AXP(SM) Small
Company
Index Fund
2000 SEMIANNUAL REPORT
(icon of) ruler
American Express (R) Fund
AXP Small Company Index Fund seeks to provide shareholders with long-term
capital appreciation.
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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, AXP Small 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 4
Fund Facts 5
The 10 Largest Holdings 6
Financial Statements 7
Notes to Financial Statements 10
Investments in Securities 19
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(picture of) Arne H. Carlson
Arne H. Carlson
Chariman of the board
From the Chairman
The financial markets have always had their ups and downs, but in recent months
volatility has become more frequent and intense. While no one can say with
certainty what the markets will do, American Express Financial Corporation, the
Fund's investment manager, expects economic growth to continue this year,
accompanied by a modest rise in long-term interest rates. But no matter what
transpires, this is a great time to take a close look at your goals and
investments. We encourage you to:
o Consult a professional investment advisor who can help you cut through
mountains of data.
o Set financial goals that extend beyond those achievable through retirement
plans of your employer.
o Learn as much as you can about your current investments.
The portfolio manager's letter that follows provides a review of the Fund's
investment strategies and performance. The annual report contains other valuable
information as well. The Fund's prospectus describes its investment objectives
and how it intends to achieve those objectives. As experienced investors know,
information is vital to making good investment decisions.
So, take a moment and decide again whether the Fund's investment objectives and
management style fit with your other investments to help you reach your
financial goals. And make it a practice on a regular basis to assess your
investment options.
On behalf of the Board,
Arne H. Carlson
(picture of) James M. Johnson, Jr.
James M. Johnson, Jr.
Portfolio manager
From the Portfolio Manager
The past six months was a highly volatile period for small-company stocks. But
in the end, the gains outweighed the losses, enabling AXP Small Company Index
Fund's Class A shares to generate a total return of 4.93% (excluding the sales
charge) for the first half of the fiscal year -- February through July 2000.
The period began with bang, as the stock-market euphoria that began in late 1999
carried over into the first two months of the new year. By early March, small
stocks had reached an all-time high, and the Fund's return reached well into
double digits. But along with the run-up, concerns about interest rates,
inflation and unsustainable stock prices had risen as well. The result was a
several-week sell-off that drove small stocks into negative territory by
mid-April.
SUMMER SURGE
Stocks quickly got back on track, though, rallying until mid-July, when they
were back near their peak. While a late-period slump erased some of the rebound,
it wasn't enough to keep small stocks from finishing in the black for the period
as a whole.
The primary reason for the ups and downs was volatility in technology-related
stocks, which comprises the largest portion of the small-stock index and, thus,
the Fund's portfolio. Investors underwent several mood swings regarding the
outlook for companies' profits, the sustainability of stock prices, developments
on the Internet front and the direction of interest rates. As the prevailing
view shifted between optimism and pessimism, stock prices responded accordingly.
As the second half of the fiscal year begins, I think it's worth noting that
small-company stocks have outperformed large-company stocks thus far in 2000.
That has not been the case in recent years, and it could indicate that small
stocks are in the early stage of closing what remains a substantial performance
gap. If so, the Fund would be in position to benefit from what might turn out to
be a long-term trend.
James M. Johnson, Jr.
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Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
July 31, 2000 $6.74
Jan. 31, 2000 $6.30
Increase $0.44
Distributions -- Feb. 1, 2000 - July 31, 2000
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, 2000 $6.53
Jan. 31, 2000 $6.13
Increase $0.40
Distributions -- Feb. 1, 2000 - July 31, 2000
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, 2000 $6.77
Jan. 31, 2000 $6.32
Increase $0.45
Distributions -- Feb. 1, 2000 - July 31, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +7.12%**
* Returns do not include sales load. The prospectus discusses the effect of
sales charges, if any, on the various classes.
** The total return is a hypothetical investment in the Fund with all
distributions reinvested.
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The 10 Largest Holdings
Percent Value
(of net assets) (as of July 31, 2000)
Intl Rectifier .91% $9,429,674
SEI Investments .78 8,053,615
Lattice Semiconductor .73 7,489,230
Vertex Pharmaceuticals .69 7,120,937
Expeditors Intl of Washington .69 7,095,701
Dallas Semiconductor .68 6,995,470
RSA Security .67 6,945,139
True North Communications .65 6,698,393
Protein Design Labs .64 6,580,965
Natl Computer Systems .62 6,380,846
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 7.06% of net assets
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Financial Statements
Statement of assets and liabilities
AXP Small Company Index Fund
July 31, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1):
<S> <C>
(identified cost $1,038,570,802) $1,044,326,551
Cash in bank on demand deposit 2,878,322
Dividends and accrued interest receivable 312,580
Receivable for investment securities sold 4,644,716
U.S. government securities held as collateral (Note 4) 252,934
-------
Total assets 1,052,415,103
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Liabilities
Payable for investment securities purchased 9,343,294
Payable upon return of securities loaned (Note 4) 11,295,534
Accrued investment management services fee 30,794
Accrued distribution fee 45,731
Accrued service fee 45
Accrued transfer agency fee 3,340
Accrued administrative services fee 5,789
Other accrued expenses 86,244
------
Total liabilities 20,810,771
----------
Net assets applicable to outstanding capital stock $1,031,604,332
==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,549,917
Additional paid-in capital 952,225,126
Net operating loss (1,974,383)
Accumulated net realized gain (loss) 74,322,824
Unrealized appreciation (depreciation) on investments (Note 5) 5,480,848
---------
Total -- representing net assets applicable to outstanding capital stock $1,031,604,332
==============
Net assets applicable to outstanding shares: Class A $ 624,788,185
Class B $ 401,308,624
Class Y $ 5,507,523
Net asset value per share of outstanding capital stock: Class A shares 92,733,889 $ 6.74
Class B shares 61,443,742 $ 6.53
Class Y shares 814,033 $ 6.77
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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, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $3,615,180
Interest 423,775
Less foreign taxes withheld (858)
----
Total income 4,038,097
---------
Expenses (Note 2):
Investment management services fee 1,499,420
Distribution fee
Class A 794,705
Class B 2,068,050
Transfer agency fee 988,092
Incremental transfer agency fee
Class A 67,648
Class B 70,476
Service fee-- Class Y 2,115
Administrative services fees and expenses 358,021
Compensation of board members 5,486
Custodian fees 57,920
Printing and postage 69,950
Registration fees 29,024
Licensing fees 13,700
Audit fees 10,375
Other 27,393
------
Total expenses 6,062,375
Earnings credits on cash balances (Note 2) (49,895)
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Total net expenses 6,012,480
---------
Investment income (loss) -- net (1,974,383)
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 76,578,856
Futures contracts (718,352)
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Net realized gain (loss) on investments 75,860,504
Net change in unrealized appreciation (depreciation) on investments (4,623,774)
----------
Net gain (loss) on investments 71,236,730
----------
Net increase (decrease) in net assets resulting from operations $69,262,347
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See accompanying notes to financial statements.
