-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wh5kyeI9B3Nfe7qAr0JTLlpyAnO2UC8Vp20JlRXLLcDHCZ8V6KnqAIGtzyN2kmIc IbYjH2Llps7FMtC8ZEfl0g== 0000820027-01-500216.txt : 20010517 0000820027-01-500216.hdr.sgml : 20010517 ACCESSION NUMBER: 0000820027-01-500216 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP PROGRESSIVE FUND INC CENTRAL INDEX KEY: 0000049722 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 410940847 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-01714 FILM NUMBER: 1641343 BUSINESS ADDRESS: STREET 1: 80 S 8TH ST STREET 2: T33/52 IDS TOWER 10 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6123722772 FORMER COMPANY: FORMER CONFORMED NAME: IDS PROGRESSIVE FUND INC DATE OF NAME CHANGE: 19920703 N-30D 1 s6450r.txt AXP PROGRESSIVE FUND AXP(R) Progressive Fund 2001 SEMIANNUAL REPORT American Express(R) Funds (icon of) ruler AXP Progressive Fund seeks to provide shareholders with long-term growth of capital. Mid-Cap Mixture Everyone likes to get a bargain. In the investment world, bargains are known as "value" stocks -- stocks whose prices are believed to be low in relation to the true worth of their respective companies. While AXP Progressive Fund's main focus is on mid-cap value stocks, the Fund also invests in mid-cap growth stocks - -- which represent rapidly growing companies -- to create a highly diversified, balanced portfolio. CONTENTS From the Chairman 3 From the Portfolio Managers 3 Fund Facts 5 The 10 Largest Holdings 6 Financial Statements 7 Notes to Financial Statements 10 Investments in Securities 18 - ------------------------------------------------------------------------------- - -2- AXP PROGRESSIVE FUND (picture of) Arne H. Carlson Arne H. Carlson Chairman of the board From the Chairman The financial markets have always had their ups and downs, but in recent months volatility has become more frequent and intense. While no one can say with certainty what the markets will do, American Express Financial Corporation, the Fund's investment manager, expects economic growth to continue, accompanied by a modest rise in long-term interest rates. But no matter what transpires, this is a great time to take a close look at your goals and investments. We encourage you to: o Consult a professional investment advisor who can help you cut through mountains of data. o Set financial goals that extend beyond those achievable through the retirement plan of your employer. o Learn as much as you can about your current investments. The portfolio managers' letter that follows provides a review of the Fund's investment strategies and performance. The semiannual report contains other valuable information as well. The Fund's prospectus describes its investment objectives and how it intends to achieve those objectives. As experienced investors know, information is vital to making good investment decisions. So, take a moment and decide again whether the Fund's investment objectives and management style fit with your other investments to help you reach your financial goals. And make it a practice on a regular basis to assess your investment options. On behalf of the Board, Arne H. Carlson (picture of) Kent A. Kelley Kent A. Kelley Portfolio manager From the Portfolio Managers Sparked by a steep decline in technology-related issues, the stock market was forced to retreat for most of the past six months. AXP Progressive Fund's performance reflected the difficult environment, as its Class A shares experienced a loss of 21.95% (excluding the sales charge) for the first half of the fiscal year -- October 2000 through March 2001. The stock market was already in a slump when the period began, as indications of a weakening economy spawned increasing concerns about a similar slowdown in corporate profits. The result was a largely uninterrupted sell-off that didn't subside until late December. - ------------------------------------------------------------------------------- - -3- SEMIANNUAL REPORT -- 2001 (picture of) Jake Hurwitz Jake Hurwitz Portfolio manager Thanks to a surprise cut in short-term interest rates by the Federal Reserve in early January, the market quickly made up some of the lost ground. But more bad news on the profit front sent stocks sharply down again in February and March. DIVERSIFICATION HELPS The stock sector most under pressure during the period was technology, the largest component in the market and the Fund. While the Fund clearly felt the effect of the tech slide, careful stock selection allowed it to avoid the Internet and telecommunications services areas, where the greatest damage occurred. Illustrating the strength of the sell-off, several prominent stocks saw their prices cut in half and, in some cases, much more during the six months. Our highly diversified portfolio also worked in the Fund's favor. Consistent with our management style, we maintained roughly a 60/40 mix of value and growth among our mid-capitalization stock holdings. As it turned out, a good performance by our value stocks helped offset a major decline among the growth group. The story was similar with regard to the portfolio's broad industry exposure. Relatively good performance by stocks representing such diverse industries as energy, utilities, health care and financial services worked to cushion the impact of the severe downturn among tech stocks. Although the murky profit outlook may continue to present a hurdle for the stock market over the near term, we see reasons to be optimistic about longer-term prospects, especially for the mid-cap sector. Chief among them is that mid-caps remain relatively cheap compared