AXPSM
Focus 20
Fund
2000 semiannual report
American
Express
Funds
(icon of) ruler
AXP Focus 20 Fund seeks to provide shareholders with long-term capital growth.
<PAGE>
Zeroing In No matter how well the stock market as a whole may be doing, there
can be vast differences in how individual stocks perform. AXP Focus 20 tries to
identify the market's potential leaders, then concentrates its investments in a
limited number of them. In doing so, the Fund seeks to provide above-average
capital appreciation for growth-oriented investors.
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 18
<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) Doug Guffy
Doug Guffy
Portfolio manager From the Portfolio Manager In an extremely volatile period for
the stock market, AXP Focus 20 Fund's Class A shares managed to generate a
return of 1.20% (excluding the sales charge) for its initial reporting period --
June 26 (when shares became publicly available) through Sept. 29, 2000.
After a relatively uneventful July, the market got back on track in August, when
it rallied sharply on encouraging inflation data and the expectation that the
Federal Reserve most likely had finished raising interest rates for the year.
Led by its technology and health care holdings, the Fund gained more than 11%
that month.
SEPTEMBER SLUMP But, in keeping with its roller-coaster pattern throughout 2000,
the market abruptly reversed course the following month as investors became
concerned that a slowdown in economic growth might result in weaker corporate
profits. Technology stocks lost the most ground and were the primary reason the
Fund ended up giving back most of the prior month's gain.
Because of the newness of the Fund, I spent much of the past three months
building its portfolio -- investing shareholders' money in the stocks that I
believe have the best potential for long-term capital appreciation. By
period-end, the portfolio held 34 stocks.
Many of my choices were based on the development of the global communications
network, with a focus on building the infrastructure of the Internet and on
telecommunications outsource manufacturing. In the infrastructure area, major
investments included Corning, JDS Uniphase, Cisco Systems, Nortel and Brocade.
In the outsourcing area, Solectron, Sanmina and Jabil Circuit were among the
biggest investments. In the data storage area, prominent holdings included
Veritas and Verisign. As a whole, technology-related investments comprised just
over 50% of the portfolio at period-end.
Several other investment choices centered on the aging of the population, or
"the graying of America," as it's often called. As people age, they typically
require more health care. To address that situation, I made investments in
Pfizer, a major pharmaceuticals manufacturer; Medtronic and Guidant, two leading
medical-device companies; and Quest Diagnostics and Invitrogen, both of which
are involved in genomics, a branch of biotechnology being boosted by the recent
mapping of the human genome. All told, health care investments accounted for
about 20% of the portfolio. The rest of the investments were spread across a
number of industries, the largest being financial services. Major holdings
included Citibank, Solomon Smith Barney and Charles Schwab.
Doug Guffy
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Fund Facts
Class A -- June 26, 2000* - Sept. 30, 2000
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $5.04
June 26, 2000* $4.98
Increase $0.06
Distributions -- June 26, 2000* - Sept. 30, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return** +1.20%***
Class B -- June 26, 2000* - Sept. 30, 2000
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $5.04
June 26, 2000* $4.99
Increase $0.05
Distributions -- June 26, 2000* - Sept. 30, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return** +1.00%***
Class C -- June 26, 2000* - Sept. 30, 2000
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $5.03
June 26, 2000* $4.98
Increase $0.05
Distributions -- June 26, 2000* - Sept. 30, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return** +1.00%***
Class Y-- June 26, 2000* - Sept. 30, 2000
(All figures per share)
Net asset value (NAV)
Sept. 30, 2000 $5.04
June 26, 2000* $4.98
Increase $0.06
Distributions -- June 26, 2000* - Sept. 30, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return** +1.20%***
* When shares became publicly available.
