AXP(SM) Strategy
Aggressive
Fund
1999 SEMIANNUAL REPORT
(icon of) ruler
AXP Strategy Aggressive Fund seeks to provide shareholders with long-term growth
of capital.
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
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Corporate Climbers
All rapidly growing companies pass through various stages. During their middle
stage, they're known in the investment world as "mid-caps." Stocks of such
companies, which are the main focus of this Fund, offer investors an attractive
combination: the potential for above-average corporate growth without the
initial risks that are inherent in brand-new businesses.
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
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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.
o A change in the investment management services agreement.
o Changes with respect to fundamental investment policies.
o A new subadvisory agreement.
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) Louis Giglio
Louis Giglio
Portfolio Manager
From the Portfolio Manager
The first half of the fiscal year was a volatile period for the stock market,
but in the end AXP Strategy Aggressive Fund produced a double-digit gain. For
the six months -- April through September 1999 -- the total return for the
Fund's Class A shares was 10.99%.
The stock market was in the middle of a strong rally when the period began last
spring. Supported by robust economic growth, healthy corporate earnings and low
inflation, the market climbed to an all-time high by mid-summer. Illustrating
the strength of the upturn, the Fund gained more than 9% in June.
From that point, stocks found the going more difficult. With long-term interest
rates up since the start of 1999 and investors concerned that the trend might
continue, stocks began a steady retreat over the final three months. The Fund,
however, fared better than the broad market, as it largely held its ground
during that time.
TECHNOLOGY LEADS THE WAY
The lion's share of the Fund's portfolio consisted of technology-related stocks,
including semiconductor, Internet, software, cellular and telecommunications
issues. They made up about half the holdings at times. Although they were
subject to substantial price swings, overall they had a very positive impact on
performance.
Financial services, utility, retailing and health care stocks comprised most of
the remaining investments. The best of those was retailing, as the others
provided mixed results over the six months.
Although large-capitalization growth stocks continued to garner most of the
attention during the period, the mid-cap stocks that this Fund focuses on
attracted more interest from investors than they have in recent years. Should
this "broadening out" of the market continue, it would almost certainly work in
the Fund's favor.
As the second half of the fiscal year begins, the economy appears to remain
strong and there's no lack of promising companies to invest in, especially in
the technology-related group. On the other hand, the possibility of higher
inflation and higher interest rates, along with potential fallout from the Y2K
computer situation, could present problems for the stock market in the months
ahead. Over the longer term, though, I'm very optimistic about the opportunities
available to patient investors.
Louis Giglio
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Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1999 $25.40
March 31, 1999 $22.88
Increase $ 2.52
Distributions -- April 1, 1999 - Sept. 30, 1999
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +10.99%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1999 $24.39
March 31, 1999 $22.05
Increase $ 2.34
Distributions -- April 1, 1999 - Sept. 30, 1999
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +10.63%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1999 $25.55
March 31, 1999 $23.00
Increase $ 2.55
Distributions -- April 1, 1999 - Sept. 30, 1999
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +11.10%**
*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.
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The 10 Largest Holdings
Percent Value
(of net assets) (as of Sept. 30, 1999)
Cisco Systems 4.42% $68,562,499
VeriSign 3.17 49,202,999
PMC-Sierra 2.26 35,057,499
Univision Communications Cl A 2.09 32,387,250
COLT Telecom Group ADR 1.70 26,372,500
JDS Uniphase 1.54 23,900,624
Adelphia Communications Cl A 1.52 23,525,000
Mercury Interactive 1.50 23,331,466
Tyco Intl 1.50 23,231,249
CMGI 1.47 22,755,000
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 21.17% of net assets
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<CAPTION>
Financial Statements
Statement of assets and liabilities
AXP Strategy Aggressive Fund
Sept. 30, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $1,261,103,503) $ 1,630,133,383
Cash in bank demand deposit 46,135
Dividends and accrued interest receivable 154,779
Receivable for investment securities sold 18,487,686
----------
Total assets 1,648,821,983
-------------
Liabilities
Payable upon return of securities loaned (Note 5) 75,072,100
Payable for investment securities purchased 21,664,457
Accrued investment management services fee 25,076
Accrued distribution fee 26,875
Accrued transfer agency fee 7,665
Accrued administrative services fee 2,046
Options contracts written, at value (premium received $1,776,015) (Note 6) 1,515,781
---------
Total liabilities 98,314,000
----------
Net assets applicable to outstanding capital stock $ 1,550,507,983
===============
Represented by
Capital stock-- $.01 par value (Note 1) $ 623,361
Additional paid-in capital 766,753,643
Net operating loss (5,678,511)
Accumulated net realized gain (loss) 419,551,888
Unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies (Note 7) 369,257,602
-----------
Total -- representing net assets applicable to outstanding capital stock $ 1,550,507,983
===============
Net assets applicable to outstanding shares: Class A $ 757,801,792
Class B $ 792,703,764
Class Y $ 2,427
Net asset value per share of outstanding capital stock: Class A shares 29,834,090 $ 25.40
Class B shares 32,501,919 $ 24.39
Class Y shares 95 $ 25.55
-- ---------------
See accompanying notes to financial statements.
