AXP(SM) Strategy
Aggressive
Fund
2000 SEMIANNUAL REPORT
American
Express(R)
Funds
(icon of) ruler
AXP Strategy Aggressive Fund seeks to provide shareholders with long-term growth
of capital.
<PAGE>
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
<PAGE>
(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 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.
On behalf of the Board,
Arne H. Carlson
(picture of) Louis Giglio
Louis Giglio
Portfolio Manager
From the Portfolio Manager
In a period of extreme volatility for stocks, especially technology-related
issues, AXP Strategy Aggressive Fund fared relatively well, although it
experienced a loss of 4.46% (excluding the sales charge). That figure represents
the performance of the Fund's Class A shares for the first half of the fiscal
year -- April through September 2000.
The six months began with the stock market as a whole, and technology stocks in
particular, on shaky ground. What had only recently been the darlings of the
market, technology stocks were now being viewed with suspicion as they struggled
to hold their ground against higher interest rates and the possibility of
less-than-spectacular corporate profits in the months ahead.
A RAPID RETREAT
The struggle was over quickly, as technology stocks were driven into a rapid
retreat that continued until late May, by which time the Nasdaq Composite Index
(commonly used as a measuring stick for technology stocks' performance) was down
some 30%. Performance for the Fund, whose largest area of investment by far was
technology, was roughly the same.
But with the remarkable resilience that has been their hallmark for several
years, tech stocks stormed back in June and, after a brief rest in July,
recorded another powerful advance in August. Again, the Fund followed suit. In
September, the Nasdaq went into another steep slump, while the Fund lost
comparatively little ground.
Although the main driver of the Fund's performance was the technology sector,
investments in other areas reduced the overall volatility somewhat and,
especially late in the period, enhanced performance. Most notable were holdings
in the biotechnology, health care, financial services and energy sectors. Also
working in the Fund's favor was its emphasis on mid-capitalization (mid-size)
stocks, which outperformed large-cap issues for the period as a whole.
As the second half of the fiscal year begins, stocks continue to be pushed and
pulled by conflicting factors. On the positive side, the economy appears to
remain healthy and inflation has yet to become a serious threat. On the other
hand, there are concerns that corporate profits may be less robust and that the
Federal Reserve may raise interest rates again. My view is that, while there
will be considerable volatility along the way, stocks could enjoy an improving
environment in the months ahead.
Louis Giglio
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $35.38
March 31, 2000 $37.03
Decrease $ 1.65
Distributions -- April 1, 2000 - Sept. 30, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return** -4.46%
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $33.37
March 31, 2000 $35.06
Decrease $ 1.69
Distributions -- April 1, 2000 - Sept. 30, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return** -4.82%
Class C -- June 26, 2000* - Sept. 30, 2000
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $33.38
June 26, 2000* $30.40
Increase $ 2.98
Distributions -- June 26, 2000* - Sept. 30, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return** +9.80%***
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $35.71
March 31, 2000 $37.33
Decrease $ 1.62
Distributions -- April 1, 2000 - Sept. 30, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return** -4.34%
* 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.