** 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 is not annualized.
<PAGE>
The 10 Largest Holdings
Percent Value
(of net assets) (as of Sept. 30, 2000)
Corning 5.95% $3,860,999
Sanmina 4.33 2,808,750
Genentech 4.30 2,785,312
Cisco Systems 4.26 2,762,500
VeriSign 4.06 2,633,312
Tyco Intl 4.00 2,593,750
Veritas Software 3.94 2,556,000
Medtronic 3.84 2,486,999
EMC 3.82 2,478,125
Guidant 3.82 2,474,062
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(picture of) pie chart
The 10 holdings listed here make up 42.32% of net assets
<PAGE>
Financial Statements
Statement of assets and liabilities
AXP Focus 20 Fund
Sept. 30, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $66,784,457) $ 65,933,525
Cash in bank on demand deposit 29,766
Expense receivable from AEFC 169
Other prepaid assets 54,730
------
Total assets 66,018,190
==========
Liabilities
Payable for investment securities purchased 1,171,068
Accrued investment management services fee 1,109
Accrued distribution fee 924
Accrued transfer agency fee 302
Accrued administrative services fee 103
Other accrued expenses 7,594
-----
Total liabilities 1,181,100
---------
Net assets applicable to outstanding capital stock $64,837,090
===========
Represented by
Capital stock -- $.01 par value (Note 1) $ 128,616
Additional paid-in capital 66,163,398
Net operating loss (64,817)
Accumulated net realized gain (loss) (539,175)
Unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies (850,932)
--------
Total -- representing net assets applicable to outstanding
capital stock $64,837,090
===========
Net assets applicable to outstanding shares:
Class A $39,527,078
Class B $23,985,926
Class C $ 1,277,824
Class Y $ 46,262
Net asset value per share of outstanding capital stock:
Class A shares 7,842,224 $ 5.04
Class B shares 4,756,231 $ 5.04
Class C shares 253,927 $ 5.03
Class Y shares 9,172 $ 5.04
See accompanying notes to financial statements.
<PAGE>
Statement of operations
AXP Focus 20 Fund
For the period from June 26, 2000* to Sept. 30, 2000 (Unaudited)
Investment income
Income:
Dividends $ 7,905
Interest 57,960
Less foreign taxes withheld (65)
---
Total income 65,800
------
Expenses (Note 2):
Investment management services fee 53,642
Distribution fee
Class A 13,080
Class B 28,544
Class C 1,630
Transfer agency fee 17,571
Incremental transfer agency fee
Class A 1,265
Class B 1,124
Class C 65
Service fee - Class Y 3
Administrative services fees and expenses 4,952
Custodian fees 2,375
Printing and postage 2,375
Registration fees 23,703
Audit fees 6,500
Other 930
---
Total expenses 157,759
Expenses reimbursed by AEFC (Note 2) (23,872)
- -------
133,887
Earnings credits on cash balances (Note 2) (361)
- ----
Total net expenses 133,526
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Investment income (loss) -- net (67,726)
-------
Realized and unrealized gain (loss) --
net Net realized gain (loss) on security transactions (539,175)
Net change in unrealized appreciation (depreciation)
on investments and on translation of
assets and liabilities in foreign currencies (838,443)
--------
Net gain (loss) on investments and foreign currencies (1,377,618)
----------
Net increase (decrease) in net assets resulting from operations $(1,445,344)
===========
* When shares became publicly available.
See accompanying notes to financial statements.
<PAGE>
Statement of changes in net assets
AXP Focus 20 Fund
For the period from June 26, 2000* to Sept. 30, 2000 (Unaudited)
Operations
Investment income (loss)-- net $ (67,726)
Net realized gain (loss) on security transactions (539,175)
Net change in unrealized appreciation (depreciation)
on investments and ontranslation of assets and
liabilities in foreign currencies (838,443)
--------
Net increase (decrease) in net assets resulting from operations (1,445,344)
----------
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 43,139,646
Class B shares 24,893,309
Class C shares 1,317,582
Class Y shares 45,000
Payments for redemptions
Class A shares (5,878,855)
Class B shares (Note 2) (220,739)
Class C shares (Note 2) (3,929)
- ------
Increase (decrease) in net assets
from capital share transactions 63,292,014
----------
Total increase (decrease) in net assets 61,846,670
Net assets at beginning of period** 2,990,420
---------
Net assets at end of period $64,837,090
===========
* When shares became publicly available.
** Initial capital of $3,000,000 was contributed on June 21, 2000. The Fund had
a decrease in net assets resulting from operations of $9,580 during the
period from June 21, 2000 to June 26, 2000 (when shares became publicly
available).
See accompanying notes to financial statements.
