<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<FILENAME>s6328.txt
<DESCRIPTION>AXP CALIFORNIA TAX-EXEMPT TRUST
<TEXT>
AXP(R) State
Tax-Exempt
Funds
2001 ANNUAL REPORT
(PROSPECTUS ENCLOSED)
American
Express(R)
Funds
(icon of) lock
Tax-exempt funds from the following states:
California
Massachusetts
Michigan
Minnesota
New York
Ohio
Each Fund seeks to provide shareholders with a high level of income generally
exempt from federal income tax as well as from the respective state and local
income tax.
(This annual report includes a prospectus that describes in detail the Fund's
objective, investment strategy, risks, sales charges, fees and other matters of
interest. Please read the prospectus carefully before you invest or send money.)
<PAGE>
Twice the Tax Relief
Many people who want to reduce their tax burden favor municipal bonds because
the interest they pay is generally free from federal tax. If you want to
eliminate state tax, too, you can invest in municipal bonds in the state in
which you reside. This double tax-exemption makes this one of the best
tax-advantaged investments still available to individuals. What's more, the
money you invest is typically used by municipalities to fund projects such as
schools and highways. So, with this investment, the benefits reach well beyond
your pocketbook.
Table of Contents
2001 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the Chairman 3
From the Portfolio Manager 3
Fund Facts 4
California Tax-Exempt Fund 10
The 10 Largest Holdings 10
The Fund's Long-term Performance 11
Massachusetts Tax-Exempt Fund 12
The 10 Largest Holdings 12
The Fund's Long-term Performance 13
Michigan Tax-Exempt Fund 14
The 10 Largest Holdings 14
The Fund's Long-term Performance 15
Minnesota Tax-Exempt Fund 16
The 10 Largest Holdings 16
The Fund's Long-term Performance 17
New York Tax-Exempt Fund 18
The 10 Largest Holdings 18
The Fund's Long-term Performance 19
Ohio Tax-Exempt Fund 20
The 10 Largest Holdings 20
The Fund's Long-term Performance 21
Making the Most of the Fund 22
Board Members and Officers 23
Independent Auditors' Report 25
Financial Statements 26
Notes to Financial Statements 33
Investments in Securities 50
Federal Income Tax Information 71
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2 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
First, I want to thank you for being a shareholder in American Express funds.
While we strongly believe in the virtues of investment, we also are very
sensitive to the fluctuations of the financial markets. That is why we want to
re-emphasize the importance of making certain that you frequently review your
investments and regularly meet with your financial advisor. By doing so, you can
take advantage of shifts in the markets to position your portfolio relative to
expected market volatility and, possibly, achieve better overall performance.
Second, I strongly advise that you keep a focus on the long-term. Reviewing past
performance is helpful, but it should not be viewed as a leading indicator of
the future. One constant is the necessity to have a financial plan based on
appropriate asset allocation. Make sure that the plan provides what you need and
expect.
Our job, as a Board, is to monitor and confirm that the Fund complies with its
investment objective and that its management style stays on target. We want the
Fund to be able to deliver to you, the shareholder, the type of performance you
expect and the best results that can be obtained. Toward that end, American
Express has made significant changes, and will continue to make changes as it
strives to provide a consistent standard of excellence.
On behalf of the Board,
Arne H. Carlson
(picture of) Paul B. Hylle
Paul B. Hylle
Portfolio manager
From the Portfolio Manager
A highly positive environment for municipal bonds led to rising prices during
the past 12 months. The trend drove up AXP State Tax-Exempt Funds' net asset
values, boosting total returns for the fiscal year -- July 2000 through June
2001.
Municipal bonds had a number of things going for them over the period. Most
important, interest rates came down, as investors became convinced that economic
growth was slowing down. That, they reasoned, would take upward pressure off
inflation and persuade the Federal Reserve to reduce short-term interest rates,
which it began doing in early January. (Falling interest rates boost bond
prices.)
`MUNIS' GET A BOOST
Among other favorable factors, with the stock market on shaky ground, investors
shifted more money into higher-quality, less-risky investments, including
municipal bonds and mutual funds that invest in them. "Muni" funds, in fact,
experienced their first period of positive cash flows in several years. Another
positive was that the supply/demand situation for munis turned quite favorable,
as the supply of new bonds declined while demand from individuals and
institutions remained robust, lending support to the muni market. As a result of
all those factors, municipal bond prices rose for much of the period, enhancing
the value of the Funds' holdings and, therefore, their net asset values.
Looking at the Funds' income component, because of the downturn in interest
rates, newly issued bonds offered correspondingly lower interest. That, in turn,
led to a slight decline in the Funds' monthly dividends. To mitigate the trend,
I continued a long-standing strategy of not selling older, higher-yielding
issues, as well as adding some slightly lower quality bonds to the portfolios.
That allowed the Funds' dividends to hold up relatively well.
Moving on to developments in the six states, healthy financial conditions led to
credit-quality upgrades in all but California, which was downgraded slightly
because of a reduction in its budget surplus caused by increased spending on
energy. However, thanks to extremely strong demand, California bonds experienced
the most price appreciation early in the fiscal year, before tailing off over
the final months in the face of the energy crisis and a downturn in the
technology sector. In Ohio, a shorter average maturity in the portfolio led to a
somewhat lower total return compared with the other Funds.
As for what the new fiscal year might hold, I think the series of cuts in
short-term interest rates by the Federal Reserve, along with income-tax rebates,
will lead to a stronger economy before the end of 2001. As the muni bond market
begins to anticipate that likelihood, yields are likely to rise somewhat,
putting downward pressure on prices. In light of that outlook, I have shortened
the Funds' durations in an effort to preserve investors' capital. (Duration, a
function of the average maturity of the bond holdings, affects the sensitivity
of a mutual fund's net asset value to changes in interest rates. In general, the
longer the duration, the greater the sensitivity.) Concurrently, I plan to focus
on enhancing each Fund's level of income and, consequently, its dividend payouts
to shareholders.
Paul B. Hylle
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3 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Fund Facts
AXP California Tax-Exempt Fund
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.18
June 30, 2000 $5.03
Increase $0.15
Distributions -- July 1, 2000 - June 30, 2001
From income $0.25
From long-term capital gains $ --
Total distributions $0.25
Total return* +8.00%
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.17
June 30, 2000 $5.03
Increase $0.14
Distributions -- July 1, 2000 - June 30, 2001
From income $0.21
From long-term capital gains $ --
Total distributions $0.21
Total return* +6.98%
Class C -- 12 month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.18
June 30, 2000 $5.03
Increase $0.15
Distributions -- July 1, 2000 - June 30, 2001
From income $0.21
From long-term capital gains $ --
Total distributions $0.21
Total return* +7.20%
* 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.
--------------------------------------------------------------------------------
4 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Massachusetts Tax-Exempt Fund
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.28
June 30, 2000 $5.11
Increase $0.17
Distributions -- July 1, 2000 - June 30, 2001
From income $0.27
From long-term capital gains $ --
Total distributions $0.27
Total return* +8.64%
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.28
June 30, 2000 $5.11
Increase $0.17
Distributions -- July 1, 2000 - June 30, 2001
From income $0.23
From long-term capital gains $ --
Total distributions $0.23
Total return* +7.83%
Class C -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.28
June 30, 2000 $5.11
Increase $0.17
Distributions -- July 1, 2000 - June 30, 2001
From income $0.23
From long-term capital gains $ --
Total distributions $0.23
Total return* +7.84%
* 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.
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5 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Michigan Tax-Exempt Fund
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.27
June 30, 2000 $5.09
Increase $0.18
Distributions -- July 1, 2000 - June 30, 2001
From income $0.27
From long-term capital gains $ --
Total distributions $0.27
Total return* +8.90%
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.27
June 30, 2000 $5.09
Increase $0.18
Distributions -- July 1, 2000 - June 30, 2001
From income $0.23
From long-term capital gains $ --
Total distributions $0.23
Total return* +8.09%
Class C -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.27
June 30, 2000 $5.09
Increase $0.18
Distributions -- July 1, 2000 - June 30, 2001
From income $0.22
From long-term capital gains $ --
Total distributions $0.22
Total return* +8.02%
* 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.
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6 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Minnesota Tax-Exempt Fund
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.14
June 30, 2000 $5.00
Increase $0.14
Distributions -- July 1, 2000 - June 30, 2001
From income $0.28
From long-term capital gains $ --
Total distributions $0.28
Total return* +8.53%
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.14
June 30, 2000 $5.00
Increase $0.14
Distributions -- July 1, 2000 - June 30, 2001
From income $0.24
From long-term capital gains $ --
Total distributions $0.24
Total return* +7.72%
Class C -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.14
June 30, 2000 $5.00
Increase $0.14
Distributions -- July 1, 2000 - June 30, 2001
From income $0.24
From long-term capital gains $ --
Total distributions $0.24
Total return* +7.75%
* 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.
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7 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP New York Tax-Exempt Fund
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.12
June 30, 2000 $4.92
Increase $0.20
Distributions -- July 1, 2000 - June 30, 2001
From income $0.25
From long-term capital gains $ --
Total distributions $0.25
Total return* +9.28%
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.12
June 30, 2000 $4.92
Increase $0.20
Distributions -- July 1, 2000 - June 30, 2001
From income $0.21
From long-term capital gains $ --
Total distributions $0.21
Total return* +8.47%
Class C -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.11
June 30, 2000 $4.92
Increase $0.19
Distributions -- July 1, 2000 - June 30, 2001
From income $0.21
From long-term capital gains $ --
Total distributions $0.21
Total return* +8.26%
* 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.