with large-cap stocks. Beyond that, we think the stock market is likely to gain some support from a pick-up in economic growth in the second half of 2001. Finally, we view the recent improving performance of stocks in a broadening range of industries as a precursor of an overall healthier stock market that may be less prone to the speculation-driven swings of recent years. Kent A. Kelley Jake Hurwitz - ------------------------------------------------------------------------------- - -4- AXP PROGRESSIVE FUND Fund Facts Class A -- 6-month performance (All figures per share) Net asset value (NAV) March 31, 2001 $5.76 Sept. 30, 2000 $8.44 Decrease $2.68 Distributions -- Oct. 1, 2000 - March 31, 2001 From income $0.02 From long-term capital gains $0.93 Total distributions $0.95 Total return* -21.95% Class B -- 6-month performance (All figures per share) Net asset value (NAV) March 31, 2001 $5.62 Sept. 30, 2000 $8.26 Decrease $2.64 Distributions -- Oct. 1, 2000 - March 31, 2001 From income $ -- From long-term capital gains $0.93 Total distributions $0.93 Total return* -21.88% Class C -- 6-month performance (All figures per share) Net asset value (NAV) March 31, 2001 $5.59 Sept. 30, 2000 $8.26 Decrease $2.67 Distributions -- Oct. 1, 2000 - March 31, 2001 From income $0.03 From long-term capital gains $0.93 Total distributions $0.96 Total return* -21.87% Class Y -- 6-month performance (All figures per share) Net asset value (NAV) March 31, 2001 $5.79 Sept. 30, 2000 $8.45 Decrease $2.66 Distributions -- Oct. 1, 2000 - March 31, 2001 From income $ -- From long-term capital gains $0.93 Total distributions $0.93 Total return* -21.60% * The total return is a hypothetical investment in the Fund with all distributions reinvested. Returns do not include sales load. The prospectus discusses the effect of sales charges, if any, on the various classes. - ------------------------------------------------------------------------------- - -5- SEMIANNUAL REPORT -- 2001 The 10 Largest Holdings Percent Value (of net assets) (as of March 31, 2001) Dynegy Cl A 1.20% $2,754,540 Lehman Brothers Holdings 1.12 2,570,700 Providian Financial 1.09 2,501,550 Harley-Davidson 1.08 2,466,750 UnitedHealth Group 1.06 2,429,660 Kinder Morgan 1.05 2,394,000 Exelon 1.03 2,353,400 El Paso 1.00 2,292,030 RJ Reynolds Tobacco Holdings .98 2,244,000 Advanced Micro Devices .94 2,149,739 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 10.55% of net assets - ------------------------------------------------------------------------------- - -6- AXP PROGRESSIVE FUND Financial Statements Statement of assets and liabilities AXP Progressive Fund, Inc. March 31, 2001 (Unaudited) Assets Investments in securities, at value (Note 1) (identified cost $255,626,242) $227,553,429 Cash in bank on demand deposit 476,807 Dividends and accrued interest receivable 269,932 Receivable for investment securities sold 1,742,447 --------- Total assets 230,042,615 ----------- Liabilities Payable for investment securities purchased 810,340 Accrued investment management services fee 3,995 Accrued distribution fee 2,288 Accrued transfer agency fee 240 Accrued administrative services fee 375 Other accrued expenses 180,302 ------- Total liabilities 997,540 ------- Net assets applicable to outstanding capital stock $229,045,075 ============ Represented by Capital stock -- $.01 par value (Note 1) $ 399,214 Additional paid-in capital 272,474,548 Undistributed net investment income (84,823) Accumulated net realized gain (loss) (15,671,051) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (28,072,813) ----------- Total -- representing net assets applicable to outstanding capital stock $229,045,075 ============ Net assets applicable to outstanding shares: Class A $193,509,677 Class B $ 35,439,659 Class C $ 93,898 Class Y $ 1,841 Net asset value per share of outstanding capital stock: Class A shares 33,600,476 $ 5.76 Class B shares 6,303,767 $ 5.62 Class C shares 16,789 $ 5.59 Class Y shares 318 $ 5.79
See accompanying notes to financial statements. - ------------------------------------------------------------------------------- - -7- SEMIANNUAL REPORT -- 2001 Statement of operations AXP Progressive Fund, Inc. Six months ended March 31, 2001 (Unaudited) Investment income Income: Dividends $ 1,359,303 Interest 287,188 Less foreign taxes withheld (457) ---- Total income 1,646,034 --------- Expenses (Note 2): Investment management services fee 772,274 Distribution fee Class A 294,880 Class B 215,710 Class C 319 Transfer agency fee 225,952 Incremental transfer agency fee Class A 20,803 Class B 8,653 Class C 12 Service fee -- Class Y 1 Administrative services fees and expenses 85,480 Compensation of board members 3,400 Custodian fees 51,545 Printing and postage 11,718 Registration fees 47,239 Audit fees 12,750 Other 1,450 ----- Total expenses 1,752,186 Earnings credits on cash balances (Note 2) (17,265) ------- Total net expenses 1,734,921 --------- Investment income (loss) -- net (88,887) ------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) (14,873,687) Foreign currency transactions 4,689 ----- Net realized gain (loss) on investments (14,868,998) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (51,647,693) ----------- Net gain (loss) on investments and foreign currencies (66,516,691) ----------- Net increase (decrease) in net assets resulting from operations $(66,605,578) ============
See accompanying notes to financial statements. - ------------------------------------------------------------------------------- - -8- AXP PROGRESSIVE FUND Statements of changes in net assets AXP Progressive Fund, Inc.