<PAGE>
Notes to Financial Statements
AXP Focus 20 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 non-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 equity
securities of medium and large size companies. On June 21, 2000, American
Express Financial Corporation (AEFC) invested $3,000,000 in the Fund which
represented 598,200 shares for Class A, 600 shares for Class B, 600 shares for
Class C and 600 shares for Class Y, which represented the initial capital for
each class at $5.00 per share. Shares of the Fund were first offered to the
public on June 26, 2000.
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.
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.
<PAGE>
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 from net investment income, declared and paid at the end of
the calendar year, 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 0.65% to 0.50% 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 Focus 20 Fund to the Lipper Large-Cap Growth 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. 2, 2001 and will cover the six month period beginning June 30, 2000.
Under an Administrative Service 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 0.06% 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.
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
$305,358 for Class A, $1,570 for Class B and $7 for Class C for the period ended
Sept. 30, 2000.
AEFC and American Express Financial Advisors Inc. agreed to waive certain fees
and to absorb certain expenses until March 31, 2001. Under this agreement, total
expenses will not exceed 1.32% for Class A; 2.08% for Class B; 2.08% for Class C
and 1.16% for Class Y.
During the period ended Sept. 30, 2000, the Fund's custodian and transfer agency
fees were reduced by $361 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 $65,369,452 and $4,517,488, respectively, for the period
ended Sept. 30, 2000. Realized gains and losses are determined on an identified
cost basis.
4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the
period from June 26, 2000 to Sept. 30, 2000 are as follows:
Class A Class B Class C Class Y
Sold 8,374,237 4,797,121 254,079 8,572
Issued for reinvested distributions -- -- -- --
Redeemed (1,130,213) (41,490) (752) --
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Net increase (decrease) 7,244,024 4,755,631 253,327 8,572
--------- --------- ------- -----
5. 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 period ended Sept.
30, 2000.
<PAGE>
6. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Period ended Sept. 30,
Per share income and capital changesa
Class A
2000b
Net asset value, beginning of period $4.98
Income from investment operations:
Net investment income (loss) (.01)
Net gains (losses) (both realized and unrealized) .07
Total from investment operations .06
Net asset value, end of period $5.04
Ratios/supplemental data
Net assets, end of period (in millions) $40
Ratio of expenses to average daily net assetsc 1.33%d,e
Ratio of net investment income (loss)
to average daily net assets (.52%)d
Portfolio turnover rate
(excluding short-term securities) 14%
Total returnf 1.20%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b For the period from June 26, 2000 (when shares became publicly available)
to 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 AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the
annual ratios of expenses would have been 1.63% for the period ended Sept. 30,
2000.
f Total return does not reflect payment of a sales charge.
<PAGE>
Period ended Sept. 30,
Per share income and capital changesa
Class B
2000b
Net asset value, beginning of period $4.99
Income from investment operations:
Net investment income (loss) (.01)
Net gains (losses) (both realized and unrealized) .06
Total from investment operations .05
Net asset value, end of period $5.04
Ratios/supplemental data
Net assets, end of period (in millions) $24
Ratio of expenses to average daily net assetsc 2.09%d,e
Ratio of net investment income (loss)
to average daily net assets (1.33%)d
Portfolio turnover rate
(excluding short-term securities) 14%
Total returnf 1.00%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b For the period from June 26, 2000 (when shares became publicly available) to
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 AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the
annual ratios of expenses would have been 2.37% for the period ended Sept. 30,
2000.
f Total return does not reflect payment of a sales charge.
<PAGE>
Period ended Sept. 30,
Per share income and capital changesa
Class C
2000b
Net asset value, beginning of period $4.98
Income from investment operations:
Net investment income (loss) (.01)
Net gains (losses) (both realized and unrealized) .06
Total from investment operations .05
Net asset value, end of period $5.03
Ratios/supplemental data
Net assets, end of period (in millions) $1
Ratio of expenses to average daily net assetsc 2.09%d,e
Ratio of net investment income (loss)
to average daily net assets (1.31%)d
Portfolio turnover rate
(excluding short-term securities) 14%
Total returnf 1.00%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b For the period from June 26, 2000 (when shares became publicly available) to
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 AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the
annual ratios of expenses would have been 2.37% for the period ended Sept. 30,
2000.
f Total return does not reflect payment of a sales charge.