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<CAPTION>
Statements of changes in net assets
AXP Small Company Index Fund
July 31, 2000 Jan. 31, 2000
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ (1,974,383) $ (3,897,191)
Net realized gain (loss) on investments 75,860,504 56,224,022
Net change in unrealized appreciation (depreciation) on investments (4,623,774) 32,500,509
---------- ----------
Net increase (decrease) in net assets resulting from operations 69,262,347 84,827,340
---------- ----------
Distributions to shareholders from:
Net realized gain
Class A -- (35,465,025)
Class B -- (23,349,925)
Class Y -- (159,701)
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Total distributions -- (58,974,651)
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Capital share transactions (Note 6)
Proceeds from sales
Class A shares (Note 2) 83,170,933 205,529,545
Class B shares 42,042,237 113,234,833
Class Y shares 3,283,461 1,905,600
Reinvestment of distributions at net asset value
Class A shares -- 32,781,016
Class B shares -- 23,141,842
Class Y shares -- 159,700
Payments for redemptions
Class A shares (108,860,044) (245,018,171)
Class B shares (Note 2) (58,486,513) (123,362,413)
Class Y shares (775,437) (1,202,601)
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Increase (decrease) in net assets from capital share transactions (39,625,363) 7,169,351
----------- ---------
Total increase (decrease) in net assets 29,636,984 33,022,040
Net assets at beginning of period 1,001,967,348 968,945,308
------------- -----------
Net assets at end of period $1,031,604,332 $1,001,967,348
============== ==============
See accompanying notes to financial statements.
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Notes to Financial Statements
AXP Small Company Index Fund
(Unaudited as to July 31, 2000)
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) 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.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to shareholders. No provision for income or excise taxes
is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
An annual dividend 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 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.
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 Small Company
Index Fund to the Lipper Small-Cap Core Index. The maximum adjustment is 0.12%
of the Fund's average daily net assets after deducting 1% from the performance
difference. If the performance difference is less than 1%, the adjustment will
be zero. The adjustment decreased the fee by $415,948 for the six months ended
July 31, 2000.
Under an Administrative Services Agreement, the Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.10% to 0.02% 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
o Class B $20
o Class Y $17
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 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.
Sales charges received by the Distributor for distributing Fund shares were
$776,524 for Class A and $244,127 for Class B for the six months ended July 31,
2000.
During the six months ended July 31, 2000, the Fund's custodian and transfer
agency fees were reduced by $49,895 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 $205,997,912 and $246,609,000, respectively, for the six
months ended July 31, 2000. Realized gains and losses are determined on an
identified cost basis.
4. LENDING OF PORTFOLIO SECURITIES
As of July 31, 2000, securities valued at $8,651,592 were on loan to brokers.
For collateral, the Fund received $11,042,600 in cash and U.S. government
securities valued at $252,934. Income from securities lending amounted to
$34,749 for the six months ended July 31, 2000. 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, 2000, included securities valued at
$6,657,506 that were pledged as collateral to cover initial margin deposits on
20 open purchase contracts. The market value of the open purchase contracts as
of July 31, 2000 was $5,060,000 with a net unrealized loss of $274,901.
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended July 31, 2000
Class A Class B Class Y
Sold 12,204,019 6,367,661 490,366
Issued for reinvested distributions -- -- --
Redeemed (15,962,105) (8,831,482) (116,826)
----------- ---------- --------
Net increase (decrease) (3,758,086) (2,463,821) 373,540
Year ended Jan. 31, 2000
Class A Class B Class Y
Sold 33,651,255 18,957,974 306,356
Issued for reinvested distributions 5,251,329 3,805,558 25,510
Redeemed (39,981,350) (20,639,324) (192,506)
----------- ----------- --------
Net increase (decrease) (1,078,766) 2,124,208 139,360
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 mutual 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, 2000.