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<CAPTION>
Statement of operations
AXP Strategy Aggressive Fund
Six months ended Sept. 30. 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 870,033
Interest 4,395,093
---------
Total income 5,265,126
---------
Expenses (Note 2):
Investment management services fee 4,443,004
Distribution fee
Class A 474,538
Class B 3,531,937
Transfer agency fee 1,204,162
Incremental transfer agency fee
Class A 65,393
Class B 114,409
Service fee
Class A 268,921
Class B 353,021
Class Y 2
Administrative services fees and expenses 371,586
Compensation of board members 5,487
Custodian fees 65,216
Printing and postage 39,317
Registration fees 23,372
Audit fees 10,750
Other 7,905
-----
Total expenses 10,979,020
Earnings credits on cash balances (Note 2) (35,383)
-------
Total net expenses 10,943,637
----------
Investment income (loss) -- net (5,678,511)
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 247,385,920
Foreign currency transactions (22,736)
Financial futures contracts 30,591
Options contracts written (Note 6) 5,689,521
---------
Net realized gain (loss) on investments 253,083,296
Net change in unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies (94,914,335)
-----------
Net gain (loss) on investments and foreign currencies 158,168,961
-----------
Net increase (decrease) in net assets resulting from operations $152,490,450
============
See accompanying notes to financial statements.
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<CAPTION>
Statements of changes in net assets
AXP Strategy Aggressive Fund
Sept. 30, 1999 March 31, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ (5,678,511) $ (12,499,760)
Net realized gain (loss) on investments 253,083,296 166,533,873
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (94,914,335) (97,819,819)
----------- -----------
Net increase (decrease) in net assets resulting from operations 152,490,450 56,214,294
----------- ----------
Distributions to shareholders from:
Net realized gain
Class A -- (6,770,133)
Class B -- (9,563,427)
Class Y -- (24)
------ ---
Total distributions -- (16,333,584)
----- -----------
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 187,525,159 434,063,764
Class B shares 50,024,067 73,615,271
Reinvestment of distributions at net asset value
Class A shares -- 6,621,726
Class B shares -- 9,498,315
Class Y shares -- 24
Payments for redemptions
Class A shares (109,279,991) (398,421,152)
Class B shares (Note 2) (145,066,005) (190,453,897)
------------ ------------
Increase (decrease) in net assets from capital share transactions (16,796,770) (65,075,949)
----------- -----------
Total increase (decrease) in net assets 135,693,680 (25,195,239)
Net assets at beginning of period 1,414,814,303 1,440,009,542
------------- -------------
Net assets at end of period $1,550,507,983 $1,414,814,303
============== ==============
See accompanying notes to financial statements.
</TABLE>
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Notes to Financial Statements
AXP Strategy Aggressive Fund
(Unaudited as to Sept. 30, 1999)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Strategy Series, Inc. and 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 common stocks that are selected for
their above-average growth potential.
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 besubject 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) differs 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 generally accepted accounting
principles 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 exchangeor 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 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 declared and paid by the end of the calendar year from net
investment income, 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 0.6% to 0.5% annually.
Effective with the new Investment Management Services Agreement, the fee will be
adjusted upward or downward by a performance incentive adjustment based on the
Fund's average daily net assets over a rolling 12-month period as measured
against the change in the Lipper Capital Appreciation Fund 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 first adjustment will be made on Jan. 1, 2000
and will cover the six-month period beginning July 1, 1999.
Under an Administrative Services Agreement, the Fund pays AEFC a fee for
administrationand accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.05% to 0.03% annually.