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8 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Ohio Tax-Exempt Fund
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.27
June 30, 2000 $5.13
Increase $0.14
Distributions -- July 1, 2000 - June 30, 2001
From income $0.27
From long-term capital gains $ --
Total distributions $0.27
Total return* +7.95%
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.27
June 30, 2000 $5.13
Increase $0.14
Distributions -- July 1, 2000 - June 30, 2001
From income $0.23
From long-term capital gains $ --
Total distributions $0.23
Total return* +7.15%
Class C -- 12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 2001 $5.28
June 30, 2000 $5.13
Increase $0.15
Distributions -- July 1, 2000 - June 30, 2001
From income $0.22
From long-term capital gains $ --
Total distributions $0.22
Total return* +7.27%
* 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.
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9 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The 10 Largest Holdings
AXP California Tax-Exempt Fund
<TABLE>
<CAPTION>
Percent Value
(of net assets) (as of June 30, 2001)
<S> <C> <C>
Anaheim Public Finance Authority Revenue Bonds
Electric Utilities San Juan 2nd Series 1993
5.75% 2022 4.43% $11,357,965
Statewide Community Development Authority
Revenue Certificate of Participation
St. Joseph Health System Group Series 1994
6.50% 2015 2.39 6,122,875
Community Development Authority Health Facilities
Unihealth America Certificate of Participation
Series 1993 Inverse Floater
7.63% 2011 2.31 5,906,250
San Diego County Water Authority Revenue Bonds
Certificates of Participation Series 1998A
4.50% 2024 2.24 5,736,721
Northern California Transmission Select Auction
Variable Rate Security & Residual Interest Revenue Bonds
Series 1993
5.50% 2024 1.79 4,591,530
Fontana Redevelopment Agency
Refunding Certificate of Participation
Police Facility Series 1993
5.63% 2016 1.78 4,567,140
Redding Redevelopment Agency Tax Allocation
Refunding Bonds Canby Hilltop Cypress Series 1993D
5.00% 2023 1.78 4,558,765
Rancho Mirage Joint Powers Finance Authority
Certificate of Participation
Eisenhower Memorial Hospital Series 1992
7.00% 2022 1.74 4,457,443
Fontana Unified School District San Bernardino
County General Obligation Convertible Capital
Appreciation Bonds Series 1995C
6.15% 2020 1.46 3,749,196
San Diego County Capital Asset Lease
Certificate of Participation Series 1993
Inverse Floater
7.47% 2007 1.44 3,692,000
</TABLE>
Note: Investment income from certain securities may be subject to the
Alternative Minimum Tax (A.M.T.).
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here make up 21.36% of net assets
--------------------------------------------------------------------------------
10 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The Fund's Long-term Performance
AXP California Tax-Exempt Fund
How your $10,000 has grown in AXP California Tax-Exempt Fund
(line chart)
$30,000
Lehman Brothers Municipal Bond Index
Lipper California Municipal Debt Funds Index
$20,000
$17,407
AXP California Tax-Exempt Fund
Class A
$9,525
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01
Average Annual Total Returns (as of June 30, 2001)
1 year 5 years 10 years Since inception
Class A +2.86% +4.46% +5.70% N/A
Class B +2.98% +4.48% N/A +4.63%*
Class C +6.20% N/A N/A +7.41%**
* Inception date was March 20, 1995.
** Inception date was June 26, 2000.
Assumes: Holding period from 7/1/91 to 6/30/01. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund has a value of $7,779. Also see "Past Performance" in
the Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the Lehman Brothers Municipal Bond Index and
the Lipper California Municipal Debt Funds Index. In comparing AXP California
Tax-Exempt Fund (Class A) to these indexes, you should take into account the
fact that the Fund's performance reflects the maximum sales charge of 4.75%,
while such charges are not reflected in the performance of the indexes.
Your investment and return values fluctuate so that your shares, when redeemed,
may be worth more or less than the original cost. Average annual total return
figures reflect the impact of the maximum applicable sales charge. This was a
period of widely fluctuating security prices. Past performance is no guarantee
of future results.
Lehman Brothers Municipal Bond Index, an unmanaged index, is made up of a
representative list of general obligation, revenue, insured and pre-refunded
bonds. The index is frequently used as a general measure of tax-exempt bond
market performance. The index reflects reinvestment of all distributions and
changes in market prices, but excludes brokerage commissions or other fees.
However, the securities used to create the index may not be representative of
the bonds held in the Fund.
Lipper California Municipal Debt Funds Index, an unmanaged 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.
--------------------------------------------------------------------------------
11 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The 10 Largest Holdings
AXP Massachusetts Tax-Exempt Fund
<TABLE>
<CAPTION>
Percent Value
(of net assets) (as of June 30, 2001)
<S> <C> <C>
Boston City Hospital Refunding Revenue Bonds
Series 1993B
5.75% 2023 3.58% $3,008,520
Health & Educational Facilities Authority
Revenue Bonds Suffolk University Series 1992B
6.35% 2022 3.07 2,576,537
Health & Educational Facilities Authority
Revenue Bonds Cape Cod Health System Series 1993A
5.25% 2021 2.94 2,469,050
Industrial Finance Agency Pollution Control
Refunding Revenue Bonds Eastern Edison Series 1993
5.88% 2008 2.47 2,075,400
State Health & Education Facilities Authority
Pre-refunded Revenue Bonds Boston College
Series 1991J
6.63% 2021 2.36 1,979,207
State Turnpike Authority Metro Highway System
Senior Lien Revenue Bonds Toll Road Series 1997A
5.00% 2037 2.19 1,838,840
State Health & Education Facilities Authority
College Revenue Bonds Brandeis University
Series 1998I
4.75% 2028 2.17 1,824,200
Health & Educational Facilities Authority
Pre-refunded Revenue Bonds Charlton Memorial Hospital
Series 1991B
7.25% 2013 2.13 1,785,420
Municipal Wholesale Electric Power
Supply System Refunding Revenue Bonds
Series 1994B
4.75% 2011 2.11 1,774,885
Bay Transportation Authority
General Transportation System
Refunding Revenue Bonds Series 1992B
6.20% 2016 2.05 1,719,240
</TABLE>
Note: Investment income from certain securities may be subject to the
Alternative Minimum Tax (A.M.T.).
For further details about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here make up 25.07% of net assets
--------------------------------------------------------------------------------
12 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The Fund's Long-term Performance
AXP Massachusetts Tax-Exempt Fund
How your $10,000 has grown in AXP Massachusetts Tax-Exempt Fund
(line chart)
$30,000
Lehman Brothers Municipal Bond Index
Lipper Massachusetts Municipal Debt Funds Index
$20,000
$17,374
AXP Massachusetts Tax-Exempt Fund
Class A
$9,525
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01
Average Annual Total Returns (as of June 30, 2001)
1 year 5 years 10 years Since inception
Class A +3.47% +4.22% +5.68% N/A
Class B +3.83% +4.28% N/A +4.50%*
Class C +6.84% N/A N/A +8.06%**
* Inception date was March 20, 1995.
** Inception date was June 26, 2000.
Assumes: Holding period from 7/1/91 to 6/30/01. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund has a value of $7,594. Also see "Past Performance" in
the Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the Lehman Brothers Municipal Bond Index and
the Lipper Massachusetts Municipal Debt Funds Index. In comparing AXP
Massachusetts Tax-Exempt Fund (Class A) to these indexes, you should take into
account the fact that the Fund's performance reflects the maximum sales charge
of 4.75%, while such charges are not reflected in the performance of the
indexes.
Your investment and return values fluctuate so that your shares, when redeemed,
may be worth more or less than the original cost. Average annual total return
figures reflect the impact of the maximum applicable sales charge. This was a
period of widely fluctuating security prices. Past performance is no guarantee
of future results.
Lehman Brothers Municipal Bond Index, an unmanaged index, is made up of a
representative list of general obligation, revenue, insured and pre-refunded
bonds. The index is frequently used as a general measure of tax-exempt bond
market performance. The index reflects reinvestment of all distributions and
changes in market prices, but excludes brokerage commissions or other fees.
However, the securities used to create the index may not be representative of
the bonds held in the Fund.
Lipper Massachusetts Municipal Debt Funds Index, an unmanaged index published by
Lipper Inc., includes the 10 largest funds that are generally similar to the
Fund, although some funds in the index may have somewhat different investment
policies or objectives.
--------------------------------------------------------------------------------
13 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The 10 Largest Holdings
AXP Michigan Tax-Exempt Fund
<TABLE>
<CAPTION>
Percent Value
(of net assets) (as of June 30, 2001)
<S> <C> <C>
Romulus Township School District Unlimited Tax
General Obligation Refunding Bonds Series 1993
5.75% 2022 3.47% $2,557,549
State Building Authority Refunding Revenue Bonds
Series 1991I
6.25% 2020 3.07 2,263,469
Grand Ledge Public Schools Unlimited Tax General
Obligation Refunding Bonds Eaton, Clinton & Ionia
Counties Series 1995
5.38% 2024 2.73 2,009,279
State Strategic Fund Limited Tax Obligation Refunding
Revenue Bonds Ford Motor Series 1991A
7.10% 2006 2.51 1,849,947
State Hospital Finance Authority Hospital Pre-refunded
Revenue Bonds McLaren Obligated Group Series 1991A
7.50% 2021 2.45 1,802,185
Detroit Sewer Disposal Pre-refunded Revenue Bonds
Series 1993
5.70% 2023 2.30 1,696,480
Troy City Downtown Development Authority
County of Oakland Development Bonds
Series 1995A
6.38% 2018 2.17 1,599,885
Farmington Hills Hospital Finance Authority
Revenue Bonds Botsford General Hospital
Series 1992A
6.50% 2022 2.12 1,564,980
State Strategic Fund Limited Tax Obligation Refunding
Revenue Bonds Detroit Edison Series 1992BB
6.50% 2016 2.11 1,557,555
Detroit Water Supply System Second Lien
Revenue Bonds Series 1995A
5.50% 2025 2.05 1,512,375
</TABLE>
Note: Investment income from certain securities may be subject to the
Alternative Minimum Tax (A.M.T.).
