AXPSM
Stock Fund
2000 ANNUAL REPORT
(PROSPECTUS ENCLOSED)
American
Express(R)
Funds
(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.)
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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 their mark overseas, 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, multinational
companies are well-positioned to prosper in the 21st century.
Table of Contents
2000 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the Chairman 3
From the Portfolio Manager 3
Fund Facts 5
The 10 Largest Holdings 6
Making the Most of the Fund 7
The Fund's Long-term Performance 8
Independent Auditors' Report (Fund) 9
Financial Statements (Fund) 10
Notes to Financial Statements (Fund) 13
Independent Auditors' Report
(Portfolio) 20
Financial Statements (Portfolio) 21
Notes to Financial Statements
(Portfolio) 23
Investments in Securities 26
Federal Income Tax Information 30
AXP STOCK FUND
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(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, 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 annual 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
(picture of) G. Michael Kennedy
G. Michael Kennedy
Portfolio manager
From the Portfolio Manager
In a volatile but overall positive period for stocks, AXP Stock Fund enjoyed a
productive fiscal year as its Class A shares generated a total return of 16.59%
(excluding the sales charge) from October 1999 through September 2000. This
compares with a 13.30% return for the Standard & Poor's 500 (an unmanaged group
of stocks commonly used to measure the performance of the stock market as a
whole).
The stock market got off to a spectacular start, rallying furiously in the
fourth quarter of 1999 and into the early days of January. After a
ANNUAL REPORT - 2000
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brief setback, the market then managed to reach an all-time high in March. But
by that time, concerns about higher interest rates set in and ultimately led to
a sharp downturn in the spring.
By summer's end, stocks had regained much of the lost ground as interest-rate
worries faded away. Taking their place, though, were doubts about the strength
of upcoming corporate profits, which quickly drove the market into retreat in
September.
WINNERS AND LOSERS
The Fund's performance during the 12 months roughly followed the pattern of the
market. But, thanks to generally good stock selection and some beneficial
portfolio shifts, the Fund was able to take advantage of market upturns while
also holding up a bit better during the downturns. A prominent example was
utilities stocks, which I emphasized in the portfolio. They turned out to be the
best-performing sector of the market, and gave the Fund a nice boost. On the
other hand, I held relatively few telecommunications stocks, which were notably
poor performers for the period.
Technology, the largest area of investment for the Fund as well as the largest
sector of the market, went through some stunning ups and downs, but, on the
whole, made a strong contribution to performance. In addition, avoiding some of
the stocks that experienced sharp drops and a decision to reduce overall
technology holdings late in the period worked to the Fund's advantage.
Looking at other sectors, financial services and health care stocks provided
good results. I added to those holdings last summer. On the other hand,
investments in capital goods and consumer staples stocks finished only slightly
in the plus column, while basic materials and consumer cyclical stocks were
negative performers for the Fund.
As we begin a new fiscal year, I think the investment environment still looks
reasonably good, though I expect that market volatility will remain high,
especially over the near term. On a more general note, I also would point out
that it's unrealistic to expect a continuation of the extraordinarily strong
gains we've seen from stocks in recent years, as the confluence of events that
produced those returns is unlikely to be repeated anytime soon.
G. Michael Kennedy
AXP STOCK FUND
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Fund Facts
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $27.12
Sept. 30, 1999 $26.14
Increase $ 0.98
Distributions -- Oct. 1, 1999 - Sept. 30, 2000
From income $ 0.18
From capital gains $ 3.14
Total distributions $ 3.32
Total return** +16.59%
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $26.90
Sept. 30, 1999 $25.97
Increase $ 0.93
Distributions -- Oct. 1, 1999 - Sept. 30, 2000
From income $ --
From capital gains $ 3.14
Total distributions $ 3.14
Total return** +15.73%
Class C -- June 26, 2000* - Sept. 30, 2000
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $26.88
June 26, 2000* $26.70
Increase $ 0.18
Distributions -- June 26, 2000* - Sept. 30, 2000
From income $ 0.04
From capital gains $ --
Total distributions $ 0.04
Total return** +0.81%***
Class Y -- 12-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $27.13
Sept. 30, 1999 $26.14
Increase $ 0.99
Distributions-- Oct. 1, 1999 - Sept. 30, 2000
From income $ 0.23
From capital gains $ 3.14
Total distributions $ 3.37
Total return** +16.80%
*Inception date.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested. Returns do not include sales load. The
prospectus discusses the effect of sales charges, if any, on the various
classes.