Additional administrative service expenses paid by the Fund are office expenses,
consultants' fees and compensation of officers and employees. 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.
AEFC has a Sub-investment Advisory Agreement with Kenwood Capital Management
LLC, an indirect subsidiary of AEFC.
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
Under terms of a prior agreement that ended Jan. 31, 1999, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $15 for Class A
and $16 for Class B. Under terms of a prior agreement that ended March 31, 1999,
the Fund paid a transfer agency fee at an annual rate per shareholder account of
$15 for Class Y.
The Fund has agreements with American Express Financial Advisors Inc. for
distribution and shareholder services. Under a Plan and Agreement of
Distribution (the Plan), 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. The Plan went into effect July 1, 1999.
Under terms of a prior Plan and Agreement of Distribution (the Prior Plan) that
endedJune 30, 1999, the Fund paid a distribution fee for Class B shares at an
annual rate up to 0.75% of average daily net assets. The Prior Plan was not
effective with respect to Class A 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. Under terms of a prior agreement that
ended June 30, 1999, the Fund paid a shareholder service fee for Class A and
Class B shares at a rate of 0.175% of average daily net assets. Effective July
1, 1999, the agreement for Class A and Class B was converted to the Plan and
Agreement of Distribution discussed above.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $883,955 for Class A and $192,622 for Class B for
the six months ended Sept. 30, 1999.
During the six months ended Sept. 30, 1999, the Fund's custodian and transfer
agency fees were reduced by $35,383 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 $970,143,369 and $1,041,171,022, respectively, for the
six months ended Sept 30, 1999. Realized gains and losses are determined on an
identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $8,442 for the
six months ended Sept. 30, 1999.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Sept. 30, 1999
Class A Class B Class Y
Sold 7,732,332 2,132,188 --
Issued for reinvested distributions -- -- --
Redeemed (4,482,084) (6,211,573) --
---------- ---------- ----------
Net increase (decrease) 3,250,248 (4,079,385) --
Year ended March 31, 1999
Class A Class B Class Y
Sold 19,926,335 3,601,446 --
Issued for reinvested distributions 305,808 454,317 1
Redeemed (18,410,711) (9,005,077) --
----------- ------------ ---------
Net increase (decrease) 1,821,432 (4,949,314) 1
5. LENDING OF PORTFOLIO SECURITIES
As of Sept. 30, 1999, securities valued at $72,210,823 were on loan to brokers.
For collateral, the Fund received $75,072,100 in cash. Income from securities
lending amounted to $309,360 for the six months ended Sept. 30, 1999. 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.
6. OPTIONS CONTRACTS WRITTEN
Contracts and premium amounts associated with options contracts written are as
follows:
Six months ended Sept. 30, 1999
Puts Calls
Contracts Premium Contracts Premium
Balance March 31, 1999 4,950 $ 1,513,725 5,200 $ 1,724,592
Opened 8,590 2,638,096 21,060 12,927,277
Closed (5,550) (2,043,320) (13,600) (9,664,529)
Expired (4,400) (884,070) (4,824) (1,039,984)
Exercised -- -- (6,551) (3,395,772)
------- -------- -------- ----------
Balance Sept. 30, 1999 3,590 $ 1,224,431 1,285 $ 551,584
See "Summary of significant accounting policies."
7. STOCK INDEX FUTURES CONTRACTS
As of Sept 30, 1999, investments in securities included securities valued at
$3,946,875 that were pledged as collateral to cover initial margin deposits on
two open purchase contracts. The market value of the open purchase contracts as
of Sept. 30, 1999 was $649,100 with a net unrealized loss of $32,512. See
"Summary of significant accounting policies."
8. 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 aggregateof 333% of advances equal to or less than five business days
plus 367% of advances over five business days. Th e agreement, which enables the
Fund to participate with other American Express 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 Sept.
30, 1999.