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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
2000c 2000 1999 1998 1997b
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $6.30 $6.11 $6.47 $5.51 $5.00
Income from investment operations:
Net investment income (loss) -- (.01) -- -- .02
Net gains (losses) (both realized and unrealized) .44 .58 (.12) 1.05 .52
Total from investment operations .44 .57 (.12) 1.05 .54
Less distributions:
Dividends from net investment income -- -- -- -- (.03)
Distributions from realized gains -- (.38) (.24) (.09) --
Total distributions -- (.38) (.24) (.09) (.03)
Net asset value, end of period $6.74 $6.30 $6.11 $6.47 $5.51
Ratios/supplemental data
Net assets, end of period (in millions) $625 $608 $596 $391 $95
Ratio of expenses to average daily net assetse .85%d .97% .94% 1.00%g 1.00%d,g
Ratio of net investment income (loss)
to average daily net assets (.08%)d (.11%) (.02%) (.05%) 1.55%d
Portfolio turnover rate
(excluding short-term securities) 20% 30% 29% 25% 48%
Total returnf 6.98% 9.41% (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, 2000 (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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<CAPTION>
Fiscal period ended Jan. 31,
Per share income and capital changesa
Class B
2000c 2000 1999 1998 1997b
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $6.13 $6.00 $6.40 $5.50 $5.00
Income from investment operations:
Net investment income (loss) (.03) (.05) (.04) (.05) .02
Net gains (losses) (both realized and unrealized) .43 .56 (.12) 1.04 .50
Total from investment operations .40 .51 (.16) .99 .52
Less distributions:
Dividends from net investment income -- -- -- -- (.02)
Distributions from realized gains -- (.38) (.24) (.09) --
Total distributions -- (.38) (.24) (.09) (.02)
Net asset value, end of period $6.53 $6.13 $6.00 $6.40 $5.50
Ratios/supplemental data
Net assets, end of period (in millions) $401 $392 $371 $225 $42
Ratio of expenses to average daily net assetse 1.61%d 1.73% 1.70% 1.76%g 1.76%d,g
Ratio of net investment income (loss)
to average daily net assets (.84%)d (.87%) (.79%) (.81%) .63%d
Portfolio turnover rate
(excluding short-term securities) 20% 30% 29% 25% 48%
Total returnf 6.53% 8.55% (2.42%) 18.12% 10.46%
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, 2000 (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 the year ended
1998 and the period ended 1997, respectively.
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<CAPTION>
Fiscal period ended Jan. 31,
Per share income and capital changesa
Class Y
2000c 2000 1999 1998 1997b
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $6.32 $6.12 $6.47 $5.51 $5.00
Income from investment operations:
Net investment income (loss) -- -- -- -- .02
Net gains (losses) (both realized and unrealized) .45 .58 (.11) 1.05 .52
Total from investment operations .45 .58 (.11) 1.05 .54
Less distributions:
Dividends from net investment income -- -- -- -- (.03)
Distributions from realized gains -- (.38) (.24) (.09) --
Total distributions -- (.38) (.24) (.09) (.03)
Net asset value, end of period $6.77 $6.32 $6.12 $6.47 $5.51
Ratios/supplemental data
Net assets, end of period (in millions) $6 $3 $2 $1 --
Ratio of expenses to average daily net assetse .69%d .81% .87% .92%g .82%d,g
Ratio of net investment income (loss)
to average daily net assets .09%d .03% .06% .01% 1.93%d
Portfolio turnover rate
(excluding short-term securities) 20% 30% 29% 25% 48%
Total returnf 7.12% 9.54% (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, 2000 (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 .92% and 1.22% 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, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (99.4%)
Issuer Shares Value(a)
Aerospace & defense (0.6%)
<S> <C> <C>
AAR 74,842 $898,104
Aeroflex 74,312(b) 2,127,181
Alliant Techsystems 26,044(b) 1,842,613
BE Aerospace 69,060(b) 833,036
Kaman Cl A 64,287 803,588
Total 6,504,522
Airlines (0.6%)
Atlantic Coast Airlines Holdings 51,918(b) 1,914,476
Mesa Air Group 90,113(b) 506,886
Midwest Express Holdings 38,920(b) 914,620
SkyWest 68,336 3,049,494
Total 6,385,476
Automotive & related (2.1%)
Central Parking 101,384 2,078,372
Disc Auto Parts 46,370(b) 376,756
GenCorp 116,443 924,266
Gentex 204,876(b) 4,660,928
Intermet 70,482 510,995
MascoTech 123,696 1,422,504
Midas 43,465 690,007
Myers Inds 54,867 733,846
O'Reilly Automotive 141,560(b) 2,043,773
Oshkosh Truck 46,190 1,564,686
Simpson Inds 49,623 403,187
Smith (AO) 65,022 1,048,480
