N-CSRS 1 progressive-ncsrs.txt AXP PROGRESSIVE SERIES, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-1714 ------------ AXP PROGRESSIVE SERIES, INC. -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 50606 AXP Financial Center, Minneapolis, Minnesota 55474 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810, Minneapolis, MN 55402-3268 -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (612) 330-9283 ----------------- Date of fiscal year end: 9/30 -------------- Date of reporting period: 3/31 -------------- AXP(R) Progressive Fund Semiannual Report for the Period Ended March 31, 2004 AXP Progressive Fund seeks to provide shareholders with long-term growth of capital. The Fund is closed to new investors. Existing shareholders may continue to own shares and make investments. (logo) (logo) American AMERICAN Express(R) EXPRESS Funds (R) Table of Contents Fund Snapshot 3 Questions & Answers with Portfolio Management 4 Investments in Securities 8 Financial Statements 12 Notes to Financial Statements 15 Proxy Voting 23 -------------------------------------------------------------------------------- 2 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT Fund Snapshot AS OF MARCH 31, 2004 PORTFOLIO MANAGER Gabelli Asset Management Company Portfolio manager Mario Gabelli, CFA Since 4/02 Years in industry 36 FUND OBJECTIVE Seeks to provide shareholders with long-term growth of capital. Inception dates A: 1/1/69 B: 3/20/95 C: 6/26/00 Y: 3/20/95 Ticker symbols A: INPRX B: IPRBX C: -- Y: -- Total net assets $145.8 million Number of holdings 157 STYLE MATRIX Shading within the style matrix indicates areas in which the Fund generally invests. STYLE VALUE BLEND GROWTH X LARGE X MEDIUM SIZE X SMALL SECTOR COMPOSITION Percentage of portfolio assets (pie chart) Consumer discretionary 30.7% Industrials 18.0% Consumer staples 11.2% Financials 8.3% Telecommunications 8.3% Energy 6.2% Materials 5.6% Utilities 5.0% Health care 2.6% Technology 2.1% Short-term securities 2.0% TOP TEN HOLDINGS Percentage of portfolio assets Deere & Co (Machinery) 3.1% Cablevision Systems NY Group Cl A (Cable) 2.8 Liberty Media Cl A (Media) 2.6 Tribune (Media) 2.2 Time Warner (Media) 1.9 Vivendi Universal ADR (Multi-industry) 1.9 ChevronTexaco (Energy) 1.8 Disney (Walt) (Media) 1.8 Honeywell Intl (Aerospace & defense) 1.7 Allied Waste Inds (Environmental services) 1.7 For further detail about these holdings, please refer to the section entitled "Investments in Securities." Stocks of small- or medium-sized companies may be subject to more abrupt or erratic price movements than stocks of larger companies. Some of these companies also have fewer financial resources. Fund holdings are subject to change. -------------------------------------------------------------------------------- 3 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT Questions & Answers WITH PORTFOLIO MANAGEMENT AXP Progressive Fund's portfolio is managed by Gabelli Asset Management Company, of Rye, N.Y. The Fund invests in value stocks of all sizes in an effort to seek capital appreciation. Below, portfolio manager Mario Gabelli discusses the Fund's positioning and results during the first half of fiscal year 2004. Shareholders will be asked at a shareholder meeting on June 9, 2004 to approve a merger of AXP Progressive Fund into AXP Partners Select Value Fund, which is also subadvised by Gabelli Asset Management. This approval is not guaranteed. If shareholder approval is obtained, existing shareholders may redeem or exchange out of the Fund prior to the merger. For more information about AXP Partners Select Value Fund, including a prospectus, fund expenses and the latest performance data, visit americanexpress.com/funds. Q: How did AXP Progressive Fund perform compared to its benchmark and peers? Gabelli: AXP Progressive Fund's Class A shares rose 18.21%, excluding sales charge, for the six months ended March 31, 2004. This was slightly more than the Russell 3000(R) Value Index, which advanced 18.16% for the period. The Fund outperformed the Lipper Multi-Cap Value Funds Index, representing the Fund's peer group, which rose 16.62% over the same time frame. (bar graph) PERFORMANCE COMPARISON For the six-month period ended March 31, 2004 20% 15% 10% (bar 1) (bar 2) (bar 3) 5% +18.21% +18.16% +16.62% 0% (bar 1) AXP Progressive Fund Class A (excluding sales charge) (bar 2) Russell 3000(R) Value Index(1) (unmanaged) (bar 3) Lipper Multi-Cap Value Funds Index(2) (1) Russell 3000(R) Value Index, an unmanaged index, measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. (2) The Lipper Multi-Cap Value Funds Index, published by Lipper Inc., includes the 30 largest funds that are generally similar to the Fund, although some funds in the index may have somewhat different investment policies or objectives. Past performance is no guarantee of future results. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart; if reflected, returns would be lower than those shown. The performance of Class B, Class C and Class Y may vary from that shown above because of differences in expenses. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. -------------------------------------------------------------------------------- 4 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT Questions & Answers Q: What factors most significantly affected performance for the period? Gabelli: Merger and acquisition activity was strong during the period with the highest level of announced deals since late 2000, and this helped the Fund's results. Following a bidding war with Vodafone, AT&T Wireless Services agreed to be bought by Cingular Wireless for $41 billion, the largest cash deal in history. The deal caused this stock, as well as other wireless telecom holdings within the Fund, to rise substantially.