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<CAPTION>
9. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Fiscal period ended March 31,
Per share income and capital changesa
Class B
1999b 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $22.05 $21.48 $18.04 $18.83 14.90
Income from investment operations:
Net investment income (loss) (.14) (.27) (.18) (.18) (.18)
Net gains (losses) (both realized and unrealized) 2.48 1.10 7.57 .52 5.21
Total from investment operations 2.34 .83 7.39 .34 5.03
Less distributions:
Distributions from realized gains -- (.26) (3.95) (1.13) (1.10)
Net asset value, end of period $24.39 $22.05 $21.48 $18.04 $18.83
Ratios/supplemental data
Net assets, end of period (in millions) $793 $806 $892 $737 $710
Ratio of expenses to average daily net assetsc 1.80%d 1.78% 1.77% 1.80% 1.85%
Ratio of net investment income (loss)
to average daily net assets (1.12%)d (1.25%) (1.21%) (.91%) (.77%)
Portfolio turnover rate
(excluding short-term securities) 72% 98% 95% 80% 101%
Total returne 10.63% 3.88% 45.08% 1.22% 34.10%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Sept. 30, 1999 (Unaudited).
c Effective fiscal year 1996, 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.
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<CAPTION>
Fiscal period ended March 31,
Per share income and capital changesa
Class A Class Y
1999b 1999 1998 1997 1996 1999b 1999 1998 1997 1996
Net asset value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period $22.88 $22.12 $18.34 $18.99 $14.91 $23.00 $22.22 $18.40 $19.16 $14.89
Income from investment operations:
Net investment income (loss) (.04) (.10) (.03) (.03) -- (.04) (.10) -- -- .03
Net gains (losses)(both
realized and unrealized) 2.56 1.12 7.76 .51 5.18 2.59 1.14 7.77 .37 5.34
Total from investment
operations 2.52 1.02 7.73 .48 5.18 2.55 1.04 7.77 .37 5.37
Less distributions:
Distributions from realized gains -- (.26) (3.95) (1.13) (1.10) -- (.26) (3.95) (1.13) (1.10)
Net asset value, end of period $25.40 $22.88 $22.12 $18.34 $18.99 $25.55 $23.00 $22.22 $18.40 $19.16
Ratios/supplemental data
Net assets, end of period
(in millions) $758 $608 $548 $386 $348 $-- $-- $-- $-- $--
Ratio of expenses to
average daily net assetsc 1.05%d 1.02% 1.01% 1.04% 1.07% 91%d .92% .88% .85% .92%
Ratio of net investment
income (loss) to average
daily net assets (.34%)d (.48%) (.45%) (.15%) --% (.22%)d (.40%) (.35%) .03% .12%
Portfolio turnover rate
(excluding short-term
securities) 72% 98% 95% 80% 101% 72% 98% 95% 80% 101%
Total returne 10.99% 4.68% 46.18% 2.00% 35.10% 11.10% 4.74% 46.34% 2.18% 35.30%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Sept. 30, 1999 (Unaudited).
c Effective fiscal year 1996, 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.
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Investments in Securities
AXP Strategy Aggressive Fund
Sept. 30, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (90.1%)
Issuer Shares Value(a)
Aerospace & defense (--%)
Alliant Techsystems 3,832(b) $265,606
Airlines (0.4%)
Alaska Air Group 33,800 1,375,238
Amtran 6,060(b) 113,625
SkyWest 4,653 102,075
Southwest Airlines 299,200 4,544,100
Total 6,135,038
Automotive & related (0.7%)
Central Parking 4,105 120,071
Gentex 473,108(b) 9,772,637
O'Reilly Automotive 5,005(b) 238,520
SPS Technologies 3,245(b) 123,107
Winnebago Inds 9,800 234,588
Total 10,488,923