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here make up 24.98% of net assets
--------------------------------------------------------------------------------
14 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The Fund's Long-term Performance
AXP Michigan Tax-Exempt Fund
How your $10,000 has grown in AXP Michigan Tax-Exempt Fund
(line chart)
$30,000
Lehman Brothers Municipal Bond Index
Lipper Michigan Municipal Debt Funds Index
$20,000
$17,446
AXP Michigan Tax-Exempt Fund
Class A
$9,525
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01
Average Annual Total Returns (as of June 30, 2001)
1 year 5 years 10 years Since inception
Class A +3.73% +4.04% +5.72% N/A
Class B +4.09% +4.10% N/A +4.39%*
Class C +7.02% N/A N/A +8.21%**
* Inception date was March 20, 1995.
** Inception date was June 26, 2000.
Assumes: Holding period from 7/1/91 to 6/30/01. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund has a value of $7,859. Also see "Past Performance" in
the Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the Lehman Brothers Municipal Bond Index and
the Lipper Michigan Municipal Debt Funds Index. In comparing AXP Michigan
Tax-Exempt Fund (Class A) to these indexes, you should take into account the
fact that the Fund's performance reflects the maximum sales charge of 4.75%,
while such charges are not reflected in the performance of the indexes.
Your investment and return values fluctuate so that your shares, when redeemed,
may be worth more or less than the original cost. Average annual total return
figures reflect the impact of the maximum applicable sales charge. This was a
period of widely fluctuating security prices. Past performance is no guarantee
of future results.
Lehman Brothers Municipal Bond Index, an unmanaged index, is made up of a
representative list of general obligation, revenue, insured and pre-refunded
bonds. The index is frequently used as a general measure of tax-exempt bond
market performance. The index reflects reinvestment of all distributions and
changes in market prices, but excludes brokerage commissions or other fees.
However, the securities used to create the index may not be representative of
the bonds held in the Fund.
Lipper Michigan Municipal Debt Funds Index, an unmanaged index published by
Lipper Inc., includes the 10 largest funds that are generally similar to the
Fund, although some funds in the index may have somewhat different investment
policies or objectives.
--------------------------------------------------------------------------------
15 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The 10 Largest Holdings
AXP Minnesota Tax-Exempt Fund
<TABLE>
<CAPTION>
Percent Value
(of net assets) (as of June 30, 2001)
<S> <C> <C>
State University Board of Regents General Obligation
Bonds Series 1996A
5.50% 2021 3.21% $13,219,374
Minneapolis & St. Paul Housing & Redevelopment
Authority Health Care System Revenue Bonds
Healthspan Series 1993A
4.75% 2018 3.06 12,619,124
Minneapolis & St. Paul Housing & Redevelopment
Authority Health Care System Revenue Bonds
Group Health Plan Series 1992
6.75% 2013 2.60 10,695,299
Southern Minnesota Municipal Power Agency
Revenue Bonds Series 1993A
4.75% 2016 2.15 8,848,073
St. Paul Housing & Redevelopment Authority
Sales Tax Revenue Bonds Civic Center
Escrowed to Maturity Series 1993
5.55% 2023 1.88 7,732,274
Southern Minnesota Municipal Power Agency
Power Supply System Revenue Bonds
Zero Coupon Series 1994A
6.67% 2019 1.87 7,725,119
Hennepin County Lease Pre-refunded Revenue
Certificates of Participation Series 1991A
6.80% 2017 1.79 7,361,360
Faribault Rice & Goodhue Counties
Independent School District #656
General Obligation School Building
Bonds Series 1995
5.75% 2015 1.78 7,323,522
St. Louis Park Health Care Facilities
Revenue Bonds Healthsystem Minnesota
Obligated Group Series 1994 Inverse Floater
6.67% 2013 1.71 7,043,750
Edina Multi-family Housing
Pre-refunded Revenue Bonds
Walker Assisted Living Series 1991
9.00% 2031 1.66 6,833,260
</TABLE>
Note: Investment income from certain securities may be subject to the
Alternative Minimum Tax (A.M.T.).
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here make up 21.71% of net assets
--------------------------------------------------------------------------------
16 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The Fund's Long-term Performance
AXP Minnesota Tax-Exempt Fund
How your $10,000 has grown in AXP Minnesota Tax-Exempt Fund
(line chart)
$30,000
Lehman Brothers Municipal Bond Index
Lipper Minnesota Municipal Debt Funds Index
$20,000
$17,382
AXP Minnesota Tax-Exempt Fund
Class A
$9,525
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01
Average Annual Total Returns (as of June 30, 2001)
1 year 5 years 10 years Since inception
Class A +3.38% +4.50% +5.68% N/A
Class B +3.72% +4.56% N/A +4.74%*
Class C +6.75% N/A N/A +7.95%**
* Inception date was March 20, 1995.
** Inception date was June 26, 2000.
Assumes: Holding period from 7/1/91 to 6/30/01. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund has a value of $7,998. Also see "Past Performance" in
the Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the Lehman Brothers Municipal Bond Index and
the Lipper Minnesota Municipal Debt Funds Index. In comparing AXP Minnesota
Tax-Exempt Fund (Class A) to these indexes, you should take into account the
fact that the Fund's performance reflects the maximum sales charge of 4.75%,
while such charges are not reflected in the performance of the indexes.
Your investment and return values fluctuate so that your shares, when redeemed,
may be worth more or less than the original cost. Average annual total return
figures reflect the impact of the maximum applicable sales charge. This was a
period of widely fluctuating security prices. Past performance is no guarantee
of future results.
Lehman Brothers Municipal Bond Index, an unmanaged index, is made up of a
representative list of general obligation, revenue, insured and pre-refunded
bonds. The index is frequently used as a general measure of tax-exempt bond
market performance. The index reflects reinvestment of all distributions and
changes in market prices, but excludes brokerage commissions or other fees.
However, the securities used to create the index may not be representative of
the bonds held in the Fund.
Lipper Minnesota Municipal Debt Funds Index, an unmanaged index published by
Lipper Inc., includes the 10 largest funds that are generally similar to the
Fund, although some funds in the index may have somewhat different investment
policies or objectives.
--------------------------------------------------------------------------------
17 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The 10 Largest Holdings
AXP New York Tax-Exempt Fund
<TABLE>
<CAPTION>
Percent Value
(of net assets) (as of June 30, 2001)
<S> <C> <C>
United Nations Development Senior Lien
Pre-refunded Revenue Bonds Series 1992A
6.00% 2026 4.62% $4,847,489
State Dormitory Authority College Revenue Bonds
Consolidated City University System Series 1993A
5.75% 2013 3.18 3,336,059
State Mortgage Agency Homeowner Mortgage
Revenue Bonds 27th Series 1992
6.90% 2015 2.96 3,105,390
State Environmental Facilities State Water Revolving
Fund Pollution Control Revenue Bonds Series 1990A
7.50% 2012 2.94 3,089,250
State Energy Research & Development Authority
Solid Waste Disposal Revenue Bonds
State Electric & Gas Company Series 1993A
A.M.T.
5.70% 2028 2.91 3,056,670
State Energy Research & Development Authority
Pollution Control Refunding Revenue Bonds
Rochester Gas & Electric Series 1992B
A.M.T.
6.50% 2032 2.45 2,576,300
State Urban Development Capital Correctional
Facilities Refunding Lease Revenue Bonds
Series 1994A
5.25% 2021 2.39 2,503,950
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds Series 1993
6.73% 2009 2.05 2,147,500
State Dormitory Authority State University
Educational Facilities Refunding Revenue Bonds
Series 1993A
5.50% 2019 2.03 2,131,840
New York City Industrial Development Agency
Civic Facilities Revenue Bonds Rockefeller Foundation
Series 1993
5.38% 2023 1.93 2,026,920
</TABLE>
Note: Investment income from certain securities may be subject to the
Alternative Minimum Tax (A.M.T.).
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here make up 27.46% of net assets
--------------------------------------------------------------------------------
18 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The Fund's Long-term Performance
AXP New York Tax-Exempt Fund
How your $10,000 has grown in AXP New York Tax-Exempt Fund
(line chart)
$30,000
Lehman Brothers Municipal Bond Index
Lipper New York Municipal Debt Funds Index
$20,000
$17,388
AXP New York Tax-Exempt Fund
Class A
$9,525
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01
Average Annual Total Returns (as of June 30, 2001)
1 year 5 years 10 years Since inception
Class A +4.09% +4.54% +5.69% N/A
Class B +4.47% +4.60% N/A +4.55%*
Class C +7.26% N/A N/A +8.47%**
* Inception date was March 20, 1995.
