AXPSM Strategy
Aggressive
Fund
2000 ANNUAL REPORT
(PROSPECTUS ENCLOSED)
American
Express(R)
Funds
(icon of) ruler
AXP Strategy Aggressive Fund seeks to provide shareholders with long-term 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.)
American
Express
(R)
<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.
AXP STRATEGY AGGRESSIVE FUND (This annual report is not part of the prospectus.)
<PAGE>
Table of Contents
2000 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the Chairman 4
From the Portfolio Managers 5
Fund Facts 7
The 10 Largest Holdings 8
Making the Most of the Fund 9
The Fund's Long-term Performance 10
Independent Auditors' Report 12
Financial Statements 13
Notes to Financial Statements 16
Investments in Securities 23
Federal Income Tax Information 39
2000 PROSPECTUS
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
The Fund 3p
Goal 3p
Investment Strategy 3p
Risks 5p
Past Performance 6p
Fees and Expenses 8p
Management 9p
Buying and Selling Shares 10p
Valuing Fund Shares 10p
Investment Options 10p
Purchasing Shares 12p
Transactions through Third Parties 15p
Sales Charges 15p
Exchanging/Selling Shares 19p
Distributions and Taxes 24p
Other Information 25p
Financial Highlights 26p
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<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 this year,
accompanied by a modest rise in long-term interest rates. But no matter what
transpires, this is a great time to take a close look at your goals and
investments. We encourage you to:
o Consult a professional investment advisor who can help you cut through
mountains of data.
o Set financial goals that extend beyond those achievable through retirement
plans of your employer.
o Learn as much as you can about your current investments.
The portfolio managers' 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.
Arne H. Carlson
AXP STRATEGY AGGRESSIVE FUND (This annual report is not part of the prospectus.)
<PAGE>
(picture of) Louis Giglio
Louis Giglio
Portfolio manager
(picture of) Jacob (Jake) Hurwitz
Jacob (Jake) Hurwitz
Portfolio manager
(picture of) Kent A. Kelley
Kent Kelley
Portfolio manager
From the Portfolio Managers
By being well positioned to take advantage of a powerful rally in
technology-related stocks, AXP Strategy Aggressive Fund generated an exceptional
gain during the past fiscal year. For the 12 months -- April 1999 through March
2000 -- the total return (excluding the sales charge) for the Fund's Class A
shares was 100.97%. (A portion of the return came in the form of a capital gain,
which was paid to shareholders last December and reduced the Fund's net asset
value by a like amount at that time.)
With worries about higher interest rates, potentially higher inflation and the
possible impact of the Y2K computer bug clouding the environment, the stock
market retreated early in the period. But as encouraging reports on inflation
and corporate profits began coming in, investors cast aside their concerns and
piled back into stocks.
By mid-fall, the market, with additional support from increasing excitement
about the potential of the Internet, was in full rally mode, a trend that
continued into the early days of January. From that point, the market mostly
struggled, as the outlook for interest rates and inflation again took a negative
turn. The Fund, however, continued to advance through February, recording a gain
of nearly 30% in that month, before slipping back in March.
TECH TAKES OFF
The magic word for the market -- and even more so for the Fund -- during the 12
months was technology. Thanks to its heavy exposure to that sector (nearly 60%
of assets at the highest point), the Fund not only out-performed the market
during the upturns but it also held up better during the downturns.
Particularly strong were stocks related to the growth of the Internet. Among the
Fund's top performers were: Verisign, InfoSpace, Knight-Trimark, Juniper, Covad,
PMC Sierra, Peregrine Systems, Mercury Interactive and Allegiance. (Other big
winners included Yahoo!, JDS Uniphase, Cisco Systems and America Online.
However, because their market values outgrew the mid-capitalization category, we
sold them before the period ended.) Aside from technology,
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
IDEC Pharmaceuticals and Alkermes, both in the biotechnology sector, experienced
sharp gains, while Kansas City Southern, with a strong presence in financial
services, performed quite well, and Univison, a media company, was also up
strongly.