Banks and savings & loans (1.4%)
Centura Banks 2,972 122,967
Commerce Bancorp 4,536 188,244
Cullen/Frost Bankers 19,706 492,650
FirstMerit 16,735 424,651
Flagstar Bancorp 6,079 93,465
Hamilton Bancorp 5,435(b) 115,494
Hudson United Bancorp 2,466 75,984
NBT Bancorp 3,793 65,666
Old Natl Bancorp 4,575 132,103
Queens County Bancorp 5,435 150,142
Republic Bancorp 11,378 131,558
Southwest Bancorp of Texas 4,418(b) 77,039
TCF Financial 305,000 8,711,562
U.S. Trust 5,669 455,646
UnionBanCal 275,000 9,968,749
Total 21,205,920
Beverages & tobacco (--%)
Beringer Wine Estates Holdings Cl B 3,910(b) 160,554
Building materials & construction (--%)
Centex Construction Products 4,418 164,018
Dycom Inds 8,524(b) 359,607
NCI Building Systems 4,731(b) 78,357
Total 601,982
Chemicals (--%)
MacDermid 5,189 176,750
Spartech 5,709 167,345
Total 344,095
Communications equipment & services (3.1%)
AirGate PCS 11,000(b) 273,625
Amdocs 850,000(b) 17,849,999
CommScope 16,305(b) 529,913
Covad Communications Group 276,000(b) 12,031,875
Digital Microwave 13,000(b) 203,938
Oak Inds 4,800(b) 163,200
Plantronics 5,083(b) 252,879
Rhythms NetConnections 60,000(b) 2,070,000
Tellabs 261,000(b) 14,860,688
Total 48,236,117
Computers & office equipment (25.0%)
Acxiom 9,142(b) 179,697
America Online 171,000(b) 17,784,000
American Management Systems 14,897(b) 382,201
BISYS Group 3,988(b) 187,062
BMC Software 250,000(b) 17,890,625
Cisco Systems 1,000,000(b) 68,562,499
Citrix Systems 274,000(b) 16,970,875
Clarent 25,000(b) 1,273,438
Clarify 4,600(b) 231,438
CMGI 222,000(b,d) 22,755,000
Cognex 12,082(b) 364,725
Concentric Network 500,000(b) 10,156,250
CustomTracks 1,500 44,438
Dendrite Intl 11,402(b) 538,745
eGain Communications 27,300(b) 505,050
EMC 136,000(b) 9,715,500
FactSet Research Systems 5,904 335,790
Fiserv 650,000(b) 21,125,000
Gadzoox Networks 30,000(b) 1,616,250
Gemstar Intl Group 275,000(b) 21,484,375
Henry (Jack) & Associates 8,094 298,972
i2 Technologies 100,000(b) 3,881,250
InfoSpace.com 400,000(b) 16,450,000
Insight Enterprises 5,200(b) 169,000
Intuit 226,000(b) 19,810,313
Juniper Networks 59,700(b,d) 10,925,100
Kana Communications 7,400(b) 369,075
Kronos 5,002(b) 183,511
Legato Systems 160,000(b) 6,975,000
Lexmark Intl Group Cl A 75,700(b) 6,093,850
Macromedia 13,294(b) 543,392
MedQuist 10,010(b) 334,709
Mercury Interactive 361,378(b) 23,331,466
Natl Computer Systems 6,063 232,478
Natl Data 6,647 172,822
Natl Instruments 2,874(b) 101,578
NetZero 67,000(b) 1,742,000
New Era of Networks 4,340(b) 93,853
Novell 457,000(b) 9,454,188
Peregrine Systems 346,000(b) 14,099,500
Profit Recovery Group Intl 15,259(b) 680,933
Progress Software 7,155(b) 224,488
Safeguard Scientifics 280,300(b) 19,060,400
SanDisk 75,000(b) 4,889,063
SunGard Data Systems 600,000(b,g) 15,787,500
Symantec 7,312(b) 263,004
Whittman-Hart 12,082(b) 468,555
Xircom 7,658(b) 326,901
Yahoo! 101,000(b) 18,142,125
Yesmail.com 11,500(b) 122,188
Total 387,330,172
Electronics (17.8%)
Actel 8,094(b) 153,786
AFC Cable Systems 4,066(b) 172,805
Alpha Inds 7,077 399,187
Altera 250,000(b) 10,843,750
Burr-Brown 6,256(b) 247,112
C-Cube Microsystems 9,697(b) 421,820
Conexant Systems 220,000(b) 15,984,375
CTS 9,618 553,035
Dallas Semiconductor 3,200 171,000
Dionex 8,289(b) 354,355
DSP Communications 7,038(b) 133,722
Etec Systems 5,300(b) 199,413
Flextronics Intl 306,000(b) 17,805,375
Foundry Networks 18,300(b) 2,305,800
