AXP(SM) S&P 500 Index Fund
AXP(SM) Mid Cap Index Fund
AXP(SM) Total Stock Market Index Fund
AXP(SM) International Equity Index Fund
AXP(SM) Nasdaq 100 Index(R) Fund
2000 ANNUAL REPORT
(PROSPECTUS ENCLOSED)
American
Express(R)
Funds
(picture of) ticker tape machine
(This annual report includes a prospectus that describes in detail the Funds`
objectives, investment strategies, risks, fees and other matters of interest.
Please read the prospectus carefully before you invest or send money.)
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Table of Contents
2000 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the Chairman 4
From the Portfolio Managers 5
Fund Facts 7
The 10 Largest Holdings 12
Making the Most of the Fund 17
Independent Auditors' Report 18
Financial Statements 19
Notes to Financial Statements 25
Investments in Securities 34
Federal Income Tax Information 157
2000 PROSPECTUS
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
The Funds 3p
Goals 3p
Investment Strategies 3p
Risks 7p
Past Performance 9p
Fees and Expenses 9p
Management 13p
Buying and Selling Shares 13p
Valuing Fund Shares 13p
Investment Options 14p
Purchasing Shares 14p
Transactions through Third Parties 18p
Exchanging/Selling Shares 19p
Distributions and Taxes 22p
Other Information 24p
Financial Highlights 25p
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
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(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
We are in an extraordinary period for investing in financial assets, with many
stocks at their all-time highs. Looking at year 2000, American Express Financial
Corporation, the Fund's investment manager, expects the economy to continue to
grow and long-term interest rates to rise only slightly. This is a great time to
take a close look at your goals and investments. We encourage you to:
o Consult a professional investment adviser 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
AXP INDEX FUNDS (This annual report is not part of the prospectus.)
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From the Portfolio Managers
AXP S&P 500 Index Fund
The Fund's Class D shares generated a total return of 7.72% during its initial
reporting period -- Oct. 25, 1999 (when shares became publicly available)
through Jan. 31, 2000. Led by technology stocks, the U.S. stock market rallied
strongly in late 1999, as reports of tame inflation and generally good corporate
profits buoyed investors' spirits. The surge continued into early January,
before renewed concerns about potentially higher inflation and rising interest
rates drove the market into a moderate retreat, causing the Fund to give back
some of its gains.
AXP Mid Cap Index Fund
The Fund's Class D shares generated a total return of 12.87% during its initial
reporting period -- Oct. 25, 1999 (when shares became publicly available)
through Jan. 31, 2000. Spurred by reports of low inflation and generally good
corporate profits, the U.S. stock market surged in the final months of 1999 and
the early days of January, before slumping over the ensuing weeks.
Mid-capitalization stocks fared relatively well over the entire period, besting
the return of large-cap stocks, as represented by the Standard & Poor's 500 (an
unmanaged index of stocks commonly used to measure the performance of large-cap
issues).
AXP Total Stock Market Index Fund
The Fund's Class D shares generated a total return of 11.57% during its initial
reporting period -- Oct. 25, 1999 (when shares became publicly available)
through Jan. 31, 2000. The stock market was surging when the period began, as
investors were encouraged by fresh reports of low inflation and generally good
corporate profits. The run-up lasted through the early days of January, after
which concerns about inflation and interest rates resulted in a moderate
pullback by the market. For the period as a whole, small- and mid-capitalization
stocks performed especially well.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
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AXP International Equity Index Fund
The Fund's Class D shares generated a total return of 8.09% during its initial
reporting period -- Oct. 25, 1999 (when shares became publicly available)
through Jan. 31, 2000. Most of Europe, which comprised 60% of the Fund's
investments and includes the United Kingdom, Germany, France and Italy,
experienced strong markets, with the sharpest gain registered by Finland. A
decline in the value of the euro, however, reduced returns to U.S. investors.
Japan, the Fund's largest country exposure (about 28%), also made a positive
contribution to performance.
AXP Nasdaq 100 Index Fund
The Fund's Class D shares generated a total return of 42.97% during its initial
reporting period -- Oct. 25, 1999 (when shares became publicly available)
through Jan. 31, 2000. Driven by a spectacular run-up in the technology sector,
particularly Internet-related stocks, the index raced ahead from the start of
the period and on into the early days of January, by which time the Fund was up
approximately 60%. At that point, concerns about potentially higher inflation,
higher interest rates and exceptionally high stock valuations resurfaced,
causing the index and the Fund to lose ground over the ensuing weeks of the
period.