There was considerable initial public offering (IPO) activity during the period,
and the Fund took part in a number of them. In some cases, we sold the stocks
quickly for a profit; other times, we held the shares based on our positive
longer-term outlook for the company. In still other cases, we didn't take part
in the IPOs, but did buy the stocks later via secondary offerings in order to
build a larger position than would have been possible by buying the IPOs. On the
whole, participation in new stock issues clearly benefited the Fund's
performance.
As the new fiscal year begins, while we don't expect a repeat of the uncommonly
strong gain of the past 12 months, we think the outlook for the Fund remains
very bright. Patience will be essential, though, because market volatility -- as
evidenced by the steep decline among technology-related stocks in April -- is
likely to remain high.
Louis Giglio
Jacob (Jake) Hurwitz
Kent A. Kelley
AXP STRATEGY AGGRESSIVE FUND (This annual report is not part of the prospectus.)
<PAGE>
Fund Facts
_______________________________________________________________________________
Class A -- 12-month performance
(All figures per share)
_______________________________________________________________________________
Net asset value (NAV)
March 31, 2000 $37.03
March 31, 1999 $22.88
Increase $14.15
Distributions -- April 1, 1999 - March 31, 2000
From income $1.56
From capital gains $5.82
Total distributions $7.38
Total return* +100.97%**
_______________________________________________________________________________
Class B -- 12-month performance
(All figures per share)
_______________________________________________________________________________
Net asset value (NAV)
March 31, 2000 $35.06
March 31, 1999 $22.05
Increase $13.01
Distributions -- April 1, 1999 - March 31, 2000
From income $1.56
From capital gains $5.82
Total distributions $7.38
Total return* +99.59%**
_______________________________________________________________________________
Class Y -- 12-month performance
(All figures per share)
_______________________________________________________________________________
Net asset value (NAV)
March 31, 2000 $37.33
March 31, 1999 $23.00
Increase $14.33
Distributions -- April 1, 1999 - March 31, 2000
From income $1.56
From capital gains $5.82
Total distributions $7.38
Total return* +101.29%**
*Returns do not include sales load. The prospectus discusses the effect of
sales charges, if any, on the various classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
The 10 Largest Holdings
_______________________________________________________________________________
Percent Value
_______________________________________________________________________________
(of net assets) (as of March 31, 2000)
Finisar 2.23% $74,356,679
SDL 2.18 72,803,249
Allegiance Telecom 2.14 71,433,749
PCM-Sierra 2.14 71,290,624
Safeguard Scientifics 2.08 69,356,249
Flextronics Intl 2.01 67,056,499
Mercury Interactive 2.00 66,574,437
Bed Bath & Beyond 1.84 61,503,749
IDEC Pharmaceuticals 1.84 61,402,516
WinStar Communications 1.75 58,425,000
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 20.21% of net assets
AXP STRATEGY AGGRESSIVE FUND (This annual report is not part of the prospectus.)
<PAGE>
Making the Most of the Fund
BUILD YOUR ASSETS SYSTEMATICALLY
One of the best ways to invest in the Fund is by dollar-cost averaging -- a
time-tested strategy that can make market fluctuations work for you. To
dollar-cost average, simply invest a fixed amount of money regularly. You'll
automatically buy more shares when the Fund's share price is low, fewer shares
when it is high. The chart below shows how dollar-cost averaging works. In these
three hypothetical scenarios, you will see six months of share price
fluctuations.
This strategy does not ensure a profit or avoid a loss if the market declines.
But, if you can continue to invest regularly through changing market conditions
even when the price of your shares fall or the market declines, it can be an
effective way to accumulate shares to meet your long-term goals.