Helix Technology 9,892 328,909
Jabil Circuit 391,000(b,e) 19,354,499
JDS Uniphase 210,000(b) 23,900,624
LSI Logic 185,000(b) 9,527,500
Methode Electronics Cl A 7,820 147,603
Micrel 8,290(b) 359,579
Novellus Systems 257,781(b) 17,384,106
Navigant Consulting 252,100(b) 11,691,138
PMC-Sierra 379,000(b) 35,057,499
Power Integrations 2,300(b) 159,275
Powerwave Technologies 4,496(b) 216,792
Sawtek 2,718(b) 95,130
SDL 60,000 12,210,000
Taiwan Semiconductor Mfg ADR 399,750(b,c) 11,792,625
Teradyne 266,000(b) 9,376,500
VeriSign 462,000(b) 49,202,999
Vicor 8,600(b) 195,113
Vitesse Semiconductor 150,000(b) 12,806,250
Xilinx 200,000(b) 13,106,250
Total 276,657,926
Energy (1.1%)
Anadarko Petroleum 100,000 3,056,250
Apache 303,000 13,085,812
Barrett Resources 4,200(b) 155,138
Newfield Exploration 9,775(b) 321,964
Pogo Producing 6,569 136,307
Total 16,755,471
Energy equipment & services (--%)
Marine Drilling 7,859(b) 124,270
Financial services (3.3%)
Capital One Financial 288,000 11,232,000
Financial Federal 8,661 163,476
Investment Technology Group 4,966 103,665
Kansas City Southern Inds 50,000 16,253,125
Knight/Trimark Group Cl A 50,000(b,d) 22,218,750
Legg Mason 8,993 344,544
Mutual Risk Management 11,456(c) 140,336
Radian Group 3,128 134,309
SEI Investments 4,379 390,963
Total 50,981,168
Food (1.4%)
Delta & Pine Land 4,809 124,433
Earthgrains 5,904 130,626
Smithfield Foods 4,223(b) 112,965
Suiza Foods 408,000(b) 15,300,000
U.S. Foodservice 300,000(b) 5,400,000
United Natural Foods 4,809(b) 42,229
Total 21,110,253
Furniture & appliances (--%)
Briggs & Stratton 2,815 164,326
Ethan Allen Interiors 9,658 307,245
La-Z-Boy 10,401 198,269
Mohawk Inds 3,754(b) 74,845
Total 744,685
Health care (2.1%)
Alkermes 205,000(b) 5,906,563
Alpharma Cl A 5,630 198,809
Barr Laboratories 5,709(b) 181,261
Biomatrix 4,379(b,d) 98,254
IDEC Pharmaceuticals 64,731(b) 6,086,737
IDEXX Laboratories 8,837(b) 152,162
Incyte Pharmaceuticals 6,178(b) 142,866
Jones Pharma 14,428 475,673
Liposome 13,027(b) 99,127
MedImmune 120,000(b) 11,958,750
Mylan Laboratories 373,000 6,853,875
OEC Medical Systems 4,262(b) 149,703
Priority Healthcare Cl B 10,200(b) 314,925
Roberts Pharmaceutical 4,692(b) 141,933
Safeskin 4,966(b) 40,814
Summit Technology 10,088(b) 184,737
Techne 5,161(b) 161,926
Total 33,148,115
Health care services (0.5%)
Express Scripts Cl A 88,524(b) 6,927,003
Hanger Orthopedic Group 5,044(b) 73,138
Patterson Dental 11,378(b) 563,922
Renal Care Group 15,288(b) 334,903
Res-Care 6,021(b) 102,357
Universal Health Services Cl B 5,943(b) 153,775
Total 8,155,098
Household products (0.2%)
Chattem 2,033 44,853
Kimberly-Clark 3,592 188,580
Scotts Cl A 4,027(b) 139,435
Seminis Cl A 404,200(b) 3,486,225
Total 3,859,093
Industrial equipment & services (0.1%)
Astec Inds 7,429(b) 179,225
G & K Services Cl A 860 34,830
JLG Inds 9,931 150,827
Manitowoc 9,501 324,221
Terex 4,770(b) 150,255
Total 839,358
Insurance (1.0%)
Blanch (EW) Holdings 140,000 9,117,500
Fidelity Natl Financial 4,262 64,729
Gallagher (Arthur J) 6,412 341,439
Hooper Holmes 10,596 271,523
Reinsurance Group of America 3,421 87,877
ReliaStar Financial 170,000 5,652,500
Triad Guaranty 8,797(b) 148,449
Total 15,684,017
Leisure time & entertainment (0.8%)
Acclaim Entertainment 12,473(b) 94,717
Anchor Gaming 2,776(b) 165,172
Polaris Inds 2,854 98,820
SFX Entertainment Cl A 400,000 12,200,000
Total 12,558,709
