjusted to an annual basis.
g Total return does not reflect payment of a sales charge.
</TABLE>
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<TABLE>
<CAPTION>
Fiscal period ended Nov. 30,
Per share income and capital changesa
Class B Class Y
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000b 1999 1998 1997 1996c 2000b 1999 1998 1997 1996c
Net asset value,
beginning of period $5.02 $5.14 $5.09 $5.04 $5.00 $5.01 $5.13 $5.09 $5.04 $5.00
Income from investment operations:
Net investment
income (loss) .07 .15 .15 .14 -- .10 .21 .19 .18 --
Net gains (losses) (both
realized and unrealized) (.06) (.12) .05 .05 .04 (.06) (.12) .05 .05 .04
Total from investment
operations .01 .03 .20 .19 .04 .04 .09 .24 .23 .04
Less distributions:
Dividends from net
investment income (.07) (.15) (.15) (.14) -- (.10) (.21) (.20) (.18) --
Net asset value,
end of period $4.96 $5.02 $5.14 $5.09 $5.04 $4.95 $5.01 $5.13 $5.09 $5.04
Ratios/supplemental data
Net assets, end of period
(in millions) $10 $9 $7 $6 $-- $-- $-- $-- $-- $--
Ratio of expenses to
average daily net assetsd 1.71%f 1.65%e 1.67%e 1.68%e 1.66%e,f .85%f .80%e .78%e .80%e 73%e,f
Ratio of net investment
income (loss) to average
daily net assets 2.88%f 3.02% 3.01% 2.87% 2.04%f 3.64%f 4.03% 3.83% 3.84% 2.32%f
Portfolio turnover rate
(excluding short-term securities) 9% 9% 7% 24% --% 9% 9% 7% 24% --%
Total returng .24% .69% 4.07% 3.67% .92% .73% 1.59% 4.78% 4.57% .97%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended May 31, 2000 (Unaudited).
c Inception date was Nov. 13, 1996.
d Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
e AEFC voluntarily limited total operating expenses, net of earnings
credits, for the Fund. Had AEFC not done so, the annual ratios of expenses
would have been 1.78%, 1.71%, 2.17% and 55.07% for Class B and 0.94%,
0.88%, 1.70% and 83.81% for Class Y for the periods ended 1999, 1998,
1997, and 1996, respectively.
f Adjusted to an annual basis.
g Total return does not reflect payment of a sales charge.
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<CAPTION>
Investments in Securities
AXP Intermediate Tax-Exempt Fund
May 31, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Municipal bonds (94.2%)
Name of issuer and Coupon Principal Value(a)
title of issue(b,c) rate amount
Alabama (0.9%)
Special Care Facilities Finance Authority
Revenue Bonds
Lanier Memorial Hospital
Series 1997A
<S> <C> <C> <C> <C> <C>
11-01-01 5.50% $390,000 $388,315
Alaska (2.1%)
Anchorage Unlimited Tax General Obligation Bonds
Series 1992 (MBIA Insured)
08-01-01 5.85 425,000 429,854
Industrial Development & Exploration Authority
Electric Power Revenue Bonds
Upper Lynn Canal Regional Power
Series 1997 A.M.T.
01-01-02 5.00 480,000 471,350
Total 901,204
California (2.1%)
Lake Elsinore School Financing Authority
Revenue Bonds Series 1997
09-01-02 5.10 205,000 203,065
09-01-03 5.20 220,000 217,270
Long Beach Harbor Revenue Bonds Series 1993 A.M.T.
05-15-02 4.50 500,000 497,130
Total 917,465
Colorado (4.3%)
Arapahoe County School District 5 Cherry Creek
General Obligation Bonds Series 1999
12-15-03 4.50 1,000,000 976,990
Arvada Urban Renewal Authority
Tax Allocation Refunding Revenue Bonds
Series 1997A (MBIA Insured)
09-01-02 5.25 200,000 200,824
Denver City & County Airport Revenue Bonds
Series 1996 (MBIA Insured) A.M.T.