James M. Johnson, Jr. Adele Kohler
Portfolio Manager Portfolio Manager
AXP S&P 500 Index Fund AXP International Equity Index Fund
AXP Mid Cap Index Fund
AXP Total Stock Market Index Fund
AXP Nasdaq 100 Index Fund
AXP INDEX FUNDS (This annual report is not part of the prospectus.)
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Fund Facts
AXP S&P 500 Index Fund
Class D -- Oct. 25, 1999* - Jan. 31, 2000
(All figures per share)
Net asset value (NAV)
Jan. 31, 2000 $5.42
Oct. 25, 1999 $5.07
Increase $0.35
Distributions -- Oct. 25, 1999* - Jan 31, 2000
From income $0.01
From capital gains $ --
Total distributions $0.01
Total return** +7.72%***
Class E -- Oct, 25, 1999* - Jan. 31, 2000
(All figures per share)
Net asset value (NAV)
Jan. 31, 2000 $5.42
Oct. 25, 1999 $5.07
Increase $0.35
Distributions -- Oct. 25, 1999* - Jan 31, 2000
From income $0.01
From capital gains $ --
Total distributions $0.01
Total return** +7.75%***
*When shares became publicly available.
**Returns do not include sales load, the prospectus discusses the effect of
sales charges, if any, on the various classes.
***The total return is a hypothetical investment in the Fund with all
distributions reinvested.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
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AXP Mid Cap Index Fund
Class D -- Oct. 25, 1999* - Jan. 31, 2000
(All figures per share)
Net asset value (NAV)
Jan. 31, 2000 $5.71
Oct. 25, 1999 $5.07
Increase $0.64
Distributions -- Oct. 25, 1999* - Jan 31, 2000
From income $0.01
From capital gains $ --
Total distributions $0.01
Total return** +12.87%***
Class E -- Oct. 25, 1999* - Jan 31, 2000
(All figures per share)
Net asset value (NAV)
Jan. 31, 2000 $5.71
Oct. 25, 1999 $5.07
Increase $0.64
Distributions -- Oct. 25, 1999* - Jan 31, 2000
From income $0.02
From capital gains $ --
Total distributions $0.02
Total return** +12.92%***
*When shares became publicly available.
**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.
AXP INDEX FUNDS (This annual report is not part of the prospectus.)
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AXP Total Stock Market Index Fund
Class D -- Oct. 25, 1999* - Jan. 31, 2000
(All figures per share)
Net asset value (NAV)
Jan. 31, 2000 $5.76
Oct. 25, 1999 $5.19
Increase $0.57
Distributions -- Oct. 25, 1999* - Jan 31, 2000
From income $0.01
From capital gains $ --
Total distributions $0.01
Total return** +11.57%***
Class E -- Oct. 25, 1999* - Jan. 31, 2000
(All figures per share)
Net asset value (NAV)
Jan. 31, 2000 $5.76
Oct. 25, 1999 $5.19
Increase $0.57
Distributions -- Oct. 25, 1999* - Jan 31, 2000
From income $0.01
From capital gains $ --
Total distributions $0.01
Total return** +11.61%***
*When shares became publicly available.
**Returns do not include sales load, the prospectus discusses the effect of
sales charges, if any, on the various classes.
***The total return is a hypothetical investment in the Fund with all
distributions reinvested.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
AXP International Equity Index Fund
Class D -- Oct. 25, 1999* - Jan 31, 2000
(All figures per share)
Net asset value (NAV)
Jan. 31, 2000 $5.42
Oct. 25, 1999 $5.00
Increase $0.42
Distributions -- Oct. 25, 1999* - Jan 31, 2000
From income $ --
From capital gains $0.01
Total distributions $0.01
Total return** +8.09%***
Class E -- Oct. 25, 1999*- Jan 31, 2000
(All figures per share)
Net asset value (NAV)
Jan. 31, 2000 $5.42
Oct. 25, 1999 $5.00
Increase $0.42
Distributions -- Oct.25, 1999*- Jan 31, 2000
From income $ --
From capital gains $0.01
Total distributions $0.01
Total return** +8.09%***
*When shares became publicly available.
**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.
AXP INDEX FUNDS (This annual report is not part of the prospectus.)