<PAGE>
The 10 Largest Holdings
Percent Value
(of net assets) (as of Sept. 30, 2000)
Mercury Interactive 4.61% $166,970,099
Extreme Networks 3.83 138,705,299
SDL 3.23 117,039,999
ALZA 2.95 106,784,249
Finisar 2.72 98,525,362
Juniper Networks 2.58 93,486,312
PCM-Sierra 2.42 87,606,749
Jabil Circuit 2.27 82,122,925
Calpine 2.24 81,245,500
IDEC Pharmaceuticals 1.79 64,900,505
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 28.64% of net assets
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
AXP Strategy Aggressive Fund
Sept. 30, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost $2,862,608,044) $3,771,429,058
Cash in bank on demand deposit 13,817
Dividends and accrued interest receivable 826,689
Receivable for investment securities sold 64,443,964
U.S. government securities held as collateral (Note 5) 7,567,042
---------
Total assets 3,844,280,570
-------------
Liabilities
Payable upon return of securities loaned (Note 5) 133,341,842
Payable for investment securities purchased 84,434,395
Accrued investment management services fee 55,309
Accrued distribution fee 54,969
Accrued service fee 13
Accrued transfer agency fee 13,873
Accrued administrative services fee 4,234
Options contracts written, at value (premium received $1,892,625) (Note 6) 686,562
Other accrued expenses 76,391
------
Total liabilities 218,667,588
-----------
Net assets applicable to outstanding capital stock $3,625,612,982
==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,050,514
Additional paid-in capital 2,150,911,939
Net operating loss (10,122,264)
Accumulated net realized gain (loss) 578,576,963
Unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies 905,195,830
-----------
Total-- representing net assets applicable to outstanding capital stock $3,625,612,982
==============
Net assets applicable to outstanding shares: Class A $2,106,620,845
Class B $1,512,265,893
Class C $ 1,922,842
Class Y $ 4,803,402
Net asset value per share of outstanding capital stock: Class A shares 59,537,499 $ 35.38
Class B shares 45,321,789 $ 33.37
Class C shares 57,611 $ 33.38
Class Y shares 134,503 $ 35.71
------- --------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
AXP Strategy Aggressive Fund
Six months ended Sept. 30, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 1,953,557
Interest 10,666,109
Less foreign taxes withheld (176)
----
Total income 12,619,490
----------
Expenses (Note 2):
Investment management services fee 9,816,039
Distribution fee
Class A 2,144,880
Class B 7,140,410
Class C 1,817
Transfer agency fee 2,027,667
Incremental transfer agency fee
Class A 129,177
Class B 163,466
Class C 88
Service fee - Class Y 1,206
Administrative services fees and expenses 711,826
Compensation of board members 6,977
Custodian fees 200,750
Printing and postage 288,792
Registration fees 140,745
Audit fees 11,250
Other 57,379
------
Total expenses 22,842,469
----------
Earnings credits on cash balances (Note 2) (100,715)
--------
Total net expenses 22,741,754
----------
Investment income (loss) -- net (10,122,264)
-----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (89,959,470)
Foreign currency transactions (410,758)
Futures contracts (5,126,651)
Options contracts written (Note 6) 4,985,060
---------
Net realized gain (loss) on investments (90,511,819)
Net change in unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies (9,150,306)
----------
Net gain (loss) on investments and foreign currencies (99,662,125)
-----------
Net increase (decrease) in net assets resulting from operations $(109,784,389)
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
AXP Strategy Aggressive Fund
Sept. 30, 2000 March 31, 2000
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ (10,122,264) $ (12,239,626)
Net realized gain (loss) on investments (90,511,819) 984,307,998
Net change in unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies (9,150,306) 450,174,199
---------- -----------
Net increase (decrease) in net assets resulting from operations (109,784,389) 1,422,242,571
------------ -------------
Distributions to shareholders from:
Net realized gain
Class A -- (226,481,763)
Class B -- (242,965,716)
Class Y -- (703)
----
Total distributions -- (469,448,182)
------------
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 678,165,255 689,257,939
Class B shares 229,244,198 321,812,306
Class C shares 1,868,187 --
Class Y shares 39,829,931 2,344
Reinvestment of distributions at net asset value
Class A shares -- 219,585,079
Class B shares -- 240,464,095
Class Y shares -- 703
Payments for redemptions
Class A shares (248,974,535) (268,667,769)
Class B shares (Note 2) (266,214,247) (233,135,299)
Class C shares (Note 2) (424) --
Class Y shares (35,449,084) --
-----------
Increase (decrease) in net assets from capital share transactions 398,469,281 969,319,398
----------- -----------
Total increase (decrease) in net assets 288,684,892 1,922,113,787
Net assets at beginning of period 3,336,928,090 1,414,814,303
------------- -------------
Net assets at end of period $3,625,612,982 $3,336,928,090
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
AXP Strategy Aggressive Fund
(Unaudited as to Sept. 30, 2000)
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. AXP Strategy Series, Inc. has 10 billion
authorized shares of capital stock that can be allocated among the separate
series as designated by the board. The Fund invests primarily in common stocks
that are selected for their above-average growth potential.
Class C shares of the Fund were offered to the public on June 26, 2000. Prior to
this date, American Express Financial Corporation (AEFC) purchased 64 shares of
capital stock, which represented the initial capital in Class C at $31.37 per
share.
The Fund offers Class A, Class B, Class C 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 (CDSC)
and automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class C shares may be subject to a CDSC.
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.