Spartan Motors 32,733 120,703
SPS Technologies 35,222(b) 1,580,587
Standard Motor Products 33,724 326,701
TBC 58,875(b) 272,297
Titan Intl 57,504 305,490
Tower Automotive 130,446(b) 1,589,811
Winnebago Inds 59,842 774,206
Total 21,427,595
Banks and savings & loans (6.1%)
Anchor Bancorp Wisconsin 68,886 1,136,619
Centura Banks 110,114 3,503,002
Chittenden 79,002 2,049,114
Commerce Bancorp 85,035 4,416,505
Commercial Federal 156,629 2,780,165
Community First Bankshares 133,945 2,243,579
Cullen/Frost Bankers 145,323 4,132,623
Downey Financial 78,095 2,733,325
First Midwest Bancorp 114,172 3,039,830
FirstBank 75,113 1,441,231
Hudson United Bancorp 140,723 3,359,762
Imperial Bancorp 125,095 2,126,615
Investors Financial Services 82,280 3,157,495
MAF Bancorp 64,444 1,284,852
Provident Bankshares 73,226 988,546
Queens County Bancorp 57,623 1,332,532
Riggs Natl 78,618 1,002,380
Silicon Valley Bancshares 127,756(b) 5,597,309
South Financial Group 119,452 1,694,725
Southwest Bancorp of Texas 78,580(b) 2,057,814
Staten Island Bancorp 102,140 1,838,520
Susquehanna Bancshares 109,055 1,622,193
TrustCo Bank NY 148,451 1,799,968
United Bankshares 116,389 2,204,117
Washington Federal 145,163 2,721,806
Whitney Holding 62,747 2,333,404
Total 62,598,031
Beverages & tobacco (0.6%)
Beringer Wine Estates Holdings Cl B 54,769(b) 2,012,761
Canandaigua Wine Cl A 50,066(b) 2,472,009
Coca-Cola Bottling 24,280 1,068,320
DIMON 123,605 355,364
Schweitzer-Mauduit Intl 42,921 568,703
Total 6,477,157
Building materials & construction (3.6%)
Apogee Enterprises 77,020 327,335
Building Materials Holding 35,371(b) 358,131
Butler Mfg 18,434 383,658
Dycom Inds 108,146(b) 4,623,219
Elcor 54,442 1,044,606
Fleetwood Enterprises 90,735 1,173,884
Florida Rock Inds 51,460 1,852,560
Foster Wheeler 113,080 826,898
Horton (DR) 171,540 2,658,870
Hughes Supply 65,330 1,237,187
Insituform Technologies Cl A 68,868(b) 1,661,441
Insteel Inds 23,502 130,730
Lennox Intl 159,437 2,102,575
M.D.C. Holdings 59,596 1,191,920
Monaco Coach 52,469(b) 783,756
Morrison Knudsen 145,327(b) 1,398,772
NVR 25,530(b) 1,573,286
Oakwood Homes 130,839 261,678
Republic Group 32,884 425,437
Ryland Group 36,287 725,740
Simpson Mfg 33,327(b) 1,633,023
Skyline 24,109 486,700
Standard Pacific 79,800 1,012,463
Texas Inds 58,504 1,897,724
Toll Brothers 100,974(b) 2,442,309
Tredegar 105,364 2,318,008
Universal Forest Products 55,883 702,030
URS 44,393(b) 665,895
Watts Inds Cl A 73,261 869,974
Total 36,769,809
Chemicals (2.1%)
Arch Chemicals 61,505 1,230,100
Cambrex 68,916 3,114,141
Chemed 27,607 795,427
ChemFirst 44,197 1,071,777
Geon 66,184 1,087,900
Ionics 44,956(b) 1,376,778
Lilly Inds Cl A 64,396 1,943,954
MacDermid 86,425 2,214,641
Mississippi Chemical 72,575 303,908
OM Group 66,236 3,142,069
Omnova Solutions 110,143 702,162
Penford 20,666 387,488
Quaker Chemical 24,443 417,059
Tetra Tech 108,593(b) 2,721,611
TETRA Technologies 37,669(b) 522,657
WD-40 42,839 811,264
Total 21,842,936
Communications equipment & services (3.3%)
Adaptive Broadband 103,956(b) 3,748,913
Allen Telecom 77,533(b) 1,356,828
Aspect Communications 142,376(b) 2,616,159
AVT 87,870(b) 483,285
C-COR.net 93,829(b,f) 2,480,604
Davox 37,640(b) 316,411
Digi Intl 41,931(b) 262,069
Digital Microwave 193,311(b) 5,255,643
General Communication Cl A 142,411(b) 747,658
General Semiconductor 104,817(b) 1,572,255
InterVoice-Brite 89,036(b) 567,605
Network Equipment Technologies 59,536(b) 610,244
Orbital Sciences 103,893(b) 1,564,888
P-COM 213,952(b) 1,297,084
Plantronics 44,868(b) 6,191,783
Proxim 34,927(b) 2,656,635
SymmetriCom 41,961(b) 894,294
ViaSat 28,920(b) 1,431,540
Total 34,053,898
Computers & office equipment (12.2%)
ADAC Laboratories 57,329(b) 1,135,831
American Management Systems 115,356(b) 2,891,110
Analysts Intl 62,743 568,608
Artesyn Technologies 103,490(b) 3,518,660
Aspen Technology 72,381(b) 2,175,954
Auspex Systems 82,525(b) 606,043
Avant! 108,065(b) 1,688,516
Avid Technology 68,669(b) 1,012,868
Aware 62,285(b) 2,452,472
BARRA 38,926(b) 2,260,141
Billing Concepts 117,496(b) 514,045
BISYS Group 77,088(b) 4,895,087
Black Box 54,376(b) 2,460,514
BMC Inds 76,066 380,330
Brooktrout 33,895(b) 1,025,324
Ciber 165,222(b) 1,931,032
Cognex 119,224(b) 5,849,427
Computer Task Group 57,938 249,858
Concord Communications 45,152(b) 1,241,680
Dendrite Intl 108,513(b) 2,941,720
Epicor Software 115,159(b) 431,846
ePresence 64,860(b) 405,375
Exabyte 63,713(b) 378,296
FactSet Research Systems 89,434 2,917,784
Fair Isaac & Co 39,836 1,984,331
FileNet 95,019(b) 1,680,649
