AXP(SM) Small
Company
Index Fund
1999 SEMIANNUAL REPORT
(icon of) ruler
The goal of AXP Small Company Index Fund is to achieve long-term capital
appreciation.
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
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Good Things, Small Packages
When people talk stocks, the conversation often centers on big, household names.
But the fact is that all companies were small once, and, as they grew, some
proved to be excellent investments. Instead of trying to sort out the most
likely winners from the huge number of possibilities, AXPSmall Company Index
Fund simply buys a representative sample of stocks from a popular small-company
index. Therefore, as the index performs, so, too, should the Fund.
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
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(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
American Express(R) Funds held shareholder meetings in June 1999. Shareholders
approved all of the proposals advanced by management. Among the proposals were:
o The election of Board members and the selection of KPMG LLP as independent
auditors.
o Change in the Fund name from "IDS" to "AXP."
o A new shareholder service and distribution plan.
o A change in the investment management services agreement.
o Changes with respect to fundamental investment policies.
No other business was presented at the meeting, which was concluded by a report
to shareholders from the Investment Department of American Express Financial
Corporation.
Thanks to all of you for your effort in reviewing the proxy material and voting
your proxies.
Arne H. Carlson
(picture of) Jim Johnson
Jim Johnson
Portfolio manager
From the Portfolio Manager
AXP Small Company Index Fund rebounded from a steep downturn last February to
post a positive result in the first half of the fiscal year. The total return
for the Fund's Class A shares was 4.93% for the six months -- February through
July 1999.
The period began with investors worrying about whether the surprisingly strong
economy would soon lead to a spike in the rate of inflation. That set off a
chain reaction of events: a sell-off in the bond market, a rise in long-term
interest rates and, ultimately, a slump in the stock market.
Bearing the brunt of the blow were stocks of smaller companies, which, according
to the prevailing view, would suffer the most in a rising-interest-rate
environment. For the Fund, the result was a loss of about 9% in February. But
there were better times ahead.
DAVID vs. GOLIATH
With prices of many large-company stocks at dizzyingly high levels, investors
began to look more favorably upon small stocks, whose prices generally offered
far better investment value. This shift in market sentiment resulted in the Fund
gaining ground for four straight months before tailing off a bit in July.
Equally encouraging was the fact that, during that five-month period, small
stocks handily outperformed their bigger brethren -- a highly uncommon
occurrence in recent years.
Looking at which types of stocks performed well over the six months, energy and
basic materials/capital goods were particularly strong, while financial services
and health care were among the weaker sectors. Technology stocks, another
substantial area of investment, made an overall positive contribution, but they
lagged the gain of the small-stock category as a whole.
As for what the second half of the fiscal year might hold, small stocks continue
to have some factors working in their favor. They remain attractive on a
valuation basis (that is, their prices generally offer better than investment
value than large-cap stocks); as a group, they continue to enjoy a robust
earnings outlook; and they appear less vulnerable to a sustained rise in
interest rates, should that occur. On the other hand, if the developing foreign
economies, particularly in Asia, experience a relapse, small stocks would surely
suffer. On balance, though, I lean toward the more optimistic scenario.
Jim Johnson
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Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
July 31, 1999 $6.41
Jan. 31, 1999 $6.11
Increase $0.30
Distributions -- Feb. 1, 1999 - July 31, 1999
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +4.93%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
July 31, 1999 $6.27
Jan. 31, 1999 $6.00
Increase $0.27
Distributions -- Feb. 1, 1999 - July 31, 1999
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +4.52%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
July 31, 1999 $6.43
Jan. 31, 1999 $6.12
Increase $0.31
Distributions -- Feb. 1, 1999 - July 31, 1999
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +4.98%**
*The prospectus discusses the effect of sales charges, if any, on the various
classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
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The 10 Largest Holdings
Percent Value
(of net assets) (as of July 31, 1999)
Express Scripts Cl A .74% $7,428,987
FirstMerit .70 7,063,237
Novellus Systems .70 7,053,568
American Bankers Insurance Group .66 6,677,343
Valassis Communications .60 6,007,679
Acxiom .59 5,934,537
Williams-Sonoma .59 5,901,647
IDEC Pharmaceuticals .57 5,737,354
Legg Mason .55 5,563,109
Radian Group .53 5,377,452
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 6.23% of net assets
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<CAPTION>
Financial Statements
Statement of assets and liabilities
AXP Small Company Index Fund
July 31, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated issuers
<S> <C>
(identified cost, $1,038,831,402) $1,018,222,707
Investments in securities of affiliated issuers
(identified cost, $3,708,629) 3,682,055
---------
Total investments in securities (identified cost, $1,042,540,031) 1,021,904,762
Cash in bank on demand deposit 201,555
Dividends and accrued interest receivable 345,769
Receivable for investment securities sold 5,203,343
U.S government securities held as collateral (Note 4) 921,960
-------
Total assets 1,028,577,389
-------------
Liabilities
Payable for investment securities purchased 3,804,628
Payable upon return of securities loaned (Note 4) 15,821,960
Accrued investment management services fee 10,070
Accrued distribution fee 14,824
Accrued service fee 7
Accrued transfer agency fee 7,018
Accrued administrative services fee 1,922
Other accrued expenses 223,068
-------
Total liabilities 19,883,497
----------
Net assets applicable to outstanding capital stock $1,008,693,892
==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,586,485
Additional paid-in capital 979,922,173
Net operating loss (1,755,444)
Accumulated net realized gain (loss) 49,738,084
Unrealized appreciation (depreciation) on investments (Note 5) (20,797,406)
-----------
Total -- representing net assets applicable to outstanding capital stock $1,008,693,892
==============
Net assets applicable to outstanding shares: Class A $ 618,773,550
Class B $ 387,344,778
Class Y $ 2,575,564
Net asset value per share of outstanding capital stock: Class A shares 96,500,183 $ 6.41
Class B shares 61,747,538 $ 6.27
Class Y shares 400,761 $ 6.43
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See accompanying notes to financial statements.