Illiquid securities
As of Sept. 30, 2000, investments in securities included issues that are
illiquid. The Fund currently limits investments in illiquid securities to 10% of
net assets, at market value, at the time of purchase. The aggregate value of
such securities as of Sept. 30, 2000 was $95,667,931, representing 2.64% of net
assets. According to board guidelines, certain unregistered securities are
determined to be liquid and are not included within the 10% limitation specified
above.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the Fund on a
forward-commitment or when-issued basis can take place one month or more after
the transaction date. During this period, such securities are subject to market
fluctuation, and they may affect the Fund's net assets the same as owned
securities. The Fund designates cash or liquid debt securities at least equal to
the amount of its commitment. As of Sept. 30, 2000, the Fund has entered into
outstanding when-issued or forward commitments of $8,466,663.
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 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 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. 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 Strategy Aggressive Fund to the Lipper Mid-Cap Growth
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
increased the fee by $818,071 for the six months ended Sept. 30, 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 0.05% to 0.03% 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.
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 $19.00
o Class B $20.00
o Class C $19.50
o Class Y $17.00
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 and Class C 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.
Sales charges received by the Distributor for distributing Fund shares were
$4,078,505 for Class A and $271,858 for Class B for the six months ended Sept.
30, 2000 and $3 for Class C for the period ended Sept. 30, 2000. The Fund also
pays custodian fees to American Express Trust Company, an affiliate of AEFC.
During the six months ended Sept. 30, 2000, the Fund's custodian and transfer
agency fees were reduced by $100,715 as a result of earnings credits from
overnight cash balances.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $2,245,087,433 and $1,663,114,447, respectively, for the
six months ended Sept. 30, 2000. Realized gains and losses are determined on an
identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $130,755 for the
six months ended Sept. 30, 2000.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Sept. 30, 2000
Class A Class B Class C* Class Y
Sold 20,721,540 7,597,802 57,624 1,246,870
Issued for
reinvested distributions 272 533 -- --
Redeemed (7,662,194) (8,362,402) (13) (1,112,546)
Net increase (decrease) 13,059,618 (764,067) 57,611 134,324
* Inception dates was June 26, 2000.
Year ended March 31, 2000
Class A Class B Class C Class Y
Sold 21,819,198 10,139,546 N/A 61
Issued for
reinvested distributions 7,191,116 8,305,215 N/A 23
Redeemed (9,116,275) (8,940,209) N/A --
Net increase (decrease) 19,894,039 (9,504,552) N/A 84
5. LENDING OF PORTFOLIO SECURITIES
As of Sept. 30, 2000, securities valued at $130,703,533 were on loan to brokers.
For collateral, the Fund received $125,774,800 in cash and U.S. government
securities valued at $7,567,042. Income from securities lending amounted to
$600,885 for the six months ended Sept. 30, 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.
6. OPTIONS CONTRACTS WRITTEN
Contracts and premium amounts associated with options contracts written are as
follows:
Six months ended Sept. 30, 2000
Puts Calls
Contracts Premium Contracts Premium
Balance March 31, 2000 500 $ 248,491 -- $ --
Opened 7,315 6,662,902 9,959 4,509,542
Closed (2,010) (2,781,819) (2,759) (795,141)
Expired (2,905) (1,725,146) (3,500) (1,225,834)
Exercised (1,025) (597,800) (3,200) (2,402,570)
Balance Sept. 30, 2000 1,875 $1,806,628 500 $85,997
See "Summary of significant accounting policies."
7. STOCK INDEX FUTURES CONTRACTS
As of Sept. 30, 2000, investments in securities included securities valued at
$23,559,750 that were pledged as collateral to cover initial margin deposits on
94 open purchase contracts. The market value of the open purchase contracts as
of Sept. 30, 2000 was $34,037,400 with a net unrealized loss of $4,831,247. 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 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
Sept. 30, 2000.