Great Plains Software 55,212(b) 1,290,581
Henry (Jack) & Associates 113,004 5,071,054
HNC Software 74,659(b) 3,294,328
Hutchinson Technology 68,845(b) 1,024,069
Hyperion Solutions 90,172(b) 2,400,830
Insight Enterprises 73,707(b) 3,408,949
Inter-Tel 73,125 950,625
Intermagnetics General 36,875(b) 513,945
Komag 152,965(b) 253,348
Kronos 34,540(b) 1,182,995
MAXIMUS 58,517(b) 1,397,093
Mercury Computer Systems 59,130(b) 1,589,119
MICROS Systems 47,880(b) 1,089,270
Midway Games 104,680(b) 896,323
Natl Computer Systems 88,777 6,380,846
Natl Data 90,937 2,500,768
Natl Instruments 139,463(b) 6,023,057
Pegasus Solutions 67,285(b) 685,466
Phoenix Technologies 71,955(b) 1,223,235
Pinnacle Systems 138,876(b) 1,063,269
Primark 56,293(b) 2,107,469
Profit Recovery Group Intl 137,580(b) 1,272,615
Progress Software 99,116(b) 1,492,935
Project Software & Development 60,568(b) 1,067,511
QRS 42,197(b) 775,370
RadiSys 46,840(b) 2,880,660
Read-Rite 138,592(b,d) 485,072
Remedy 86,447(b) 1,907,237
Robotic Vision Systems 95,325(b) 1,280,930
RSA Security 109,588(b) 6,945,139
S3 253,464(b) 2,598,006
Saga Systems 80,720(b) 817,290
Systems & Computer Technology 90,110(b) 1,824,728
Telxon 45,180(b) 824,535
THQ 53,195(b) 877,718
Verity 86,825(b) 3,163,686
Visual Networks 69,830(b) 833,596
Xircom 82,768(b) 2,829,631
Zixit 45,896(b,d) 1,939,106
Total 125,759,905
Electronics (12.6%)
Actel 64,343(b) 2,392,755
Alliance Semiconductor 117,180(b) 2,350,924
Alpha Inds 110,350(b) 3,758,797
American Xtal Technology 52,440(b) 1,868,175
Analogic 35,581 1,636,726
Anixter Intl 100,957(b) 2,934,063
APW 108,495(b) 3,987,191
Audiovox Cl A 62,474(b) 968,347
Belden 67,475 1,695,309
Benchmark Electronics 45,195(b) 1,858,644
Brush Engineered Materials 45,356 751,209
C&D Technologies 72,036 2,917,458
C-Cube Microsystems 122,995(b) 2,452,213
Cable Design Technologies 79,050(b) 2,786,513
Cohu 56,040 991,208
CTS 77,214(f) 3,542,192
Dallas Semiconductor 167,056 6,995,470
Dionex 61,362(b) 1,595,412
Electro Scientific Inds 73,994(b) 3,362,102
Electroglas 57,280(b) 1,145,600
ESS Technology 116,815(b) 1,971,253
Esterline 48,167(b) 710,463
Gerber Scientific 61,643 616,430
Harman Intl Inds 47,366 2,995,900
Harmon Inds 31,663 932,080
Helix Technology 62,676 2,036,970
Innovex 41,163 493,956
Intl Rectifier 170,480(b) 9,429,674
Itron 41,946(b,d) 293,622
KEMET 241,118(b) 5,786,832
Kent Electronics 78,164(b) 2,432,855
Kulicke & Soffa Inds 66,922(b) 3,019,855
Lattice Semiconductor 136,478(b) 7,489,230
Methode Electronics Cl A 98,672 4,483,409
Park Electrochemical 28,994 980,360
Paxar 126,625(b) 1,566,984
Photronics 81,270(b) 2,016,512
Pioneer-Standard Electronics 75,611 1,020,749
Plexus 50,629(b) 5,711,584
Scott Technologies 47,056(b) 905,828
Silicon Valley Group 93,523(b) 2,373,146
SLI 93,971 1,016,061
SpeedFam-IPEC 82,309(b) 1,630,747
Standard Microsystems 43,257(b) 762,405
Technitrol 45,393 5,004,578
Three-Five Systems 58,722(b) 1,537,782
Trimble Navigation 63,831(b) 2,760,691
Ultratech Stepper 58,601(b) 966,917
Varian Medical Systems 86,623(b) 3,724,789
Vicor 117,695(b) 4,906,410
X-Rite 59,082 550,201
Total 130,118,581
Energy (2.2%)
Atmos Energy 87,750 1,809,844
Barrett Resources 90,733(b,f) 2,523,512
Cabot Oil & Gas Cl A 78,729 1,456,487
Cross Timbers Oil 127,866 2,101,797
HS Resources 52,352(b) 1,446,224
Newfield Exploration 117,462(b) 4,001,048
Nuevo Energy 48,885(b) 745,496
Pogo Producing 112,059 2,227,173
St. Mary Land & Exploration 31,316 937,523
Stone Energy 51,189(b) 2,457,072
Vintage Petroleum 173,384 3,120,912
Total 22,827,088
Energy equipment & services (2.0%)
Atwood Oceanics 38,303(b) 1,608,726
Cal Dive Intl 43,558(b) 2,101,674
Dril-Quip 47,879(b) 1,912,168
Friede Goldman Halter 135,218(b) 870,466
Input/Output 140,955(b) 1,154,069
Louis Dreyfus Natural Gas 112,600(b) 2,927,599
Oceaneering Intl 63,199(b) 963,785
Plains Resources 49,919(b) 736,305
Pride Intl 180,839(b) 3,763,711
Remington Oil & Gas 59,602(b) 365,062
SEACOR SMIT 46,780(b) 1,865,353
Seitel 65,646(b) 754,929
Veritas DGC 71,655(b) 1,540,583
Total 20,564,430
AmeriCredit 210,332(b) 4,364,389
Bowne & Co 102,478 903,087
Dain Rauscher 35,542 2,410,192
Delphi Financial Group Cl A 55,772(b) 2,147,222
Eaton Vance 98,565 5,106,898
Heidrick & Struggles Intl 53,415(b) 3,578,805
Insurance Auto Auctions 32,212(b) 676,452
Jefferies Group 67,742 1,812,099
Morgan Keegan 80,660 1,603,118
Mutual Risk Management 114,401(c) 1,773,216
Natl Disc Brokers Group 48,965(b) 1,612,785
Pioneer Group 74,324(b) 3,177,351
Radian Group 104,332 6,351,210