March 31, 2001 Sept. 30, 2000 Six months ended Year ended (Unaudited) Operations and distributions Investment income (loss)-- net $ (88,887) $ 1,306,394 Net realized gain (loss) on investments (14,868,998) 58,863,883 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (51,647,693) 288,322 ----------- ------- Net increase (decrease) in net assets resulting from operations (66,605,578) 60,458,599 ----------- ---------- Distributions to shareholders from: Net investment income Class A (811,637) (3,258,017) Class B -- (1,711) Class C (252) -- Class Y -- (105,288) Net realized gain Class A (28,599,427) -- Class B (5,330,038) -- Class C (6,729) -- Class Y (257) -- ---- ---- Total distributions (34,748,340) (3,365,016) ----------- ---------- Capital share transactions (Note 4) Proceeds from sales Class A shares (Note 2) 6,196,902 22,836,979 Class B shares 1,998,487 7,351,507 Class C shares 94,880 24,636 Class Y shares 269 2,280,880 Reinvestment of distributions at net asset value Class A shares 28,380,931 3,069,199 Class B shares 5,231,957 1,708 Class C shares 6,981 -- Class Y shares 257 105,288 Payments for redemptions Class A shares (32,136,848) (189,771,084) Class B shares (Note 2) (7,226,232) (48,936,208) Class C shares (Note 2) (9,075) -- Class Y shares -- (13,052,262) ----- ----------- Increase (decrease) in net assets from capital share transactions 2,538,509 (216,089,357) --------- ------------ Total increase (decrease) in net assets (98,815,409) (158,995,774) Net assets at beginning of period 327,860,484 486,856,258 ----------- ----------- Net assets at end of period $229,045,075 $ 327,860,484 ============ ============= Undistributed (excess of distributions over) net investment income $ (84,823) $ 815,953 ------------ -------------
See accompanying notes to financial statements. - ------------------------------------------------------------------------------- - -9- SEMIANNUAL REPORT -- 2001 Notes to Financial Statements AXP Progressive Fund, Inc. (Unaudited as to March 31, 2001) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The Fund has 10 billion authorized shares of capital stock. The Fund invests primarily in common stocks of medium-sized U.S. companies. Class C shares of the Fund were offered to the public on June 26, 2000. Prior to this date, American Express Financial Corporation (AEFC) purchased 253 shares of capital stock at $7.92 per share, which represented the initial capital in Class C. The Fund offers Class A, Class B, Class C and Class Y shares. o Class A shares are sold with a front-end sales charge. o Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth calendar year of ownership. o Class C shares may be subject to a CDSC. o Class Y shares have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend and liquidation rights. The distribution fee, incremental transfer agency fee and service fee (class specific expenses) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: Use of estimates Preparing financial statements that conform to accounting principles generally accepted in the United States of America requires management to make estimates (e.g., on assets, liabilities and contingent 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 - ------------------------------------------------------------------------------- - -10- AXP PROGRESSIVE FUND increases. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. Futures transactions To gain exposure to or protect itself from market changes, the Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Fund also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Fund may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Fund is subject to the credit risk that the other party will not complete its contract obligations. Federal taxes The Fund's policy is to comply with all sections of the Internal Revenue Code that apply to regulated investment companies and to distribute substantially all of its taxable income to shareholders. No provision for income or excise taxes is thus required. 