AXP(SM)
Progressive Fund
1999 ANNUAL REPORT
(PROSPECTUS ENCLOSED)
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AXP Progressive Fund seeks to provide shareholders with long-term growth of
capital.
(This annual report includes a prospectus that describes in detail the Fund's
objective, investment strategy, risks, sales charges, fees and other matters of
interest. Please read the prospectus carefully before you invest or send money.)
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
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The Power of Patience
Everyone likes to get a bargain. In the investment world, bargains are known as
"value" stocks -- stocks whose prices are believed to be low in relation to the
true worth of their respective companies. In the case of AXP Progressive Fund,
the focus is on small-company value stocks, which can get overlooked as
investors try to find a new "high-flier." Many of these companies have already
proved themselves in the marketplace and are financially sound. Patient
investors may benefit, however, when such stocks get rediscovered and eventually
rise to their fair values.
AXP PROGRESSIVE FUND (This annual report is not part of the prospectus.)
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Table of Contents
1999 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the Chairman 4
From the Portfolio Manager 4
Fund Facts 6
The 10 Largest Holdings 7
Making the Most of the Fund 8
The Fund's Long-term Performance 9
Independent Auditors' Report 10
Financial Statements 11
Notes to Financial Statements 14
Investments in Securities 21
Federal Income Tax Information 27
1999 PROSPECTUS
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
The Fund 3p
Goal 3p
Investment Strategy 3p
Risks 5p
Past Performance 6p
Fees and Expenses 8p
Management 9p
Buying and Selling Shares 10p
Valuing Fund Shares 10p
Investment Options 11p
Purchasing Shares 12p
Sales Charges 15p
Exchanging/Selling Shares 19p
Distributions and Taxes 24p
Personalized Shareholder
Information 26p
About the Company 27p
Quick Telephone Reference 29p
Financial Highlights 30p
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
American Express(R) Funds held shareholder meetings in June 1999. Shareholders
approved all of the proposals advanced by management. Among the proposals were:
o The election of Board members and the selection of KPMG LLP as independent
auditors.
o Change in the Fund name from "IDS" to "AXP."
o A new shareholder service and distribution plan.
No other business was presented at the meeting, which was concluded by a report
to shareholders from the Investment Department of American Express Financial
Corporation.
Thanks to all of you for your effort in reviewing the proxy material and voting
your proxies.
Arne H. Carlson
(picture of) Kurt Winters
Kurt Winters
Portfolio manager
From the Portfolio Manager
AXP Progressive Fund recorded positive results for the past fiscal year,
although a late-period decline substantially reduced its return. For the 12
months -- October 1998 through September 1999 -- the Fund's Class A shares
generated a total return of 8.20%. (A portion of the return came in the form of
a capital gain, which was paid to shareholders in December 1998 and reduced the
Fund's net asset value by the same amount at that time.)
When the period began, the U.S. stock market was just coming off a sharp
decline. But, supported by three reductions in short-term interest rates by the
Federal Reserve, stocks quickly gained positive momentum and powered their way
through the winter. After backing off a bit in February, the market resumed its
advance until mid-summer.
At that point, the mood of the market began to change. With the economy
continuing to show little sign of slowing down and oil prices and wages on the
rise, the Federal Reserve decided to raise interest rates in June, then again in
August -- the goal being to head off a potential run-up in the inflation rate.
The stock market reacted in predictable fashion, losing ground in each of the
last three months of the fiscal year.
MID-SUMMER PEAK
The Fund's performance roughly tracked that of the market. It reached its peak
in mid-summer, as the Fund logged a gain of more than 20% by that time. But more
than half of that total was eroded during the final quarter.
As has been the case in recent years, the market's progress was largely
determined by a relatively small number of large-capitalization growth stocks.
The Fund's focus, on the other hand, is on small- and mid-size stocks whose
prices appear to offer above-average value in relation to their respective
companies' fundamental strengths and earnings potential -- "value" stocks.
Therefore, while the Fund's performance was positive for the period, the bias of
the market continued to work against its investment style.
Looking at the make-up of the portfolio, I kept the greatest portion (about
20-25%) in financial stocks. Most of the remaining investments were divided in
roughly equal amounts among technology, utility and industrial stocks.
Given the Federal Reserve's apparent willingness to raise interest rates to keep
inflation at bay, stocks may continue to face a challenging environment, at
least for the first part of the new fiscal year. As for the Fund, its holdings
still offer what I believe is above-average investment value. This should
provide some performance stability until such time as market leadership moves
beyond large-cap growth stocks.
Kurt Winters
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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Fund Facts
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1999 $7.21
Sept. 30, 1998 $7.93
Decrease $0.72
Distributions -- Oct. 1, 1998 - Sept. 30, 1999
From income $0.05
From capital gains $1.37
Total distributions $1.42
Total return* +8.20%**
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1999 $7.06
Sept. 30, 1998 $7.80
Decrease $0.74
Distributions -- Oct. 1, 1998 - Sept. 30, 1999
From income $ --
From capital gains $1.37
Total distributions $1.37
Total return* +7.49%**
Class Y -- 12-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1999 $7.22
Sept. 30, 1998 $7.94
Decrease $0.72
Distributions -- Oct. 1, 1998 - Sept. 30, 1999
From income $0.05
From capital gains $1.37
Total distributions $1.42
Total return* +8.32%**
*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.
AXP PROGRESSIVE FUND (This annual report is not part of the prospectus.)
