AXP(SM) International Fund
1999 ANNUAL REPORT
(PROSPECTUS ENCLOSED)
American
Express
Funds
(icon of) compass
AXP International Fund seeks to provide shareholders with long-term capital
growth.
(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
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A World of Opportunity
There's a new recognition among investors that the stock market extends beyond
Wall Street. Opportunity abounds in other markets, from Tokyo, London and
Frankfurt to Singapore, Mexico and Hong Kong. Ignoring these opportunities may
mean missing out on tremendous world economic growth in the years ahead. AXP
International Fund focuses on finding the markets that offer the greatest
current potential to investors. With about two-thirds of the world's stock
market value currently based outside of the United States, American investors
now have an even greater opportunity to diversify their portfolios beyond our
boundaries.
AXP INTERNATIONAL FUND (This annual report is not part of the prospectus.)
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Table of Contents
1999 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the Chairman 4
From the Portfolio Manager 4
Fund Facts 6
The 10 Largest Holdings 7
Making the Most of the Fund 8
The Fund's Long-term Performance 9
Independent Auditors' Report 10
Financial Statements 11
Notes to Financial Statements 14
Investments in Securities 22
Federal Income Tax Information 30
1999 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 4p
Past Performance 6p
Fees and Expenses 8p
Management 9p
Buying and Selling Shares 9p
Valuing Fund Shares 9p
Investment Options 10p
Purchasing Shares 11p
Transactions through Third Parties 14p
Sales Charges 14p
Exchanging/Selling Shares 18p
Distributions and Taxes 23p
Other Information 25p
Financial Highlights 26p
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
American Express(R) Funds held shareholder meetings in June 1999. Shareholders
approved all of the proposals advanced by management. Among the proposals were:
o The election of Board members and the selection of KPMG LLP as independent
auditors.
o Change in the Fund name from "IDS" to "AXP."
o A new shareholder service and distribution plan.
o Changes with respect to fundamental investment policies.
No other business was presented at the meeting, which was concluded by a report
to shareholders from the Investment Department of American Express Financial
Corporation.
Thanks to all of you for your effort in reviewing the proxy material and voting
your proxies.
I also want to announce a change in Portfolio Managers for this Fund. As of
December 15, 1999, Ian King became co-manager of the Fund.
Arne H. Carlson
(picture of) Peter Lamaison
Peter Lamaison
Portfolio Manager
From the Portfolio Manager
Well-positioned to take advantage of rebounding stock markets in Europe and
Japan, AXP International Fund recorded a strong gain during the past fiscal
year. For the 12 months -- November 1998 through October 1999 period -- the
Fund's Class A shares (before sales charge) generated a total return of 27.81%.
(That figure exceeded the 26.09% return of the Lipper International Fund Index,
which is commonly used to compare the performance of mutual funds that invest in
foreign stocks.)
Not long before the fiscal year began, financial markets around the globe were
reeling from further debt problems in the emerging markets, notably Russia.
However, in early October 1998 markets began to recover, thanks largely to
strong support from interest-rate reductions in the United States and Europe, as
well as financial rescue efforts by the International Monetary
AXP INTERNATIONAL FUND (This annual report is not part of the prospectus.)
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Fund. By January, the U.S. and the major markets of Europe had more than
recovered their earlier losses. After a bit of a relapse the following month,
many of them got back on track with healthy advances in March and April.
From that point, investors became concerned about the strong pace of economic
growth in the U.S. and the possibility of higher inflation and, therefore,
rising interest rates. While that kept many markets off balance over the summer,
the fiscal year concluded on an encouraging note with a sharp global upturn in
October, which pushed the Fund's net asset value to a record high.
EUROPE LEADS THE WAY
For most of the period, the majority of the portfolio was invested in Europe.
Although European markets experienced a solid gain for the 12 months, unexpected
weakness in the euro, the region's common currency, cut it in half when
translated into U.S. dollars. Fortunately, the Fund's industry and stock
selection were particularly good.
As I expected improving economic growth in Europe, I shifted the portfolio's
European exposure into economically sensitive stocks early in 1999. The strategy
proved quite successful. Later in the period, I trimmed those positions and
moved more money back into growth stocks.
The biggest international market story of the period, though, was in Japan. That
market rose by 44% (as measured by the Nikkei index), which was boosted to
almost 60% thanks to appreciation in the yen. The rise in the market resulted
from the stabilization of the economy and a long-awaited effort by companies to
emphasize shareholder value. Throughout 1999, I increased the portfolio's
exposure to Japan, which reached about 25% by the end of October.
Looking ahead to the new fiscal year, I remain positive on the outlook for
Europe, where I expect double-digit annual gains in corporate earnings. As for
Japan, I believe we are just at the beginning of the corporate restructuring
story, which could well sustain forward momentum in that market. In light of
that, I probably will increase holdings there in upcoming months.