AVERAGE ANNUAL TOTAL RETURNS Class A Class B Class C Class Y (Inception dates) (1/1/69) (3/20/95) (6/26/00) (3/20/95) NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4) NAV(5) POP(5) as of March 31, 2004 6 months* +18.21% +11.42% +17.64% +13.64% +17.73% +16.73% +18.39% +18.39% 1 year +40.19% +32.14% +39.14% +35.14% +39.39% +39.39% +40.47% +40.47% 5 years +1.39% +0.20% +0.60% +0.43% N/A N/A +1.53% +1.53% 10 years +6.61% +5.98% N/A N/A N/A N/A N/A N/A Since inception N/A N/A +5.35% +5.35% -1.20% -1.20% +6.31% +6.31%
The performance information shown represents the past performance and is not a guarantee of future results. The value of your investment and returns will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by calling (888) 723-8476 or visiting www.americanexpress.com/funds. You should consider the investment objectives, risks, and charges and expenses of the Fund carefully before investing. * Not annualized. (1) Excluding sales charge. (2) Returns at public offering price (POP) reflect a sales charge of 5.75%. (3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as follows: first year 5%; second and third year 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. (4) 1% CDSC applies to redemptions made within the first year of purchase. (5) Sales charge is not applicable to these shares. Shares available to institutional investors only. -------------------------------------------------------------------------------- 5 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT Questions & Answers (begin callout quote) > Currently, the utility industry is particularly interesting to us. Through companies like Xcel Energy, an electric utility in the upper midwest, we have selectively added to the Fund's positioning in this sector. (end callout quote) The Fund's media holdings were helped by several merger announcements since September 2003. Comcast made a $55 billion hostile bid for Walt Disney. GE's NBC announced the purchase of Vivendi Universal Studios, and NewsCorp closed on its purchase of control of DirecTV. Vivendi, Cablevision, Liberty Media and NewsCorp all rose in the period. Among the Fund's industrial holdings in the portfolio are several companies in the automotive parts business, such as Dana Corp. Our research efforts show that people are keeping their cars longer, requiring greater maintenance. We have focused on the number and average age of cars on the road and the life expectancy of specific types of auto parts. Q: What changes were made to the portfolio, and why? Gabelli: With the coming November 2004 election, the 2004 Summer Olympics, and the expected move toward further deregulation for the broadcast and publishing industries, we augmented our position in media stocks during the fiscal period. Advertising volume may rise given these pending events. We also believe industry consolidation will continue, driven by the desire to marry content to distribution. We added to several positions: Viacom, New York Times Co. and Paxson Communications. During the fiscal period, we also added to Xcel Energy, which should benefit from the nation's need for alternative power. We sold several stocks including MGM, Gillette, Staples and Dial Corp. We also sold a position in SPS Technologies, which was acquired by Precision Castparts. While we can't say for sure what will happen in the future, merger and acquisition activity has historically provided a favorable performance tailwind for our investing style. During the fiscal period, we sought to identify the most -------------------------------------------------------------------------------- 6 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT Questions & Answers likely takeover targets in industries ripe for consolidation. We expect regulatory change to contribute to further consolidation in television and radio broadcasting, cable and satellite television, newspaper publishing and utilities. Currently, the utility industry is particularly interesting to us. Through companies like Xcel Energy, an electric utility in the upper midwest, we have selectively added to the Fund's positioning in this sector. Electric and gas utilities are highly fragmented industries, and consolidation would make the distribution of energy more efficient. We expect the Public Utilities Holding Company Act to be repealed at some point in the next few years, spawning increased deal activity. We also like this industry at the current time because last year's reduction in the tax rate on dividends from equity securities has made the sector more attractive, in our view. We have focused on solidly run companies in what we believe is a lower risk industry group. Q: How do you believe current economic trends and global events are affecting the U.S. equity market? Gabelli: We believe higher yielding stocks and undervalued companies in consolidating industries have the potential to provide attractive results. However, we are