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 - ------------------------------------------------------------------------------- - -11- SEMIANNUAL REPORT -- 2001 ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. Dividends to shareholders An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including level-yield amortization of premium and discount, is accrued daily. 2. EXPENSES AND SALES CHARGES The Fund has agreements with AEFC to manage its portfolio and provide administrative services. Under an Investment Management Services Agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the Fund's average daily net assets in reducing percentages from 0.64% to 0.515% 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 Progressive Fund, Inc. to the Lipper Mid-Cap Value 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 $116,871 for the six months ended March 31, 2001. 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 0.06% to 0.035% annually. A minor portion of additional administrative service expenses paid by the Fund are consultants' fees and fund office expenses. Under this agreement, the Fund also pays taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees and any other expenses properly payable by the Fund and approved by the board. Under a separate Transfer Agency Agreement, American Express Client Service Corporation (AECSC) maintains shareholder accounts and records. The Fund pays AECSC an annual fee per shareholder account for this service as follows: o Class A $19.00 o Class B $20.00 o Class C $19.50 o Class Y $17.00 The Fund has agreements with American Express Financial Advisors Inc. (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund pays a distribution fee at an annual rate up to 0.25% of the Fund's average daily net assets attributable to Class A shares and up to 1.00% for Class B and Class C shares. Under a Shareholder Service Agreement, the Fund pays the Distributor 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 $55,559 for Class A and $17,706 for Class B for the six months ended March 31, 2001. - ------------------------------------------------------------------------------- - -12- AXP PROGRESSIVE FUND During the six months ended March 31, 2001, the Fund's custodian and transfer agency fees were reduced by $17,265 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 $89,685,067 and $121,100,403, respectively, for the six months ended March 31, 2001. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with AEFC were $13,383 for the six months ended March 31, 2001. Income from securities lending amounted to $10,915 for the six months ended March 31, 2001. The risks to the Fund of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows: Six months ended March 31, 2001 Class A Class B Class C Class Y Sold 891,392 295,485 14,264 -- Issued for reinvested distributions 4,441,460 837,113 1,122 40 Redeemed (4,524,781) (1,026,750) (1,594) -- ---------- ---------- ------ ----- Net increase (decrease) 808,071 105,848 13,792 40 ------- ------- ------ -- Year ended Sept. 30, 2000 Class A Class B Class C* Class Y Sold 3,046,538 1,003,999 2,997 312,152 Issued for reinvested distributions 421,662 232 -- 14,483 Redeemed (25,249,079) (6,627,263) -- (1,680,899) ----------- ---------- ----- ---------- Net increase (decrease) (21,780,879) (5,623,032) 2,997 (1,354,264) ----------- ---------- ----- ---------- * Inception date was June 26, 2000. 5. BANK BORROWINGS The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund must have asset coverage for borrowings not to exceed the aggregate of 333% of advances equal to or less than five business days plus 367% of advances over five business days. The agreement, which enables the Fund to participate with other American Express mutual funds, permits borrowings up to $200 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.05% per annum. The Fund had no borrowings outstanding during the six months ended March 31, 2001. 6. NEW ACCOUNTING PRONOUNCEMENT In November 2000, the AICPA issued a revised Audit and Accounting Guide, Audits of Investment Companies, which is effective for fiscal years beginning after Dec. 15, 2000. Adopting the revised Guide is not expected to have a significant impact on the Fund's financial position, results of operations or changes in its net assets. - ------------------------------------------------------------------------------- - -13- SEMIANNUAL REPORT -- 2001 7. FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating the Fund's results. Class A Per share income and capital changes(a)