<PAGE>
<TABLE>
<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 changes(a)
Class A
2000(b) 2000 1999 1998 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $37.03 $22.88 $22.12 $18.34 $18.99
Income from investment operations:
Net investment income (loss) (.04) (.05) (.10) (.03) (.03)
Net gains (losses) (both realized and unrealized) (1.61) 21.58 1.12 7.76 .51
Total from investment operations (1.65) 21.53 1.02 7.73 .48
Less distributions:
Distributions from realized gains -- (7.38) (.26) (3.95) (1.13)
Net asset value, end of period $35.38 $37.03 $22.88 $22.12 $18.34
Ratios/supplemental data
Net assets, end of period (in millions) $2,107 $1,721 $608 $548 $386
Ratio of expenses to average daily net assets(c) 1.11%(d) 1.06% 1.02% 1.01% 1.04%
Ratio of net investment income (loss) to average daily net assets (.30%)(d) (.22%) (.48%) (.45%) (.15%)
Portfolio turnover rate (excluding short-term securities) 56% 155% 98% 95% 80%
Total return(e) (4.46%) 100.97% 4.68% 46.18% 2.00%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Six months ended Sept. 30, 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 March 31,
Per share income and capital changes(a)
Class B
2000(b) 2000 1999 1998 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $35.06 $22.05 $21.48 $18.04 $18.83
Income from investment operations:
Net investment income (loss) (.17) (.22) (.27) (.18) (.18)
Net gains (losses) (both realized and unrealized) (1.52) 20.61 1.10 7.57 .52
Total from investment operations (1.69) 20.39 .83 7.39 .34
Less distributions:
Distributions from realized gains -- (7.38) (.26) (3.95) (1.13)
Net asset value, end of period $33.37 $35.06 $22.05 $21.48 $18.04
Ratios/supplemental data
Net assets, end of period (in millions) $1,512 $1,616 $806 $892 $737
Ratio of expenses to average daily net assets(c) 1.86%(d) 1.81% 1.78% 1.77% 1.80%
Ratio of net investment income (loss) to average daily net assets (1.05%)(d) (1.00%) (1.25%) (1.21%) (.91%)
Portfolio turnover rate (excluding short-term securities) 56% 155% 98% 95% 80%
Total return(e) (4.82%) 99.59% 3.88% 45.08% 1.22%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Six months ended Sept. 30, 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>
Fiscal period ended March 31,
Per share income and capital changes(a)
Class C
2000(b)
Net asset value, beginning of period $30.40
Income from investment operations:
Net investment income (loss) (.04)
Net gains (losses) (both realized and unrealized) 3.02
Total from investment operations 2.98
Less distributions:
Distributions from realized gains --
Net asset value, end of period $33.38
Ratios/supplemental data
Net assets, end of period (in millions) $2
Ratio of expenses to average daily net assets(c) 1.86%(d)
Ratio of net investment income (loss) to average daily net assets (1.15%)(d)
Portfolio turnover rate (excluding short-term securities) 56%
Total return(e) 9.80%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 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.
<PAGE>
<TABLE>
<CAPTION>
Fiscal period ended March 31,
Per share income and capital changes(a)
Class Y
2000(b) 2000 1999 1998 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $37.33 $23.00 $22.22 $18.40 $19.16
Income from investment operations:
Net investment income (loss) (.01) (.01) (.10) -- --
Net gains (losses) (both realized and unrealized) (1.61) 21.72 1.14 7.77 .37
Total from investment operations (1.62) 21.71 1.04 7.77 .37
Less distributions:
Distributions from realized gains -- (7.38) (.26) (3.95) (1.13)
Net asset value, end of period $35.71 $37.33 $23.00 $22.22 $18.40
Ratios/supplemental data