<PAGE>
Period ended Sept. 30,
Per share income and capital changesa
Class Y
2000b
Net asset value, beginning of period $4.98
Income from investment operations:
Net investment income (loss) (.01)
Net gains (losses) (both realized and unrealized) .07
Total from investment operations .06
Net asset value, end of period $5.04
Ratios/supplemental data
Net assets, end of period (in millions) $ --
Ratio of expenses to average daily net assetsc 1.16%d,e
Ratio of net investment income (loss)
to average daily net assets (.50%)d
Portfolio turnover rate
(excluding short-term securities) 14%
Total returnf 1.20%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b For the period from June 26, 2000 (when shares became publicly available) to
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 AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the
annual ratios of expenses would have been 1.41% for the period ended Sept. 30,
2000.
f Total return does not reflect payment of a sales charge.
<PAGE>
Investments in Securities
AXP Focus 20 Fund
Sept. 30, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (95.8%)
Issuer Shares Value(a)
Communications equipment & services (20.2%)
Brocade Communications
Systems 10,000(b) $2,360,000
Corning 13,000 3,860,999
Finisar 25,000(b) 1,209,375
JDS Uniphase 25,000(b) 2,367,188
Nokia ADR Cl A 30,000(c) 1,194,375
Nortel Networks 35,000(c) 2,084,688
Total 13,076,625
Computer software & services (12.6%)
Akamai Technologies 20,000(b) 1,050,313
Microsoft 19,000(b) 1,144,750
Portal Software 20,000(b) 800,000
VeriSign 13,000(b) 2,633,312
Veritas Software 18,000(b) 2,556,000
Total 8,184,375
Computers & office equipment (19.5%)
Cisco Systems 50,000(b) 2,762,500
Dell Computer 20,000(b) 616,250
EMC 25,000(b) 2,478,125
Juniper Networks 6,000(b) 1,313,625
McDATA Cl B 10,000(b) 1,228,906
Sanmina 30,000(b) 2,808,750
Solectron 31,000(b) 1,429,875
Total 12,638,031
Electronics (8.9%)
Broadcom Cl A 5,000(b) 1,218,750
Intel 26,000 1,082,250
Jabil Circuit 40,000(b) 2,270,000
Maxim Integrated Products 15,000(b) 1,206,563
Total 5,777,563
Financial services (6.0%)
Citigroup 43,000 2,324,688
Schwab (Charles) 45,000 1,597,500
Total 3,922,188
Health care (21.1%)
Amgen 15,000(b) $1,047,422
Genentech 15,000(b) 2,785,312
Guidant 35,000(b) 2,474,062
Invitrogen 25,000(b) 1,778,125
Medtronic 48,000 2,486,999
Pfizer 43,000 1,932,313
Quest Diagnostics 10,000(b) 1,147,500
Total 13,651,733
Miscellaneous (0.6%)
TyCom 10,000(b,c) 383,750
Multi-industry conglomerates (4.0%)
Tyco Intl 50,000(c) 2,593,750
Retail (2.9%)
Best Buy 30,000(b) 1,908,750
Total common stocks
(Cost: $62,986,932) $62,136,765
Short-term securities (5.9%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agency (0.9%)
Federal Natl Mtge Assn Disc Nt
10-12-00 6.44% $600,000 $598,547
Commercial paper (5.0%)
AEGON Funding
10-02-00 6.70 3,200,000(d) 3,198,213
Total short-term securities
(Cost: $3,797,525) $3,796,760
Total investments in securities
(Cost: $66,784,457)(e) $65,933,525
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 9.65% of net assets.
(d) 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.
(e) At Sept. 30, 2000, the cost of securities for federal income tax purposes
was approximately $66,784,000 and the approximate aggregate gross unrealized
depreciation
based on that cost was:
Unrealized appreciation $3,391,000
Unrealized depreciation (4,241,000)
----------
Net unrealized depreciation $(850,000)
<PAGE>
American
Express
Funds
AXP Focus 20 Fund
70100 AXPFinancial Center
Minneapolis, MN 55474
Ticker Symbol
Class A: AFAFX Class B: AFTBX
Class C: N/A Class Y: N/A
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.
S-6010 A (11/00)