Raymond James Financial 127,913 3,197,825
SEI Investments 147,098 8,053,615
Southwest Securities Group 44,074(d) 1,214,790
Total 47,983,054
Food (2.2%)
American Italian Pasta Cl A 50,844(b) 1,004,169
Chiquita Brands Intl 184,545 692,044
Corn Products Intl 97,584 2,439,600
Delta & Pine Land 106,573 2,664,325
Earthgrains 117,650 2,353,000
Fleming Companies 108,899 1,708,353
Hain Celestial Group 80,627(b) 2,146,694
J & J Snack Foods 24,485(b) 364,214
Michael Foods 54,749 1,313,976
Nash Finch 31,682 287,118
Performance Food Group 38,008(b) 1,251,889
Ralcorp Holdings 82,899(b) 1,145,042
Smithfield Foods 156,596(b) 4,453,198
United Natural Foods 50,722(b) 722,789
Total 22,546,411
Furniture & appliances (1.0%)
Aaron Rents 55,047 798,182
Bassett Furniture Inds 32,885 443,948
Ethan Allen Interiors 109,734 2,798,216
Fedders 98,523 511,088
Interface 143,820 737,078
La-Z-Boy 170,341 2,640,285
Natl Presto Inds 19,619 592,249
Royal Appliance Mfg 43,598(b) 228,890
Salton 31,525(b,d) 993,037
Thomas Inds 43,033 898,314
Total 10,641,287
Health care (9.5%)
Advanced Tissue Sciences 166,102(b) 897,989
Alliance Pharmaceutical 130,979(b) 1,383,466
Alpharma Cl A 96,495(f) 6,320,422
Barr Laboratories 95,736(b) 5,169,771
Bio-Technology General 151,038(b) 1,548,140
Biomatrix 64,857(b) 1,349,836
Cephalon 94,130(b,d) 3,794,616
Coherent 69,696(b) 4,173,048
Conmed 42,538(b) 568,946
Cooper Companies 39,204 1,377,041
COR Therapeutics 73,312(b) 5,901,615
Cygnus 71,466(b) 649,894
Datascope 41,250 1,557,188
Diagnostic Products 37,925 1,517,000
Dura Pharmaceuticals 123,055(b,f) 2,784,119
Enzo Biochem 70,321(b) 3,748,988
Hologic 42,670(b) 320,025
IDEXX Laboratories 98,374(b) 2,385,570
Immune Response 75,985(b) 629,251
Invacare 83,437 1,929,481
Jones Pharma 181,735 5,940,462
Laser Vision Centers 70,469(b) 364,457
Medicis Pharmaceutical Cl A 81,378(b) 4,577,513
Mentor 67,428 1,213,704
Noven Pharmaceuticals 60,464(b) 1,715,666
Organogenesis 94,455(b) 1,145,267
Osteotech 39,550(b) 395,500
Priority Healthcare Cl B 61,800(b) 3,314,025
Protein Design Labs 54,304(b) 6,580,965
Regeneron Pharmaceuticals 97,337(b) 2,731,520
ResMed 84,714(b) 2,350,814
Respironics 81,532(b) 1,391,140
Spacelabs Medical 26,425(b) 265,902
Sunrise Medical 61,762(b) 289,509
Syncor Intl 33,032(b) 2,394,820
Techne 56,949(b) 5,687,781
Theragenics 81,994(b) 609,830
Vertex Pharmaceuticals 72,709(b) 7,120,937
Vital Signs 34,370 556,364
Wesley Jessen VisionCare 49,041(b) 1,814,517
Total 98,467,099
Health care services (3.1%)
Advance Paradigm 59,540(b) 1,469,894
Cerner 93,780(b) 3,282,300
Coventry Health Care 162,502(b) 2,721,909
Curative Health Services 24,661(b) 157,214
Hanger Orthopedic Group 53,118(b) 215,792
Morrison Management Specialists 32,525 937,127
Orthodontic Centers of America 134,247(b) 3,473,641
Owens & Minor 91,148 1,458,368
PAREXEL Intl 70,400(b) 699,600
Patterson Dental 186,810(b) 4,950,464
Pediatrix Medical Group 43,837(b) 673,994
Pharmaceutical Product Development 68,985(b) 1,474,554
Renal Care Group 125,289(b) 2,905,139
Sierra Health Services 75,049(b) 239,219
Universal Health Services Cl B 83,322(b) 5,613,819
US Oncology 252,639(b) 1,263,195
Total 31,536,229
Household products (0.7%)
Action Performance Companies 45,388(b,d) 385,798
Applica 63,735(b) 661,251
Enesco Group 37,588(f) 239,624
Libbey 42,263 1,318,077
Nature's Sunshine Products 47,187 377,496
Scotts Cl A 77,641(b) 2,533,037
Sola Intl 69,217(b) 410,976
Valence Technology 95,509(b) 1,426,666
Total 7,352,925
Industrial equipment & services (2.6%)
Applied Industrial Technologies 56,342 908,515
Arctic Cat 69,446 850,714
Astec Inds 53,346(b) 1,038,580
Barnes Group 51,195 1,011,101
Clarcor 67,334 1,409,806
Flow Intl 40,926(b) 419,492
G & K Services Cl A 56,948 1,711,999
Gardner Denver 42,514(b) 624,424
Graco 56,350 1,915,900
IDEX 82,394 2,719,002
JLG Inds 123,220 1,255,304
Kroll-O'Gara 61,801(b) 322,524
Lawson Products 27,783 715,412
Lindsay Mfg 34,174 606,589
Lydall 43,890(b) 488,276
Manitowoc 68,593 1,689,103
Milacron 99,345 1,428,084
Regal Beloit 58,287 939,878
Robbins & Myers 30,396 653,514
Roper Inds 84,472 2,333,539
Specialty Equipment Companies 53,290(b) 1,452,153
Toro 35,248 1,061,846
Watsco 75,038 1,045,842
Wolverine Tube 33,739(b) 586,215
Total 27,187,812
Insurance (2.2%)
Blanch (EW) Holdings 37,073 1,049,629
Enhance Financial Services Group 105,936 1,675,113
Fidelity Natl Financial 186,022 3,290,264
First American 175,823 2,736,245
Fremont General 194,329 789,462
Gallagher (Arthur J) 103,250 5,065,703
Hilb, Rogal & Hamilton 36,440 1,425,715