Net assets, end of period (in millions) $5 $-- $-- $-- $--
Ratio of expenses to average daily net assets(c) .91%(d) .89% .92% .88% .85%
Ratio of net investment income (loss) to average daily net assets (.09%)(d) (.07%) (.40%) (.35%) .03%
Portfolio turnover rate (excluding short-term securities) 56% 155% 98% 95% 80%
Total return(e) (4.34%) 101.29% 4.74% 46.34% 2.18%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Six months ended Sept. 30, 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>
Investments in Securities
AXP Strategy Aggressive Fund
Sept. 30, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (94.5%)
Issuer Shares Value(a)
Banks and savings & loans (2.8%)
CompuCredit 294,200(b,d) $16,502,781
Silicon Valley Bancshares 474,600(b) 27,638,034
Sovereign Bancorp 3,116,900 28,831,326
TCF Financial 575,000 21,634,375
Zions Bancorp 145,500 7,440,961
Total 102,047,477
Chemicals (0.1%)
Eden Bioscience 144,000(b) 4,752,000
Communications equipment & services (13.8%)
Aether Systems 128,000(b) 13,504,000
CIENA 420,000(b) 51,581,249
Copper Mountain Networks 417,800(b) 15,667,500
Covad Communications Group 1,196,700(b,d) 16,005,863
Ditech Communications 273,500(b) 11,213,500
DMC Stratex Networks 1,090,000(b) 17,508,125
Elastic Networks 150,000(b) 2,078,646
Equinix 970,000(b) 8,608,750
Fairchild Semiconductor Intl Cl A 460,100(b) 12,940,313
Finisar 2,036,700(b) 98,525,362
Netro 516,200(b) 30,584,850
New Focus 448,400(b) 35,451,625
ONI Systems 425,000(b,d) 36,682,813
Powerwave Technologies 250,000(b) 9,492,188
SDL 380,000(b) 117,039,999
Sonus Networks 40,000(b) 5,055,000
WebMD 850,000(b) 12,962,500
WJ Communications 56,000(b) 2,072,000
Total 496,974,283
Computer software & services (3.7%)
Edwards (JD) & Co 1,000,000(b) 25,875,000
i2 Technologies 201,500(b) 37,693,094
PeopleSoft 1,070,700(b) 29,912,681
SunGard Data Systems 948,600(b) 40,611,938
Total 134,092,713
Computers & office equipment (22.3%)
Akamai Technologies 381,700(b,d) 20,045,214
Avici Systems 88,500(b) 8,418,563
Embarcadero Technologies 200,000(b) 10,275,000
Emulex 300,000(b) 36,750,000
Extreme Networks 1,211,400(b) 138,705,299
Fiserv 870,300(b) 52,109,213
Genomica 50,000(b) 969,337
Genuity 963,100(b) 6,290,247
Juniper Networks 427,000(b) 93,486,312
Liberate Technologies 156,100(b) 4,517,144
McDATA Cl B 450,000(b) 55,300,780
Mercury Interactive 1,065,200(b) 166,970,099
NetIQ 493,500(b) 32,416,781
Portal Software 690,000(b) 27,600,000
Predictive Systems 500,000(b) 9,656,250
Sanmina 434,500(b) 40,680,063
Software.com 188,000(b) 34,110,250
Trintech Group ADR 208,700(b,c) 4,200,088
Tumbleweed Communications 410,100(b) 20,915,100
VeriSign 210,000(b) 42,538,125
Total 805,953,865
Electronics (17.4%)
Advanced Energy Inds 404,200(b) 13,338,600
Applied Micro Circuits 125,000(b) 25,882,813
Avanex 255,000(b,d) 27,460,313
Celestica 674,200(b,c) 46,688,350
Flextronics Intl 320,000(b,c) 26,280,000
GlobeSpan 257,100(b) 31,366,200
Integrated Device Technology 392,200(b) 35,494,100
Jabil Circuit 1,447,100(b) 82,122,925
Newport 200,000 31,853,125
Novellus Systems 833,000(b) 38,786,563
Pericom Semiconductor 431,600(b) 15,969,200
PMC-Sierra 407,000(b) 87,606,749
Semtech 605,800(b) 26,125,125
TriQuint Semiconductor 431,600(b) 15,726,425
Virata 250,000(b) 16,531,250
Vitesse Semiconductor 550,000(b) 48,915,625
Waters 657,400(b) 58,508,600
Total 628,655,963
Energy (4.3%)
Alberta Energy 460,000(c) 19,092,782
Apache 400,000 23,650,000
Kerr-McGee 680,700 45,096,374
Murphy Oil 212,600 13,779,138
Newfield Exploration 210,000(b,f) 9,804,375
Southern Energy 415,750(b) 13,044,156
Suncor Energy 704,400(c) 15,543,055
Tosco 556,100 17,343,369