11-15-00 4.80 500,000 500,030
Highlands Ranch District 3 Douglas County
(ACA Insured)
12-01-01 4.30 200,000 196,964
Total 1,874,808
District of Columbia (3.4%)
District of Columbia University Revenue Bonds
George Washington University
Series 1999A (MBIA Insured)
09-15-03 5.25 1,000,000 1,002,310
Fixed Rate Revenue Bonds
National Academy of Sciences
Series 1999A (AMBAC Insured)
01-01-05 4.00 500,000 462,120
Total 1,464,430
Florida (6.7%)
Arbor Greene Community Development District
Special Assessment Revenue Bonds Series 2000
05-01-07 6.50 655,000 647,081
Grand Haven Community Development District
Special Assessment Bonds Flagler County
Series 1997A
05-01-02 6.30 300,000 299,874
Heritage Palms Community Development District
Capital Improvement Revenue Bonds
Series 1998
11-01-03 5.40 315,000 304,750
Hillsborough County Industrial Development Authority
Health Facilities Revenue Bonds
University Community Hospital Series 1999A
08-15-03 4.50 500,000 479,210
Lakewood Ranch Community Development District 1
Manatec County Benefit Special Assessment Bonds
Series 1998
05-01-17 7.30 200,000 190,314
North Springs Improvement Special Assessment
District Revenue Bonds Parkland Isles Series 1997B
05-01-05 6.25 400,000 394,012
State Ports Financing Commission Port District
Revenue Bonds Series 1996 (MBIA
Insured) A.M.T.
06-01-03 4.60 100,000 98,418
Stoneybrook Community Development District
Capital Improvement Revenue Bonds
Lee County Series 1998B
05-01-08 5.70 500,000 472,270
Total 2,885,929
Georgia (0.6%)
Clarke County Hospital Authority Hospital
Revenue Certificates Series 1996 (MBIA Insured)
01-01-01 5.00 150,000 150,327
Dalton Development Authority Revenue Certificates
Series 1996 (MBIA Insured)
08-15-04 4.63 125,000 121,848
Total 272,175
Hawaii (0.4%)
State Housing Finance & Development
Single Family Mortgage Revenue Bonds
Series 1998A A.M.T.
07-01-01 4.25 195,000 193,684
Illinois (6.6%)
Chicago Unlimited Tax General Obligation
Refunding Bonds Series 1996B (FGIC Insured)
01-01-02 6.00 520,000 527,082
Du Page & Will Counties Community School District 204
General Obligation Refunding Bonds Indian Prairie
(FGIC Insured)
12-30-01 4.95 1,000,000 1,000,210
Dundee Township Open Space General Obligation Bonds
Series 1997 (FSA Insured)
12-01-02 4.40 250,000 244,260
Health Facility Authority Nursing Home
Refunding Revenue Bonds
Covenant Retirement Communities Series 1998
12-01-00 4.20 415,000 412,838
McDonough County Hospital District
Hospital Facility Refunding Revenue Bonds
Series 1998
07-01-01 4.35 200,000 197,132
North Chicago Unlimited General Obligation
Refunding Bonds Series 1996 (FGIC Insured)
01-01-01 4.60 200,000 199,970
State Educational Facilities Authority Revenue Bonds
Lewis University Series 1996
10-01-03 5.10 140,000 136,685
State Health Facilities Authority Hospital
Refunding Revenue Bonds Series 1996A
08-15-03 5.00 125,000 122,996
Total 2,841,173
Indiana (2.6%)
State Bank Refunding Revenue Bonds Series 2000A
02-01-02 5.50 1,000,000 1,004,860
State Transportation Finance Authority Airport
Facility Lease Refunding Revenue Bonds
Series 1996A (AMBAC Insured)
11-01-03 4.50 125,000 121,755
Total 1,126,615
Kansas (0.5%)
State Development Finance Authority
Health Facilities Revenue Bonds Hays Medical Center
Series 1997B (MBIA Insured)
11-15-00 5.00 200,000 200,374
Louisiana (1.0%)
Jefferson Parish Home Mortgage Authority Single Family
Revenue Bonds Series 1997A
(GNMA & FNMA Insured) A.M.T.
06-01-07 4.90 130,000 126,105
State Public Facilities Authority College Revenue Bonds
Series 1997
02-01-03 5.10 100,000 99,796
State Unlimited Tax General Obligation
Refunding Bonds Series 1996A
08-01-02 6.00 200,000 203,878
Total 429,779
Maine (0.2%)
State Technical College System Certificates of Participation
Series 1997 (MBIA Insured)
01-01-02 4.80 100,000 99,551
Maryland (2.3%)
Montgomery County General Obligation Bonds
Series 1998A
05-01-03 4.88 1,000,000 996,870
Massachusetts (2.8%)
State Education Finance Authority
Student Loan Refunding Revenue Bonds
Issue E Series 1999A A.M.T.