Hooper Holmes 183,416 2,246,846
RLI 27,250 953,750
SCPIE Holdings 26,075 539,427
Selective Insurance Group 72,419 1,335,225
Trenwick Group 51,605 909,538
Zenith Natl Insurance 47,677(f) 1,120,410
Total 23,137,327
Leisure time & entertainment (0.9%)
Anchor Gaming 31,961(b) 1,731,887
Aztar 115,461(b) 1,760,780
Carmike Cinemas Cl A 31,611(b) 104,711
Coachmen Inds 43,244 448,657
Huffy 28,235 199,410
K2 49,842(b) 495,305
Pinnacle Entertainment 73,049(b) 1,429,021
Polaris Inds 66,336 2,006,663
Thor Inds 33,610 791,936
Total 8,968,370
Media (2.5%)
ADVO 56,035(b) 2,293,933
Catalina Marketing 50,798(b) 5,467,135
Consolidated Graphics 39,539(b) 422,573
GC Companies 21,732(b) 374,877
HA-LO Inds 176,915(b) 895,632
Harland (John H) 78,719 1,052,867
Information Resources 80,716(b) 459,072
Penton Media 88,210 3,054,271
Snyder Communications 199,343(b) 5,033,411
Thomas Nelson 39,537 321,238
True North Communications 137,227 6,698,393
Total 26,073,402
Metals (1.6%)
Amcast Inds 24,705 265,579
Birmingham Steel 86,237 274,880
Castle (AM) 39,021 385,332
Commercial Metals 39,479 1,159,696
Commonwealth Inds 46,167 297,200
IMCO Recycling 42,857 208,928
Material Sciences 42,640(b) 442,390
Mueller Inds 95,608(b) 2,778,608
Quanex 39,027 702,486
Reliance Steel & Aluminum 77,165 1,620,465
RTI Intl Metals 57,881 810,334
Shaw Group 49,405(b) 2,328,211
Steel Dynamics 133,335(b) 1,508,352
Steel Technologies 29,882 205,439
Stillwater Mining 106,915(b) 2,806,518
WHX 40,260(b,d) 203,816
Total 15,998,234
Miscellaneous (1.2%)
ABM Inds 62,173 1,616,498
American States Water 24,903 750,203
Champion Enterprises 131,164(b) 713,204
Cross (AT) Cl A 47,388(b) 242,864
eLoyalty 136,435(b) 2,025,207
JAKKS Pacific 52,414(b) 864,831
Philadelphia Suburban 113,634 2,521,254
PolyMedica 36,005(b) 1,362,564
SCP Pool 47,042(b) 1,238,528
Tenneco Automotive 94,306 554,048
Total 11,889,201
Multi-industry conglomerates (3.8%)
Administaff 37,460(b) 1,994,745
Agribrands Intl 28,066(b) 1,052,475
Baldor Electric 94,560 1,737,540
Brady Cl A 62,998 1,917,502
CDI 52,973(b) 1,052,838
ChoicePoint 111,273(b) 4,840,375
CUNO 45,274(b) 1,369,539
Cyrk Intl 43,896(b) 301,785
Edgewater Technology 81,955(b) 530,146
F.Y.I. 41,735(b) 1,528,544
Franklin Covey 57,141(b) 457,128
Griffon 82,886(b) 518,038
Labor Ready 118,742(b) 593,710
Lason 54,101(b) 101,439
MemberWorks 45,050(b) 1,475,388
New England Business Service 37,506 778,250
On Assignment 61,215(b) 1,687,238
Pre-Paid Legal Services 62,563(b) 1,912,082
Spherion 177,119(b) 3,387,400
Standex Intl 34,898 601,991
StarTek 38,920(b) 1,534,908
Teledyne Technologies 74,337(b) 1,482,094
Triarc Companies 66,418(b) 1,448,743
Valmont Inds 64,399 1,308,105
Volt Information Sciences 41,893(b) 1,476,728
Zebra Technologies Cl A 87,516(b) 4,468,785
Total 39,557,516
Paper & packaging (0.7%)
AptarGroup 99,754 2,487,615
Buckeye Technologies 96,971(b) 2,363,668
Caraustar Inds 71,536 965,736
Deltic Timber 34,210 707,719
Pope & Talbot 40,458 778,817
Total 7,303,555
Restaurants & lodging (1.8%)
Applebee's Intl 73,882 1,639,257
CEC Entertainment 74,315(b) 2,071,531
Cheesecake Factory (The) 84,893(b) 2,573,318
CKE Restaurants 140,197 411,829
Consolidated Products 81,158(b) 745,639
IHOP 55,296(b) 905,472
Jack in the Box 106,240(b) 2,277,519
Landry's Seafood Restaurants 68,925 534,169
Luby's Cafeterias 62,241 505,708
Marcus 82,126 964,981
Panera Bread Cl A 33,966(b) 371,503
Prime Hospitality 124,532(b) 1,183,054
Ruby Tuesday 170,796 2,102,926
Ryan's Family Steak Houses 90,128(b) 822,418
Sonic 49,700(b) 1,512,744
Taco Cabana Cl A 32,224(b) 142,994
Total 18,765,062
Retail (6.0%)
99 Cents Only Stores 92,902(b) 4,000,591
Ames Dept Stores 80,931(b) 576,633
AnnTaylor Stores 87,507(b) 2,472,073
Baker (J) 39,088 200,326
Bindley Western Inds 95,063 2,501,345
Bombay 100,765(b) 289,699
Books-A-Million 50,184(b) 178,781
Casey's General Stores 139,858 1,652,073
Cash America Intl 71,652 519,477
Cato Cl A 73,453 817,165
Checkpoint Systems 83,866(b) 770,519
Copart 149,246(b) 1,977,510
Cost Plus 56,876(b) 1,894,682
CPI 24,351 604,209
Damark Intl Cl A 16,015(b) 276,259
Dept 56 40,158(b) 396,560
Dress Barn 50,619(b) 1,050,344
Factory 2-U Stores 34,495(b) 1,431,543
Footstar 54,436(b) 1,714,734
Fossil 89,164(b) 1,627,243
Goody's Family Clothing 91,934(b) 479,781
Gottschalks 34,997(b) 218,731
Group 1 Automotive 62,242(b) 743,014
Gymboree 67,726(b) 351,329
Hancock Fabrics 51,790 210,397
Jo-Ann Stores Cl A 49,978(b) 362,341
Lillian Vernon 24,960 274,560
Linens `N Things 110,220(b) 3,299,711
Mayor's Jewelers 62,463(b) 179,581