_______________________________________________________________________________
How dollar-cost averaging works
_______________________________________________________________________________
Accumulated shares* Average market Your average
price per share cost per share
42.25 $15 $14.20
-------------------------------------------------------------------------------
Jan Feb Mar Apr May Jun
$20
$18
$16
$14
$15 $12
$10 $10
$ 5
-------------------------------------------------------------------------------
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 $10
$8 $8
$ 5 $5 $5
-------------------------------------------------------------------------------
Accumulated shares* Average market Your average
price per share cost per share
103.5 $6.50 $5.80
-------------------------------------------------------------------------------
Jan Feb Mar Apr May Jun
$15
$10 $10
$8
$7
$ 5 $6
$4 $4
-------------------------------------------------------------------------------
$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.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
The Fund's Long-term Performance
_______________________________________________________________________________
How $10,000 has grown in AXP Strategy Aggressive Fund
_______________________________________________________________________________
$80,000
$70,000
$60,000
Russell Midcap
Growth Index
$50,000
S&P 500 Index
$40,000 Lipper Mid-Cap Growth Index
S&P MidCap 400 Index
$30,000
$20,000
$63,809
AXP Strategy
Aggressive Fund
Class B
$10,000
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00
_______________________________________________________________________________
Average annual total returns (as of March 31, 2000)
_______________________________________________________________________________
1 year 5 years 10 years (B) Since inception (A &Y)
Class A +89.41% +31.94% --% +31.78%*
Class B +95.59% +32.45% +20.36% --%
Class Y +101.29% +33.68% --% +33.49%*
* Inception date was March 20, 1995.
Assumes: Holding period from 4/1/90 to 3/31/00. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund has a value of $35,573. 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 four
widely cited performance indexes, Standard & Poor's MidCap 400 Index (S&PMidCap
400 Index), Russell Midcap(R) Growth Index, Lipper Mid-Cap Growth Index and
Standard & Poor's 500 Index (S&P 500 Index). Recently, the Fund's investment
manager recommended to the Fund that the Fund change its comparative index from
the S&P 500 Index to the S&P MidCap 400 Index. The investment manager made this
recommendation because the new index more closely represents the Fund's
holdings. We will include both indexes in this transition year. In the future
however, only the S&P MidCap 400 Index will be included. Sales charges are not
reflected in the performance of the indexes.
Your investment and return values fluctuate so that your shares, when redeemed,
may be worth more or less than the original cost. Average annual total return
figures reflect the impact of the applicable sales charge up to a maximum of 5%.
This was a period of widely fluctuating security prices. Past performance is no
guarantee of future results.
AXP STRATEGY AGGRESSIVE FUND (This annual report is not part of the prospectus.)
<PAGE>
S&P MidCap 400 Index, an unmanaged market-weighted index, consists of 400
domestic stocks chosen for market size, liquidity and industry group
representation. The index reflects reinvestment of all distributions and changes
in market prices, but excludes brokerage commissions or other fees.
The Fund may invest in stocks that may not be listed in the index. Russell
Midcap Growth Index, an unmanaged list of common stocks, measures the
performance of those Russell Midcap companies with higher price-to-book ratios
and higher forecasted growth values. The stocks are also members of the Russell
1000 Growth Index.
Lipper Mid-Cap Growth 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.
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.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
The financial statements contained in Post-Effective Amendment #37 to
Registration Statement No. 2-89288 filed on or about May 17, 2000, are
incorporated herein by reference.
<PAGE>
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. 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 Strategy Aggressive Fund Fiscal year ended March 31, 2000
Class A
Income distribution taxable as dividend income, 0.38% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1999 $1.56299
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1999 $5.81796
Total distributions $7.38095
The distribution of $7.38095 per share, payable Dec. 23, 1999, consisted of
$1.56299 from net short-term capital gains and $5.81796 from net long-term
capital gains.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
Class B
Income distribution taxable as dividend income, 0.38% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1999 $1.56299
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1999 $5.81796
Total distributions $7.38095
The distribution of $7.38095 per share, payable Dec. 23, 1999, consisted of
$1.56299 from net short-term capital gains and $5.81796 from net long-term
capital gains.
Class Y
Income distribution taxable as dividend income, 0.38% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1999 $1.56299
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1999 $5.81796
Total distributions $7.38095
The distribution of $7.38095 per share, payable Dec. 23, 1999, consisted of
$1.56299 from net short-term capital gains and $5.81796 from net long-term
capital gains.
AXP STRATEGY AGGRESSIVE FUND (This annual report is not part of the prospectus.)
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American
Express(R)
Funds
AXP Strategy Aggressive Fund
200 AXP Financial Center
Minneapolis, MN 55474
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN American
EXPRESS Express
(R)
S-6381 J (5/00)
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and is
not a broker-dealer.
<PAGE>
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.
