AXP(SM)
Progressive
Fund
2000 SEMIANNUAL REPORT
American Express (R) Funds
(icon of) ruler
AXP Progressive Fund seeks to provide shareholders with long-term growth of
capital.
<PAGE>
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.
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 19
<PAGE>
(picture of) Arne H. Carlson
Arne H. Carlson
Chariman 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.
Arne H. Carlson
(picture of) Kurt Winters
Kurt Winters
Portfolio manager
From the Portfolio Manager
Although value stocks continued to take a back seat to growth stocks during the
past six months, AXP Progressive Fund managed to generate a double-digit gain
for the period. For the first half of the fiscal year -- October 1999 through
March 2000 -- the total return for the Fund's Class A shares was 10.97%
(excluding the sales charge).
The period got off to a strong start, as investors took encouragement from
reports of continued low inflation and generally good corporate profits. The
positive environment got even better during the fall, as concern about the
potential impact of the Y2K computer bug faded away and excitement about the
Internet continued to build. The stock market responded with a powerful advance
that gathered momentum through the end of 1999 and into the new year.
MOOD SWINGS
At that point, the mood of the market changed, as worries about the possibility
of higher inflation and higher interest rates resurfaced. The result for the
stock market was a steady retreat through February. The market had one more
rally left, though, as it rebounded in March to post its best monthly gain of
the period.
The Fund's performance followed a roughly similar path, although its advances
were muted by its value-oriented investment style, which remained largely out of
favor as investors chased after momentum-driven, technology-related growth
stocks, particularly those linked to the development of the Internet. The Fund's
investments, on the other hand, were mainly concentrated in financial services,
industrial, consumer and utility stocks.
I changed the asset mix somewhat as the period progressed, reducing financial
services holdings in light of the possibility of higher interest rates and
increasing the technology exposure given that sector's remarkable momentum. Even
so, I continued to focus on stocks that offered relatively good investment
value, as opposed to riskier, high-flying issues.
As for what the second half of the fiscal year may bring, I think it's worth
noting that the Fund's best first-half performance came in March, when it was up
just over 12% -- its best one-month gain in recent years. While it's too early
to draw any firm conclusions, the rebound could indicate that the stock market
is "broadening out" -- that is, allowing a wider range of stocks to more fully
participate in market advances. If so, the Fund is well positioned for the
possibility of such a shift in the market.
Kurt Winters
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 2000 $7.93
Sept. 30, 1999 $7.21
Increase $0.72
Distributions -- Oct. 1, 1999 - March 31, 2000
From income $0.06
From capital gains $ --
Total distributions $0.06
Total return* +10.97%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 2000 $7.80
Sept. 30, 1999 $7.06
Increase $0.74
Distributions -- Oct. 1, 1999 - March 31, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +10.48%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 2000 $7.94
Sept. 30, 1999 $7.22
Increase $0.72
Distributions -- Oct. 1, 1999 - March 31, 2000
From income $0.08
From capital gains $ --
Total distributions $0.08
Total return* +11.14%**
*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>
The 10 Largest Holdings
Percent Value
(of net assets) (as of March 31, 2000)
Kansas City Southern Inds 2.98% $11,876,562
TCF Financial 2.37 9,434,512
Southwest Airlines 2.33 9,277,171
Danaher 2.06 8,221,200
SkyWest 1.99 7,930,638
Hanover Compressor 1.97 7,860,125
Martin Marietta Materials 1.97 7,832,750
USA Networks 1.83 7,274,150
Petro-Canada 1.82 7,264,782
Houghton Mifflin 1.70 6,790,000
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 21.02% of net assets
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities AXP Progressive Fund, Inc.