** Inception date was June 26, 2000.
Assumes: Holding period from 7/1/91 to 6/30/01. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund has a value of $7,724. Also see "Past Performance" in
the Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the Lehman Brothers Municipal Bond Index and
the Lipper New York Municipal Debt Funds Index. In comparing AXP New York
Tax-Exempt Fund (Class A) to these indexes, you should take into account the
fact that the Fund's performance reflects the maximum sales charge of 4.75%,
while such charges are not reflected in the performance of the indexes.
Your investment and return values fluctuate so that your shares, when redeemed,
may be worth more or less than the original cost. Average annual total return
figures reflect the impact of the maximum applicable sales charge. This was a
period of widely fluctuating security prices. Past performance is no guarantee
of future results.
Lehman Brothers Municipal Bond Index, an unmanaged index, is made up of a
representative list of general obligation, revenue, insured and pre-refunded
bonds. The index is frequently used as a general measure of tax-exempt bond
market performance. The index reflects reinvestment of all distributions and
changes in market prices, but excludes brokerage commissions or other fees.
However, the securities used to create the index may not be representative of
the bonds held in the Fund.
Lipper New York Municipal Debt Funds Index, an unmanaged 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.
--------------------------------------------------------------------------------
19 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The 10 Largest Holdings
AXP Ohio Tax-Exempt Fund
<TABLE>
<CAPTION>
Percent Value
(of net assets) (as of June 30, 2001)
<S> <C> <C>
Lakota Local School District
Unlimited Tax Improvement
General Obligation Bonds Series 1994
6.25% 2014 2.93% $2,216,539
State Air Quality Development Authority Refunding
Revenue Bonds JMG Funding Limited Partnership
Series 1994 A.M.T.
6.38% 2029 2.78 2,103,800
Erie County Hospital Improvement Refunding
Revenue Bonds Firelands Community Hospital Series 1992
6.75% 2015 2.71 2,052,620
Lorain County Hospital Facilities
Refunding Revenue Bonds EMH Regional Medical Center
Series 1995
5.38% 2021 2.65 2,009,980
State Valley School District School Improvement
Unlimited Tax General Obligation Bonds
Counties of Adams & Highland Series 1995
5.25% 2021 2.65 2,007,480
State Municipal Electric Generation Agency Revenue Bonds
Joint Venture #5 Series 1993
5.38% 2024 2.65 2,004,760
Butler County Hospital Facility Improvement Refunding
Revenue Bonds Fort Hamilton-Hughes Memorial Center
Series 1991
7.50% 2010 2.41 1,823,605
Cuyahoga County Hospital Refunding Revenue Bonds
Cleveland Clinic Foundation Series 1992C
5.50% 2011 2.04 1,547,385
State Housing Finance Agency Mortgage Revenue
Bonds Aristocrat South Board & Care Series 1991A A.M.T.
7.30% 2031 2.04 1,546,095
North Olmstead County General Obligation Bonds Series 1996
5.00% 2016 1.99 1,504,035
</TABLE>
Note: Investment income from certain securities may be subject to the
Alternative Minimum Tax (A.M.T.).
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here make up 24.85% of net assets
--------------------------------------------------------------------------------
20 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
The Fund's Long-term Performance
AXP Ohio Tax-Exempt Fund
How your $10,000 has grown in AXP Ohio Tax-Exempt Fund
(line chart)
$30,000
Lehman Brothers Municipal Bond Index
Lipper Ohio Municipal Debt Funds Index
$20,000
$17,282
AXP Ohio Tax-Exempt Fund
Class A
$9,525
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01
Average Annual Total Returns (as of June 30, 2001)
1 year 5 years 10 years Since inception
Class A +2.82% +4.27% +5.62% N/A
Class B +3.15% +4.34% N/A +4.45%*
Class C +6.27% N/A N/A +7.49%**
* Inception date was March 20, 1995.
** Inception date was June 26, 2000.
Assumes: Holding period from 7/1/91 to 6/30/01. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund has a value of $7,624. Also see "Past Performance" in
the Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the Lehman Brothers Municipal Bond Index and
the Lipper Ohio Municipal Debt Funds Index. In comparing AXP Ohio Tax-Exempt
Fund (Class A) to these indexes, you should take into account the fact that the
Fund's performance reflects the maximum sales charge of 4.75%, while such
charges are not reflected in the performance of the indexes.
Your investment and return values fluctuate so that your shares, when redeemed,
may be worth more or less than the original cost. Average annual total return
figures reflect the impact of the maximum applicable sales charge. This was a
period of widely fluctuating security prices. Past performance is no guarantee
of future results.
Lehman Brothers Municipal Bond Index, an unmanaged index, is made up of a
representative list of general obligation, revenue, insured and pre-refunded
bonds. The index is frequently used as a general measure of tax-exempt bond
market performance. The index reflects reinvestment of all distributions and
changes in market prices, but excludes brokerage commissions or other fees.
However, the securities used to create the index may not be representative of
the bonds held in the Fund.
Lipper Ohio Municipal Debt Funds Index, an unmanaged index published by Lipper
Inc., includes the 10 largest funds that are generally similar to the Fund,
although some funds in the index may have somewhat different investment policies
or objectives.
--------------------------------------------------------------------------------
21 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Making the Most of the Fund
BUILD YOUR ASSETS SYSTEMATICALLY
One of the best ways to invest in the Fund is by dollar-cost averaging -- a
time-tested strategy that can make market fluctuations work for you. To
dollar-cost average, simply invest a fixed amount of money regularly. You'll
automatically buy more shares when the Fund's share price is low, fewer shares
when it is high. The chart below shows how dollar-cost averaging works. In these
three hypothetical scenarios, you will see six months of share price
fluctuations.
This strategy does not ensure a profit or avoid a loss if the market declines.
But, if you can continue to invest regularly through changing market conditions
even when the price of your shares falls or the market declines, it can be an
effective way to accumulate shares to meet your long-term goals.
How dollar-cost averaging works
Jan Feb Mar Apr May Jun
$15 $16 $18 $20
$10 $10 $12 $14
$ 5
Accumulated shares* Average market Your average
price per share cost per share
42.25 $15 $14.20
-------------------------------------------------------------------------------
Jan Feb Mar Apr May Jun
$15
$10 $10 $10
$ 5 $8 $5 $5 $8
Accumulated shares* Average market Your average
price per share cost per share
85.0 $7.66 $7.05
-------------------------------------------------------------------------------
Jan Feb Mar Apr May Jun
$15
$10 $10
$ 5 $8 $6 $4 $4 $7
Accumulated shares* Average market Your average
price per share cost per share
103.5 $6.50 $5.80
-------------------------------------------------------------------------------
$100 invested per month. Total invested: $600.
* Shares purchased is determined by dividing the amount invested per month by
the current share price.
THREE WAYS TO BENEFIT FROM A MUTUAL FUND:
o your shares increase in value when the Fund's investments do well
o you receive capital gains when the gains on investments sold by the Fund
exceed losses
o you receive income when the Fund's stock dividends, interest and short-term
gains exceed its expenses.
All three make up your total return. You potentially can increase your
investment if, like most investors, you reinvest your dividends and capital gain
distributions to buy additional shares of the Fund or another fund.
--------------------------------------------------------------------------------
22 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Board Members and Officers
Shareholders elect a board that oversees the Fund's operations. The board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the board.
The following is a list of the Fund's board members. Each member oversees 15
Master Trust portfolios and 68 American Express mutual funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the board.
<TABLE>
<CAPTION>
Independent Board Members
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Name, Position held Principal Other Committee
address, with Registrant occupations directorships memberships
age and length of during past
service 5 years
------------------------------- ----------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
------------------------------- ----------------------- --------------------- --------------------- ---------------------
H. Brewster Atwater, Jr. Board member since Retired chairman Merck & Co., Inc. Board
4900 IDS Tower 1996 and chief executive (pharmaceuticals) Effectiveness,
Minneapolis, MN 55402 officer, General Investment Review
Born in 1931 Mills, Inc.
(consumer foods)
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Arne H. Carlson Chair of the Board Chairman, Board Contracts,
901 S. Marquette Ave. since 1999 Services Executive,
Minneapolis, MN 55402 Corporation Investment Review,
Born in 1934 (provides Board Effectiveness
administrative
services to boards)
Former Governor of
Minnesota
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Lynne V. Cheney Board member since Distinguished The Reader's Digest Joint Audit,
American Enterprise 1994 Fellow, AEI Association Inc. Contracts
Institute for Public
Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C. 20036
Born in 1941
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Livio D. DeSimone Board member since Retired chair of Cargill, Joint Audit,
30 Seventh Street 2001 the board and chief Incorporated Contracts
St. Paul, MN 55101-4901 executive officer, (commodity
Born in 1936 Minnesota Mining merchants and
and Manufacturing processors), Target
(3M) Corporation
(department
stores), General
Mills, Inc.
(consumer foods)
and Vulcan
Materials Company
(construction
materials/
chemicals)
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Ira D. Hall Board member since Treasurer, Texaco Joint Audit,
Texaco, Inc. 2001 Inc. since 1998. Investment Review
2000 Westchester Avenue Prior to that,
White Plains, NY 10650 director,
Born in 1944. International
Operations IBM Corp.