Fiscal period ended Sept. 30, 2001(b) 2000 1999 1998 1997 Net asset value, beginning of period $ 8.44 $7.21 $ 7.93 $10.17 $ 8.23 Income from investment operations: Net investment income (loss) -- .04 .05 .05 .08 Net gains (losses) (both realized and unrealized) (1.73) 1.25 .65 (1.43) 2.54 Total from investment operations (1.73) 1.29 .70 (1.38) 2.62 Less distributions: Dividends from net investment income (.02) (.06) (.05) (.08) (.08) Distributions from realized gains (.93) -- (1.37) (.78) (.60) Total distributions (.95) (.06) (1.42) (.86) (.68) Net asset value, end of period $ 5.76 $8.44 $ 7.21 $ 7.93 $10.17 Ratios/supplemental data Net assets, end of period (in millions) $194 $277 $394 $445 $491 Ratio of expenses to average daily net assets(c) 1.13%(d) 1.06% .99% 1.02% 1.10% Ratio of net investment income (loss) to average daily net assets .06%(d) .45% .65% .57% .95% Portfolio turnover rate (excluding short-term securities) 33% 121% 93% 116% 60% Total return(e) (21.95%) 18.10% 8.20% (14.77%) 33.87%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Six months ended March 31, 2001 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge. - ------------------------------------------------------------------------------- - -14- AXP PROGRESSIVE FUND Class B Per share income and capital changes(a)
Fiscal period ended Sept. 30, 2001(b) 2000 1999 1998 1997 Net asset value, beginning of period $ 8.26 $7.06 $ 7.80 $10.03 $ 8.15 Income from investment operations: Net investment income (loss) (.02) (.02) (.01) -- .03 Net gains (losses) (both realized and unrealized) (1.69) 1.22 .64 (1.42) 2.49 Total from investment operations (1.71) 1.20 .63 (1.42) 2.52 Less distributions: Dividends from net investment income -- -- -- (.03) (.04) Distributions from realized gains (.93) -- (1.37) (.78) (.60) Total distributions (.93) -- (1.37) (.81) (.64) Net asset value, end of period $ 5.62 $8.26 $ 7.06 $ 7.80 $10.03 Ratios/supplemental data Net assets, end of period (in millions) $35 $51 $83 $84 $60 Ratio of expenses to average daily net assets(c) 1.91%(d) 1.83% 1.76% 1.78% 1.87% Ratio of net investment income (loss) to average daily net assets (.76%)(d) (.31%) (.12%) (.21%) .21% Portfolio turnover rate (excluding short-term securities) 33% 121% 93% 116% 60% Total return(e) (21.88%) 17.00% 7.49% (15.42%) 32.85%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Six months ended March 31, 2001 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge. - ------------------------------------------------------------------------------- - -15- SEMIANNUAL REPORT -- 2001 Class C Per share income and capital changes(a) Fiscal period ended Sept. 30, 2001(b) 2000(c) Net asset value, beginning of period $ 8.26 $7.78 Income from investment operations: Net investment income (loss) (.02) (.06) Net gains (losses) (both realized and unrealized) (1.69) .54 Total from investment operations (1.71) .48 Less distributions: Dividends from net investment income (.03) -- Distributions from realized gains (.93) -- Total distributions (.96) -- Net asset value, end of period $ 5.59 $8.26 Ratios/supplemental data Net assets, end of period (in millions) $-- $-- Ratio of expenses to average daily net assets(d) 1.91%(e) 1.83%(e) Ratio of net investment income (loss) to average daily net assets (.60%)(e) (.85%)(e) Portfolio turnover rate (excluding short-term securities) 33% 121% Total return(f) (21.87%) 6.17% (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Six months ended March 31, 2001 (Unaudited). (c) Inception date was June 26, 2000. (d) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. - ------------------------------------------------------------------------------- - -16- AXP PROGRESSIVE FUND Class Y Per share income and capital changes(a)