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AXP Nasdaq 100 Index Fund
Class D -- Oct. 25, 1999* - Jan. 31, 2000
(All figures per share)
Net asset value (NAV)
Jan. 31, 2000 $7.52
Oct. 25, 1999 $5.26
Increase $2.26
Distributions -- Oct. 25, 1999* - Jan 31, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return** +42.97%***
Class E -- Oct. 25, 1999* - Jan. 31, 2000
(All figures per share)
Net asset value (NAV)
Jan. 31, 2000 $7.52
Oct. 25, 1999 $5.26
Increase $2.26
Distributions -- Oct. 25, 1999* - Jan 31, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return** +42.97%***
*When shares became publicly available.
**Returns do not include sales load, the prospectus discusses the effect of
sales charges, if any, on the various classes.
***The total return is a hypothetical investment in the Fund with all
distributions reinvested.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
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The 10 Largest Holdings
AXP S&P 500 Index Fund
Percent Value
(of net assets) (as of Jan. 31, 2000)
Standard & Poor's Depositary Receipts 4.73% $780,084
Microsoft 4.04 666,821
General Electric 3.50 577,780
Cisco Systems 2.87 472,930
Intel 2.64 436,412
Exxon Mobil 2.31 380,760
Wal-Mart Stores 1.95 321,655
Intl Business Machines 1.62 267,006
Citigroup 1.55 255,713
Merck & Co 1.47 243,214
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 26.68% of net assets
AXP INDEX FUNDS (This annual report is not part of the prospectus.)
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AXP Mid Cap Index Fund
Percent Value
(of net assets) (as of Jan. 31, 2000)
S&P Mid-Cap 400 Depositary Receipts 8.46% $1,029,828
Veritas Software 3.97 482,700
Siebel Systems 1.85 225,643
Linear Technology 1.53 186,533
Maxim Integrated Products 1.44 174,935
Altera 1.38 167,531
Intuit 1.24 150,419
Univision Communications Cl A 1.15 139,476
MedImmune 1.03 125,705
Millennium Pharmaceuticals 0.87 106,276
For further details about these holdings, please refer to the section entitled
"Investments in Securities".
(icon of) pie chart
The 10 holdings listed here make up 22.92% of net assets
(This annual reportis not part of the prospectus.) ANNUAL REPORT - 2000
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AXP Total Stock Market Index Fund
Percent Value
(of net assets) (as of Jan. 31, 2000)
Microsoft 3.31% $790,535
General Electric 2.87 685,013
Cisco Systems 2.35 560,639
Intel 2.16 517,343
Exxon Mobil 1.89 451,400
Wal-Mart Stores 1.59 381,333
Intl Business Machines 1.32 315,582
Citigroup 1.27 303,097
Merck & Co 1.20 287,428
Lucent Technologies 1.13 270,945
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 19.09% of net assets
AXP INDEX FUNDS (This annual report is not part of the prospectus.)
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AXP International Equity Index Fund
Percent Value
(of net assets) (as of Jan. 31, 2000)
Nokia (Finland) 2.36% $526,040
Deutsche Telekom (Germany) 1.84 409,749
Nippon Telegraph & Telephone (Japan) 1.84 408,626
BP Amoco (United Kingdom) 1.72 383,412
Vodafone AirTouch (United Kingdom) 1.62 361,669
Toyota Motor (Japan) 1.57 350,519
France Telecom (France) 1.23 274,569
British Telecommunications (United Kingdom) 1.21 269,491
Mannesman (Germany) 1.21 268,274
Royal Dutch Petroleum (Netherlands) 1.17 260,457
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 15.77% of net assets
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
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AXP Nasdaq 100 Index Fund
Percent Value
(of net assets) (as of Jan. 31, 2000)
Microsoft 9.17% $2,174,977
Cisco Systems 6.81 1,614,686
Intel 6.11 1,448,347
QUALCOMM 5.63 1,335,404
Oracle 3.13 742,103
JDS Uniphase 3.02 715,617
Sun Microsystems 2.54 603,438
Nextel Communications Cl A 2.52 598,040
MCI WorldCom 2.47 586,920
Global Crossing 2.24 531,200
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 43.64% of net assets
AXP INDEX FUNDS (This annual report is not part of the prospectus.)