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Heinz F. Hutter Board member since Retired president Board
P.O. Box 2187 1994 and chief operating Effectiveness,
Minneapolis, MN 55402 officer, Cargill, Investment Review
Born in 1929 Incorporated
(commodity
merchants and
processors)
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Anne P. Jones Board member since Attorney and Motorola, Inc. Joint Audit, Board
5716 Bent Branch Rd. 1985 telecommunications (electronics) Effectiveness
Bethesda, MD 20816 consultant
Born in 1935
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
William R. Pearce Board member since RII Weyerhaeuser Executive,
2050 One Financial Plaza 1980 World Timberfund, Investment Review,
Minneapolis, MN 55402 L.P. (develops Board Effectiveness
Born in 1927 timber resources) --
management
committee; Former
chair, American
Express Funds
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Alan K. Simpson Board member since Former three-term Biogen, Inc. Joint Audit,
1201 Sunshine Ave. 1997 United States (bio-pharmaceuticals) Contracts
Cody, WY 82414 Senator for Wyoming
Born in 1931
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
C. Angus Wurtele Board member since Retired chair of The Valspar Contracts,
Suite 1700 Foshay Tower 1994 the board and chief Corporation Investment Review
Minneapolis, MN 55402 executive officer, (paints), Bemis
Born in 1934 The Valspar Corporation
Corporation (packaging)
------------------------------- ----------------------- --------------------- --------------------- ---------------------
</TABLE>
--------------------------------------------------------------------------------
23 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Board Members Affiliated with American Express Financial Corporation (AEFC)
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Name, Position held Principal Other Committee
address, with Registrant occupations directorships Memberships
age and length of during past
service 5 years
------------------------------- ----------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
------------------------------- ----------------------- --------------------- --------------------- ---------------------
David R. Hubers Board member since Retired chief Chronimed Inc.
50643 AXP Financial Center 1993 executive officer, (specialty
Minneapolis, MN 55474 director and chair pharmaceutical
Born in 1943 of the board of AEFC distribution), RTW
Inc. (manages
worker's
compensation
programs), Lawson
Software, Inc.
(technology based
business
applications)
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
John R. Thomas Board member since Senior vice Executive,
50652 AXP Financial Center 1987, president since president - Investment Review
Minneapolis, MN 55474 1997 information and
Born in 1937 technology of AEFC
------------------------------- ----------------------- --------------------- --------------------- ---------------------
The board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the board. In addition to Mr. Thomas, who is president, the Fund's
other officers are:
Other Officers
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Name, Position held Principal Other Committee
address, with Registrant occupations directorships memberships
age and length of during past
service 5 years
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
John M. Knight Treasurer since 1999 Vice president -
50005 AXP Financial Center investment
Minneapolis, MN 55474 accounting of AEFC
Born in 1952
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Leslie L. Ogg Vice president, President of Board
901 S. Marquette Ave. general counsel, and Services Corporation
Minneapolis, MN 55402 secretary since 1978
Born in 1938
------------------------------- ----------------------- --------------------- --------------------- ---------------------
------------------------------- ----------------------- --------------------- --------------------- ---------------------
Frederick C. Quirsfeld Vice president since Senior vice
53609 AXP Financial Center 1998 president - fixed
Minneapolis, MN 55474 income of AEFC
Born in 1947
------------------------------- ----------------------- --------------------- --------------------- ---------------------
</TABLE>
--------------------------------------------------------------------------------
24 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Independent Auditors' Report
THE BOARD AND SHAREHOLDERS
AXP CALIFORNIA TAX-EXEMPT TRUST
AXP SPECIAL TAX-EXEMPT SERIES TRUST
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of AXP California Tax-Exempt Fund (a
fund within AXP California Tax-Exempt Trust) and AXP Massachusetts Tax-Exempt
Fund, AXP Michigan Tax-Exempt Fund, AXP Minnesota Tax-Exempt Fund, AXP New York
Tax-Exempt Fund and AXP Ohio Tax-Exempt Fund (funds within AXP Special
Tax-Exempt Series Trust) as of June 30, 2001, the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period ended June 30, 2001, and the financial
highlights for each of the years in the five-year period ended June 30, 2001.
These financial statements and the financial highlights are the responsibility
of fund management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 2001, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AXP California Tax-Exempt Fund,
AXP Massachusetts Tax-Exempt Fund, AXP Michigan Tax-Exempt Fund, AXP Minnesota
Tax-Exempt Fund, AXP New York Tax-Exempt Fund and AXP Ohio Tax-Exempt Fund as of
June 30, 2001, and the results of its operations, changes in its net assets and
the financial highlights for each of the periods stated in the first paragraph
above, in conformity with accounting principles generally accepted in the United
States of America.
KPMG LLP
Minneapolis, Minnesota
August 3, 2001
--------------------------------------------------------------------------------
26 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statements of assets and liabilities
AXP California Tax-Exempt Trust
AXP Special Tax-Exempt Series Trust
California Massachusetts Michigan
Tax-Exempt Tax-Exempt Tax-Exempt
June 30, 2001 Fund Fund Fund
Assets
Investments in securities, at value (Note 1)
<S> <C> <C> <C>
(identified cost $232,904,178, $80,369,995 and $68,933,571) $248,420,782 $82,359,714 $72,675,394
Cash in bank on demand deposit 69,691 22,510 6,977
Accrued interest receivable 3,531,434 1,657,950 1,062,437
Receivable for investment securities sold 4,317,187 -- --
--------- --- ---
Total assets 256,339,094 84,040,174 73,744,808
----------- ---------- ----------
Liabilities
Dividends payable to shareholders 88,268 27,532 24,725
Accrued investment management services fee 3,299 1,083 948
Accrued distribution fee 2,270 972 642
Accrued transfer agency fee 263 132 94
Accrued administrative services fee 280 92 81
Other accrued expenses 28,811 26,913 36,381
------ ------ ------
Total liabilities 123,191 56,724 62,871
------- ------ ------
Net assets applicable to outstanding shares $256,215,903 $83,983,450 $73,681,937
============ =========== ===========
Represented by
Shares of beneficial interest -- $.01 par value (Note 1) $ 494,987 $ 158,962 $ 139,741
Additional paid-in capital 248,712,602 83,258,171 72,229,875
Undistributed (excess of distributions over) net investment income 10,398 (2) 15
Accumulated net realized gain (loss) (Note 6) (8,646,889) (1,423,400) (2,429,517)
Unrealized appreciation (depreciation) on investments (Note 5) 15,644,805 1,989,719 3,741,823
---------- --------- ---------
Total -- representing net assets applicable to outstanding shares $256,215,903 $83,983,450 $73,681,937
============ =========== ===========
Net assets applicable to outstanding shares: Class A $231,307,621 $64,752,672 $66,982,257
Class B $ 23,816,952 $18,490,629 $ 6,480,055
Class C $ 1,091,330 $ 740,149 $ 219,625
Outstanding shares of beneficial interest: Class A shares 44,685,006 12,256,160 12,703,629
Class B shares 4,602,988 3,499,925 1,228,832
Class C shares 210,695 140,089 41,645
Net asset value per share: Class A $ 5.18 $ 5.28 $ 5.27
Class B $ 5.17 $ 5.28 $ 5.27
Class C $ 5.18 $ 5.28 $ 5.27
------------ ----------- -----------
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
26 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Statements of assets and liabilities
AXP California Tax-Exempt Trust
AXP Special Tax-Exempt Series Trust
Minnesota New York Ohio
Tax-Exempt Tax-Exempt Tax-Exempt
June 30, 2001 Fund Fund Fund
<S> <C> <C> <C>
Assets
Investments in securities, at value (Note 1)
(identified cost $395,770,324, $98,104,546 and $71,701,373) $405,095,984 $103,704,963 $74,687,367
Cash in bank on demand deposit 197,323 26,095 144,881
Accrued interest receivable 6,701,739 1,632,532 940,752
Receivable for investment securities sold 338,521 12,575 6,094
Total assets 412,333,567 105,376,165 75,779,094
----------- ----------- ----------
Liabilities
Dividends payable to shareholders 178,845 35,132 21,825
Payable for investment securities purchased -- 338,759 --
Accrued investment management services fee 5,196 1,353 975
Accrued distribution fee 3,953 1,059 699
Accrued transfer agency fee 592 151 98
Accrued administrative services fee 429 115 83
Other accrued expenses 45,339 17,766 25,914
------ ------ ------
Total liabilities 234,354 394,335 49,594
------- ------- ------
Net assets applicable to outstanding shares $412,099,213 $104,981,830 $75,729,500
============ ============ ===========
Represented by
Shares of beneficial interest -- $.01 par value (Note 1) $ 801,397 $ 205,184 $ 143,604
Additional paid-in capital 412,973,934 101,635,979 74,579,623