Fiscal period ended Sept. 30, 2001(b) 2000 1999 1998 1997 Net asset value, beginning of period $ 8.45 $7.22 $ 7.94 $10.18 $ 8.24 Income from investment operations: Net investment income (loss) .01 .06 .06 .06 .09 Net gains (losses) (both realized and unrealized) (1.74) 1.25 .64 (1.43) 2.54 Total from investment operations (1.73) 1.31 .70 (1.37) 2.63 Less distributions: Dividends from net investment income -- (.08) (.05) (.09) (.09) Distributions from realized gains (.93) -- (1.37) (.78) (.60) Total distributions (.93) (.08) (1.42) (.87) (.69) Net asset value, end of period $ 5.79 $8.45 $ 7.22 $ 7.94 $10.18 Ratios/supplemental data Net assets, end of period (in millions) $-- $-- $10 $8 $7 Ratio of expenses to average daily net assets(c) 1.03%(d) .85% .89% .95% .98% Ratio of net investment income (loss) to average daily net assets .18%(d) .73% .75% .62% 1.09% Portfolio turnover rate (excluding short-term securities) 33% 121% 93% 116% 60% Total return(e) (21.60%) 18.28% 8.32% (14.70%) 34.06%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Six months ended March 31, 2001 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge. - ------------------------------------------------------------------------------- - -17- SEMIANNUAL REPORT -- 2001 Investments in Securities AXP Progressive Fund, Inc. March 31, 2001 (Unaudited) (Percentages represent value of investments compared to net assets)
Common stocks (97.3%) Issuer Shares Value(a) Aerospace & defense (2.1%) General Dynamics 23,100 $1,449,294 Goodrich (BF) 29,200 1,120,404 Northrop Grumman 18,300 1,592,100 Rockwell Intl 16,000 581,600 Total 4,743,398 Airlines (1.1%) Continental Airlines Cl B 17,000(b) 703,800 Southwest Airlines 105,750 1,877,063 Total 2,580,863 Automotive & related (1.4%) Delphi Automotive Systems 74,000 1,048,580 Johnson Controls 12,000 749,520 Lear 20,000(b) 586,000 SPX 9,000(b) 816,840 Total 3,200,940 Banks and savings & loans (6.7%) City Natl 41,700 1,601,697 Commerce Bancshares 31,330 1,167,043 First Virginia Banks 29,000 1,257,730 Golden State Bancorp 40,000 1,115,200 Golden West Financial 25,500 1,654,950 Greater Bay Bancorp 20,000 503,750 Hibernia Cl A 101,000 1,410,970 Mercantile Bankshares 40,600 1,502,200 Silicon Valley Bancshares 20,000(b) 470,000 Southtrust 43,500 1,990,125 Synovus Financial 55,500 1,498,500 TCF Financial 31,600 1,194,164 Total 15,366,329 Beverages & tobacco (2.5%) Coors (Adolph) Cl B 25,500 1,668,720 Pepsi Bottling Group 45,000 1,710,450 RJ Reynolds Tobacco Holdings 40,000 2,244,000 Total 5,623,170 Building materials & construction (2.6%) American Standard 22,000(b) 1,299,540 Centex 21,000 874,650 Masco 46,000 1,110,440 Quanta Services 39,200(b) 874,944 Weyerhaeuser 36,000 1,828,440 Total 5,988,014 Chemicals (2.4%) Air Products & Chemicals 38,600 1,482,240 Eastman Chemical 22,500 1,107,450 Ecolab 30,000 1,272,600 Republic Services 64,000(b) 1,200,000 Waste Management 21,000 518,700 Total 5,580,990 Communications equipment & services (1.4%) Brocade Communications Systems 15,000(b) 313,350 DMC Stratex Networks 49,600(b) 411,680 Powerwave Technologies 55,500(b) 756,188 RF Micro Devices 54,000(b) 631,125 Scientific-Atlanta 15,000 623,850 Time Warner Telecom Cl A 13,000(b) 472,875 Total 3,209,068 Computer software & services (1.3%) BroadVision 60,073(b) 321,015 Citrix Systems 51,000(b) 1,077,375 PeopleSoft 34,000(b) 796,875 Portal Software 96,000(b) 810,000 Total 3,005,265 Computers & office equipment (6.6%) Art Technology Group 33,000(b) 396,000 BISYS Group 20,000(b) 1,068,750 Cadence Design Systems 54,900(b) 1,015,101 Concord EFS 48,700(b) 1,969,305 DST Systems 19,500(b) 939,705 Henry (Jack) & Associates 35,200 833,800 Mercury Interactive 15,000(b) 628,125 Micromuse 26,000(b) 982,540 Netegrity 10,000(b) 246,250
See accompanying notes to investments in securities. - ------------------------------------------------------------------------------- - -18- AXP PROGRESSIVE FUND Common stocks (continued)