cognizant of forces and events that could threaten the U.S. economic recovery. In the months ahead, we expect a tug of war between earnings and interest rates. Corporate earnings comparisons may be more difficult during the second half of 2004. In our view, interest rates are likely to tread higher, with the 10-year U.S. Treasury bond yield rising by possibly 1.00% (100 basis points) or more. Oil prices are still high and it is taking a distressingly long time to rebuild Iraq's damaged oil infrastructure. Expensive energy could become a drag on the U.S. and global economies. Still another reason to be cautious about the stock market this year is that the terrorist bombing in Madrid has had a chilling effect on investor psychology. With the elections still months away, investors fear additional terrorist acts against the U.S. and its allies. Also, at some point in the coming quarters, investors may start looking ahead to 2005 and the prospect of a change in fiscal policy to address growing federal budget deficits. Should these headwinds grow in intensity, we will draw on our decades of experience to guide us as we manage the Fund. -------------------------------------------------------------------------------- 7 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT Investments in Securities AXP Progressive Fund March 31, 2004 (Unaudited) (Percentages represent value of investments compared to net assets) Common stocks (99.0%) Issuer Shares Value(a) Aerospace & defense (3.7%) Curtiss-Wright Cl B 10,000 $456,700 Honeywell Intl 75,000 2,538,750 Northrop Grumman 10,000 984,200 Precision Castparts 25,001 1,100,794 Sequa Cl B 6,500(b) 349,700 Total 5,430,144 Automotive & related (4.8%) AutoNation 35,000(b) 596,750 Dana 75,000 1,489,500 GenCorp 70,000 758,100 General Motors 4,000 188,400 Johnson Controls 15,000 887,250 Modine Mfg 40,000 1,042,400 Navistar Intl 33,000(b) 1,513,050 PACCAR 6,000 337,440 Volkswagen 5,000(c) 218,855 Total 7,031,745 Banks and savings & loans (4.3%) Astoria Financial 4,000 152,120 BB&T 17,640 622,692 City Natl 3,000 179,700 Compass Bancshares 12,000 497,640 Deutsche Bank 20,000(c) 1,669,600 Hibernia Cl A 45,500 1,068,795 M&T Bank 14,000 1,257,900 Mellon Financial 22,000 688,380 North Fork Bancorporation 4,000 169,280 Total 6,306,107 Beverages & tobacco (2.3%) Coca-Cola 15,000 754,500 Coors (Adolph) Cl B 4,000 277,800 Diageo ADR 22,000(c) 1,163,360 PepsiAmericas 60,000 1,225,200 Total 3,420,860 Broker dealers (1.2%) Bear Stearns Companies 10,000 876,800 Merrill Lynch & Co 15,000 893,400 Total 1,770,200 Building materials & construction (0.6%) Watts Water Technologies Cl A 37,000 865,430 Cable (3.3%) Cablevision Systems NY Group Cl A 180,000(b) 4,118,400 Comcast Cl A 15,000(b) 431,100 Cox Communications Cl A 10,000(b) 316,000 Total 4,865,500 Cellular telecommunications (2.1%) AT&T Wireless Services 110,000(b) 1,497,100 mmO2 ADR 50,000(b,c) 932,500 Rogers Communications Cl B 30,000(c) 560,700 Total 2,990,300 Chemicals (3.0%) Ecolab 44,000 1,255,320 Ferro 8,000 209,200 Fuller (HB) 15,000 426,600 Givaudan 250(c) 127,856 Great Lakes Chemical 32,000 763,200 Hercules 35,000(b) 401,800 Omnova Solutions 80,000(b) 420,000 Roto-Rooter 15,000 758,250 Total 4,362,226 Computer software & services (0.2%) State Street 6,000 312,780 Electronics (1.9%) CTS 25,000 326,000 Texas Instruments 60,000 1,753,200 Thomas & Betts 33,000 720,060 Total 2,799,260 Energy (6.3%) Cabot Oil & Gas Cl A 29,400 898,464 ChevronTexaco 30,000 2,633,400 ConocoPhillips 35,000 2,443,350 Devon Energy 12,000 697,800 Exxon Mobil 60,000 2,495,400 Total 9,168,414 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 8 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT Common stocks (continued) Issuer Shares Value(a) Environmental services (3.0%) Allied Waste Inds 190,000(b) $2,528,900 Republic Services 25,000 676,750 Waste Management 40,000 1,207,200 Total 4,412,850 Financial services (1.1%) T. Rowe Price Group 30,000 1,614,900 Food (6.3%) Archer-Daniels-Midland 136,000 2,294,320 Corn Products Intl 47,000 1,880,000 Flowers Foods 15,000 393,600 General Mills 32,000 1,493,760 Heinz (HJ) 15,000 559,350 Hershey Foods 7,000 579,950 Ralcorp Holdings 12,000(b) 365,160 Sensient Technologies 30,000 560,100 Wrigley (Wm) Jr 17,000 1,005,040 Total 9,131,280 Furniture & appliances (0.1%) Aaron Rents Cl A 3,000 65,250 Thomas Inds 3,000 94,500 Total 159,750 Health care products (2.6%) Bristol-Myers Squibb 20,000 484,600 INAMED 9,000(b) 479,520 IVAX 22,000(b) 500,940 Merck & Co 20,000 883,800 Pfizer 43,000 1,507,150 Total 3,856,010 Household products (2.6%) Church & Dwight 20,000 866,200 Energizer Holdings 10,000(b) 466,900 Gillette 16,000 625,600 Procter & Gamble 17,000 1,782,960 Total 3,741,660 Industrial transportation (0.5%) GATX 22,000 487,740 Norfolk Southern 11,000 242,990 Total 730,730 Insurance (1.7%) Alleghany 3,121 771,873 Fidelity Natl Financial 19,250 762,300 St. Paul Companies 24,000 960,240 