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Making the Most of the Fund
BUILD YOUR ASSETS SYSTEMATICALLY
One of the best ways to invest in the Fund is by dollar-cost averaging -- a
time-tested strategy that can make market fluctuations work for you. To
dollar-cost average, simply invest a fixed amount of money regularly. You'll
automatically buy more shares when the Fund's share price is low, fewer shares
when it is high. The chart below shows how dollar-cost averaging works. In these
three hypothetical scenarios, you will see six months of share price
fluctuations.
This strategy does not ensure a profit or avoid a loss if the market declines.
But, if you can continue to invest regularly through changing market conditions
even when the price of your shares fall or the market declines, it can be an
effective way to accumulate shares to meet your long-term goals.
How dollar-cost averaging works
Accumulated shares* Average market Your average
price per share cost per share
42.25 $15 $14.20
- -------------------------------------------------------------------------------
Jan Feb Mar Apr May Jun
$15
$10 $10 $10
$ 5 $8 $5 $5 $8
Accumulated shares* Average market Your average
price per share cost per share
85.0 $7.66 $7.05
- -------------------------------------------------------------------------------
Jan Feb Mar Apr May Jun
$15
$10 $10 $8 $6 $7
$ 5 $4 $4
Accumulated shares* Average market Your average
price per share cost per share
103.5 $6.50 $5.80
- -------------------------------------------------------------------------------
$100 invested per month. Total invested: $600.
*Shares purchased is determined by dividing the amount invested per month by the
current share price.
THREE WAYS TO BENEFIT FROM A MUTUAL FUND:
o your shares increase in value when the Fund's investments do well
o you receive capital gains when the gains on investments sold by the Fund
exceed losses
o you receive income when the Fund's stock dividends, interest and short-term
gains exceed its expenses.
All three make up your total return. You potentially can increase your
investment if, like most investors, you reinvest your dividends and capital gain
distributions to buy additional shares of the Fund or another fund.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
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The financial statements contained in Post-Effective Amendment #24 to
Registration Statement No. 33-30770 filed on or about March 31, 2000, are
incorporated herein by reference.
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Federal Income Tax Information
(Unaudited)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
AXP S&P 500 Index Fund
Period ended Jan. 31, 2000
Class D
Income distribution taxable as dividend income, 100% qualifying for deduction by
corporations.
Payable date Per share
Dec. 23, 1999 $0.00949
Total distributions $0.00949
The distribution of $0.00949 per share, payable Dec. 23, 1999, consisted of
$0.00881 from net investment income and $0.00068 from net short-term capital
gains.
Class E
Income distribution taxable as dividend income, 100% qualifying for deduction by
corporations.
Payable date Per share
Dec. 23, 1999 $0.01121
Total distributions $0.01121
The distribution of $0.01121 per share, payable Dec. 23, 1999, consisted of
$0.01053 from net investment income and $0.00068 from net short-term capital
gains.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
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AXP Mid Cap Index Fund
Period ended Jan. 31, 2000
Class D
Income distribution taxable as dividend income, 14.45% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1999 $0.01288
Total distributions $0.01288
The distribution of $0.01288 per share, payable Dec. 23, 1999, consisted of
$0.00925 from net investment income and $0.00363 from net short-term capital
gains.
Class E
Income distribution taxable as dividend income, 14.45% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1999 $0.01513
Total distributions $0.01513
The distribution of $0.01513 per share, payable Dec. 23, 1999, consisted of
$0.01150 from net investment income and $0.00363 from net short-term capital
gains.
AXP Total Stock Market Index Fund
Period ended Jan. 31, 2000
Class D
Income distribution taxable as dividend income, 80.71% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1999 $0.00838
Total distributions $0.00838
Class E
Income distribution taxable as dividend income, 80.71% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1999 $0.01068
Total distributions $0.01068
AXP INDEX FUNDS (This annual report is not part of the prospectus.)
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AXP International Equity Index Fund
Period ended Jan. 31, 2000
Class D
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1999 $0.00626
Total distributions $0.00626
Class E
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1999 $0.00626
Total distributions $0.00626
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
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American
Express(R)
Funds
AXP Index Funds
200 AXP Financial Center
Minneapolis, MN 55474
PRSRT STD AUTO
U.S. POSTAGE
PAID
SPENCER, IA
PERMIT NO. 85
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and is
not a broker-dealer.
AMERICAN EXPRESS
S-6434 C (3/00)