Issuer Shares Value(a) Computers & office equipment (cont.) NVIDIA 21,000(b) $1,363,359 Palm 82,800(b) 696,038 Rational Software 38,500(b) 683,375 Redback Networks 24,000(b) 313,920 RSA Security 34,500(b) 851,719 SanDisk 20,800(b) 423,800 Sanmina 53,400(b) 1,044,638 Sybase 56,200(b) 871,100 Tech Data 30,000(b) 885,000 Total 15,212,525 Electronics (7.9%) Advanced Micro Devices 81,000(b) 2,149,739 Amkor Technology 48,500(b) 791,156 Amphenol Cl A 24,200(b) 762,300 Applied Micro Circuits 46,000(b) 759,000 Atmel 118,800(b) 1,165,725 Cypress Semiconductor 34,600(b) 613,458 Foundry Networks 45,000(b) 337,500 Integrated Device Technology 38,700(b) 1,145,907 KEMET 29,000(b) 491,260 KLA-Tencor 23,000(b) 905,625 Lam Research 55,400(b) 1,315,750 LSI Logic 44,500(b) 699,985 Microchip Technology 45,450(b) 1,150,453 PerkinElmer 9,300 487,785 Symbol Technologies 24,000 837,600 Teradyne 32,400(b) 1,069,200 TranSwitch 25,700(b) 337,313 TriQuint Semiconductor 30,300(b) 448,819 Vishay Intertechnology 52,000(b) 1,034,800 Vitesse Semiconductor 17,000(b) 404,813 Waters 32,000(b) 1,486,399 Total 18,394,587 Energy (4.5%) Anadarko Petroleum 22,000 1,381,160 Cabot Oil & Gas Cl A 40,000 1,080,000 Devon Energy 26,000 1,513,200 FirstEnergy 67,000 1,870,640 Kerr-McGee 31,000 2,011,900 Noble Affiliates 34,000 1,418,820 Triton Energy 24,000(b,c) 450,480 Valero Energy 18,000 639,000 Total 10,365,200 Energy equipment & services (3.3%) Baker Hughes 50,000 1,815,500 BJ Services 28,000(b) 1,993,600 Jacobs Engineering Group 7,300(b) 423,400 Nabors Inds 27,000(b) 1,399,680 Noble Drilling 41,000(b) 1,892,560 Total 7,524,740 Financial services (4.4%) AmeriCredit 32,900(b) 1,066,947 Bear Stearns Companies 21,000 960,540 Lehman Brothers Holdings 41,000 2,570,700 Neuberger Berman 20,500 1,275,305 Providian Financial 51,000 2,501,550 Radian Group 25,700 1,741,175 Total 10,116,217 Food (1.0%) Quaker Oats 12,600 1,234,800 Suiza Foods 23,000(b) 1,106,070 Total 2,340,870 Furniture & appliances (0.7%) Ethan Allen Interiors 28,400 959,352 Whirlpool 11,000 549,890 Total 1,509,242 Health care (5.7%) Allergan 28,800 2,135,520 Applera-Applied Biosystem Group 13,000 360,750 Biomet 18,200 716,909 Coherent 8,000(b) 284,000 Forest Laboratories 16,000(b) 947,840 Genzyme-General Division 9,000(b) 812,970 Gilead Sciences 22,000(b) 715,000 Immunex 19,000(b) 271,938 IVAX 16,000(b) 504,000 King Pharmaceuticals 39,937(b) 1,627,433 MedImmune 18,000(b) 645,750 Millennium Pharmaceuticals 28,214(b) 859,398 MiniMed 18,000(b) 523,125 Protein Design Labs 17,000(b) 756,500 Quest Diagnostics 10,000(b) 888,700 Techne 18,800(b) 491,150 Vertex Pharmaceuticals 15,000(b) 549,375 Total 13,090,358
See accompanying notes to investments in securities. - ------------------------------------------------------------------------------- - -19- SEMIANNUAL REPORT -- 2001 Common stocks (continued)
Issuer Shares Value(a) Health care services (4.0%) McKesson HBOC 28,100 $751,675 Oxford Health Plans 24,000(b) 642,000 Tenet Healthcare 47,000(b) 2,068,000 Trigon Healthcare 13,000(b) 669,500 UnitedHealth Group 41,000 2,429,660 Universal Health Services Cl B 14,000(b) 1,236,200 Wellpoint Health Networks 15,000(b) 1,429,650 Total 9,226,685 Household products (1.4%) Avon Products 42,000 1,679,580 Clorox 46,000 1,446,700 Total 3,126,280 Industrial equipment & services (0.4%) Deere & Co 22,200 806,748 Insurance (4.0%) Everest Re Group 17,000(c) 1,130,840 Hartford Financial Services Group 25,200 1,486,800 Jefferson-Pilot 23,300 1,581,837 John Hancock Financial Services 33,100 1,272,695 Old Republic Intl 61,200 1,738,080 St. Paul Companies 42,200 1,858,910 Total 9,069,162 Leisure time & entertainment (1.5%) Harley-Davidson 65,000 2,466,750 Intl Game Technology 18,000(b) 906,300 Total 3,373,050 Media (3.7%) Cox Radio Cl A 30,000(b) 630,300 Entercom Communications Cl A 29,500(b) 1,159,350 Interpublic Group of Companies 18,000 618,300 McGraw-Hill Companies 35,000 2,087,750 New York Times Cl A 46,000 1,884,620 Reader's Digest Assn Cl A 38,000 1,044,240 Westwood One 41,600(b) 957,632 Total 8,382,192 Metals (0.2%) Nucor 12,000 480,840 Miscellaneous (0.5%) Dobson Communications Cl A 49,000(b) 811,563 Stilwell Financial 15,000 402,300 Total 1,213,863 Multi-industry conglomerates (0.9%) Danaher 17,700 965,712 ITT Inds 22,000 852,500 Mettler-Toledo Intl 6,300(b) 259,308 Total 2,077,520 Paper & packaging (1.4%) Bowater 18,500 876,900 Sealed Air 22,200(b) 739,926 Smurfit-Stone Container 50,000(b) 665,500 Westvaco 39,000 944,970 Total 3,227,296 Real estate investment trust (2.0%) Archstone Communities Trust 46,000 1,131,600 Equity Office Properties Trust 45,000 1,260,000 Equity Residential Properties Trust 14,000 728,420 Starwood Hotels & Resorts Worldwide 42,000 1,428,420 Total 4,548,440 Restaurants & lodging (2.1%) Brinker Intl 42,000(b) 1,172,220 Darden Restaurants 51,000 1,211,250 MGM Mirage 55,000(b) 1,380,500 Wendy's Intl 42,600 950,832 Total 4,714,802 Retail (5.1%) Bed Bath & Beyond 56,300(b) 1,382,868 Best Buy 25,000(b) 899,000 CDW Computer Centers 28,000(b) 868,000 Circuit City Stores- Circuit City Group 79,000 837,400 Dollar Tree Stores 25,000(b) 481,641 Federated Dept Stores 21,000(b) 872,550 Intimate Brands 51,000 749,700 RadioShack 37,000 1,357,530 Staples 48,000(b) 714,000 Talbots 16,000 679,680 Tiffany 28,600 779,350 TJX Companies 30,000 960,000 Toys "R" Us 42,000(b) 1,054,200 Total 11,635,919 Transportation (1.3%) Burlington Northern Santa Fe 67,000 2,035,460 Expeditors Intl of Washington 19,000 958,313 Total 2,993,773
See accompanying notes to investments in securities. - ------------------------------------------------------------------------------- - -20- AXP PROGRESSIVE FUND Common stocks (continued)
Issuer Shares Value(a) Utilities-- electric (7.6%) Calpine 34,400(b) $1,894,408 Citizens Communications 68,000(b) 860,200 Entergy 44,900 1,706,200 Exelon 35,875 2,353,400 NRG Energy 30,000(b) 1,092,000 PG&E 45,000 560,250 Pinnacle West Capital 30,000 1,376,100 PPL 44,000 1,934,240 Public Service Co of New Mexico 18,400 533,784 Public Service Enterprise Group 21,000 906,360 Reliant Energy 45,400 2,054,350 TXU 31,000 1,280,920 Xcel Energy 30,000 903,300 Total 17,455,512 Utilities -- gas (4.2%) Dynegy Cl A 54,000 2,754,540 El Paso 35,100 2,292,030 Equitable Resources 13,600 938,400 Kinder Morgan 45,000 2,394,000 Ocean Energy 38,000 628,900 Questar 25,000 685,000 Total 9,692,870 Utilities -- telephone (1.4%) BroadWing 33,000(b) 631,950 Telephone & Data Systems 16,000 1,496,000 Western Wireless Cl A 24,000(b) 975,000 Total 3,102,950 Total common stocks (Cost: $251,051,325) $222,979,678
Short-term securities (2.0%)
Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agencies Federal Home Loan Bank Disc Nt 04-25-01 4.91% $500,000 $498,234 Federal Home Loan Mtge Corp Disc Nts 04-17-01 5.28 400,000 398,946 05-22-01 4.73 2,000,000 1,986,160 Federal Natl Mtge Assn Disc Nts 04-16-01 5.30 1,000,000 997,441 05-18-01 4.74 200,000 198,676 06-21-01 4.62 500,000 494,294 Total short-term securities (Cost: $4,574,917) $4,573,751 Total investments in securities (Cost: $255,626,242)(d) $227,553,429
See accompanying notes to investments in securities. - ------------------------------------------------------------------------------- - -21- SEMIANNUAL REPORT -- 2001 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 March 31, 2001, the value of foreign securities represented 0.69% of net assets. (d) At March 31, 2001, the cost of securities for federal income tax purposes was approximately $255,626,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 27,942,000 Unrealized depreciation (56,015,000) ----------- Net unrealized depreciation $(28,073,000) ------------ - ------------------------------------------------------------------------------- - -22- AXP PROGRESSIVE FUND AXP Progressive Fund 70100 AXP Financial Center Minneapolis, MN 55474 Ticker Symbol Class A: INPRX Class B: IPRBX Class C: N/A Class Y: N/A PRSRT STD AUTO U.S. POSTAGE PAID AMERICAN EXPRESS This report must be accompanied or preceded by the Fund's current prospectus. Distributed by American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer. S-6450 R (5/01) -----END PRIVACY-ENHANCED MESSAGE-----