Total 2,494,413 Leisure time & entertainment (1.3%) Mattel 25,000 461,000 Six Flags 40,000(b) 314,000 Viacom Cl A 30,000 1,186,200 Total 1,961,200 Lodging & gaming (1.2%) Gaylord Entertainment 28,000(b) 865,200 Hilton Group 200,000(c) 837,903 Total 1,703,103 Machinery (4.6%) Clarcor 13,000 573,950 Deere & Co 65,000 4,505,150 Donaldson 25,000 663,250 Flowserve 28,000(b) 586,600 Thermo Electron 15,000(b) 424,200 Total 6,753,150 Media (19.8%) Belo Cl A 14,000 388,640 Cox Radio Cl A 15,000(b) 319,500 DIRECTV Group 35,000(b) 538,300 Disney (Walt) 105,000 2,623,950 Emmis Communications Cl A 25,000(b) 595,250 Fox Entertainment Group Cl A 20,000(b) 542,000 Grupo Televisa ADR 18,000(c) 852,120 Interpublic Group of Companies 10,000(b) 153,800 Knight-Ridder 20,000 1,465,000 Liberty 3,000 138,810 Liberty Media Cl A 350,000(b) 3,832,499 McClatchy Cl A 26,000 1,847,040 McGraw-Hill Companies 10,000 761,400 Media General Cl A 31,000 2,085,680 New York Times Cl A 25,000 1,105,000 News Corp ADR 42,143(c) 1,336,355 Paxson Communications Cl A 50,000(b) 195,000 PRIMEDIA 58,600(b) 158,220 Pulitzer 26,100 1,259,325 Reader's Digest Assn 10,296 144,968 Scripps (EW) Cl A 23,000 2,325,530 Time Warner 170,000(b) 2,866,200 Tribune 63,000 3,177,719 Young Broadcasting Cl A 10,000(b) 181,000 Total 28,893,306 Miscellaneous (0.5%) Rollins 25,500 657,135 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 9 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT Common stocks (continued) Issuer Shares Value(a) Multi-industry (5.9%) AMETEK 18,000 $461,520 Cooper Inds Cl A 20,000 1,143,600 Crane 42,000 1,386,000 ITT Inds 15,000 1,144,950 Manpower 4,000 186,000 Pentair 1,000 59,000 Sony ADR 29,000(c) 1,212,490 Tyco Intl 6,000(c) 171,900 Vivendi Universal ADR 105,000(b,c) 2,786,700 Total 8,552,160 Paper & packaging (0.5%) Greif Cl A 15,000 524,100 St. Joe 5,000 203,450 Total 727,550 Precious metals (1.5%) Barrick Gold 35,000(c) 832,300 Newmont Mining 30,000 1,398,900 Total 2,231,200 Real estate investment trust (0.1%) Starwood Hotels & Resorts Worldwide 2,000 81,000 Retail -- general (0.4%) Neiman Marcus Group Cl A 10,000 539,400 Retail -- grocery (0.2%) Albertson's 10,000 221,500 Telecom equipment & services (0.6%) Corning 30,000(b) 335,400 Motorola 30,000 528,000 Total 863,400 Utilities -- electric (4.0%) Duquesne Light Holdings 29,500 575,250 El Paso Electric 80,000(b) 1,107,200 Energy East 25,000 634,000 FirstEnergy 13,000 508,040 Northeast Utilities 86,000 1,603,900 Westar Energy 8,000 167,680 Xcel Energy 70,000 1,246,700 Total 5,842,770 Utilities -- natural gas (1.0%) El Paso 60,000 426,600 Kinder Morgan 8,000 504,160 Southwest Gas 22,000 514,800 Total 1,445,560 Utilities -- telephone (5.7%) AT&T 26,000 508,820 BellSouth 24,000 664,560 CenturyTel 22,000 604,780 Cincinnati Bell 70,000(b) 284,900 Citizens Communications 77,400(b) 1,001,556 Qwest Communications Intl 250,000(b) 1,077,500 Sprint (FON Group) 55,000 1,013,650 Sprint (PCS Group) 35,000(b) 322,000 Telecom Italia Mobile 100,000(c) 566,536 Telephone & Data Systems 10,000 708,700 Verizon Communications 44,000 1,607,760 Total 8,360,762 Total common stocks (Cost: $123,889,252) $144,297,755 Short-term security (2.1%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity Commercial paper Amsterdam Funding 04-01-04 1.07% $3,000,000(d) $2,999,911 Total short-term security (Cost: $3,000,000) $2,999,911 Total investments in securities (Cost: $126,889,252)(e) $147,297,666 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 10 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT 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, 2004, the value of foreign securities represented 9.1% of net assets. (d) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. As of March 31, 2004, the value of these securities amounted to $2,999,911 or 2.1% of net assets. (e) At March 31, 2004, the cost of securities for federal income tax purposes was approximately $126,889,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $25,106,000 Unrealized depreciation (4,697,000) ---------- Net unrealized appreciation $20,409,000 ----------- -------------------------------------------------------------------------------- 11 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT
Financial Statements Statement of assets and liabilities AXP Progressive Fund March 31, 2004 (Unaudited) Assets Investments in securities, at value (Note 1)* (identified cost $126,889,252) $147,297,666 Dividends and accrued interest receivable 186,842 Receivable for investment securities sold 376,047 ------- Total assets 147,860,555 ----------- Liabilities Disbursements in excess of cash on demand deposit 220,696 Capital shares payable 9,500 Payable for investment securities purchased 89,600 Payable upon return of securities loaned (Note 5) 1,700,000 Accrued investment management services fee 2,542 Accrued distribution fee 1,325 Accrued transfer agency fee 715 Accrued administrative services fee 238 Other accrued expenses 64,571 ------ Total liabilities 2,089,187 --------- Net assets applicable to outstanding capital stock $145,771,368 ============ Represented by Capital stock -- $.01 par value (Note 1) $ 216,599 Additional paid-in capital 170,192,718 Undistributed net investment income 184,930 Accumulated net realized gain (loss) (Note 7) (45,231,462) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 20,408,583 ---------- Total -- representing net assets applicable to outstanding capital stock $145,771,368 ============ Net assets applicable to outstanding shares: Class A $129,498,578 Class B $ 16,193,366 Class C $ 77,256 Class Y $ 2,168 Net asset value per share of outstanding capital stock: Class A shares 19,146,393 $ 6.76 Class B shares 2,501,172 $ 6.47 Class C shares 11,997 $ 6.44 Class Y shares 318 $ 6.82 * Including securities on loan, at value (Note 5) $ 1,669,600 ------------
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 12 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT
Statement of operations AXP Progressive Fund Six months ended March 31, 2004 (Unaudited) Investment income Income: Dividends $ 1,020,665 Interest 13,657 Fee income from securities lending (Note 5) 1,229 Less foreign taxes withheld (3,382) ------ Total income 1,032,169 --------- Expenses (Note 2): Investment management services fee 398,907 Distribution fee Class A 160,265 Class B 82,368 Class C 378 Transfer agency fee 127,061 Incremental transfer agency fee Class A 12,094 Class B 3,624 Class C 7 Service fee -- Class Y 2 Administrative services fees and expenses 44,186 Compensation of board members 4,383 Custodian fees 12,500 Printing and postage 21,315 Registration fees 22,229 Audit fees 13,000 Other 5,006 ----- Total expenses 907,325 Expenses waived/reimbursed by AEFC (Note 2) (59,504) ------- 847,821 Earnings credits on cash balances (Note 2) (747) ---- Total net expenses 847,074 ------- Investment income (loss) -- net 185,095 ------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) 621,831 Foreign currency transactions 1,336 ----- Net realized gain (loss) on investments 623,167 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 22,936,851 ---------- Net gain (loss) on investments and foreign currencies 23,560,018 ---------- Net increase (decrease) in net assets resulting from operations $23,745,113 ===========
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 13 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets AXP Progressive Fund March 31, 2004 Sept. 30, 2003 Six months ended Year ended (Unaudited) Operations and distributions Investment income (loss) -- net $ 185,095 $ 473,064 Net realized gain (loss) on investments 623,167 (4,869,446) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 22,936,851 32,182,533 ---------- ---------- Net increase (decrease) in net assets resulting from operations 23,745,113 27,786,151 ---------- ---------- Distributions to shareholders from: Net investment income Class A (479,033) -- Class Y (11) -- ---------- ---------- Total distributions (479,044) -- ---------- ---------- Capital share transactions (Note 4) Proceeds from sales Class A shares (Note 2) 820,020 3,837,979 Class B shares 167,100 473,609 Class C shares 2,233 10,597 Reinvestment of distributions at net asset value Class A shares 458,791 -- Payments for redemptions Class A shares (10,194,214) (21,412,956) Class B shares (Note 2) (2,185,493) (6,666,073) Class C shares (Note 2) (3,744) (43,365) ------ ------- Increase (decrease) in net assets from capital share transactions (10,935,307) (23,800,209) ----------- ----------- Total increase (decrease) in net assets 12,330,762 3,985,942 Net assets at beginning of period 133,440,606 129,454,664 ----------- ----------- Net assets at end of period $145,771,368 $133,440,606 ============ ============ Undistributed net investment income $ 184,930 $ 478,879 ------------ ------------
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 14 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT Notes to Financial Statements AXP Progressive Fund (Unaudited as to March 31, 2004) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of AXP Progressive Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. AXP Progressive Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designed by the board. The Fund invests primarily in common stocks, preferred stocks and securities convertible into common stocks that are listed on a nationally recognized securities exchange or traded on the NASDAQ National Market System of the National Association of Securities Dealers. On March 8, 2002, the Fund was closed to new investors. Current shareholders may continue to hold shares and make investments in the Fund. 