AXP(SM)
Stock
Fund
1999 ANNUAL REPORT
(PROSPECTUS ENCLOSED)
(icon of) magnifying glass
AXP Stock Fund seeks to provide shareholders with current income and 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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Big Names, Big Business
These are the names you know. They are the movers and shakers of today's
business world. Whether representing established U.S. firms or companies that
have made theirmark over-seas, the securities found in AXP Stock Fund make up a
veritable who's who in the financial market. These stocks offer a dual benefit
of ongoing growth potential along with a steady stream of dividend income. And
as we move toward a more global economy, these blue chip, multi-national
companies are well-positioned to prosper in the 21st century.
AXP STOCK 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 (Fund) 10
Financial Statements (Fund) 11
Notes to Financial Statements (Fund) 14
Independent Auditors' Report (Portfolio) 19
Financial Statements (Portfolio) 20
Notes to Financial Statements (Portfolio)23
Investments in Securities 28
Federal Income Tax Information 38
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 9p
Valuing Fund Shares 9p
Investment Options 10p
Purchasing Shares 11p
Sales Charges 14p
Exchanging/Selling Shares 18p
Distributions and Taxes 23p
Personalized Shareholder Information 25p
Master/Feeder Structure 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 selection 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.
o Changes with respect to fundamental investment policies.
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) Michael Kennedy
Michael Kennedy
Portfolio manager
From the Portfolio Manager
The past 12 months was a volatile but overall positive period for U.S. stocks,
allowing AXP Stock Fund's Class A shares to generate a gain of 17.71% for the
October 1998 through September 1999 fiscal year. (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.)
At the outset of the period, the stock market was still licking its wounds
suffered in a steep decline that began in the late summer of 1998. But with the
remarkable resilience that has been its hallmark in recent years, the market
gathered itself and began to move forward. Supported by three reductions in
short-term interest rates by the Federal Reserve Board during the fall, stocks
quickly turned a tentative advance into a roaring rally that, despite a slump in
February, ultimately took the market and the Fund to an all-time high in
mid-summer.
By that time, long-term interest rates had risen from the beginning of 1999, and
so had concern about a possible run-up in inflation. That was enough to send
stocks into retreat over the final three months of the period and, in the
process, erode some of the Fund's gain earned during the first nine months.
`LARGE-CAPS' LEAD
Consistent with the trend of recent years, the market's advances were most often
driven by large-capitalization stocks. Because of the Fund's emphasis on
large-cap issues, that trend worked to the Fund's advantage. More specifically,
the Fund's largest areas of investment were technology, financial services,
retailing, utilities, consumer products and health care. Looking at individual
stocks, several of the Fund's largest holdings were also among its best
performers. They included General Electric, IBM, Wal-Mart, Microsoft and Intel.
As for changes to the portfolio, I added to the technology exposure about
mid-period and reduced the level of cash reserves (from about 14% in the fall of
1998 to about 5% at period-end). Also, in light of the interest-rate rise, I
reduced holdings among rate-sensitive stocks such as banks and credit card
companies, as well as retailing and housing-related businesses. In addition, I
decreased the exposure to pharmaceuticals, given the possibility of reform in
healthcare. Those moves allowed me to shift more assets into commodities and
companies with a strong international presence, which I felt would benefit from
a recovering world economy.
Looking toward the current fiscal year, while I expect the global economic
recovery to continue, I think the volatility in the U.S. stock market may
actually increase. Therefore, I plan to maintain a portfolio that is well
diversified and structured on the conservative side.