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Statement of operations
AXP Small Company Index Fund
Six months ended July 31, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends (including $61,392 earned from affiliates) $ 3,899,978
Interest 374,351
Less foreign taxes withheld (1,529)
------
Total income 4,272,800
---------
Expenses (Note 2):
Investment management services fee 1,720,775
Distribution fee
Class A 128,897
Class B 1,432,085
Transfer agency fee 1,055,735
Incremental transfer agency fee
Class A 100,241
Class B 93,278
Service fee
Class A 413,161
Class B 257,908
Class Y 1,018
Administrative services fees and expenses 343,743
Compensation of board members 5,036
Custodian fees 130,494
Postage 215,393
Registration fees 79,414
Reports to shareholders 31,736
Audit fees 9,500
Other 29,672
------
Total expenses 6,048,086
Earnings credits on cash balances (Note 2) (19,842)
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Total net expenses 6,028,244
---------
Investment income (loss) -- net (1,755,444)
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (including loss of $29,632 on sale of
affiliated issuers) (Note 3) 43,482,440
Financial futures contracts 1,145,504
---------
Net realized gain (loss) on investments 44,627,944
Net change in unrealized appreciation (depreciation) on investments 1,598,481
---------
Net gain (loss) on investments and foreign currencies 46,226,425
----------
Net increase (decrease) in net assets resulting from operations $44,470,981
===========
See accompanying notes to financial statements.
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Statements of changes in net assets
AXP Small Company Index Fund
July 31, 1999 Jan. 31, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ (1,755,444) $(2,499,650)
Net realized gain (loss) on investments 44,627,944 37,922,351
Net change in unrealized appreciation (depreciation) on investments 1,598,481 (61,299,801)
--------- -----------
Net increase (decrease) in net assets resulting from operations 44,470,981 (25,877,100)
---------- -----------
Distributions to shareholders from:
Net realized gain
Class A -- (22,119,664)
Class B -- (13,932,020)
Class Y -- (63,657)
----- -------
Total distributions -- (36,115,341)
----- -----------
Capital share transactions (Note 6)
Proceeds from sales
Class A shares (Note 2) 117,173,370 346,959,760
Class B shares 65,272,300 206,964,012
Class Y shares 971,492 1,686,708
Reinvestment of distributions at net asset value
Class A shares -- 20,219,551
Class B shares -- 13,836,948
Class Y shares -- 63,657
Payments for redemptions
Class A shares (122,898,288) (125,266,252)
Class B shares (Note 2) (64,883,270) (49,812,491)
Class Y shares (358,001) (623,501)
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Increase (decrease) in net assets from capital share transactions (4,722,397) 414,028,392
---------- -----------
Total increase (decrease) in net assets 39,748,584 352,035,951
Net assets at beginning of period 968,945,308 616,909,357
----------- -----------
Net assets at end of period $1,008,693,892 $968,945,308
============== ============
See accompanying notes to financial statements.
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Notes to Financial Statements
AXP Small Company Index Fund
(Unaudited as to July 31, 1999)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Market Advantage Series, Inc. and is registered
under the Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. AXP Market Advantage Series 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
of small capitalization companies that are expected to provide investment
results that correspond to the performance of the S&P SmallCap 600 Index.
The Fund offers Class A, Class B and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge and
automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, incremental transfer agency fee and service fee (class
specific expenses) differs among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on investments
are allocated to each class of shares based upon its relative net assets.
The Fund's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liablilities) 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.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute all of its
taxable income to shareholders. No provision for income or excise taxes is thus
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
An annual dividend from net investment income, declared and paid at the end of
the calendar year, 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 an agreement with American Express Financial Corporation (AEFC) to
manage its portfolio and provide administrative services. Under an Investment
Management Services Agreement, AEFC determines which securities will be
purchased, held or sold. The management fee is a percentage of the Fund's
average daily net assets in reducing percentages from 0.38% to 0.34% annually.
Effective with the new Investment Management Services Agreement, the fee will be
adjusted upward or downward by a performance incentive adjustment based on the
Fund's average daily net assets over a rolling 12-month period as measured
against the change in the Lipper Small Cap Fund Index. The maximum adjustment is
0.12% of the Fund's average daily net assets after deducting 1% from the
performance difference. If the performance difference is less than 1%, the
adjustment will be zero. The first adjustment will be made on Jan. 1, 2000 and
will cover the six month period beginning July 1, 1999.
Under an Administrative Services Agreement, the Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.10% to 0.02% annually.
Additional administrative service expenses paid by the Fund are office expenses,
consultants' fees and compensation of officers and employees. Under this
agreement, the Fund also pays taxes, audit and certain legal fees, registration
fees for shares, compensation of board members, corporate filing fees and any
other expenses properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $19
o Class B $20
o Class Y $17
Under terms of a prior agreement that ended Jan. 31, 1999, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $15 for Class A
and $16 for Class B. Under terms of a prior agreement that ended March 31, 1999,
the Fund paid a transfer agency fee at an annual rate per shareholder account of
$15 for Class Y.
The Fund has agreements with American Express Financial Advisors Inc. for
distribution and shareholder services. Under a Plan and Agreement of
Distribution (the Plan), the Fund pays a distribution fee at an annual rate up
to 0.25% of the Fund's average daily net assets attributable to Class A shares
and up to 1.00% for Class B shares. The Plan went into effect July 1, 1999.
Under terms of a prior Plan and Agreement of Distribution (the Prior Plan) that
ended June 30, 1999, the Fund paid a distribution fee for Class B shares at an
annual rate up to 0.75% of average daily net assets. The Prior Plan was not
effective with respect to Class A shares.
Under a Shareholder Service Agreement, the Fund's Class Y shares pay a fee for
service provided to shareholders by financial advisors and other servicing
agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net
assets attributable to Class Y shares. Under terms of a prior agreement that
ended June 30, 1999, the Fund paid a shareholder service fee for Class A and
Class B shares at a rate of 0.175% of average daily net assets. Effective July
1, 1999, the agreement for Class A and Class B shares was converted to the Plan
and Agreement of Distribution discussed above.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $1,502,888 for Class A and $251,386 for Class B
for the six months ended July 31, 1999.
AEFC agreed to waive certain fees and to absorb certain other of the Funds'
expenses until Jan. 31, 2000. Under this agreement, the Fund's total expenses
would not exceed 1.00% for Class A, 1.76% for Class B and 0.92% for Class Y of
the Fund's average daily net assets.
During the six months ended July 31, 1999, the Fund's custodian and transfer
agency fees were reduced by $19,842 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 $138,939,807 and $147,917,164, respectively, for the six
months ended July 31, 1999. Realized gains and losses are determined on an
identified cost basis.