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. American Express Financial Corporation (AEFC) may use fair value if a security's value has been materially affected by events after the close of the primary exchanges or markets on which the security is traded and before the NAV is calculated. The fair value of a security may be different from the quoted or published price. AEFC will price a security at fair value in accordance with procedures adopted by the Fund and board if a -------------------------------------------------------------------------------- 15 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT reliable market quotation is not readily available. 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. 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. -------------------------------------------------------------------------------- 16 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT 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 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 amortization of premium, market discount and original issue discount using the effective interest method, 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 the Fund to the Lipper Multi-Cap Value Funds Index. The maximum adjustment is 0.12% per year. If the performance difference is less than 0.50%, the adjustment will be zero. The adjustment decreased the fee by $64,335 for the six months ended March 31, 2004. -------------------------------------------------------------------------------- 17 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT 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 Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other American Express mutual funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. AEFC has a Subadvisory Agreement with GAMCO Investors, Inc., which does business under the name Gabelli Asset Management Company. 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 $19.50 o Class B $20.50 o Class C $20.00 o Class Y $17.50 The incremental transfer agency fee is the amount charged to the specific classes for the additional expense above the fee for Class Y. In addition, AECSC is entitled to charge an annual closed-account fee of $5 per inactive account, charged on a pro rata basis from the date the account becomes inactive until the date the account is purged from the transfer agent system generally within one year. However, the closed account fee is currently not effective. 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 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. Due to the Fund being closed to new investors, the Distributor reimbursed the Fund for the marketing portion of the distribution fees, which results in a 0.0375% reduction to this rate. 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 $16,386 for Class A and $6,596 for Class B for the six months ended March 31, 2004. -------------------------------------------------------------------------------- 18 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT For the six months ended March 31, 2004, AEFC and its affiliates waived certain fees and expenses to 1.08% for Class A, 1.85% for Class B, 1.83% for Class C and 0.97% for Class Y. Under a prior agreement which ended Oct. 31, 2003, AEFC and its affiliates agreed to waive certain fees and expenses so that net expenses would not exceed 1.20% for Class A, 1.97% for Class B, 1.98% for Class C and 1.00% for Class Y of the Fund's average daily net assets. Under a new agreement beginning Nov. 1, 2003, AEFC and its affiliates have agreed to waive certain fees and expenses until Sept. 30, 2004. Under this agreement, net expenses will not exceed 1.39% for Class A, 2.16% for Class B, 2.17% for Class C and 1.19% for Class Y of the Fund's average daily net assets. During the six months ended March 31, 2004, the Fund's custodian and transfer agency fees were reduced by $747 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 $5,521,530 and $15,660,415, respectively, for the six months ended March 31, 2004. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with the subadviser were $29,035 for the six months ended March 31, 2004. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
Six months ended March 31, 2004 Class A Class B Class C Class Y Sold 126,651 27,314 374 -- Issued for reinvested distributions 70,910 -- -- -- Redeemed (1,578,404) (354,855) (586) -- ---------- -------- ---- ---- Net increase (decrease) (1,380,843) (327,541) (212) -- ---------- -------- ---- ---- Year ended Sept. 30, 2003 Class A Class B Class C Class Y Sold 695,914 92,936 2,207 -- Issued for reinvested distributions -- -- -- -- Redeemed (4,118,114) (1,306,666) (7,925) -- ---------- ---------- ------ ---- Net increase (decrease) (3,422,200) (1,213,730) (5,718) -- ---------- ---------- ------ ----