March 31, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C>
Investments in securities of unaffiliated issuers (identified cost $338,559,822) $387,108,711
Investments in securities of affiliated issuers (identified cost $5,613,940) 3,669,750
---------
Total investments in securities (identified cost: $344,173,762) 390,778,461
Cash in bank on demand deposit 212,512
Dividends and accrued interest receivable 499,919
Receivable for investment securities sold 6,944,625
---------
Total assets 398,435,517
-----------
Liabilities
Capital shares payable 12,008
Accrued investment management services fee 6,721
Accrued distribution fee 3,896
Accrued service fee 2,892
Accrued transfer agency fee 2,027
Accrued administrative services fee 620
Other accrued expenses 77,106
------
Total liabilities 105,270
-------
Net assets applicable to outstanding capital stock $398,330,247
============
Represented by
Capital stock-- $.01 par value (Note 1) $ 503,564
Additional paid-in capital 360,522,851
Undistributed net investment income 752,126
Accumulated net realized gain (loss) (10,052,905)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 46,604,611
----------
Total -- representing net assets applicable to outstanding capital stock $398,330,247
============
Net assets applicable to outstanding shares: Class A $323,374,628
Class B $ 64,792,322
Class Y $ 10,163,297
Net asset value per share of outstanding capital stock: Class A shares 40,766,842 $ 7.93
Class B shares 8,309,077 $ 7.80
Class Y shares 1,280,512 $ 7.94
--------- ------------
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statement of operations
AXP Progressive Fund, Inc.
Six months ended March 31, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 3,450,207
Interest 322,894
Less foreign taxes withheld (9,208)
------
Total income 3,763,893
---------
Expenses (Note 2):
Investment management services fee 1,102,902
Distribution fee
Class A 449,644
Class B 376,328
Transfer agency fee 397,004
Incremental transfer agency fee
Class A 33,201
Class B 15,085
Service fee -- Class Y 5,080
Administrative services fees and expenses 130,624
Compensation of board members 4,512
Custodian fees 12,480
Registration fees 15,119
Audit fees 12,750
------
Total expenses 2,554,729
Earnings credits on cash balances (Note 2) (20,325)
-------
Total net expenses 2,534,404
---------
Investment income (loss) -- net 1,229,489
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (including $725,206 realized loss
on investments of affiliated issuers) (Note 3) 15,687,849
Foreign currency transactions 1,724
-----
Net realized gain (loss) on investments 15,689,573
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 23,318,053
----------
Net gain (loss) on investments and foreign currencies 39,007,626
----------
Net increase (decrease) in net assets resulting from operations $40,237,115
===========
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
AXP Progressive Fund, Inc.
March 31, 2000 Sept. 30, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 1,229,489 $ 2,943,888
Net realized gain (loss) on investments 15,689,573 (25,804,699)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 23,318,053 72,592,356
---------- ----------
Net increase (decrease) in net assets resulting from operations 40,237,115 49,731,545
---------- ----------
Distributions to shareholders from:
Net investment income
Class A (3,259,643) (2,498,090)
Class B -- (2,577)
Class Y (105,288) (53,923)
Net realized gain
Class A -- (75,429,332)
Class B -- (15,387,157)
Class Y -- (1,410,207)
------ ----------
Total distributions (3,364,931) (94,781,286)
---------- -----------
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 14,614,265 155,451,139
Class B shares 5,256,464 29,641,581
Class Y shares 2,280,312 4,170,853
Reinvestment of distributions at net asset value
Class A shares 3,068,967 73,244,867
Class B shares 1,745 15,209,816
Class Y shares 105,288 1,464,130
Payments for redemptions
Class A shares (117,630,416) (244,298,288)
Class B shares (Note 2) (30,197,046) (36,435,799)
Class Y shares (2,897,774) (2,954,089)
---------- ----------
Increase (decrease) in net assets from capital share transactions (125,398,195) (4,505,790)
------------ ----------
Total increase (decrease) in net assets (88,526,011) (49,555,531)
Net assets at beginning of period 486,856,258 536,411,789
----------- -----------
Net assets at end of period $ 398,330,247 $ 486,856,258
============= =============
Undistributed net investment income $ 752,126 $ 2,887,568
------------- -------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
AXP Progressive Fund, Inc. (Unaudited as to March 31, 2000)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. The Fund has 10 billion
authorized shares of capital stock. The Fund invests primarily in undervalued
common stocks.
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 and
automatically convert to Class A shares during the ninth calendar year of
ownership.
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 write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
The Fund also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete its contract obligations.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to shareholders. No provision for income or excise taxes
is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available is reinvested in additional shares of the Fund
at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including 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 0.64% to 0.515% annually.