Media (7.2%)
Adelphia Communications Cl A 400,000(b,d) 23,525,000
ADVO 5,005(b) 99,787
Cablevision Systems Cl A 212,000(b,d) 15,423,000
Catalina Marketing 3,985(b) 337,978
Clear Channel Communications 62,800(b) 5,016,150
Consolidated Graphics 4,846(b) 204,138
TeleWest Communications 1,595,000(b,c) 5,842,510
True North Communications 5,709 207,665
Univision Communications Cl A 398,000(b) 32,387,250
USA Networks 295,000(b) 11,431,250
Valassis Communications 16,860(b) 740,786
Young & Rubicam 360,000 15,840,000
Total 111,055,514
Metals (--%)
Mueller Inds 5,943(b) 176,433
Stillwater Mining 7,086(b) 190,436
Total 366,869
Miscellaneous (0.8%)
Apex 3,800(b) 71,013
Internap Network Services 57,200(b) 2,552,550
John Nuveen Cl A 3,871 144,921
Philadelphia Suburban 10,557 248,749
ShopNow.com 200,000(b) 2,325,000
Terayon Communication Systems 146,000 7,135,749
TiVo 2,900(b) 86,819
Total 12,564,801
Multi-industry conglomerates (2.1%)
Bell & Howell 4,340(b) 159,224
DeVry 15,953(b) 319,060
Education Management 5,748(b) 71,132
Electronics for Imaging 164,000(b) 8,430,625
Labor Ready 15,240(b) 153,353
Lason 3,206(b) 142,767
Mettler-Toledo Intl 5,904(b) 174,906
NCO Group 3,930(b) 184,710
Pre-Paid Legal Services 4,809(b) 189,354
Sylvan Learning Systems 4,887(b) 94,686
Tyco Intl 225,000(c) 23,231,249
Total 33,151,066
Paper & packaging (--%)
Buckeye Technologies 8,211(b) 128,810
Shorewood Packaging 5,200(b) 70,525
Total 199,335
Restaurants & lodging (0.7%)
CEC Entertainment 9,970(b) 357,692
Foodmaker 13,685(b) 341,270
Papa John's Intl 248,000(b) 10,229,999
Sonic 4,418(b) 134,473
Taco Cabana Cl A 14,311(b) 138,638
Total 11,202,072
Retail (10.3%)
99 Cents Only Stores 3,323(b) 120,043
American Eagle Outfitters 310,000(b) 15,015,625
Ames Dept Stores 5,748(b) 183,218
AnnTaylor 347,680(b) 14,211,420
Ashford.com 56,000(b) 516,250
Bed Bath & Beyo 596,000(b) 20,822,749
CDW Computer Ce 2,776(b) 135,677
Circuit City St 222,000 9,365,625
Dollar General 527,000 16,271,125
EMusic.com 400,000(b) 5,950,000
Family Dollar 565,000 11,935,625
Fossil 13,258(b) 358,795
Kohl's 304,500(b) 20,135,062
Linens `N Thing 9,267(b) 312,761
Men's Wearhouse 17,151(b) 368,747
Musicmaker.com 193,000(b) 1,990,313
Pacific Sunwear of California 7,449(b) 208,805
Regis 12,923 248,768
Tiffany 334,000(e) 20,019,125
TJX Companies 375,000 10,523,438
Tuesday Morning 171,800(b) 4,337,950
Whole Foods Market 200,000(b) 6,543,750
Williams-Sonoma 8,367(b) 406,322
Total 159,981,193
Textiles & apparel (1.0%)
Abercrombie & Fitch 430,000(b) 14,646,876
K-Swiss Cl A 6,031 190,353
Oshkosh B'Gosh Cl A 10,909 174,203
Quiksilver 5,669(b) 103,459
Total 15,114,891
Transportation (--%)
Atlas Air 5,339(b) 116,791
Expeditors Intl of Washin 11,613 372,704
Swift Transportation 7,546(b) 148,562
Total 638,057
Utilities -- telephone (8.9%)
Allegiance Telecom 335,000(b) 17,629,375
COLT Telecom Group ADR 274,000(b,c) 26,372,500
Global TeleSystems Group 600,000(b) 11,831,250
Intermedia Communications 500,000(b) 10,875,000
Omnipoint 300,000(b) 16,762,500
RCN 410,000(b) 16,810,000
United States Cellular 139,000(b) 9,452,000
Western Wireless Cl A 139,000(b) 6,233,281
WinStar Communications 552,000(b) 21,562,500
Total 137,528,406
Total common stocks
(Cost: $1,027,629,825) $1,397,188,774
Preferred stock (0.3%)
Issuer Shares Value(a)
Protein Delivery
2.50% 2,000,000 $5,000,000
Total preferred stock
(Cost: $5,000,000) $5,000,000