Peter Lamaison
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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Fund Facts
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1999 $13.45
Oct. 31, 1998 $10.70
Increase $ 2.75
Distributions -- Nov. 1, 1998 - Oct. 31, 1999
From income $ 0.06
From capital gains $ 0.13
Total distributions $ 0.19
Total return* +27.81%**
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1999 $13.32
Oct. 31, 1998 $10.62
Increase $ 2.70
Distributions -- Nov. 1, 1998 - Oct. 31, 1999
From income $ --
From capital gains $ 0.13
Total distributions $ 0.13
Total return* +26.85%**
Class Y -- 12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1999 $13.46
Oct. 31, 1998 $10.70
Increase $ 2.76
Distributions -- Nov. 1, 1998 - Oct. 31, 1999
From income $ 0.07
From capital gains $ 0.13
Total distributions $ 0.20
Total return* +27.91%**
*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.
AXP INTERNATIONAL FUND (This annual report is not part of the prospectus.)
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The 10 Largest Holdings
Percent Value
(of net assets) (as of Oct. 31, 1999)
Ericsson (LM) Cl B (Sweden) 4.98% $70,662,880
General Electric (United Kingdom) 4.00 56,791,537
Mannesmann (Germany) 3.98 56,436,325
Banque Natl de Paris (France) 3.72 52,801,973
Total Petroleum Cl B (France) 3.46 49,130,457
Nippon Telegraph & Telephone (Japan) 3.42 48,568,551
Fortis (Netherlands) 3.10 44,032,177
UBS (Switzerland) 3.00 42,480,243
Bayer (Germany) 2.72 38,539,218
Lafarge (France) 2.56 36,273,293
Note: Certain foreign investment risks include: changes in currency exchange
rates, adverse political or economic order and lack of similar regulatory
requirements followed by U.S. companies.
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 34.94% of net assets
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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Making the Most of the Fund
BUILD YOUR ASSETS SYSTEMATICALLY
One of the best ways to invest in the Fund is by dollar-cost averaging -- a
time-tested strategy that can make market fluctuations work for you. To
dollar-cost average, simply invest a fixed amount of money regularly. You'll
automatically buy more shares when the Fund's share price is low, fewer shares
when it is high. The chart below shows how dollar-cost averaging works. In these
three hypothetical scenarios, you will see six months of share price
fluctuations.
This strategy does not ensure a profit or avoid a loss if the market declines.
But, if you can continue to invest regularly through changing market conditions
even when the price of your shares 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
Jan Feb Mar Apr May Jun
$15 $16 $18 $20
$10 $10 $12 $14
$ 5
Accumulated shares* Average market Your average
price per share cost per share
42.25 $15 $14.20
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Jan Feb Mar Apr May Jun
$15
$10 $10 $8 $8 $10
$ 5 $5 $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 $8 $6 $7
$ 5 $4 $4
Accumulated shares* Average market Your average
price per share cost per share
103.5 $6.50 $5.80
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$100 invested per month. Total invested: $600
*Share purchased is determined by dividing the amount invested permonth 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.
AXP INTERNATIONAL FUND (This annual report is not part of the prospectus.)
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The Fund's Long-term Performance
How $10,000 has grown in AXP International Fund
$30,000
$22,422
AXP International Fund
Class A
$20,000
Lipper International
Fund Index
$10,000
MSCI
EAFE
Index
$9,500
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99
Average annual total return (as of Oct. 31, 1999)
1 year 5 years 10 years Since inception
Class A +21.42% +7.96% +8.41% --
Class B +22.85% -- -- +11.79%*
Class Y +27.91% -- -- +13.08%*
*Inception date was March 20, 1995.
Assumes: Holding period from 11/1/89 to 10/31/99. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund has a value of $1,259. Also see "Past Performance" in
the Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the MSCI EAFE Index and the Lipper
International Fund Index. In comparing AXP International Fund (Class A) to the
two indexes, you should take into account the fact that the Fund's performance
reflects the maximum sales charge of 5%, while such 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.
Morgan Stanley Capital International EAFE Index (MSCI EAFE Index), compiled from
a composite of securities markets of Europe, Australasia and the Far East, is
widely recognized by investors in foreign markets as the measurement index for
portfolios of non-North American securities.
Lipper International Fund Index, published by Lipper Analytical Services, Inc.,
includes 10 funds that are generally similar to the Fund, although some funds in
the index may have somewhat different investment policies or objectives.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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The financial statements contained in Post-Effective Amendment #29 to
Registration Statement No. 2-92309 filed on or about December 27, 1999, are
incorporated herein by reference.
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Federal Income Tax Information
(Unaudited)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. 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 International Fund, Inc.
Fiscal year ended Oct. 31, 1999
Class A
Income distribution taxable as dividend income, none qualifying for deduction
for corporations.
Payable date Per share
Dec. 23, 1998 $0.05794
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1998 $0.13152
Total distributio $0.18946
Class B
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1998 $0.13152
Class Y
Income distribution taxable as dividend income, none qualifying for deduction
for corporations.
Payable date Per share
Dec. 23, 1998 $0.06619
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1998 $0.13152
Total distributions $0.19771
AXP INTERNATIONAL FUND (This annual report is not part of the prospectus.)
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American
Express(R)
Funds
AXP International Fund
IDS Tower 10
Minneapolis, MN 55440-0010
PRSRT STD AUTO
U.S. POSTAGE
PAID
SPENCER, IA
PERMIT NO. 85
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.
American
Express
S-6140 N (12/99)
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STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) There are pictures, icons 2) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