***The total return for Class C is not annualized.
ANNUAL REPORT - 2000
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The 10 Largest Holdings
Percent Value
(of net assets) (as of Sept. 30, 2000)
American Intl Group 3.40% $162,279,972
General Electric 3.26 155,756,250
Cisco Systems 2.89 138,125,000
Microsoft 2.78 132,550,000
Citigroup 2.49 118,937,500
Corning 2.49 118,800,000
Pfizer 2.38 113,467,188
Exxon Mobil 2.23 106,421,221
Enron 2.20 105,150,000
Intel 2.18 104,062,500
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 26.30% of net assets
AXP STOCK FUND
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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 falls 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
_______________________________________________________________________________
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
_______________________________________________________________________________
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
_______________________________________________________________________________
$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.
ANNUAL REPORT - 2000
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The Fund's Long-term Performance
How your $10,000 has grown in AXP Stock Fund
$70,000
$60,000
X
S&P 500
$50,000 Index
X
$40,382
AXP Stock Fund
Class A
$40,000
X
Lipper Large-Cap
Core Index
$30,000
$20,000
$9,425
10/1/90 9/91 9/92 9/93 9/94 9/95 9/96 9/97 9/98 9/99 9/00
Average Annual Total Returns (as of Sept. 30, 2000)
1 year 5 years 10 years (A) Since inception (B&Y)
Class A +9.88% +14.89% +14.98% --%
Class B +11.73% +15.27% --% +16.51%*
Class Y +16.80% +16.41% --% +17.64%*
* Inception date was March 20, 1995.
Assumes: Holding period from 10/1/90 to 9/30/00. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund has a value of $27,230. 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 Large-Cap Core 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 5.75%, while such
charges are not reflected in the performance of the indexes. Class C became
effective June 26, 2000 and therefore performance information is not presented.
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
5.75%. This was a period of widely fluctuating security prices. Past performance
is no guarantee of future results.
Standard & Poor's 500 Index (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 Large-Cap Core Index, an unmanaged index published by Lipper Inc.,
includes the 30 largest funds that are generally similar to the Fund, although
some funds in the index may have somewhat different investment policies or
objectives.
AXP STOCK FUND
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The financial statements contained in Post-Effective Amendment #101 to
Registration Statement No. 2-11358 filed on or about November 22, 2000, 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, 2000
Class A
Income distributions taxable as dividend income, 37.53% qualifying for deduction
by corporations.
Payable date Per share
Dec. 22, 1999 $0.04737
March 24, 2000 0.03038
June 22, 2000 0.05473
Sept. 22, 2000 0.05188
Total $0.18436
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 22, 1999 $3.13556
Total distributions $3.31992
Class B
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 22, 1999 $3.13556
Total distributions $3.13556
Class C
Income distributions taxable as dividend income, 37.53% qualifying for deduction
by corporations.
Payable date Per share
Sept. 22, 2000 $0.03629
Total distributions $0.03629
AXP STOCK FUND
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Class Y
Income distributions taxable as dividend income, 37.53% qualifying for deduction
by corporations.
Payable date Per share
Dec. 22, 1999 $0.05779
March 24, 2000 0.04107
June 22, 2000 0.06539
Sept. 22, 2000 0.06282
Total $0.22707
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 22, 1999 $3.13556
Total distributions $3.36263
ANNUAL REPORT - 2000
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American
Express(R)
Funds
AXP Stock Fund
70100 AXP Financial Center
Minneapolis, MN 55474
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN
EXPRESS
AMERICAN
(R)EXPRESS
S-6351 U (11/00)
This report must be accompanied or preceded by the Fund's current prospectus.
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.
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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 2) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