Total 157,353,249
Energy equipment & services (1.8%)
Cooper Cameron 440,000(b) 32,422,500
Diamond Offshore Drilling 810,000 33,210,000
Total 65,632,500
Financial services (1.4%)
Lehman Brothers Holdings 90,900 13,430,475
Metris Companies 550,000 21,725,000
Radian Group 230,000 15,525,000
Total 50,680,475
Health care (11.6%)
Alkermes 1,246,700(b) 48,153,788
ALZA 1,234,500(b) 106,784,249
Diversa 245,000(b) 6,615,000
Forest Laboratories 450,000(b) 51,609,375
Gilead Sciences 200,000(b,g) 21,937,500
IDEC Pharmaceuticals 370,100(b) 64,900,505
Invitrogen 490,000(b,d) 34,851,250
Laboratory Corp America Holdings 58,400(b) 6,993,400
MiniMed 361,700(b) 32,326,938
Teva Pharmaceutical Inds ADR 624,700(c) 45,720,231
Wilson Greatbatch Technologies 48,400(b) 1,107,150
Total 420,999,386
Health care services (2.1%)
Abgenix 547,900(b) 44,277,169
McKesson HBOC 1,100,000(g) 33,618,750
Total 77,895,919
Insurance (0.9%)
XL Capital Cl A 463,100(c) 34,037,850
Media (1.7%)
TMP Worldwide 351,400(b) 28,287,700
Univision Communications Cl A 940,000(b) 35,132,500
Total 63,420,200
Miscellaneous (3.4%)
AvantGo 84,000(b) 1,680,000
Biotech Holdings Trust Depositary Receipts 190,000(b,d) 37,038,125
CacheFlow 125,000(b) 17,875,000
Convergys 485,400(b) 18,869,925
Digex 614,700(b) 28,814,063
FirePond 338,200(b) 4,903,900
Proton Energy Systems 14,250(b) 407,906
Semiconductor Holdings Trust Depositary Receipts 180,000(b,d) 12,798,000
Total 122,386,919
Multi-industry conglomerates (0.7%)
Robert Half Intl 706,700(b) 24,513,656
Retail (3.0%)
Bed Bath & Beyond 2,208,200(b) 53,859,378
Best Buy 290,000(b) 18,451,250
Dollar Tree Stores 890,300(b) 36,112,794
Total 108,423,422
Utilities -- electric (2.2%)
Calpine 778,400(b) 81,245,500
Utilities -- telephone (1.3%)
Allegiance Telecom 1,166,000(b) 43,433,500
WinStar Communications 167,000(b) 2,588,500
Total 46,022,000
Total common stocks
(Cost: $2,535,210,984) $3,425,087,377
Preferred stocks & other (2.6%)(i)
Issuer Shares Value(a)
Adaytum Software 574,163(b) $3,600,002
Aurgin Systems
2.46% 2,285,975(b) 5,623,498
Bluestream Ventures LP 8,000,000(b,e,j) 8,000,000
Covia Technologies
Cv 1,390,043(b) 3,483,448
Dia Dexus
Cv Series C 795,698(b) 6,166,659
Equinix
Cv 238,726(b) 1,694,955
Warrants 9,300 1,395,000
Fibrogen
Cv Series E 1,113,586(b) 5,000,001
FREEI.Net 237,659(b,j) 1,666,663
8.05% 621,062(b) 4,355,403
Mars
Cv Series D 2,142,857(b) 4,500,000
MarsMusic.com
Cv 5,000,000(b) 5,000,000
Protein Delivery
2.50% 2,000,000(b) 5,000,000
Signalsoft
Cv Series E 844,594(b) 27,449,305
Tellium 90,000(b) 2,700,000
Therox 814,130(b) 3,744,998
Vcommerce
Cv Series C 769,957(b) 3,588,000
YOUpowered
Cv Series B 347,938(b) 2,699,999
Total preferred stocks & other
(Cost: $75,258,968) $95,667,931
Bond (0.2%)
Issuer Coupon Principal Value(a)
rate amount
Equinix
Sr Nts
12-01-07 13.00% $9,300,000 $7,428,375
Total bond
(Cost: $9,295,721) $7,428,375
Option purchased (-%)
Issuer Contracts Exercise Expiration Value(a)
price date
Call
Zions Bancorp 1,000 $45 Jan. 2001 $775,000
Total option purchased
(Cost: $309,688) $775,000
Short-term securities (6.7%)(f)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (3.2%)
Federal Home Loan Bank Disc Nts
10-06-00 6.41% $20,400,000 $20,373,780
10-11-00 6.40 2,500,000 2,494,500
11-24-00 6.44 16,300,000 16,133,058
Federal Home Loan Mtge Corp Disc Nts
10-24-00 6.43 1,500,000 1,493,292
10-31-00 6.47 3,500,000 3,479,996
11-07-00 6.45 12,100,000 12,016,040
Federal Natl Mtge Assn Disc Nts
10-25-00 6.45 21,200,000 21,101,625
11-15-00 6.43 11,000,000 10,908,376
11-20-00 6.43 30,000,000 29,723,965
Total 117,724,632
Commercial paper (3.5%)
Aloca