07-01-05 4.10 500,000 459,910
State Health & Education Facilities Authority
Hospital Revenue Bonds
Caritas Christi Obligation Group
Series 1999A
07-01-04 5.25 500,000 478,350
State Health & Education Facilities Authority
Hospital Revenue Bonds
Milford-Whitinsville Regional Hospital
Series 1998C
07-15-01 5.00 300,000 297,726
Total 1,235,986
Michigan (6.4%)
Chippewa County Finance Authority
Hospital Refunding Revenue Bonds
Chippewa County War Memorial Hospital
Series 1997B
11-01-01 4.75 200,000 197,552
Concord Academy Certificate of Participation Series 1998
10-01-03 5.70 175,000 169,705
Countryside Charter School
Full Term Certificates of Participation
Berrien County Series 1999
04-01-04 5.70 145,000 140,272
Garden City Hospital Finance Authority
Hospital Revenue Bonds Series 1998
09-01-03 5.38 200,000 192,622
Livingston Developmental Agency
Certificates of Participation Series 1999
05-01-05 5.70 145,000 139,734
State Building Authority Lease Revenue Bonds
Series 1997II
10-15-01 5.00 1,000,000 1,002,079
State Hospital Finance Authority
Refunding Revenue Bonds
Chelsea Community Hospital
Series 1998
05-15-01 4.50 200,000 198,054
Summit Academy Certificates of Participation
Junior High School Facility
Series 1999
09-01-04 5.70 260,000 250,723
Summit Academy Certificates of Participation
Series 1998
09-01-04 5.70 500,000 482,160
Total 2,772,901
Minnesota (4.1%)
Crow Finance Authority Tribal Purpose
Revenue Bonds Series 1998
10-01-02 5.00 315,000 312,452
Hastings Healthcare Tax-Exempt Nursing Home Revenue Bonds
Regina Medical Center (ACA Insured)
09-15-03 4.30 285,000 271,739
Metropolitan Council Pre-refunded General Obligation Bonds
Series 1991D
09-01-03 6.50 500,000 502,284
Minneapolis Community Development Agency
Limited Tax Supported Development Revenue Bonds
Common Bond Fund Series 1997 A.M.T.
06-01-00 5.10 215,000 215,004
State Higher Education Facilities Authority
Mortgage Revenue Bonds
Augsburg College Series 1999 4-Y
10-01-04 4.40 250,000 236,080
10-01-05 4.40 250,000 232,148
Total 1,769,707
Mississippi (0.7%)
Jackson Airport Authority Revenue Bonds
(AMBAC Insured) A.M.T.
12-01-01 6.25 135,000 137,225
12-01-02 6.25 145,000 148,493
Total 285,718
Missouri (0.9%)
State Health & Educational Facilities Authority
Hospital Revenue Bonds Series 1993A
05-15-02 4.50 125,000 123,208
West Plains Industrial Development Authority
Hospital Revenue Bonds
Ozarks Medical Center
11-15-01 4.60 290,000 284,321
Total 407,529
Nevada (2.6%)
Clark County Sanitation District
Pre-refunded General Obligation Sewer Bonds
Series 1993A (AMBAC Insured)
07-01-09 6.75 1,000,000 1,043,990
Washoe County Limited General Obligation
Refunding Bonds Series 1993B (AMBAC Insured)
09-01-00 4.80 100,000 100,048
Total 1,144,038
New Hampshire (0.2%)
State Business Finance Authority Resource
Recovery Revenue Bonds (MBIA Insured)
07-01-01 4.65 100,000 99,775
New Mexico (2.9%)
Sandoval County Multi-family Housing
Refunding Revenue Bonds Meadowlark Apartments
Series 1998B A.M.T.
07-01-01 6.38 600,000 595,404
Santa Fe County Lifecare Revenue Bonds
El Castillo Retirement Series 1998A
05-15-04 5.00 200,000 189,882
Santa Fe Educational Facilities College
Improvement Refunding Revenue Bonds Series 1997
10-01-03 5.20 235,000 230,972
10-01-04 5.30 245,000 240,125
Total 1,256,383
New York (8.0%)
New York City Pre-refunded General Obligation Bonds
Series 1992C-1
08-01-19 7.50 1,000,000 1,066,669
New York City Unlimited General Obligation Bonds
Series 1997G
10-15-00 5.00 100,000 100,154
08-01-02 5.00 300,000 296,592
10-15-02 5.00 200,000 200,209
New York City Unlimited Tax General Obligation Bonds
Series 1999F
08-01-04 4.00 500,000 465,500
State Dormitory Authority Federal Housing
Authority Insured Hospital Revenue Bonds
Series 1996 (AMBAC Insured)
02-01-01 5.00 125,000 125,258
State Dormitory Authority Health Care Revenue Bonds
Mental Health Services Facilities Series 1997B
08-15-02 5.00 500,000 497,285
State Environmental Facilities Corporation
Special Obligation Lease Refunding Revenue Bonds
Series 1996 (AMBAC Insured)
04-01-01 4.60 200,000 199,988
State Mortgage Agency Single Family Housing
Revenue Bonds Series 1998 A.M.T.