Michael Kennedy
(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 $26.14
Sept. 30, 1998 $24.18
Increase $ 1.96
Distributions -- Oct. 1, 1998 - Sept. 30, 1999
From income $ 0.28
From capital gains $ 2.00
Total distributions $ 2.28
Total return* +17.71%**
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1999 $25.97
Sept. 30, 1998 $24.05
Increase $ 1.92
Distributions -- Oct. 1, 1998 - Sept. 30, 1999
From income $ 0.10
From capital gains $ 2.00
Total distributions $ 2.10
Total return* +16.81%**
Class Y -- 12-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1999 $26.14
Sept. 30, 1998 $24.18
Increase $ 1.96
Distributions -- Oct. 1, 1998 - Sept. 30, 1999
From income $ 0.31
From capital gains $ 2.00
Total distributions $ 2.31
Total return* +17.81%**
*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 STOCK 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)
Microsoft 4.01% $181,124,999
General Electric 3.93 177,843,750
Intl Business Machines 2.69 121,375,000
American Intl Group 2.17 98,293,711
Wal-Mart Stores 1.89 85,612,500
Cisco Systems 1.82 82,275,000
Texas Instruments 1.82 82,250,000
Illinois Tool Works 1.65 74,562,500
Intel 1.64 74,312,500
Solectron 1.58 71,557,494
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 23.20% 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 STOCK FUND (This annual report is not part of the prospectus.)
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The Fund's Long-term Performance
$40,000
X
S&P 500 Index
X
34,138
AXP Stock
Fund
$30,000 X
Lipper Growth &
Income Fund Index
$20,000
$10,000
$9,500
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 +11.82% +15.19% +13.06% --%
Class B +12.81% --% --% +16.54%
Class Y +17.81% --% --% +17.83%
*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 $3,989. 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 unmanaged performance indexes, the Standard & Poor's 500 Index (S&P
500 Index) and the Lipper Growth & Income Fund Index. In comparing AXP Stock
Fund (Class A) to the two indexes, you should take into account the fact that
the Fund's performance 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 500 companies may be generally larger than those
in which the Fund invests.
Lipper Growth and Income Fund Index, an unmanaged index published by Lipper
Analytical Services, Inc., includes 30 funds that are generally similar to the
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 #99 to
Registration statement No. 2-11358 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. Some of 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 Stock 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. 22, 1998 $0.13065
March 25, 1999 0.04573
June 24, 1999 0.07087
Sept. 23, 1999 0.03753
Total $0.28478
Capital gain distribution taxable for long-term capital gain.
Payable date Per share
Dec. 22, 1998 $1.99824
Total distributions $2.28302
The distribution of $2.12889 per share, payable Dec. 22, 1998, consisted of
$0.09211 derived from net investment income, $0.03854 from net short-term
capital gains (a total of $0.13065 taxable as dividend income) and $1.99824 from
net long-term capital gains.
AXP STOCK FUND (This annual report is not part of the prospectus.)
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Class B
Income distributions taxable as dividend income, 100% qualifying for deduction
by corporations.
Payable date Per share
Dec. 22, 1998 $0.08515
June 24, 1999 0.01564
Total $0.10079
Capital gain distribution taxable for long-term capital gain.
Payable date Per share
Dec. 22, 1998 $1.99824
Total distributions $2.09903
The distribution of $2.08339 per share, payable Dec. 22, 1998, consisted of
$0.04661 derived from net investment income, $0.03854 from net short-term
capital gains (a total of $0.08515 taxable as dividend income) and $1.99824 from
net long-term capital gains.
Class Y
Income distributions taxable as dividend income, 100% qualifying for deduction
by corporations.
Payable date Per share
Dec. 22, 1998 $0.13505
March 25, 1999 0.05111
June 24, 1999 0.07636
Sept. 23, 1999 0.04784
Total $0.31036
Capital gain distribution taxable for long-term capital gain.
Payable date Per share
Dec. 22, 1998 $1.99824
Total distributions $2.30860
The distribution of $2.13329 per share, payable Dec. 22, 1998, consisted of
$0.09651 derived from net investment income, $0.03854 from net short-term
capital gains (a total of $0.13505 taxable as dividend income) and $1.99824 from
net long-term capital gains.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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S-6351 P (11/99)
AXP Stock 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.