Options purchased (0.1%)
Issuer Shares Exercise Expiration Value(a)
price date
Calls
Alaska Air Group 50,000 $45 Jan. 2000 143,750
Altera 75,000 50 Dec. 1999 229,687
SunGard Data Systems 100,000 25 April 2000 537,500
Stryker 60,000 55 Oct. 1999 48,750
TJX Companies 50,000 30 Oct. 1999 15,625
Total 975,312
Put
Tyco Intl 150,000 100 Nov. 1999 637,500
Total options purchased
(Cost: $2,088,197) $1,612,812
<PAGE>
Short-term securities (14.6%)(e)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S government agencies (9.2%)
Federal Home Loan Bank Disc Nts
10-13-99 5.14% $35,000,000 $34,932,127
10-22-99 5.21 4,400,000 4,385,587
11-03-99 5.25 3,100,000 3,084,160
11-03-99 5.27 4,300,000 4,278,029
Federal Home Loan Mtge Corp Disc Nts
10-07-99 5.16 28,700,000 28,671,259
10-07-99 5.19 7,500,000 7,492,446
10-15-99 5.22 7,400,000 7,383,935
10-26-99 5.26 2,700,000 2,689,782
11-15-99 5.29 12,500,000 12,413,430
Federal Natl Mtge Assn Disc Nts
10-21-99 5.22 3,700,000 3,688,776
11-05-99 5.28 14,700,000 14,617,864
12-08-99 5.31 19,700,000 19,495,727
Total 143,133,122
Commercial paper (5.4%)
Alcoa
11-12-99 5.35 5,500,000 5,463,226
American General
10-07-99 5.28 7,600,000 7,592,212
ANZ (Delaware)
12-01-99 5.35 6,000,000 5,945,233
BellSouth Capital Funding
11-08-99 5.32 5,800,000(f) 5,766,761
11-08-99 5.33 7,600,000(f) 7,556,363
Merrill Lynch
10-20-99 5.30 6,100,000 6,082,106
Paccar Financial
10-01-99 5.55 5,300,000 5,299,183
Procter & Gamble
10-29-99 5.29 13,400,000 13,343,113
Salomon Smith Barney
10-05-99 5.18% 5,700,000 5,695,828
SBC Communications Capital
10-13-99 5.12 3,700,000(f) 3,692,825
USAA Capital
10 04-99 5.18 8,400,000 8,395,165
Wal-Mart Stores
10-26-99 5.31 4,900,000(f) 4,881,279
Windmill Funding
10-28-99 5.39 3,500,000(f) 3,485,381
Total 83,198,675
Total short-term securities
(Cost: $226,385,481) $226,331,797
Total investments in securities
(Cost: $1,261,103,503)(h) $1,630,133,383
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 Sept. 30, 1999,
the value of foreign securities represented 4.35% of net assets.
(d) Security is partially or fully on loan. See Note 5 to the financial
statements.
(e) At Sept. 30, 1999, securities valued at $7,232,281 were held to cover open
call options written as follows:
Issuer Shares Exercise Expiration Value(a)
price date
Jabil Circuit 45,000 $50 Oct. 1999 $87,187
Tiffany 83,500 60 Nov. 1999 360,094
Total $447,281
At Sept. 30, 1999, cash or short-term securities were designated to cover open
put options written as follows:
Issuer Shares Exercise Expiration Value(a)
price date
Best Buy 100,000 $55 Oct. 1999 $31,250
Knight/Trimark Group C/A 75,000 28 Oct. 1999 84,375
Global TeleSystems Group 90,000 23 Oct. 1999 303,750
ReliaStar Financial 34,000 35 Jan. 2000 146,625
Tellabs 60,000 65 Oct. 1999 502,500
Total $1,068,500
(f) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(g) Partially pledged as initial margin deposit on the following open stock
index futures purchase contracts (see Note 7 to the financial statements):
Type of security Contracts
S&P 500 Index, Dec. 1999 2
(h) At Sept. 30, 1999, the cost of securities for federal income tax purposes
was approximately $1,261,103,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $416,810,000
Unrealized depreciation (47,780,000)
-----------
Net unrealized appreciation $369,030,000
<PAGE>
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