04-01-01 4.15 500,000 497,519
Total 3,449,174
North Carolina (0.2%)
Union City Unlimited General Obligation Bonds
Series 1996B (MBIA Insured)
05-01-01 5.25 100,000 100,550
North Dakota (1.3%)
State Housing Finance Agency Home Mortgage Finance
Revenue Bonds Single Family Housing
Series 1998A A.M.T.
01-01-01 4.20 195,000 194,261
07-01-01 4.20 265,000 262,689
Ward County Health Care Facilities
Revenue Bonds Series 1996A
07-01-03 5.40 100,000 98,510
Total 555,460
Ohio (5.7%)
Akron Bath Copley Joint Township Hospital District
Revenue Bonds Summa Hospital
Series 1998A
11-15-03 4.50 500,000 473,060
Carroll Water & Sewer District
Unlimited Tax General Obligation Bonds
12-01-10 6.25 215,000 214,755
Cleveland Cuyahoga County Port Authority
Refunding Revenue Bonds
Sub Rock & Roll Hall of Fame
12-01-02 5.10 300,000 295,875
Columbus General Obligation Bonds Series 1999-2
06-15-03 5.00 1,000,000 999,700
Portage County Hospital Revenue Bonds
Robinson Memorial Hospital (AMBAC Insured)
11-15-04 4.75 500,000 488,235
Total 2,471,625
Oregon (2.3%)
State Department of Administrative Services
Lottery Revenue Bonds Series B (FSA Insured)
04-01-03 4.40 1,000,000 977,210
Pennsylvania (3.7%)
Clarion County Hospital Authority
Hospital Refunding Revenue Bonds
Clarion Hospital Series 1997
07-01-00 4.60 200,000 199,885
07-01-01 4.75 200,000 197,862
Commonwealth of Pennsylvania Unlimited General
Obligation Bonds 3rd Series 1993
09-01-00 4.50 150,000 149,955
Cumberland County Municipal Authority
Nursing Home Revenue Bonds Series 1996
12-01-03 5.35 125,000 122,289
Delaware County Industrial Development Authority
Pollution Control Refunding Revenue Bonds
Series 1997A
01-01-01 5.30 500,000 498,120
State Higher Education Facilities Authority
Revenue Bonds UPMC Health System
Series 1999A
08-01-05 4.05 500,000 456,780
Total 1,624,891
Rhode Island (0.5%)
State Refunding Certificates of Participation
Series 1997 (MBIA Insured)
10-01-02 4.70 200,000 198,032
South Dakota (0.8%)
Sioux Falls Health Facilities
Hospital Revenue Bonds
Evangelical Lutheran Good Samaritan Society
Series 1998B (AMBAC Insured)
06-01-01 4.45 200,000 199,056
Sioux Falls Sales Tax Revenue Bonds
Series 1996A (AMBAC Insured)
11-15-04 5.00 150,000 149,169
Total 348,225
Tennessee (1.1%)
Knox County Unlimited Tax General
Obligation Bonds Series 1997
02-01-03 4.45 500,000 489,990
Texas (6.3%)
Denison Hospital Authority Revenue Bonds Series 1997
08-15-02 5.45 255,000 251,346
Grapevine-Colleyville Independent School District
Refunding General Obligation Bonds
(Permanent School Fund Guarantee) Series 1998
08-15-03 4.75 1,000,000 986,799
Harris County Municipal Utilities District 196
Water & Sewer Revenue Bonds Series 1998
09-01-03 4.40 140,000 133,853
09-01-05 4.50 155,000 146,545
Harris County Municipal Utilities District 230
Unlimited Tax General Obligation Bonds Series 1999
09-01-03 4.20 140,000 133,020
09-01-04 4.30 150,000 140,685
09-01-05 4.40 160,000 148,045
Houston Water & Sewer System Prior Lien
Refunding Revenue Bonds Series 1992B (MBIA Insured)
12-01-02 5.75 500,000 508,360
Webb County Certificates of Participation
Series 1997A (Asset Guaranty)
10-01-00 4.45 300,000 299,670
Total 2,748,323
Utah (0.8%)
Salt Lake City College Revenue Bonds
Westminster College Series 1997
10-01-00 4.50 185,000 184,608
Salt Lake City School District Unlimited General
Obligation Bonds Series 1995A
03-01-01 5.25 150,000 150,711
Total 335,319
Virginia (0.2%)
Chesapeake Individual Development Authority Public Facility
Lease Revenue Bonds Series 1996 (MBIA Insured)
06-01-03 4.80 100,000 99,000
Washington (5.0%)
Spokane County Airport Revenue Bonds
Passenger Facilities Charge
Series 1999A (AMBAC Insured)
10-01-04 4.00 500,000 465,735
State Higher Education Facilities Authority
Refunding Revenue Bonds
University of Puget Sound
10-01-01 5.00 200,000 199,782
State Housing Finance Commission
Single Family Program Bonds
(FNMA Insured) A.M.T.