Undistributed (excess of distributions over) net investment income 100,093 (16) (1)
Accumulated net realized gain (loss) (Note 6) (11,179,933) (2,467,112) (1,987,098)
Unrealized appreciation (depreciation) on investments (Note 5) 9,403,722 5,607,795 2,993,372
--------- --------- ---------
Total -- representing net assets applicable to outstanding shares $412,099,213 $104,981,830 $75,729,500
============ ============ ===========
Net assets applicable to outstanding shares: Class A $357,171,329 $ 88,469,657 $66,944,092
Class B $ 53,194,945 $ 16,140,120 $ 8,091,928
Class C $ 1,732,939 $ 372,053 $ 693,480
Outstanding shares of beneficial interest: Class A shares 69,458,878 17,291,139 12,694,446
Class B shares 10,343,954 3,154,544 1,534,487
Class C shares 336,830 72,754 131,454
Net asset value per share: Class A $ 5.14 $ 5.12 $ 5.27
Class B $ 5.14 $ 5.12 $ 5.27
Class C $ 5.14 $ 5.11 $ 5.28
------------ ------------ -----------
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
27 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Statements of operations
AXP California Tax-Exempt Trust
AXP Special Tax-Exempt Series Trust
California Massachusetts Michigan
Tax-Exempt Tax-Exempt Tax-Exempt
Year ended June 30, 2001 Fund Fund Fund
Investment income
Income:
<S> <C> <C> <C>
Interest $13,906,342 $4,695,182 $4,310,730
----------- ---------- ----------
Expenses (Note 2):
Investment management services fee 1,162,687 369,827 336,169
Distribution fee
Class A 562,308 154,135 163,461
Class B 221,970 164,467 60,565
Class C 4,017 5,846 832
Transfer agency fee 84,154 41,575 30,817
Incremental transfer agency fee
Class A 8,404 3,796 3,171
Class B 1,764 1,414 512
Class C 45 13 10
Administrative services fees and expenses 110,418 32,247 29,317
Compensation of board members 8,519 8,519 8,519
Custodian fees 17,522 9,200 8,006
Printing and postage 25,293 8,085 5,878
Registration fees 44,011 53,901 56,360
Audit fees 17,500 16,000 16,000
Other 3,973 8,875 7,697
----- ----- -----
Total expenses 2,272,585 877,900 727,314
Earnings credits on cash balances (Note 2) (47,014) (22,831) (16,786)
------- ------- -------
Total net expenses 2,225,571 855,069 710,528
--------- ------- -------
Investment income (loss) -- net 11,680,771 3,840,113 3,600,202
---------- --------- ---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 712,448 124,201 191,171
Futures contracts (2,543,196) -- --
---------- --- ---
Net realized gain (loss) on investments (1,830,748) 124,201 191,171
Net change in unrealized appreciation (depreciation) on investments 8,710,217 2,441,440 2,276,366
--------- --------- ---------
Net gain (loss) on investments 6,879,469 2,565,641 2,467,537
--------- --------- ---------
Net increase (decrease) in net assets resulting from operations $18,560,240 $6,405,754 $6,067,739
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
28 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Statements of operations
AXP California Tax-Exempt Trust
AXP Special Tax-Exempt Series Trust
Minnesota New York Ohio
Tax-Exempt Tax-Exempt Tax-Exempt
Year ended June 30, 2001 Fund Fund Fund
Investment income
Income:
<S> <C> <C> <C>
Interest $24,675,815 $5,814,438 $4,177,028
----------- ---------- ----------
Expenses (Note 2):
Investment management services fee 1,809,270 470,866 332,912
Distribution fee
Class A 861,815 214,968 158,858
Class B 471,780 140,599 71,754
Class C 6,846 1,357 1,126
Transfer agency fee 190,640 48,174 30,915
Incremental transfer agency fee
Class A 18,803 4,670 3,092
Class B 4,382 1,218 647
Class C 74 26 9
Administrative services fees and expenses 141,349 41,153 28,999
Compensation of board members 8,519 8,519 8,519
Custodian fees 27,121 11,014 8,010
Printing and postage 44,718 1,728 8,193
Registration fees 63,120 48,198 42,561
Audit fees 19,000 17,500 16,000
Other 8,380 5,200 2,551
----- ----- -----
Total expenses 3,675,817 1,015,190 714,146
Earnings credits on cash balances (Note 2) (52,343) (10,567) (15,569)
------- ------- -------
Total net expenses 3,623,474 1,004,623 698,577
--------- --------- -------
Investment income (loss) -- net 21,052,341 4,809,815 3,478,451
---------- --------- ---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (335,119) 633,995 45,155
Futures contracts (1,608,857) (72,163) (162,879)
---------- ------- --------
Net realized gain (loss) on investments (1,943,976) 561,832 (117,724)
Net change in unrealized appreciation (depreciation) on investments 12,884,312 3,325,987 1,999,088
---------- --------- ---------
Net gain (loss) on investments 10,940,336 3,887,819 1,881,364
---------- --------- ---------
Net increase (decrease) in net assets resulting from operations $31,992,677 $8,697,634 $5,359,815
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
29 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
AXP California Tax-Exempt Trust
AXP Special Tax-Exempt Series Trust
California Tax-Exempt Fund Massachusetts Tax-Exempt Fund
Year ended June 30, 2001 2000 2001 2000
Operations and distributions
<S> <C> <C> <C> <C>
Investment income (loss) -- net $ 11,680,771 $ 12,519,505 $ 3,840,113 $ 4,137,360
Net realized gain (loss) on investments (1,830,748) (1,375,667) 124,201 (595,611)
Net change in unrealized appreciation (depreciation)
on investments 8,710,217 (7,129,128) 2,441,440 (3,933,993)
--------- ---------- --------- ----------
Net increase (decrease) in net assets resulting
from operations 18,560,240 4,014,710 6,405,754 (392,244)
---------- --------- --------- --------
Distributions to shareholders from:
Net investment income
Class A (10,760,792) (11,607,146) (3,110,622) (3,435,437)
Class B (893,383) (912,358) (705,659) (743,470)
Class C (16,198) -- (25,202) --
Net realized gain
Class A -- -- -- (507)
Class B -- -- -- (130)
Class C -- -- -- --
--- --- --- ---
Total distributions (11,670,373) (12,519,504) (3,841,483) (4,179,544)
----------- ----------- ---------- ----------
Share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 39,718,956 32,986,509 10,931,282 10,282,330
Class B shares 6,533,410 5,768,913 3,986,974 3,974,341
Class C shares 1,283,535 2,000 401,630 302,203
Reinvestment of distributions at net asset value
Class A shares 7,119,547 7,691,981 2,494,457 2,684,138
Class B shares 682,053 698,334 547,285 598,328
Class C shares 12,648 -- 25,164 --
Payments for redemptions
Class A shares (35,050,333) (65,575,795) (10,097,344) (20,313,022)
Class B shares (Note 2) (4,535,825) (6,199,583) (2,202,984) (4,979,083)
Class C shares (Note 2) (199,923) -- (7,584) --
-------- --- ------ ---
Increase (decrease) in net assets from share transactions 15,564,068 (24,627,641) 6,078,880 (7,450,765)
---------- ----------- --------- ----------
Total increase (decrease) in net assets 22,453,935 (33,132,435) 8,643,151 (12,022,553)
Net assets at beginning of year 233,761,968 266,894,403 75,340,299 87,362,852
----------- ----------- ---------- ----------
Net assets at end of year $256,215,903 $233,761,968 $ 83,983,450 $ 75,340,299
============ ============ ============ ============
Undistributed (excess of distributions over)
net investment income $ 10,398 $ -- $ (2) $ 1,368
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
30 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
AXP California Tax-Exempt Trust
AXP Special Tax-Exempt Series Trust
Michigan Tax-Exempt Fund Minnesota Tax-Exempt Fund
Year ended June 30, 2001 2000 2001 2000
Operations and distributions
<S> <C> <C> <C> <C>
Investment income (loss) -- net $ 3,600,202 $ 4,040,334 $ 21,052,341 $ 23,150,982
Net realized gain (loss) on investments 191,171 (1,385,947) (1,943,976) (1,007,388)
Net change in unrealized appreciation (depreciation)
on investments 2,276,366 (3,025,369) 12,884,312 (21,736,643)
Net increase (decrease) in net assets resulting
from operations 6,067,739 (370,982) 31,992,677 406,951
--------- -------- ---------- -------
Distributions to shareholders from:
Net investment income
Class A (3,327,020) (3,751,726) (18,810,469) (20,827,151)
Class B (262,535) (295,567) (2,219,057) (2,212,248)
Class C (3,631) -- (32,460) --
Net realized gain
Class A -- (4,302) -- --
Class B -- (409) -- --
--- ---- --- ---
Total distributions (3,593,186) (4,052,004) (21,061,986) (23,039,399)
---------- ---------- ----------- -----------
Share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 8,519,696 9,682,669 72,638,585 64,411,374
Class B shares 1,208,719 1,357,740 12,617,886 12,060,209
Class C shares 216,679 2,000 1,721,901 2,000
Reinvestment of distributions at net asset value
Class A shares 2,517,943 2,736,240 14,979,095 16,104,962
Class B shares 198,272 222,111 1,846,453 1,823,682
Class C shares 1,174 -- 28,344 --
Payments for redemptions
Class A shares (11,731,757) (19,584,407) (79,888,353) (126,213,915)
Class B shares (Note 2) (1,047,810) (1,871,092) (7,009,477) (12,684,696)
Class C shares (Note 2) -- -- (29,028) --
--- --- ------- ---
Increase (decrease) in net assets from share transactions (117,084) (7,454,739) 16,905,406 (44,496,384)
-------- ---------- ---------- -----------
Total increase (decrease) in net assets 2,357,469 (11,877,725) 27,836,097 (67,128,832)
Net assets at beginning of year 71,324,468 83,202,193 384,263,116 451,391,948
---------- ---------- ----------- -----------
Net assets at end of year $ 73,681,937 $ 71,324,468 $412,099,213 $ 384,263,116
============ ============ ============ =============
Undistributed (excess of distributions over)
net investment income $ 15 $ (7,001) $ 100,093 $ 109,738
------------ ------------ ------------ -------------
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
31 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
AXP California Tax-Exempt Trust