4. LENDING OF PORTFOLIO SECURITIES
As of July 31, 1999, securities valued at $14,528,047 were on loan to brokers.
For collateral, the Fund received $14,900,000 in cash and U.S. government
securities valued at $921,960. Income from securities lending amounted to
$172,331 for the six months ended July 31, 1999. The risks to the Fund of
securities lending are that the borrower may not provide additional collateral
when required or return securities when due.
5. STOCK INDEX FUTURES CONTRACTS
Investments in securities as of July 31, 1999, included securities valued at
$2,636,528 that were pledged as collateral to cover initial margin deposits on
31 open purchase contracts. The market value of the open purchase contracts as
of July 31, 1999 was $6,908,350 with a net unrealized loss of $162,137.
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended July 31, 1999
Class A Class B Class Y
Sold 19,605,734 11,138,701 159,671
Issued for reinvested distributions -- -- --
Redeemed (20,676,292) (11,174,518) (60,043)
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Net increase (decrease) (1,070,558) (35,817) 99,628
Year ended Jan. 31, 1999
Class A Class B Class Y
Sold 53,874,693 32,482,960 266,752
Issued for reinvested distributions 3,414,327 2,377,447 10,733
Redeemed (20,253,176) (8,157,328) (99,646)
----------- ---------- -------
Net increase (decrease) 37,035,844 26,703,079 177,839
7. 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 funds, permits the
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
July 31, 1999.
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<CAPTION>
8. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Fiscal period ended Jan. 31,
Per share income and capital changesa
Class A
1999c 1999 1998 1997b
<S> <C> <C> <C> <C>
Net asset value, beginning of period $6.11 $6.47 $5.51 $5.00
Income from investment operations:
Net investment income (loss) -- -- -- .02
Net gains (losses) (both realized and unrealized) .30 (.12) 1.05 .52
Total from investment operations .30 (.12) 1.05 .54
Less distributions:
Dividends from net investment income -- -- -- (.03)
Distributions from realized gains -- (.24) (.09) --
Total distributions -- (.24) (.09) (.03)
Net asset value, end of period $6.41 $6.11 $6.47 $5.51
Ratios/supplemental data
Net assets, end of period (in millions) $619 $596 $391 $95
Ratio of expenses to average daily net assetse .99%d .94% 1.00%g 1.00%d,g
Ratio of net investment income (loss)
to average daily net assets (.08%)d (.02%) (.05%) 1.55%d
Portfolio turnover rate
(excluding short-term securities) 15% 29% 25% 48%
Total returnf 4.93% (1.69%) 19.00% 10.84%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was Aug. 19, 1996.
c Six months ended July 31, 1999 (Unaudited).
d Adjusted to an annual basis.
e Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
f Total return does not reflect payment of a sales charge.
g AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the
annual ratios of expenses would have been 1.05% and 1.48% for the year ended
1998 and the period ended 1997, respectively.
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Fiscal period ended Jan. 31,
Per share income and capital changesa
Class B Class Y
1999c 1999 1998 1997b 1999c 1999 1998 1997b
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $6.00 $6.40 $5.50 $5.00 $6.12 $6.47 $5.51 $5.00
Income from investment operations:
Net investment income (loss) (.02) (.04) (.05) .02 -- -- -- .02
Net gains (losses) (both
realized and unrealized) .29 (.12) 1.04 .50 .31 (.11) 1.05 .52
Total from investment operations .27 (.16) .99 .52 .31 (.11) 1.05 .54
Less distributions:
Dividends from net investment income -- -- -- (.02) -- -- -- (.03)
Distributions from realized gains -- (.24) (.09) -- -- (.24) (.09) --
Total distributions -- (.24) (.09) (.02) -- (.24) (.09) (.03)
Net asset value, end of period $6.27 $6.00 $6.40 $5.50 $6.43 $6.12 $6.47 $5.51
Ratios/supplemental data
Net assets, end of period (in millions) $387 $371 $225 $42 $3 $2 $1 --
Ratio of expenses to
average daily net assetse 1.76%d 1.70% 1.76%g 1.76%d,g .87%d .87% .92%g .82%d,g
Ratio of net investment income
(loss) to average daily net assets (.85%)d (.79%) (.81%) .63%d .02%d .06% .01% 1.93%d
Portfolio turnover rate
(excluding short-term securities) 15% 29% 25% 48% 15% 29% 25% 48%
Total returnf 4.52% (2.42%) 18.12% 10.46% 4.98% (1.61%) 19.13% 10.86%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was Aug. 19, 1996.
c Six months ended July 31, 1999 (Unaudited).
d Adjusted to an annual basis.
e Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
f Total return does not reflect payment of a sales charge.
g AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the
annual ratios of expenses would have been 1.81% and 2.60% for Class B, and
.92% and 1.22% for Class Y, for the year ended 1998 and the period ended
1997, respectively.