06-01-01 4.35 205,000 203,706
State Public Power Supply System Nuclear Project 3
Refunding Revenue Bonds Series 1993B
07-01-02 5.15 300,000 300,045
State Refunded General Obligation Bonds
Series 1991B
06-01-16 6.70 1,000,000 1,019,470
Total 2,188,738
West Virginia (0.2%)
State Facility Authority Community Building
Series 1997A (MBIA Insured)
07-01-02 5.00 100,000 99,957
Wisconsin (3.3%)
State Health & Educational Facilities Authority
College Revenue Bonds
Carroll College Series 1998
10-01-00 4.30 200,000 199,500
State Health & Educational Facilities Authority
Nursing Home Revenue Bonds
St. John's Home of Milwaukee & Sunrise Care Center
Series 1997
12-15-01 4.70 100,000 98,642
State Health & Educational Facilities Authority
Revenue Bonds Series 1996 (MBIA Insured)
12-01-04 4.75 150,000 146,676
State Pre-refunded General Obligation Revenue Bonds
Series 1993A
05-01-06 5.20 1,000,000 1,004,160
Total 1,448,978
Wyoming (0.5%)
Teton County School District 1 Public Facilities
Joint Powers Revenue Bonds (MBIA Insured)
06-01-01 4.20 200,000 198,482
Total municipal bonds
(Cost: $41,659,277) $40,898,363
Municipal notes (4.4%)
Issuer(c,d) Effective Amount Value(a)
yield payable at
maturity
Cuyahoga County Ohio Economic Development
Cleveland Orchard V.R.
04-01-28 4.30% $700,000 $700,000
Kemmerer Wyoming Pollution Control Revenue Bonds
(Exxon) V.R.
11-01-14 4.30 200,000 200,000
Maricopa County Pollution Control Revenue Bonds
(Arizona Public Service) Series A
05-01-29 4.35 200,000 200,000
Minneapolis St. Paul Housing and Redevelopment
Children's Hospital V.R. Series B
08-15-25 4.45 100,000 100,000
SweetWater Wyoming Pollution Control Revenue Bonds
Idaho Power V.R. Series C
07-15-26 4.35 100,000 100,000
University of Michigan Hospital Refunding
Revenue Bonds V.R. Series 1992A
12-01-19 4.35 100,000 100,000
University of Michigan Hospital Refunding
Revenue Bonds V.R. Series 1995A
12-01-27 4.35 500,000 500,000
Total municipal notes
(Cost: $1,900,000) $1,900,000
Total investments in securities
(Cost: $43,559,277)(e) $42,798,363
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) 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
(c) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of May 31, 2000, the value of
securities subject to alternative minimum tax represented 10.60%
of net assets.
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
(d) 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.
(e) At May 31, 2000, the cost of securities for federal income tax purposes was
approximately $43,559,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $6,000
Unrealized depreciation (767,000)
--------
Net unrealized depreciation $(761,000)
<PAGE>
American
Express(R)
Funds
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN
EXPRESS
AXP Intermediate Tax-Exempt Fund
200 AXP Financial Center
Minneapolis, MN 55474
TICKER SYMBOL
Class A: INFAX Class B: N/A Class C: N/A Class Y: N/A
S-6324 E (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.