AXP Special Tax-Exempt Series Trust
New York Tax-Exempt Fund Ohio Tax-Exempt Fund
Year ended June 30, 2001 2000 2001 2000
Operations and distributions
<S> <C> <C> <C> <C>
Investment income (loss) -- net $ 4,809,815 $ 5,485,609 $ 3,478,451 $ 3,689,250
Net realized gain (loss) on investments 561,832 (812,443) (117,724) (716,775)
Net change in unrealized appreciation (depreciation)
on investments 3,325,987 (4,393,371) 1,999,088 (2,615,074)
--------- ---------- --------- ----------
Net increase (decrease) in net assets resulting
from operations 8,697,634 279,795 5,359,815 357,401
--------- ------- --------- -------
Distributions to shareholders from:
Net investment income
Class A (4,229,578) (4,864,876) (3,170,105) (3,370,300)
Class B (585,710) (609,708) (303,547) (319,979)
Class C (5,568) -- (4,799) --
------ --- ------ ---
Total distributions (4,820,856) (5,474,584) (3,478,451) (3,690,279)
---------- ---------- ---------- ----------
Share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 10,426,775 11,946,734 13,023,386 11,263,709
Class B shares 4,013,030 4,440,284 2,015,019 1,346,434
Class C shares 357,049 69,000 686,081 2,000
Reinvestment of distributions at net asset value
Class A shares 3,190,608 3,542,377 2,420,796 2,342,776
Class B shares 433,889 483,551 231,940 244,089
Class C shares 3,471 -- 4,639 --
Payments for redemptions
Class A shares (13,763,371) (28,059,049) (10,236,659) (19,406,820)
Class B shares (Note 2) (2,300,461) (4,369,115) (937,170) (2,438,407)
Class C shares (Note 2) (61,242) -- -- --
------- --- --- ---
Increase (decrease) in net assets from share transactions 2,299,748 (11,946,218) 7,208,032 (6,646,219)
--------- ----------- --------- ----------
Total increase (decrease) in net assets 6,176,526 (17,141,007) 9,089,396 (9,979,097)
Net assets at beginning of year 98,805,304 115,946,311 66,640,104 76,619,201
---------- ----------- ---------- ----------
Net assets at end of year $104,981,830 $ 98,805,304 $ 75,729,500 $ 66,640,104
============ ============ ============ ============
Undistributed (excess of distributions over)
net investment income $ (16) $ 11,025 $ (1) $ (1)
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
32 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Notes to Financial Statements
AXP California Tax-Exempt Trust
AXP Special Tax-Exempt Series Trust
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AXP California Tax-Exempt Trust and AXP Special Tax-Exempt Series Trust were
organized as Massachusetts business trusts. AXP California Tax-Exempt Trust
includes only AXP California Tax-Exempt Fund. AXP Special Tax-Exempt Series
Trust is a "series fund" that is currently composed of individual state
tax-exempt funds and one insured national tax-exempt fund, including AXP
Massachusetts Tax-Exempt Fund, AXP Michigan Tax-Exempt Fund, AXP Minnesota
Tax-Exempt Fund, AXP New York Tax-Exempt Fund and AXP Ohio Tax-Exempt Fund (the
Funds). The Funds are non-diversified, open-end management investment companies
as defined in the Investment Company Act of 1940 (as amended). Each Fund has
unlimited authorized shares of beneficial interest.
Class C shares of the Funds were offered to the public on June 26, 2000. Prior
to this date, American Express Financial Corporation (AEFC) purchased the
following shares of capital stock, which represented the following initial
capital in each Fund's Class C shares:
Fund Number of shares Initial capital per share
California Tax-Exempt Fund 398 $5.03
Massachusetts Tax-Exempt Fund 391 5.11
Michigan Tax-Exempt Fund 393 5.09
Minnesota Tax-Exempt Fund 400 5.00
New York Tax-Exempt Fund 407 4.92
Ohio Tax-Exempt Fund 390 5.13
Each Fund's goal is to provide a high level of income generally exempt from
federal income tax as well as from the respective state and local income tax. A
portion of each Fund's assets may be invested in bonds whose interest is subject
to the alternative minimum tax computation. The Funds concentrate their
investments in a single state and therefore may have more credit risk related to
the economic conditions of the respective state than funds that have a broader
geographical diversification.
Each Fund offers Class A, Class B and Class C 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.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee and incremental transfer agency 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.
Each 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 sale 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 Funds 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 Funds
give up the opportunity for profit if the market price of the security
increases. The risk in writing a put option is that the Funds 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 Funds pay a premium whether or not the
option is exercised. The Funds also have the additional risk of being unable to
enter into a closing transaction if a liquid secondary market does not exist.
The Funds also may write over-the-counter options where completing the
obligation depends upon the credit standing of the other party.
--------------------------------------------------------------------------------
33 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Funds
will realize a gain or loss when the option transaction expires or closes. When
options on debt securities or futures are exercised, the Funds will realize a
gain or loss. When other options are 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 the
premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Funds may buy and
sell financial 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 Funds are 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 Funds 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 Funds recognize a realized gain or loss when the contract is closed
or expires.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the Funds on a
forward-commitment or when-issued basis can take place one month or more after
the transaction date. During this period, such securities are subject to market
fluctuation, and they may affect each Fund's net assets the same as owned
securities. The Funds designate cash or liquid securities at least equal to the
amount of its commitment. As of June 30, 2001, AXP New York Tax-Exempt Fund had
entered into outstanding when-issued or forward-commitments of $338,759.
Federal taxes
Each Fund's policy 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. Each Fund is treated as a separate entity for federal income tax
purposes.
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 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 Funds.
Dividends to shareholders
Dividends from net investment income, declared daily and paid monthly, are
reinvested in additional shares of each Fund at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last income
dividend of the calendar year.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Interest income, including level-yield amortization of premium and
discount, is accrued daily.
--------------------------------------------------------------------------------
34 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
2. EXPENSES AND SALES CHARGES
Each 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 each Fund's average daily net assets in reducing percentages
from 0.47% to 0.38% annually.
Under an Administrative Services Agreement, each Fund pays AEFC a fee for
administration and accounting services at a percentage of each Fund's average
daily net assets in reducing percentages from 0.04% to 0.02% annually. A minor
portion of additional administrative service expenses paid by the Funds are
consultants' fees and fund office expenses. Under this agreement, the Funds also
pay 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 Funds and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. Each 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
Each Fund has agreements with American Express Financial Advisors Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution, each Fund pays a distribution fee at an annual rate
up to 0.25% of each Fund's average daily net assets attributable to Class A
shares and up to 1.00% for Class B and Class C shares.
Sales charges received by the Distributor for distributing the Funds' shares for
the year ended June 30, 2001, are as follows:
Fund Class A Class B Class C
California Tax-Exempt Fund $346,450 $26,001 $1,569
Massachusetts Tax-Exempt Fund 124,831 19,367 75
Michigan Tax-Exempt Fund 89,967 8,755 --
Minnesota Tax-Exempt Fund 520,061 42,182 28
New York Tax-Exempt Fund 102,023 22,653 242
Ohio Tax-Exempt Fund 93,914 9,791 --
During the year ended June 30, 2001, the Funds' custodian and transfer agency
fees were reduced as a result of earnings credits from overnight cash balances
as follows:
Fund Reduction
California Tax-Exempt Fund $47,014
Massachusetts Tax-Exempt Fund 22,831
Michigan Tax-Exempt Fund 16,786
Minnesota Tax-Exempt Fund 52,343
New York Tax-Exempt Fund 10,567
Ohio Tax-Exempt Fund 15,569
3. SECURITIES TRANSACTIONS
For the year ended June 30, 2001, cost of purchases and proceeds from sales
(other than short-term obligations) aggregated for each Fund are as follows:
Fund Purchases Proceeds
California Tax-Exempt Fund $25,209,739 $32,816,943
Massachusetts Tax-Exempt Fund 3,274,618 4,495,486
Michigan Tax-Exempt Fund 3,009,165 6,513,167
Minnesota Tax-Exempt Fund 16,002,014 32,047,636
New York Tax-Exempt Fund 12,132,602 18,510,085
Ohio Tax-Exempt Fund 4,890,507 2,225,845
Realized gains and losses are determined on an identified cost basis.