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<CAPTION>
Investments in Securities
AXP Small Company Index Fund
July 31, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (99.3%)
Issuer Shares Value(a)
Aerospace & defense (0.6%)
<S> <C> <C>
AAR 77,570 $1,633,818
Alliant Techsystems 29,880(b) 2,470,702
BE Aerospace 69,720(b) 1,320,323
Kaman Cl A 66,300 961,350
Total 6,386,193
Airlines (0.8%)
Air Express Intl 94,420 2,525,735
Atlantic Coast Airlines Holdings 55,145(b) 1,120,133
Aviation Sales 41,210(b) 1,602,039
Mesa Air Group 96,930(b) 739,091
SkyWest 68,600 1,843,625
Total 7,830,623
Automotive & related (3.0%)
Breed Technologies 103,200(e) 161,250
Central Parking 103,640(e) 3,426,597
Discount Auto Parts 46,760(b) 1,046,255
Gentex 205,340(b) 5,351,673
Intermet 72,100 820,138
MascoTech 124,870 2,091,573
Myers Inds 51,360 1,219,800
O'Reilly Automotive 69,890(b) 2,979,060
Simpson Inds 51,100 613,200
Smith (AO) 65,550 1,909,144
Spartan Motors 35,200 220,000
SPS Technologies 35,860(b) 1,468,019
Standard Motor Products 36,600 889,838
Standard Products 45,100 1,601,050
TBC 59,400(b) 441,788
Titan Intl 58,600 633,613
Tower Automotive 132,420(b) 3,153,250
Winnebago Inds 62,080 1,520,960
Wynn's Intl 52,575 1,018,641
Total 30,565,849
Banks and savings & loans (7.3%)
Anchor Bancorp Wisconsin 70,710 1,228,586
Banknorth Group 65,600 2,123,800
Carolina First 63,600 1,431,000
Centura Banks 80,760 4,517,513
Commerce Bancorp 77,836 3,424,784
Commercial Federal 171,265 3,981,911
Community First Bankshares 133,160 2,796,360
Cullen/Frost Bankers 151,360 3,888,060
Downey Financial 79,553 1,854,579
First Midwest Bankcorp 79,720 3,258,555
Firstbank 82,380 1,868,996
FirstMerit 257,430 7,063,237
Hudson United Bancorp 113,294(g) 3,682,055
JSB Financial 26,320 1,437,730
MAF Bancorp 68,240 1,590,845
Premier Bancshares 73,780 1,314,206
Provident Bankshares 68,793 1,659,631
Queens County Bancorp 61,540 1,942,356
Riggs Natl 79,860 1,577,235
Silicon Valley Bancshares 57,960(b) 1,420,020
St. Paul Bancorp 112,845 2,736,491
Susquehanna Bancshares 104,400 1,872,675
TrustCo Bank NY 77,115 2,091,744
U.S. Trust 52,560 4,730,400
United Bankshares 122,780 3,100,195
UST 120,620 3,663,833
Whitney Holding 65,360 2,532,700
Total 72,789,497
Beverages & tobacco (0.6%)
Canandaigua Wine Cl A 51,180(b) 2,942,849
Coca-Cola 23,500 1,379,156
DIMON 124,820 702,113
Schweitzer-Mauduit Intl 44,600 705,238
Total 5,729,356
Building materials & construction (3.9%)
Apogee Enterprises 77,500 765,313
Building Materials Holding 35,400(b) 446,925
Butler Mfg 20,900 581,281
Dycom Inds 72,215(b) 3,448,265
Elcor 37,100 1,525,738
Florida Rock Inds 53,220 2,048,970
Horton (DR) 181,460 2,948,725
Hughes Supply 68,360 1,948,260
Insituform Technologies Cl A 72,040(b) 1,566,870
Insteel Inds 23,700 213,300
Lone Star Inds 55,260 2,117,149
M.D.C. Holdings 62,960 1,306,420
Morrison Knudsen 150,140(b) 1,510,784
Oakwood Homes 133,040 1,405,235
Republic Group 33,030 598,669
Ryland Group 41,200 1,148,450
Simpson Mfg 32,760(b) 1,683,045
Skyline 25,220 764,481
Southern Energy Homes 35,400(b) 132,750
Standard Pacific 83,000 1,073,813
Stone & Webster 36,660 927,956
Texas Inds 59,320 2,091,030
TJ Intl 44,000 1,364,000
Toll Brothers 104,240(b) 2,215,100
Tredegar Inds 104,540 2,424,021
U.S. Home 37,620(b) 1,293,188
Universal Forest Products 58,080 1,081,740
URS 43,600 1,133,600
Total 39,765,078
Chemicals (1.8%)
Cambrex 70,500 1,863,844
Chemed 29,560 949,615
ChemFirst 51,800 1,320,900
Geon 66,580 2,039,013
Ionics 45,600(b) 1,544,700
Lilly Inds Cl A 64,980 1,165,579
MacDermid 71,040 2,530,799
Mississippi Chemical 73,245 704,983
OM Group 67,000 2,508,312
Penford 20,600 272,950
Quaker Chemical 24,700 398,288
Tetra Tech 107,225(b) 1,702,197
TETRA Technologies 38,000(b) 323,000
WD-40 44,100 1,132,819
Total 18,456,999
Communications equipment & services (2.5%)
Adaptive Broadband 41,420(b) 934,539
Allen Group 76,900(b) 692,100
Aspect Telecommunications 134,960(b) 1,518,300
C-COR Electronics 30,000(b) 896,250
Centigram Communications 18,220(b) 163,980
CommScope 143,000(b) 4,888,812
Digi Intl 41,000(b) 471,500
Digital Microwave 174,660(b) 2,074,088
General Communication Cl A 139,200(b) 870,000
General Semiconductor 103,100(b) 882,794
InterVoice 81,440(b) 1,231,780
Network Equipment Technologies 60,260(b) 583,769
Oak Inds 51,480(b) 2,216,858
Orbital Sciences 105,140(b) 2,694,212
P-COM 139,120(b) 632,561
PictureTel 113,920(b) 708,440
Plantronics 48,500(b) 3,431,374
SymmetriCom 42,320(b) 335,915
TCSI 62,900(b) 121,869
Total 25,349,141
Computers & office equipment (11.2%)
Acxiom 220,820(b) 5,934,537
ADAC Laboratories 57,340(b) 404,964
American Management Systems 119,880(b) 3,536,460
Analysts Intl 63,170 892,276
Applied Magnetics 118,360(b,e) 192,335
Aspen Technology 70,200(b) 807,300
Auspex Systems 72,760(b) 713,958
Avid Technology 67,780(b) 904,439