Men's Wearhouse 115,970(b) 3,007,972
Michaels Stores 85,765(b) 3,714,696
Nashua 16,558(b) 134,534
NBTY 186,552(b) 1,189,269
Pacific Sunwear of California 87,889(b) 1,329,321
Pep Boys - Manny, Moe & Jack 147,520 857,460
Phillips-Van Heusen 75,779 682,011
Pier 1 Imports 263,615 3,146,904
Regis 113,053 1,483,821
Russ Berrie 56,725 1,113,228
School Specialty 48,395(b) 837,838
ShopKo Stores 82,155(b) 1,186,113
Stein Mart 119,632(b) 1,315,952
Sturm, Ruger & Co 74,736 658,611
United Stationers 94,518(b) 2,752,837
Wet Seal Cl A 38,322(b) 426,332
Whole Foods Market 72,413(b) 3,235,956
Zale 97,348(b) 3,638,381
Total 61,782,447
Textiles & apparel (1.2%)
Angelica 24,083 198,685
Ashworth 37,589(b) 203,216
Brown Shoe 50,712 719,477
Cone Mills 70,742(b) 402,345
Dixie Group 32,079(b) 168,415
Guilford Mills 53,277 179,810
Haggar 18,316 226,661
Hartmarx 81,143(b) 187,643
K-Swiss Cl A 28,866 490,722
Kellwood 66,317 1,483,842
Nautica Enterprises 96,188(b) 1,046,045
Oshkosh B'Gosh Cl A 34,492 547,561
Oxford Inds 21,245 410,294
Pillowtex 39,523(d) 81,516
Quiksilver 62,231(b) 832,340
Stride Rite 120,078 712,963
Timberland Cl A 112,238(b,f) 3,682,808
Wolverine World Wide 115,446 1,219,398
Total 12,793,741
Transportation (2.9%)
American Freightways 89,626(b) 1,554,451
Arkansas Best 54,920(b) 779,178
Circle International Group 49,000 1,384,250
EGL 79,369(b) 2,276,898
Expeditors Intl of Washington 141,208 7,095,701
Forward Air 58,085(b) 2,621,085
Fritz Companies 101,683(b) 1,512,535
Frozen Food Express Inds 45,333 135,999
Heartland Express 70,440(b) 1,259,115
Landstar System 24,991(b) 1,360,448
M.S. Carriers 32,528(b) 652,593
Offshore Logistics 58,596(b) 739,775
Roadway Express 53,790 1,277,513
Rollins Truck Leasing 162,123 1,155,126
USFreightways 73,801 2,047,978
Wabash Natl 63,819 686,054
Werner Enterprises 130,646 1,894,367
Yellow Corp 69,997(b) 1,124,327
Total 29,557,393
Utilities -- electric (0.9%)
Avista 130,750 2,451,563
Bangor Hydro Electric 20,469 479,742
Central Vermont Public Service 31,872 378,480
CH Energy Group 46,824 1,527,633
Green Mountain Power 15,256 123,955
NorthWestern 64,098 1,474,254
UIL Holdings 39,755 1,893,332
Unisource Energy 89,875 1,387,446
Total 9,716,405
Utilities -- gas (1.7%)
Cascade Natural Gas 30,679 506,204
Energen 83,110 1,869,975
Kirby 68,097(b) 1,519,414
Laclede Gas 52,400 1,038,175
New Jersey Resources 49,023 1,960,920
Northwest Natural Gas 69,903 1,616,507
Piedmont Natural Gas 87,469 2,481,932
Southern Union 137,327 2,368,891
Southwest Gas 86,760 1,561,680
Southwestern Energy 69,502 512,577
UGI 75,490 1,693,807
Total 17,130,082
Utilities -- telephone (0.2%)
Brightpoint 154,311(b) 839,066
TALK.com 182,700(b) 936,338
Total 1,775,404
Total common stocks
(Cost: $1,019,728,057) $1,025,492,384
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (1.8%)
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>
09-06-00 6.46% $500,000 $496,598
Federal Home Loan Mtge Corp Disc Nts
09-14-00 6.48 200,000 198,318
10-12-00 6.52 1,500,000 1,479,895
Federal Natl Mtge Assn Disc Nts
09-18-00 6.45 3,300,000 3,270,310
09-20-00 6.45 6,500,000 6,439,041
10-12-00 6.51 3,500,000 3,453,087
Total 15,337,249
Commercial paper (0.3%)
Cargill Global Funding
08-10-00 6.52 1,500,000(e) 1,497,287
Gillette
08-01-00 6.64 2,000,000(e) 1,999,631
Total 3,496,918
Total short-term securities
(Cost: $18,842,745) $18,834,167
Total investments in securities
(Cost: $1,038,570,802)(g) $1,044,326,551
See accompanying notes to investments in securities.
</TABLE>
<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 July 31, 2000, the
value of foreign securities represented 0.17% of net assets.
(d) Security is partially or fully on loan. See Note 4 to the financial
statements.
(e) 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.
(f) Partially pledged as initial margin deposit on the following open stock
index futures contracts (see Note 5 to the financial statements):
Type of security Contracts
Purchase contracts
Russell Index, Sept. 2000 20
(g) At July 31, 2000, the cost of securities for federal income tax purposes was
approximately $1,038,571,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $217,976,000
Unrealized depreciation (212,220,000)
------------
Net unrealized appreciation $5,756,000
<PAGE>
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN
EXPRESS
S-6361 E (9/00)
Ticker Symbol
Class A: ISIAX Class B: ISIBX Class Y: ISCYX
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.
AXP Small Company Index Fund
70100 AXP Financial Center
Minneapolis, MN 55474