10-11-00 6.49% 10,500,000 10,476,899
Amsterdam Funding
10-11-00 6.52 4,800,000(h) 4,789,584
AT&T
11-10-00 6.53 6,300,000 6,250,051
Cargill
10-02-00 6.68 10,000,000(h) 9,994,434
Cargill Global Funding
10-18-00 6.49 800,000(h) 797,268
CXC
11-16-00 6.57 9,000,000(h) 8,919,745
Enterprise Funding
11-13-00 6.55 11,000,000(h) 10,909,524
Gillette
10-12-00 6.50 12,500,000(h) 12,470,750
10-13-00 6.49 19,900,000(h) 19,847,247
Intl Lease Finance
10-10-00 6.49 4,900,000 4,890,118
Kimberly-Clark
10-23-00 6.50 6,000,000(h) 5,973,680
Natl Rural Utilities Cooperative Finance
10-30-00 6.52 10,500,000 10,440,505
Pfizer
10-23-00 6.50 6,000,000(h) 5,974,120
Preferred Receivables
11-14-00 6.54 2,700,000(h) 2,677,609
SBC Communications
11-02-00 6.52 10,400,000(h) 10,334,209
Total 124,745,743
Total short-term securities
(Cost: $242,532,683) $242,470,375
Total investments in securities
(Cost: $2,862,608,044)(k) $3,771,429,058
See accompanying notes to investments in securities.
<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 Sept. 30, 2000,
the value of foreign securities represented 5.28% of net assets.
(d) Security is partially or fully on loan. See Note 5 to the financial
statements.
(e) The share amount for Limited Liability Companies (LLC) or Limited
Partnerships (LP) represents capital contributions.
(f) At Sept. 30, 2000, securities valued at $2,500,000 were held to cover open
call options written as follows (see Note 6 to the financial statements):
Issuer Contracts Exercise Expiration Value(a)
price date
Newfield Exploration 500 $50 Dec. 2000 $148,437
At Sept. 30, 2000, cash or short-term securities were designated to cover
open put options written as follows (see Note 6 to the financial
statements):
Issuer Contracts Exercise Expiration Value(a)
price date
Best Buy 350 $60 Oct. 2000 $61,250
EBay 1,000 68 Oct. 2000 437,500
MiniMed 175 55 Nov. 2000 4,375
MiniMed 350 65 Nov. 2000 35,000
Total $538,125
(g) Partially pledged as initial margin deposit on the following open stock
index futures contracts (see Note 7 to the financial statements):
Type of security Contracts
Purchase contracts
Nasdaq 100, Dec. 2000 94
(h) 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.
(i) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at Sept. 30, 2000, is as follows:
Security Acquisition Cost
dates
Adaytum Software 09-15-00 $3,600,002
Aurgin Systems
2.46% 12-16-99 5,623,498
Bluestream Ventures LP 06-28-00 8,000,000
Covia Technologies
Cv 08-16-00 3,483,448
Dia Dexus
Cv Series C 04-03-00 6,166,659
Equinix
Cv 05-09-00 3,599,988
Warrants 12-01-99 885,713
Fibrogen
Cv Series E 05-17-00 5,000,001
FREEI.Net 09-22-00 1,666,663
8.05% 11-04-99 thru 09-28-00 5,000,002
Mars
Cv Series D 06-16-00 4,500,000
MarsMusic.com
Cv 12-01-99 5,000,000
Protein Delivery
2.50% 05-04-99 5,000,000
Signalsoft
Cv Series E 12-15-99 4,999,996
Tellium 09-19-00 2,700,000
Therox 09-05-00 3,744,998
Vcommerce
Cv Series C 07-21-00 3,588,000
YOUpowered
Cv Series B 06-01-00 2,699,999
(j) At Sept. 30, 2000, the cost of securities purchased, including
interest purchased, on a when-issued basis was $8,466,663.
(k) At Sept. 30, 2000, the cost of securities for federal income tax purposes
was approximately $2,862,608,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $1,127,034,000
Unrealized depreciation (218,213,000)
------------
Net unrealized appreciation $908,821,000
------------
<PAGE>
American
Express(R)
Funds
AXP Strategy Aggressive Fund
70100 AXP Financial Center
Minneapolis, MN 55474
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN
EXPRESS
S-6480 P (11/00)
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.