Billing Information Concepts 107,625(b) 766,828
BISYS Group 76,540(b) 3,932,243
Black Box 49,940(b) 2,534,455
BMC Inds 76,100 884,663
Ciber 165,140(b) 2,889,950
Clarify 64,350(b) 2,119,528
Cognex 115,100(b) 3,668,813
Computer Task Group 60,660 1,004,681
CustomTracks 43,100 1,794,038
DBT Online 52,590(b) 1,587,561
Dendrite Intl 70,620(b) 2,683,560
Epicor Software 111,500(b) 536,594
Exabyte 63,200(b) 252,800
FactSet Research Systems 43,660 2,177,543
Fair Isaac & Co 39,760 1,344,385
FileNet 89,180(b) 891,800
Hadco 38,340(b) 1,531,204
Harbinger 108,480(b) 1,464,480
Henry (Jack) & Associates 56,760 2,454,870
HNC Software 69,400(b) 2,524,425
Hutchinson Technology 69,670(b) 1,833,192
Hyperion Solutions 88,560(b) 1,693,710
InaCom 127,840(b) 1,773,780
Insight Enterprises 72,100(b) 2,090,900
Inter-Tel 73,940 1,525,013
Intermagnetics General 34,853(b) 217,831
Komag 149,820(b) 575,871
Kronos 35,410(b) 1,712,959
Macromedia 116,120(b) 4,049,684
MedQuist 100,680(b) 4,366,994
Mercury Interactive 104,880(b) 4,837,589
MicroAge 56,820(b) 205,973
MICROS Systems 45,660(b) 1,561,001
Midway Games 106,299(b) 1,249,013
Natl Computer Systems 89,720 3,072,910
Natl Data 95,540 3,988,795
Natl Instruments 94,200(b) 4,215,449
Primark 58,420(b) 1,475,105
Profit Recovery Group Intl 77,050(b) 3,968,075
Progress Software 49,450(b) 1,316,606
Read-Rite 138,100(b) 690,500
Remedy 82,025(b) 1,691,766
Security Dynamics Technologies 109,920(b) 2,006,040
System Software Associates 133,300(b) 233,275
Technology Solutions 115,470(b) 1,400,074
Telxon 45,200 350,300
Vantive 73,500(b) 686,766
Visio 86,100(b) 2,948,925
Wall Data 27,900(b) 272,025
Whittman-Hart 150,220(b) 3,802,444
Xircom 67,940(b) 2,169,834
Total 112,413,089
Electronics (10.1%)
Alpha Inds 54,120 2,760,120
Analogic 35,560 1,217,930
Anixter Intl 101,855(b) 2,011,636
Belden 68,840 1,712,395
Benchmark Electronics 42,960(b) 1,648,590
Brush Wellman 45,900 774,563
Burr-Brown 103,410(b) 3,955,432
C&D Technologies 34,900 1,051,363
C-Cube Microsystems 110,640(b) 3,602,715
Cable Design Technologies 79,570(b) 1,442,206
CTS 39,270 3,225,049
Dallas Semiconductor 81,100 4,131,030
Dionex 63,180(b) 2,728,586
DSP Communications 111,995(b) 2,624,883
Electro Scientific Inds 36,720(b) 1,399,950
Electroglas 55,300(b) 1,043,788
Esterline 48,730 752,269
Etec Systems 61,120(b) 2,376,040
Gerber Scientific 64,060 1,541,444
Harman Intl Inds 50,080 2,203,520
Harmon Inds 30,810 550,729
Helix Technology 62,460 1,670,805
Innovex 41,400 589,950
Intl Rectifier 144,980(b) 2,102,210
Itron 41,200(b,e) 315,438
KEMET 110,880(b) 2,633,400
Kent Electronics 78,200(b) 1,358,725
Kulicke & Soffa Inds 66,320(b) 1,633,130
Lattice Semiconductor 66,100(b) 3,792,487
Marshall Inds 46,600(b) 1,735,850
Methode Electronics Cl A 99,640 2,223,218
Micrel 57,045(b) 4,506,554
Novellus Systems 109,570(b) 7,053,568
Park Electrochemical 28,920 889,290
Paxar 134,112(b) 1,315,974
Photronics 67,920(b) 1,910,250
Pioneer-Standard Electronics 73,800 945,563
Plexus 49,520(b) 1,584,640
Powerwave Technologies 56,210(b) 2,002,481
S3 148,800(b) 1,674,000
Scott Technologies 51,560 947,415
Silicon Valley Group 93,340(b) 1,201,753
SLI 98,670 2,479,084
SpeedFam-IPEC 82,100(b) 808,172
Standard Microsystems 43,460(b) 347,680
Technitrol 45,300 1,582,669
Three-Five Systems 20,800(b) 347,100
Trimble Navigation 61,900(b) 742,800
Ultratech Stepper 59,100(b) 856,950
Unitrode 90,880(b) 3,356,880
Varian Medical Systems 86,000 2,015,625
Vicor 116,800(b) 2,423,600
Watkins-Johnson 18,400 616,400
X-Rite 59,300 444,750
Total 100,862,649
Energy (2.3%)
Barrett Resources 91,520(b) 3,677,959
Benton Oil & Gas 82,900(b) 227,975
Cabot Oil & Gas Cl A 69,800 1,260,763
Cross Timbers Oil 137,370 1,725,711
Devon Energy 136,860 5,038,158
HS Resources 52,100(b) 742,425
Newfield Exploration 115,640(b) 3,346,333
Pogo Producing 113,460 2,162,831
St. Mary Land & Exploration 30,580 806,548
Stone Energy 50,415(b) 2,278,128
Vintage Petroleum 176,750 2,098,906
Total 23,365,737
Energy equipment & services (1.1%)
Input/Output 141,280(b) 1,050,770
Oceaneering Intl 63,460(b) 1,118,483
Plains Resources 47,300(b) 895,744
Pool Energy Services 59,960(b) 1,247,918
Pride Intl 141,240(b) 1,677,225
Remington Oil & Gas 57,100(b) 289,069
SEACOR SMIT 34,340(b) 1,706,268
Seitel 67,300(b) 883,313
Tuboscope 125,300(b) 1,879,499
Total 10,748,289
Financial services (4.1%)
AmeriCredit 180,460 2,718,179
AMRESCO 139,110(b) 869,438
Bowne & Co 104,120 1,379,590
Dain Rauscher 34,980 1,860,499
Delphi Financial Group Cl A 57,330 2,149,875
Eaton Vance 101,800 3,543,913
Hambrecht & Quist Group 69,000(b) 2,596,125
Insurance Auto Auctions 31,700(b) 566,638
Jefferies Group 67,730 1,955,704
Legg Mason 158,946 5,563,109
Mutual Risk Management 122,400(c) 3,649,050
Pioneer Group 75,500 1,302,375
Radian Group 104,290 5,377,452
Raymond James Financial 134,615 2,885,809