The fee may be adjusted upward or downward by a performance incentive adjustment
based on a comparison of the performance of Class A shares of AXP Progressive
Fund, Inc. to the Lipper Mid-Cap Value Index. The maximum adjustment is 0.12% of
the Fund's average daily net assets after deducting 1% from the performance
difference. If the performance difference is less than 1%, the adjustment will
be zero. The adjustment decreased the fee by $297,197 for the six months ended
March 31, 2000.
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 0.06% to 0.035% 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
o Class B $20
o Class Y $17
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 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
$133,845 for Class A and $55,306 for Class B for the six months ended March 31,
2000.
During the six months ended March 31, 2000, the Fund's custodian and transfer
agency fees were reduced by $20,325 as a result of earnings credits from
overnight cash balances. The Fund also pays custodian fees to American Express
Trust Company, an affiliate of AEFC.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $141,668,134 and $280,016,616, respectively, for the six
months ended March 31, 2000. Realized gains and losses are determined on an
identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $19,422 for the
six months ended March 31, 2000.
Income from securities lending amounted to $1,144 for the six months ended March
31, 2000. The risks to the Fund of securities lending are that the borrower may
not provide additional collateral when required or return the securities when
due.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended March 31, 2000
Class A Class B Class Y
Sold 2,016,274 738,812 311,854
Issued for reinvested distributions 421,630 237 14,483
Redeemed (16,244,346) (4,250,923) (400,367)
----------- ---------- --------
Net increase (decrease) (13,806,442) (3,511,874) (74,030)
Year ended Sept. 30, 1999
Class A Class B Class Y
Sold 19,982,304 3,822,466 536,593
Issued for reinvested distributions 9,830,201 2,074,443 196,422
Redeemed (31,341,794) (4,790,066) (377,649)
----------- ---------- --------
Net increase (decrease) (1,529,289) 1,106,843 355,366
5. 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
March 31, 2000.
6. CAPITAL LOSS CARRYOVER
For federal income tax purposes, the Fund had a capital loss carryover of
$25,742,474 as of Sept. 30, 1999, that will expire in 2007 if not offset by
capital gains. It is unlikely the board will authorize a distribution of any net
realized capital gains until the available capital loss carryover has been
offset or expires.
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<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Fiscal period ended Sept. 30,
Per share income and capital changesa
Class A
2000b 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.21 $7.93 $10.17 $ 8.23 $7.66
Income from investment operations:
Net investment income (loss) .03 .05 .05 .08 .09
Net gains (losses) (both realized and unrealized) .75 .65 (1.43) 2.54 .96
Total from investment operations .78 .70 (1.38) 2.62 1.05
Less distributions:
Dividends from net investment income (.06) (.05) (.08) (.08) (.13)
Distributions from realized gains -- (1.37) (.78) (.60) (.35)
Total distributions (.06) (1.42) (.86) (.68) (.48)
Net asset value, end of period $7.93 $7.21 $ 7.93 $10.17 $8.23
Ratios/supplemental data
Net assets, end of period (in millions) $323 $394 $445 $491 $368
Ratio of expenses to average daily net assetsc 1.02%d .99% 1.02% 1.10% 1.04%
Ratio of net investment income (loss)
to average daily net assets .68%d .65% .57% .95% 1.21%
Portfolio turnover rate
(excluding short-term securities) 33% 93% 116% 60% 56%
Total returne 10.97% 8.20% (14.77%) 33.87% 14.39%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended March 31, 2000 (Unaudited).
c Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
d Adjusted to an annual basis.
e Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal period ended Sept. 30,
Per share income and capital changesa
Class B Class Y
2000b 1999 1998 1997 1996 2000b 1999 1998 1997 1996
Net asset value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period $7.06 $7.80 $10.03 $8.15 $7.63 $7.22 $7.94 $10.18 $8.24 $7.67
Income from investment operations:
Net investment income (loss) -- (.01) -- .03 .06 .04 .06 .06 .09 .11
Net gains (losses)
(both realized and unrealized) .74 .64 (1.42) 2.49 .92 .76 .64 (1.43) 2.54 .95
Total from investment
operations .74 .63 (1.42) 2.52 .98 .80 .70 (1.37) 2.63 1.06
Less distributions:
Dividends from net
investment income -- -- (.03) (.04) (.11) (.08) (.05) (.09) (.09) (.14)
Distributions from
realized gains -- (1.37) (.78) (.60) (.35) -- (1.37) (.78) (.60) (.35)
Total distributions -- (1.37) (.81) (.64) (.46) (.08) (1.42) (.87) (.69) (.49)
Net asset value,
end of period $7.80 $7.06 $7.80 $10.03 $8.15 $7.94 $7.22 $7.94 $10.18 $8.24
Ratios/supplemental data
Net assets, end of period
(in millions) $65 $83 $84 $60 $25 $10 $10 $8 $7 $3
Ratio of expenses to
average daily net assetsc 1.79%d 1.76% 1.78% 1.87% 1.81% .85%d .89% .95% .98% .87%
Ratio of net investment
income (loss) to average
daily net assets .09%d (.12%) (.21%) .21% .36% .85%d .75% .62% 1.09% 1.31%
Portfolio turnover rate
(excluding short-term
securities) 33% 93% 116% 60% 56% 33% 93% 116% 60% 56%
Total returne 10.48% 7.49% (15.42%) 32.85% 13.51% 11.14% 8.32% (14.70%) 34.06% 14.56%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended March 31, 2000 (Unaudited).
c Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
d Adjusted to an annual basis.
e Total return does not reflect payment of a sales charge.
</TABLE>
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<TABLE>
<CAPTION>
Investments in Securities
AXP Progressive Fund, Inc.
March 31, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (95.4%)
Issuer Shares Value(a)
Aerospace & defense (3.4%)
<S> <C> <C>
General Dynamics 36,900 $1,835,775
Goodrich (BF) 124,400 3,568,725
Howmet Intl 242,500(b) 4,895,469
Northrop Grumman 64,500 3,414,469
Total 13,714,438
Airlines (5.4%)
Northwest Airlines Cl A 193,500(b) 4,377,938
SkyWest 202,700 7,930,638
Southwest Airlines 445,750 9,277,171
Total 21,585,747
Automotive & related (1.4%)
Tower Automotive 350,200(b) 5,734,525
Banks and savings & loans (7.7%)
Comerica 46,100 1,930,438
CompuCredit 101,800(b) 3,683,888
Southtrust 165,900 4,220,081
Sovereign Bancorp 797,000 6,027,312
TCF Financial 396,200 9,434,512
UnionBanCal 189,100 5,212,068
Total 30,508,299
Building materials & construction (2.0%)
Martin Marietta Materials 164,900 7,832,750
Chemicals (2.5%)
Air Products & Chemicals 69,100 1,965,031
Great Lakes Chemical 121,200 4,120,800
PPG Inds 77,600 4,059,450
Total 10,145,281
Communications equipment & services (0.6%)
Com21 29,100(b) 1,367,700
SBA Communications 19,400(b) 853,600
Total 2,221,300
Computers & office equipment (4.0%)
Affiliated Computer Services Cl A 53,300(b) 2,025,400
Concord EFS 101,800(b) 2,335,038
DAOU Systems 1,048,500(b,d) 3,669,750
DST Systems 33,900(b) 2,201,381
Maxtor 185,300(b) 2,397,319
Novell 58,200(b) 1,665,975
Transaction Systems Architects Cl A 59,800(b) 1,726,725
Total 16,021,588
Electronics (7.2%)
Analog Devices 39,800(b) 3,206,388
Atmel 32,000(b) 1,652,000
LSI Logic 55,300(b) 4,016,163
Microchip Technology 82,400(b) 5,417,800
Natl Semiconductor 48,500(b) 2,940,313
SCI Systems 108,800(b) 5,854,799
Teradyne 66,600(b) 5,477,850
Total 28,565,313
Energy (5.9%)
EOG Resources 304,100 6,443,119
Petro-Canada 437,000(c) 7,264,782
Sunoco 175,100 4,793,363
Tosco 165,900 5,049,581
Total 23,550,845
Energy equipment & services (3.6%)