5. LENDING OF PORTFOLIO SECURITIES As of March 31, 2004, securities valued at $1,669,600 were on loan to brokers. For collateral, the Fund received $1,700,000 in cash. Cash collateral received is invested in short-term securities, which are included in the short-term section of the "Investments in securities." Income from securities lending amounted to $1,229 for the six months ended March 31, 2004. 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. -------------------------------------------------------------------------------- 19 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT 6. BANK BORROWINGS The Fund has a revolving credit agreement with a syndicate of banks headed by Deutsche Bank, whereby the Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund must maintain asset coverage for borrowings of at least 300%. The agreement, which enables the Fund to participate with other American Express mutual funds, permits borrowings up to $500 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime Lending Rate. Borrowings are payable within 60 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 0.09% per annum. The Fund had no borrowings outstanding during the six months ended March 31, 2004. 7. CAPITAL LOSS CARRY-OVER For federal income purposes, the Fund has a capital loss carry-over of $43,146,974 as of Sept. 30, 2003, that will expire in 2009 through 2012 if not offset by capital gains. It is unlikely the board will authorize a distribution of any net realized capital gains until the available capital loss carry-over has been offset or expires. 8. SUBSEQUENT EVENT Shareholders will be asked at a shareholder meeting on June 9, 2004 to approve a merger of the Fund into AXP Partners Select Value Fund. This approval is not guaranteed. If shareholder approval is obtained, existing shareholders may redeem or exchange out of the Fund prior to the merger. -------------------------------------------------------------------------------- 20 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT 9. 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, 2004(k) 2003 2002 2001 2000 Net asset value, beginning of period $5.74 $4.65 $5.01 $ 8.44 $7.21 Income from investment operations: Net investment income (loss) .01 .03 .01 -- .04 Net gains (losses) (both realized and unrealized) 1.03 1.06 (.37) (2.48) 1.25 Total from investment operations 1.04 1.09 (.36) (2.48) 1.29 Less distributions: Dividends from net investment income (.02) -- -- (.02) (.06) Distributions from realized gains -- -- -- (.93) -- Total distributions (.02) -- -- (.95) (.06) Net asset value, end of period $6.76 $5.74 $4.65 $ 5.01 $8.44 Ratios/supplemental data Net assets, end of period (in millions) $129 $118 $111 $153 $277 Ratio of expenses to average daily net assets(c) 1.08%(d),(e) 1.18%(e) 1.12% 1.08% 1.06% Ratio of net investment income (loss) to average daily net assets .34%(d) .46% .10% .01% .45% Portfolio turnover rate (excluding short-term securities) 4% 4% 116% 73% 121% Total return(i) 18.21%(j) 23.44% (7.19%) (31.80%) 18.10% Class B Per share income and capital changes(a) Fiscal period ended Sept. 30, 2004(k) 2003 2002 2001 2000 Net asset value, beginning of period $5.50 $4.48 $4.87 $ 8.26 $7.06 Income from investment operations: Net investment income (loss) (.01) (.02) (.04) (.03) (.02) Net gains (losses) (both realized and unrealized) .98 1.04 (.35) (2.43) 1.22 Total from investment operations .97 1.02 (.39) (2.46) 1.20 Less distributions: Dividends from net investment income -- -- -- -- -- Distributions from realized gains -- -- -- (.93) -- Total distributions -- -- -- (.93) -- Net asset value, end of period $6.47 $5.50 $4.48 $ 4.87 $8.26 Ratios/supplemental data Net assets, end of period (in millions) $16 $16 $18 $27 $51 Ratio of expenses to average daily net assets(c) 1.85%(d),(f) 1.95%(f) 1.90% 1.86% 1.83% Ratio of net investment income (loss) to average daily net assets (.43%)(d) (.30%) (.68%) (.79%) (.31%) Portfolio turnover rate (excluding short-term securities) 4% 4% 116% 73% 121% Total return(i) 17.64%(j) 22.77% (8.01%) (32.31%) 17.00%
See accompanying notes to financial highlights on page 23. -------------------------------------------------------------------------------- 21 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT
Class C Per share income and capital changes(a) Fiscal period ended Sept. 30, 2004(k) 2003 2002 2001 2000(b) Net asset value, beginning of period $5.47 $4.46 $4.85 $ 8.26 $7.78 Income from investment operations: Net investment income (loss) (.01) (.04) (.04) (.02) (.06) Net gains (losses) (both realized and unrealized) .98 1.05 (.35) (2.43) .54 Total from investment operations .97 1.01 (.39) (2.45) .48 Less distributions: Dividends from net investment income -- -- -- (.03) -- Distributions from realized gains -- -- -- (.93) -- Total distributions -- -- -- (.96) -- Net asset value, end of period $6.44 $5.47 $4.46 $ 4.85 $8.26 Ratios/supplemental data Net assets, end of period (in millions) $-- $-- $-- $-- $-- Ratio of expenses to average daily net assets(c) 1.83%(d),(g) 1.96%(g) 1.92% 1.86% 1.83%(d) Ratio of net investment income (loss) to average daily net assets (.41%)(d) (.32%) (.69%) (.76%) (.85%)(d) Portfolio turnover rate (excluding short-term securities) 4% 4% 116% 73% 