SEI Investments 50,040 4,841,370
Total 41,259,126
Food (2.1%)
Chiquita Brands Intl 188,100 1,375,481
Corn Products Intl 105,460 3,321,989
Delta & Pine Land 108,653 3,273,171
Earthgrains 121,220 3,166,873
Fleming Companies 107,240 1,293,583
J & J Snack Foods 25,540(b) 612,960
Michael Foods 58,190 1,349,281
Nash Finch 31,800 290,175
Performance Food Group 38,185(b) 1,026,222
Ralcorp Holdings 88,020(b) 1,430,325
Smithfield Foods 118,260(b) 3,562,582
United Natural Foods 51,570(b) 966,938
Total 21,669,580
Furniture & appliances (1.2%)
Bassett Furniture Inds 35,740 884,565
Ethan Allen Interiors 115,570 3,669,347
Fedders 103,080 676,463
Interface 152,460 1,362,611
La-Z-Boy 148,100 3,619,194
Natl Presto Inds 20,700 802,125
Royal Appliance Mfg 56,000(b) 343,000
Thomas Inds 44,500 931,719
Total 12,289,024
Health care (6.5%)
Advanced Tissue Sciences 120,060(b,e) 435,218
Alliance Pharmaceutical 122,170(b) 404,688
Alpharma Cl A 77,740(f) 2,886,097
Ballard Medical Products 88,060 2,135,455
Barr Laboratories 64,380(b) 2,261,348
Bio-Technology General 148,240(b) 1,408,280
Biomatrix 65,120(b,e) 1,334,960
Cephalon 81,760(b) 1,543,220
Coherent 66,980(b) 1,218,199
Cooper Companies 40,440(b) 829,020
COR Therapeutics 68,100(b) 1,357,744
Cygnus 63,410(b) 634,100
Datascope 42,500(b) 1,476,875
Diagnostic Products 38,600 1,073,563
Dura Pharmaceuticals 124,660(b,f) 1,301,139
Enzo Biochem 69,812(b) 1,361,334
Hologic 43,280(b) 240,745
IDEC Pharmaceuticals 57,880(b) 5,737,354
IDEXX Laboratories 110,480(b) 2,168,170
Immune Response 65,800(b,e) 401,997
Incyte Pharmaceuticals 78,900(b) 2,100,713
Invacare 85,960 1,891,120
Jones Pharma 82,080 3,562,784
Liposome 108,860(b) 2,918,808
Maxxim Medical 39,900(b) 932,663
Mentor 68,100 1,489,688
Molecular Biosystems 52,100(b) 123,738
North American Vaccine 90,200(b,e) 631,400
Noven Pharmaceuticals 59,900(b) 372,503
Organogenesis 86,020(b,e) 827,943
Priority Healthcare Cl B 61,019(b) 2,944,166
Protein Design Labs 52,000(b) 1,381,250
Regeneron Pharmaceuticals 86,900(b) 727,788
Respironics 86,440(b) 929,230
Roberts Pharmaceutical 90,540(b) 2,484,190
Safeskin 155,720(b) 1,382,015
Spacelabs Medical 26,400(b) 417,450
Summit Technology 120,200(b) 2,877,287
Sunrise Medical 62,200(b) 412,075
Syncor Intl 32,840(b) 972,885
U.S. Bioscience 75,840(b) 639,900
Vertex Pharmaceuticals 73,140(b,e) 1,846,785
Vital Signs 34,860 714,630
Wesley Jessen VisionCare 48,760(b) 1,542,035
Xomed Surgical Products 34,650(b) 1,578,741
Total 65,911,293
Health care services (3.6%)
Cerner 95,140(b) 1,587,649
Coventry Health Care 166,360(b) 1,840,358
Curative Health Services 28,520(b) 167,555
Express Scripts Cl A 106,700(b) 7,428,987
Genesis Health Ventures 98,700(b) 259,088
Hanger Orthopedic Group 53,770(b) 631,798
Integrated Health Services 148,060 832,838
Magellan Health Services 89,100(b) 902,138
NCS HealthCare Cl A 56,500(b) 257,781
Orthodontic Centers of America 137,180(b) 2,280,618
Owens & Minor 91,300 1,124,131
PAREXEL Intl 72,140(b) 793,540
Patterson Dental 95,140(b) 3,740,190
Pediatrix Medical Group 43,820(b,e) 862,706
Pharmaceutical Product Development 69,320(b) 1,815,318
PhyCor 213,200(b) 932,750
Renal Care Group 125,340(b) 2,812,316
Sierra Health Services 75,950(b) 982,603
Universal Health Services Cl B 89,620(b) 3,814,450
US Oncology 238,560(b) 2,832,900
Total 35,899,714
Household products (0.8%)
Action Performance Companies 48,140(b,e) 1,666,848
Libbey 46,150 1,430,650
Nature's Sunshine Products 50,800 476,250
Scotts Cl A 51,880(b) 2,321,630
Sola Intl 69,720(b) 1,167,810
USA Detergents 38,800(b) 223,100
Valence Technology 74,880(b,e) 465,660
Total 7,751,948
Industrial equipment & services (3.8%)
Applied Industrial Technologies 60,700 971,200
Applied Power Cl A 110,555 3,150,817
Arctic Cat 76,260 691,106
Astec Inds 53,760(b) 1,834,560
Barnes Group 55,780 1,105,141
Blount Intl Cl A 104,760 2,959,470
Clarcor 67,640 1,331,663
Flow Intl 40,980(b) 417,484
G & K Services Cl A 58,540 3,108,107
Gardner Denver 42,160(b) 761,515
Global Industrial Technologies 61,800(b) 737,738
Graco 57,380 1,771,608
Halter Marine Group 80,800(b) 419,150
JLG Inds 124,640 2,485,010
Kroll-O'Gara 59,635(b) 1,181,518
Lawson Products 30,300 719,625
Lindsay Mfg 36,825 695,072
Lydall 43,900(b) 515,825
Manitowoc 73,390 3,050,272
Regal Beloit 58,500 1,224,844
Robbins & Myers 30,560 697,150
Roper Inds 85,560 2,994,600
Service Experts 48,700(b) 657,450
Specialty Equipment Companies 52,580(b) 1,367,080
Toro 36,580 1,298,590
Watsco 81,060 1,180,436
Wolverine Tube 37,780(b) 788,658
Total 38,115,689
Insurance (3.2%)
American Bankers Insurance Group 122,100 6,677,343
Blanch (EW) Holdings 37,000 2,423,500
Capital Re 90,580 1,217,169
Enhance Financial Services Group 107,120 2,222,740
Fidelity Natl Financial 85,782 1,495,824
First American Financial 182,570 3,035,226