Hanover Compressor 138,200(b) 7,860,125
Jacobs Engineering Group 202,700(b) 6,537,075
Total 14,397,200
Financial services (8.0%)
AmeriCredit 336,300(b) 5,485,893
Kansas City Southern Inds 138,200(b) 11,876,562
LaBranche 324,500(b) 4,096,813
Lehman Brothers Holdings 59,800 5,800,599
Providian Financial 55,300 4,790,363
Total 32,050,230
Food (2.3%)
Suiza Foods 73,700(b) 2,966,425
SUPERVALU 331,700 6,281,569
Total 9,247,994
Furniture & appliances (1.0%)
Ethan Allen Interiors 152,000 3,800,000
Health care (3.1%)
Allergan 60,800 3,039,999
Alpharma Cl A 67,900 2,495,325
Bard (CR) 64,500 2,495,344
Biomet 82,900 3,015,488
IDEXX Laboratories 63,000(b) 1,468,688
Total 12,514,844
Health care services (1.0%)
McKesson HBOC 184,300 3,870,300
Industrial equipment & services (1.6%)
Ingersoll-Rand 147,400 6,522,450
Insurance (3.3%)
Aon 21,400 690,150
Reinsurance Group of America 194,000 4,619,625
ReliaStar Financial 93,000 3,150,375
XL Capital Cl A 86,900(c) 4,812,088
Total 13,272,238
Leisure time & entertainment (0.7%)
Royal Caribbean Cruises 97,000 2,716,000
Media (4.0%)
Deluxe 72,700 1,926,550
Houghton Mifflin 160,000 6,790,000
USA Networks 322,400(b) 7,274,150
Total 15,990,700
Multi-industry conglomerates (5.9%)
Danaher 161,200 8,221,200
Dover 78,300 3,748,613
Electronics for Imaging 61,100(b) 3,666,000
Grainger (WW) 92,100 4,996,425
Mettler-Toledo Intl 67,900(b) 2,779,656
Total 23,411,894
Paper & packaging (0.8%)
Fort James 152,000 3,344,000
Real estate investment trust (1.1%)
Pinnacle Holdings 81,000(b) 4,475,250
Restaurants & lodging (1.4%)
Wendy's Intl 276,400 5,579,825
Retail (3.9%)
American Eagle Outfitters 133,600(b) 5,068,450
Family Dollar Stores 244,100 5,080,331
Tiffany 64,500 5,393,813
Total 15,542,594
Transportation (1.5%)
Werner Enterprises 341,000 5,797,000
Utilities -- electric (6.7%)
Allegheny Energy 174,600 4,812,413
LG&E Energy 194,000 4,437,750
Northeast Utilities 291,000 6,256,499
Pinnacle West Capital 218,200 6,150,512
Reliant Energy 213,400 5,001,563
Total 26,658,737
Utilities -- gas (4.8%)
Coastal 92,100 4,236,600
El Paso Energy 71,700 2,894,888
Equitable Resources 145,500 6,520,218
MCN 213,400 5,335,000
Total 18,986,706
Utilities -- telephone (0.5%)
Brightpoint 150,300(b) 1,841,175
Total common stocks
(Cost: $333,292,006) $379,899,223
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (2.7%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies
Federal Home Loan Bank Disc Nt
<S> <C> <C> <C> <C>
06-02-00 6.03% $9,500,000 $9,400,749
Federal Natl Mtge Assn Disc Nt
06-22-00 6.11 1,500,000 1,478,489
Total short-term securities
(Cost: $10,881,756) $10,879,238
Total investments in securities
(Cost: $344,173,762)(e) $390,778,461
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) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. As of March 31, 2000,
the value of foreign securities represented 3.03% of net assets.
(d) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
six months ended March 31, 2000 are as follows:
Issuer Beginning Purchase Sales Ending Dividend Value(a)
cost cost cost cost income
DAOU Systems* $6,912,502 $-- $1,298,562 $5,613,940 $-- $3,669,750
*Issuer was not an affiliate for the entire period ended March 31, 2000.
(e) At March 31, 2000, the cost of securities for federal income tax purposes
was approximately $344,219,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $68,960,000
Unrealized depreciation (22,401,000)
-----------
Net unrealized appreciation $46,559,000
<PAGE>
AXP Progressive Fund
200 AXP Financial Center
Minneapolis, MN 55474
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN
EXPRESS
S-6450 P (5/00)
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.