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The 10 Largest Holdings
Percent Value
(of net assets) (as of Sept. 30, 1999)
TCF Financial 2.52% $12,281,874
Tiffany 2.46 11,987,499
Danaher 1.89 9,220,313
Tosco 1.87 9,090,000
Ingersoll-Rand 1.81 8,790,000
El Paso Energy 1.76 8,559,688
Reliant Energy 1.75 8,524,687
Allegheny Energy 1.73 8,430,312
Coastal 1.71 8,347,156
Unicom 1.67 8,126,250
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 19.17% of net assets
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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Making the Most of the Fund
BUILD YOUR ASSETS SYSTEMATICALLY
One of the best ways to invest in the Fund is by dollar-cost averaging -- a
time-tested strategy that can make market fluctuations work for you. To
dollar-cost average, simply invest a fixed amount of money regularly. You'll
automatically buy more shares when the Fund's share price is low, fewer shares
when it is high. The chart below shows how dollar-cost averaging works. In these
three hypothetical scenarios, you will see six months of share price
fluctuations.
This strategy does not ensure a profit or avoid a loss if the market declines.
But, if you can continue to invest regularly through changing market conditions
even when the price of your shares fall or the market declines, it can be an
effective way to accumulate shares to meet your long-term goals.
How dollar-cost averaging works
Jan Feb Mar Apr May Jun
$15 $16 $18 $20
$10 $10 $12 $14
$ 5
Accumulated shares* Average market Your average
price per share cost per share
42.25 $15 $14.20
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Jan Feb Mar Apr May Jun
$15
$10 $10 $10
$ 5 $8 $5 $5 $8
Accumulated shares* Average market Your average
price per share cost per share
85.0 $7.66 $7.05
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Jan Feb Mar Apr May Jun
$15
$10 $10 $8 $6 $7
$ 5 $4 $4
Accumulated shares* Average market Your average
price per share cost per share
103.5 $6.50 $5.80
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$100 invested per month. Total invested: $600.
*Shares purchased is determined by dividing the amount invested per month by the
current share price.
THREE WAYS TO BENEFIT FROM A MUTUAL FUND:
o your shares increase in value when the Fund's investments do well
o you receive capital gains when the gains on investments sold by the Fund
exceed losses
o you receive income when the Fund's stock dividends, interest and short-term
gains exceed its expenses.
All three make up your total return. You potentially can increase your
investment if, like most investors, you reinvest your dividends and capital gain
distributions to buy additional shares of the Fund or another fund.
AXP PROGRESSIVE FUND (This annual report is not part of the prospectus.)
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The Fund's Long-term Performance
$50,000
$40,000
$30,000 X
S&P 500 Index
X
AXP Progressive
Fund
$20,000 X
Lipper Capital Appreciation
Fund Index
$10,00
10/01/89 9/90 9/91 9/92 9/93 9/94 9/95 9/96 9/97 9/98 9/99
Average annual total return (as of Sept. 30, 1999)
1 year 5 years 10 years Since inception*
Class A +2.80% +9.55% +8.30% --%
Class B +3.87% --% --% +9.39%
Class Y +8.32% --% --% +10.66%
*Inception date was March 20, 1995.
Assumes: Holding period from 10/1/89 to 9/30/99. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund, with a value of $2,333. Also see "Past Performance"
in the Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, Standard & Poor's 500 Index (S&P 500 Index)
and the Lipper Capital Appreciation Fund Index. In comparing AXP Progressive
Fund (Class A) to the two indexes, you should take into account the fact that
the Fund'sperformance reflects the maximum sales charge of 5%, while such
charges are not reflected in the performance of the indexes.
Your investment and return values fluctuate so that your shares, when redeemed,
may be worth more or less than the original cost. Average annual total return
figures reflect the impact of the applicable sales charge up to a maximum of 5%.
This was a period of widely fluctuating security prices. Past performance is no
guarantee of future results.
S&P 500 Index, an unmanaged list of common stocks, is frequently used as a
general measure of market performance. The index reflects reinvestment of all
distributions and changes in market prices, but excludes brokerage commissions
or other fees. However, the S&P companies may be generally larger than those in
which the Fund invests.
Lipper Capital Appreciation Fund Index, an unmanaged index published by Lipper
Analytical Services, Inc., includes 30 funds that are generally similar to this
Fund, although some funds in the index may have somewhat different investment
policies or objectives.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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The financial statements contained in Post-Effective Amendment #67 to
Registration Statement No. 2-30059 filed on or about November 24, 1999, are
incorporated herein by reference.
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Federal Income Tax Information
(Unaudited)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
AXP Progressive Fund, Inc.
Fiscal year ended Sept. 30, 1999
Class A
Income distributions taxable as dividend income, 100% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1998 $0.04536
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1998 $1.37089
Total distributions $1.41625
(This annual report is not part of the prospectus.) ANNUAL REPORT -1999
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Class B
Income distributions taxable as dividend income, 100% qualifying for deductions
by corporations.
Payable date Per share
Dec. 23, 1998 $0.00000
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1998 $1.37089
Total distributions $1.37089
Class Y
Income distributions taxable as dividend income, 100% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1998 $0.05242
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1998 $1.37089
Total distributions $1.42331
AXP PROGRESSIVE FUND (This annual report is not part of the prospectus.)
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S-6449 N (11/99)
AXP Progressive Fund
IDS Tower 10
Minneapolis, MN 55440-0010
AMERICAN EXPRESS Financial Advisors (logo)
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STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