Fremont General 199,560 3,392,520
Frontier Insurance Group 98,060 1,440,256
Gallagher (Arthur J) 50,860 2,651,078
Hilb, Rogal & Hamilton 37,540 839,958
Orion Capital 77,540 3,687,995
Selective Insurance Group 79,120 1,562,620
Trenwick Group 30,060 725,198
Zenith Natl Insurance 47,790(f) 1,129,039
Total 32,500,466
Leisure time & entertainment (1.1%)
Anchor Gaming 33,580(b) 1,699,988
Aztar 126,700(b) 1,179,894
Carmike Cinemas Cl A 31,900(b) 430,650
Coachmen Inds 46,440 893,970
Family Golf Centers 72,700(b,e) 504,356
Hollywood Park 72,300(b) 1,337,550
Huffy 30,080 338,400
K2 46,400 458,200
Players Intl 89,500(b) 615,313
Polaris Inds 71,240 2,805,074
Thor Inds 34,300 1,011,850
Total 11,275,245
Media (3.2%)
ADVO 62,000(b) 1,185,750
Catalina Marketing 52,160(b) 4,994,319
Consolidated Graphics 41,110(b) 1,634,123
GC Companies 21,700(b) 775,775
Gibson Greetings 44,400(b) 222,000
HA-LO Inds 137,120(b) 959,840
Harland (John H) 86,940 1,749,668
Merrill 45,120 902,400
Metro Networks 47,540(b) 2,602,815
Thomas Nelson 41,400 450,225
True North Communications 133,880 4,359,468
Valassis Communications 161,280(b) 6,007,679
Westwood One 79,980(b,f) 2,989,253
World Color Press 107,670(b) 3,896,308
Total 32,729,623
Metals (1.7%)
Amcast Inds 25,800 472,463
AMCOL Intl 75,900 1,129,013
Birmingham Steel 83,160 680,873
Castle (AM) 39,400 603,313
Coeur d'Alene Mines 61,400(b) 268,625
Commercial Metals 40,880 1,349,040
Commonwealth Inds 44,700 698,438
Hecla Mining 154,300(b) 347,175
IMCO Recycling 46,700 814,331
Material Sciences 43,900(b) 606,369
Mueller Inds 101,340(b) 3,464,560
Pittston Burlington Group 58,860 588,600
Quanex 39,700 1,047,088
Reliance Steel & Aluminum 52,200 1,774,799
RTI Intl Metals 58,100(e) 748,038
Steel Technologies 31,600 337,725
Stillwater Mining 97,910(b) 2,215,213
WHX 49,900(b) 358,656
Total 17,504,319
Miscellaneous (1.2%)
ABM Inds 62,200 1,729,938
American States Water 25,100 754,569
Apex 58,100(b) 1,517,863
Aquarion 32,110 1,123,850
Champion Enterprises 137,440(b) 1,881,210
Cross (AT) Cl A 46,400 232,000
Philadelphia Suburban 116,069 2,655,077
United Water Resources 108,840 2,516,925
Total 12,411,432
Multi-industry conglomerates (3.3%)
Baldor Electric 102,253 1,859,726
Brady (WH) Cl A 63,740 2,230,900
CDI 53,840(b) 1,756,530
Cyrk Intl 43,300(b) 240,856
DeVry 196,160(b) 4,070,320
Franklin Covey 59,520(b) 416,640
Griffon 85,340(b) 640,050
Interim Services 184,512(b) 3,897,816
Labor Ready 121,275(b) 2,084,414
Lason 52,575(b) 2,517,028
New England Business Service 40,620 1,165,286
NFO Worldwide 61,920(b) 928,800
Pre-Paid Legal Services 66,220(b) 2,040,404
Rural/Metro 40,550(b) 329,469
StaffMark 82,760(b) 900,015
Standex Intl 36,400 964,600
Triarc Companies 72,860(b) 1,507,291
Valmont Inds 68,520 1,062,060
Volt Information Sciences 42,080(b) 988,880
Zebra Technologies Cl A 87,740(b) 4,118,297
Total 33,719,382
Paper & packaging (0.8%)
AptarGroup 103,060 2,982,299
Buckeye Technologies 100,000(b) 1,662,500
Caraustar Inds 70,520 1,754,185
Pope & Talbot 37,800 463,050
Shorewood Packaging 77,540(b) 1,352,104
Total 8,214,138
Restaurants & lodging (2.4%)
Applebee's Intl 83,200 2,631,200
CEC Entertainment 76,770(b) 2,418,255
Cheesecake Factory (The) 56,720(b) 1,701,600
CKE Restaurants 148,035 2,072,490
Consolidated Products 74,948(b) 1,194,484
Foodmaker 116,740(b) 3,195,757
IHOP 55,400(b) 1,288,050
Landry's Seafood Restaurants 78,640(b) 658,610
Luby's Cafeterias 63,740 944,149
Marcus 84,540 1,009,196
Panera Bread Cl A 33,800(b) 242,938
Prime Hospitality 145,100(b) 1,587,031
Ruby Tuesday 90,380 1,897,980
Ryan's Family Steak Houses 108,720(b) 1,161,945
Sonic 53,570(b) 1,720,936
Taco Cabana Cl A 38,200(b) 343,800
TCBY Enterprises 64,240 361,350
Total 24,429,771
Retail (6.9%)
Ames Dept Stores 80,660(b) 3,307,059
AnnTaylor Stores 73,580(b) 2,823,633
Baker (J) 39,400 302,888
Bindley Western Inds 84,960 1,837,260
Bombay 104,560(b) 705,780
Books-A-Million 49,900(b,e) 449,100
Casey's General Stores 148,960 2,290,260
Cash America Intl 71,920 566,370
Cato Cl A 77,000(c) 967,313
Checkpoint Systems 87,560(b) 804,458
CPI 28,100 946,619
Damark Intl Cl A 17,900(b) 117,469
Dept 56 51,300(b) 1,484,494
Dress Barn 56,860(b) 906,206
Footstar 63,130(b) 2,272,680
Fossil 59,800(b) 3,139,499
Goody's Family Clothing 94,220(b) 989,310
Gottschalks 35,300(b) 304,463
Gymboree 67,700(b) 351,194
Hancock Fabrics 55,400 280,463
Jan Bell Marketing 79,300(b) 237,900
Jo-Ann Stores Cl A 53,400 750,938
Just For Feet 87,440(b,e) 319,703
Justin Inds 73,700 1,027,194
Lillian Vernon 25,600 364,800
Linens `N Things 111,160(b) 5,141,149
Men's Wearhouse 111,290(b) 2,768,339
Michaels Stores 80,840(b) 2,354,465
Nashua 17,800(b) 194,688
NBTY 202,700(b) 1,266,875
Pacific Sunwear of California 88,290(b) 2,207,250
Phillips-Van Heusen 76,200 647,700
Pier 1 Imports 272,505 2,554,734
Regis 109,260 2,294,460