121% Total return(i) 17.73%(j) 22.65% (8.04%) (32.22%) 6.17%(j) Class Y Per share income and capital changes(a) Fiscal period ended Sept. 30, 2004(k) 2003 2002 2001 2000 Net asset value, beginning of period $5.79 $4.68 $5.04 $ 8.45 $7.22 Income from investment operations: Net investment income (loss) .02 .04 .01 .01 .06 Net gains (losses) (both realized and unrealized) 1.04 1.07 (.37) (2.49) 1.25 Total from investment operations 1.06 1.11 (.36) (2.48) 1.31 Less distributions: Dividends from net investment income (.03) -- -- -- (.08) Distributions from realized gains -- -- -- (.93) -- Total distributions (.03) -- -- (.93) (.08) Net asset value, end of period $6.82 $5.79 $4.68 $ 5.04 $8.45 Ratios/supplemental data Net assets, end of period (in millions) $-- $-- $-- $-- $-- Ratio of expenses to average daily net assets(c) .97%(d),(h) 1.00%(h) .92% .95% .85% Ratio of net investment income (loss) to average daily net assets .42%(d) .59% .28% .14% .73% Portfolio turnover rate (excluding short-term securities) 4% 4% 116% 73% 121% Total return(i) 18.39%(j) 23.72% (7.14%) (31.75%) 18.28%
See accompanying notes to financial highlights on page 23. -------------------------------------------------------------------------------- 22 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT Notes to financial highlights (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Inception date was June 26, 2000. (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) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class A would have been 1.16% for the six months ended March 31, 2004 and 1.33% for the year ended Sept. 30, 2003. (f) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class B would have been 1.94% for the six months ended March 31, 2004 and 2.11% for the year ended Sept. 30, 2003. (g) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class C would have been 1.91% for the six months ended March 31, 2004 and 2.13% for the year ended Sept. 30, 2003. (h) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class Y would have been 1.03% for the six months ended March 31, 2004 and 1.14% for the year ended Sept. 30, 2003. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) Six months ended March 31, 2004 (Unaudited). Proxy Voting The policy of the Board is to vote all proxies of the companies in which the Fund holds investments. The procedures are stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling (800) 862-7919; by looking at the Web site americanexpress.com/funds; or by searching the Web site of the Securities and Exchange Commission http://www.sec.gov. You may view the Fund's voting record for all portfolio companies whose shareholders meetings were completed the previous quarter on americanexpress.com/funds or obtain a copy by calling the Fund's administrator, Board Services Corporation, collect at (612) 330-9283. In addition, after Aug. 1, 2004, information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 will be available at http://www.sec.gov. -------------------------------------------------------------------------------- 23 -- AXP PROGRESSIVE FUND -- 2004 SEMIANNUAL REPORT American Express Funds 70100 AXP Financial Center Minneapolis, MN 55474 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. Item 2. Code of Ethics. Not applicable for semi-annual reports. Item 3. Audit Committee Financial Expert. Not applicable for semi-annual reports. Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual reports. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. [Reserved] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 9. Submission of matters to a vote of security holders. Not applicable. Item 10. Controls and Procedures. (a) The registrant's Principal Executive Officer and Principal Financial Officer have evaluated the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant's disclosure controls and procedures by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) At the date of filing this Form N-CSR, the registrant's Principal Executive Officer and Principal Financial Officer are aware of no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Item 11. Exhibits. (a)(1) Not applicable for semi-annual reports. (a)(2) Separate certification for the Registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached as EX.99.CERT. (a)(3) Not applicable. (b) A certification by the Registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment Company Act of 1940, is attached as EX.99.906 CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) AXP Progressive Series, Inc. By /s/ Paula R. Meyer ------------------ Paula R. Meyer President and Principal Executive Officer Date June 2, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ Paula R. Meyer ------------------ Paula R. Meyer President and Principal Executive Officer Date June 2, 2004 By /s/ Jeffrey P. Fox ------------------ Jeffrey P. Fox Treasurer and Principal Financial Officer Date June 2, 2004