Richfood Holdings 136,320 2,479,320
Russ Berrie 60,040 1,467,228
ShopKo Stores 83,990(b) 3,217,866
Sports Authority 89,100(b) 339,694
Stein Mart 128,180(b) 853,198
Sturm, Ruger & Co 75,400 791,700
Swiss Army Brands 22,200(b) 205,350
Whole Foods Market 73,880(b) 3,250,719
Williams-Sonoma 157,640(b) 5,901,647
Zale 103,120(b) 4,124,799
Total 69,608,234
Textiles & apparel (1.8%)
Angelica 24,500 313,906
Ashworth 39,500(b) 158,000
Authentic Fitness 64,460 1,132,079
Brown Shoe 50,600 1,008,838
Cone Mills 71,300(b) 427,800
Delta Woodside Inds 67,700 342,731
Dixie Group 31,900 287,100
Galey & Lord 33,200(b) 141,100
Guilford Mills 64,540 605,063
Haggar 21,400 292,913
Hartmarx 97,400(b) 426,125
K-Swiss Cl A 30,760(e) 997,778
Kellwood 78,760 1,786,867
Nautica Enterprises 97,720(b) 1,661,239
Oshkosh B'Gosh Cl A 46,720 794,240
Oxford Inds 23,260 580,046
Pillowtex 39,580 620,911
Quiksilver 62,900(b) 1,564,638
Stride Rite 131,180 1,197,018
Timberland Cl A 31,400(b,f) 2,553,212
Wolverine World Wide 116,340 1,366,995
Total 18,258,599
Transportation (2.4%)
American Freightways 89,840(b) 2,156,160
Arkansas Best 55,000(b) 598,125
Expeditors Intl of Washington 140,800 4,373,599
Fritz Companies 101,600(b) 1,200,150
Frozen Food Express Inds 46,800 342,225
Heartland Express 84,800(b) 1,309,100
Landstar System 29,200(b) 1,178,950
M.S. Carriers 34,400(b) 1,053,500
Offshore Logistics 60,100(b) 728,713
RailTex 25,800(b) 375,713
Rollins Truck Leasing 162,780 1,851,623
USFreightways 75,220 3,713,987
Wabash Natl 64,360 1,359,605
Werner Enterprises 133,820 2,642,945
Yellow Corp 70,200(b) 1,202,175
Total 24,086,570
Utilities -- electric (1.5%)
Bangor Hydro Electric 20,700(b) 344,138
Central Hudson Gas & Electric 47,660 1,995,763
Central Vermont Public Service 32,100 445,388
CILCORP 38,480 2,462,719
Commonwealth Energy System 60,880 2,655,889
Eastern Utilities Associates 57,760 1,721,970
Green Mountain Power 14,800 200,725
NorthWestern 64,890 1,622,250
TNP Enterprises 37,880 1,446,543
United Illuminating 40,520 1,805,673
Total 14,701,058
Utilities -- gas (2.2%)
Atmos Energy 88,040 2,201,000
Cascade Natural Gas 31,000 556,063
Connecticut Energy 29,020 1,110,015
Energen 84,000 1,575,000
Kirby 58,220(b) 1,193,510
New Jersey Resources 50,640 2,003,445
Northwest Natural Gas 70,450 1,858,119
Pennsylvania Enterprises 30,620 941,565
Piedmont Natural Gas 87,760 2,989,325
Public Service Co of North Carolina 58,160 1,741,165
Southwest Gas 86,880 2,503,230
Southwestern Energy 69,900 581,044
WICOR 105,840 3,069,359
Total 22,322,840
Utilities -- telephone (0.3%)
Brightpoint 150,640(b) 781,445
TALK.com 169,980(b) 1,806,038
Total 2,587,483
Total common stocks
(Cost: $1,022,138,582) $1,001,508,034
See accompanying notes to investment in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (2.0%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (1.5%)
Federal Home Loan Bank Disc Nt
<S> <C> <C> <C>
10-01-99 5.09% $1,900,000 $1,883,209
Federal Home Loan Mtge Corp Disc Nts
08-06-99 4.90 2,600,000 2,597,602
08-23-99 5.01 3,300,000 3,288,371
08-24-99 5.09 400,000 398,653
09-13-99 5.06 2,600,000 2,582,928
09-17-99 5.06 3,300,000 3,276,429
Federal Natl Mtge Assn Disc Nts
08-18-99 5.08 400,000 398,990
08-25-99 4.91 800,000 797,283
Total 15,223,465
Commercial paper (0.1%)
Delaware Funding
09-20-99 5.16 600,000(d) 595,506
Variable Funding Capital
09-30-99 5.18 900,000(d) 891,909
Total 1,487,415
Letter of credit (0.4%)
Bank of America-
AES Hawaii
08-27-99 5.12 3,700,000 3,685,848
Total short-term securities
(Cost: $20,401,449) $20,396,728
Total investments in securities
(Cost: $1,042,540,031)(h) $1,021,904,762
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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 July 31, 1999, the
value of foreign securities represented 0.46% 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) Security is partially or fully on loan. See Note 4 to the financial
statements.
(f) Partially pledged as initial margin deposit on the following open stock
index futures purchase contracts (see Note 5 to the financial statements):
Type of security Contracts
Russell 2000, Sept. 1999 31
(g) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
six months ended July 31, 1999 are as follows:
Issuer Beginning Purchase Sales Ending Dividend Value(a)
cost cost cost cost income
<S> <C> <C> <C> <C> <C> <C>
Hudson United Bancorp* $4,027,332 $74,750 $393,453 $3,708,629 $61,392 $3,682,055
* Issuer was not an affiliate for the entire period ended July 31, 1999.
(h) At July 31, 1999, the cost of securities for federal income tax purposes was
approximately $1,042,540,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $149,329,000
Unrealized depreciation (169,964,000)
------------
Net unrealized depreciation $(20,635,000)
</TABLE>
<PAGE>
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