--------------------------------------------------------------------------------
35 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
4. SHARE TRANSACTIONS
Transactions in shares of each Fund for the years indicated are as follows:
California Tax-Exempt Fund
Year ended June 30, 2001
Class A Class B Class C
Sold 7,659,300 1,263,236 246,520
Issued for reinvested distributions 1,376,078 131,813 2,434
Redeemed (6,761,420) (879,873) (38,657)
---------- -------- -------
Net increase (decrease) 2,273,958 515,176 210,297
--------- ------- -------
Year ended June 30, 2000
Class A Class B Class C*
Sold 6,630,939 1,156,809 398
Issued for reinvested distributions 1,545,163 140,357 --
Redeemed (13,199,838) (1,249,749) --
----------- ---------- ---
Net increase (decrease) (5,023,736) 47,417 398
---------- ------ ---
Massachusetts Tax-Exempt Fund
Year ended June 30, 2001
Class A Class B Class C
Sold 2,084,519 761,081 77,464
Issued for reinvested distributions 476,839 104,628 4,807
Redeemed (1,929,278) (422,594) (1,437)
---------- -------- ------
Net increase (decrease) 632,080 443,115 80,834
------- ------- ------
Year ended June 30, 2000
Class A Class B Class C*
Sold 1,990,307 767,970 59,255
Issued for reinvested distributions 522,475 116,483 --
Redeemed (3,959,643) (966,813) --
---------- -------- ------
Net increase (decrease) (1,446,861) (82,360) 59,255
---------- ------- ------
Michigan Tax-Exempt Fund
Year ended June 30, 2001
Class A Class B Class C
Sold 1,627,887 230,545 41,029
Issued for reinvested distributions 483,154 38,031 223
Redeemed (2,251,346) (201,446) --
---------- -------- ------
Net increase (decrease) (140,305) 67,130 41,252
-------- ------ ------
Year ended June 30, 2000
Class A Class B Class C*
Sold 1,885,978 262,272 393
Issued for reinvested distributions 533,379 43,272 --
Redeemed (3,824,914) (366,568) --
---------- -------- ---
Net increase (decrease) (1,405,557) (61,024) 393
---------- ------- ---
Minnesota Tax-Exempt Fund
Year ended June 30, 2001
Class A Class B Class C
Sold 14,211,979 2,466,687 336,562
Issued for reinvested distributions 2,933,370 361,533 5,526
Redeemed (15,653,720) (1,377,164) (5,658)
----------- ---------- ------
Net increase (decrease) 1,491,629 1,451,056 336,430
--------- --------- -------
Year ended June 30, 2000
Class A Class B Class C*
Sold 12,812,025 2,393,608 400
Issued for reinvested distributions 3,206,595 363,460 --
Redeemed (25,180,705) (2,538,499) --
----------- ---------- ---
Net increase (decrease) (9,162,085) 218,569 400
---------- ------- ---
* Inception date was June 26, 2000.
--------------------------------------------------------------------------------
36 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
New York Tax-Exempt Fund
Year ended June 30, 2001
Class A Class B Class C
Sold 2,061,413 789,717 70,172
Issued for reinvested distributions 631,197 85,801 680
Redeemed (2,729,151) (456,854) (12,150)
---------- -------- -------
Net increase (decrease) (36,541) 418,664 58,702
------- ------- ------
Year ended June 30, 2000
Class A Class B Class C*
Sold 2,432,603 901,503 14,052
Issued for reinvested distributions 720,424 98,421 --
Redeemed (5,723,434) (889,429) --
---------- -------- ------
Net increase (decrease) (2,570,407) 110,495 14,052
---------- ------- ------
Ohio Tax-Exempt Fund
Year ended June 30, 2001
Class A Class B Class C
Sold 2,487,537 385,003 130,184
Issued for reinvested distributions 462,347 44,290 880
Redeemed (1,957,754) (179,453) --
---------- -------- ------
Net increase (decrease) 992,130 249,840 131,064
------- ------- ------
Year ended June 30, 2000
Class A Class B Class C*
Sold 2,204,022 261,911 390
Issued for reinvested distributions 456,700 47,594 --
Redeemed (3,796,480) (474,614) --
---------- -------- ---
Net increase (decrease) (1,135,758) (165,109) 390
---------- -------- ---
* Inception date was June 26, 2000.
5. MUNICIPAL INTEREST RATE FUTURES CONTRACTS
Investments in securities as of June 30, 2001, included securities that were
valued and pledged as collateral to cover initial margin deposits (see "Summary
of significant accounting policies") as follows:
Market value Open purchase
Fund of collateral (sale) contracts
California Tax-Exempt Fund $627,531 (270)
Minnesota Tax-Exempt Fund 537,499 (250)
New York Tax-Exempt Fund 125,764 (15)
Ohio Tax-Exempt Fund 221,185 (15)
The market value of the open sale contracts as of June 30, 2001, was as follows:
Market value Net unrealized
Fund of futures gain (loss)
California Tax-Exempt Fund $27,641,250 $128,201
Minnesota Tax-Exempt Fund 25,593,750 78,062
New York Tax-Exempt Fund 1,535,625 7,378
Ohio Tax-Exempt Fund 1,535,625 7,378
The Funds maintain, in a segregated account with their custodian, bonds with at
least a market value equal to the value of open long futures contracts, if any.
--------------------------------------------------------------------------------
37 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
6. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, capital loss carry-overs were as follows as of
June 30, 2001:
Fund Carry-over Expiration date
California Tax-Exempt Fund $6,561,937 2007-2010
Massachusetts Tax-Exempt Fund 899,068 2008-2010
Michigan Tax-Exempt Fund 1,687,209 2008-2010
Minnesota Tax-Exempt Fund 7,573,386 2005-2010
New York Tax-Exempt Fund 2,160,266 2005-2010
Ohio Tax-Exempt Fund 1,276,710 2005-2010
It is unlikely the board will authorize a distribution of any net realized
capital gains for a Fund until the respective capital loss carry-over has been
offset or expires.
7. BANK BORROWINGS
Each Fund has a revolving credit agreement with U.S. Bank, N.A., whereby each
Fund is permitted to have bank borrowings for temporary or emergency purposes to
fund shareholder redemptions. Each 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 each 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. Each 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. Each Fund had no borrowings outstanding during the
year ended June 30, 2001.
8. 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 Funds' financial position, results of operations or changes in
their net assets.
9. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating
each Fund's results.
AXP California Tax-Exempt Trust
AXP California Tax-Exempt Fund
<TABLE>
<CAPTION>
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.03 $5.18 $5.35 $5.24 $5.15
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .25 .26 .27 .29 .29
Net gains (losses) (both realized and unrealized) .15 (.15) (.17) .11 .10
--- ---- ---- --- ---
Total from investment operations .40 .11 .10 .40 .39
--- --- --- --- ---
Less distributions:
Dividends from net investment income (.25) (.26) (.27) (.29) (.29)
Distributions from realized gains -- -- -- -- (.01)
---- ---- ---- --- ---
Total distributions (.25) (.26) (.27) (.29) (.30)
---- ---- ---- ---- ----
Net asset value, end of period $5.18 $5.03 $5.18 $5.35 $5.24
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $231 $213 $246 $239 $232
---- ---- ---- ---- ----
Ratio of expenses to average daily net assets(c) .85% .82% .79% .75% .77%
--- --- --- --- ---
Ratio of net investment income (loss)
to average daily net assets 4.79% 5.18% 4.97% 5.24% 5.64%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 11% 18% 16% 15% 14%
-- -- -- -- --
Total return(e) 8.00% 2.19% 1.80% 7.72% 7.77%
---- ---- ---- ---- ----
</TABLE>
See accompanying notes to financial highlights.
--------------------------------------------------------------------------------
38 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP California Tax-Exempt Trust
AXP California Tax-Exempt Fund
<TABLE>
<CAPTION>
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.03 $5.18 $5.35 $5.24 $5.15
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .21 .22 .22 .25 .25
Net gains (losses) (both realized and unrealized) .14 (.15) (.17) .11 .10
--- ---- ---- --- ---
Total from investment operations .35 .07 .05 .36 .35
--- --- --- --- ---
Less distributions:
Dividends from net investment income (.21) (.22) (.22) (.25) (.25)
Distributions from realized gains -- -- -- -- (.01)
--- --- --- --- ---
Total distributions (.21) (.22) (.22) (.25) (.26)
---- ---- ---- ---- ----
Net asset value, end of period $5.17 $5.03 $5.18 $5.35 $5.24
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $24 $21 $21 $15 $10
--- --- --- --- ---
Ratio of expenses to average daily net assets(c) 1.60% 1.58% 1.53% 1.50% 1.52%
---- ---- ---- ---- ----
Ratio of net investment income (loss)
to average daily net assets 3.99% 4.43% 4.23% 4.50% 4.94%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 11% 18% 16% 15% 14%
-- -- -- -- --
Total return(e) 6.98% 1.44% 1.03% 6.94% 6.95%
---- ---- ---- ---- ----
</TABLE>
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000(b)
Net asset value, beginning of period $5.03 $5.02
----- -----
Income from investment operations:
Net investment income (loss) .21 --
Net gains (losses) (both realized and unrealized) .15 .01
--- ---
Total from investment operations .36 .01
--- ---
Less distributions:
Dividends from net investment income (.21) --
---- ---
Net asset value, end of period $5.18 $5.03
----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $1 $--
-- ---
Ratio of expenses to average daily net assets(c) 1.60% 1.58%(d)
---- ----
Ratio of net investment income (loss)
to average daily net assets 4.04% 4.43%(d)
---- ----
Portfolio turnover rate (excluding short-term securities) 11% 18%
-- --
Total return(e) 7.20% .20%
---- ---
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) Total return does not reflect payment of a sales charge.
--------------------------------------------------------------------------------
39 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Special Tax-Exempt Series Trust
AXP Massachusetts Tax-Exempt Fund
<TABLE>
<CAPTION>
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.11 $5.39 $5.56 $5.42 $5.30
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .27 .27 .27 .29 .29
Net gains (losses) (both realized and unrealized) .17 (.27) (.17) .14 .12
--- ---- ---- --- ---
Total from investment operations .44 -- .10 .43 .41
--- --- --- --- ---
Less distributions:
Dividends from net investment income (.27) (.28) (.27) (.29) (.29)
---- ---- ---- ---- ----
Net asset value, end of period $5.28 $5.11 $5.39 $5.56 $5.42
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $65 $59 $70 $67 $67
--- --- --- --- ---
Ratio of expenses to average daily net assets(c) .95% .93% .81% .82% .84%
--- --- --- --- ---
Ratio of net investment income (loss)
to average daily net assets 5.04% 5.28% 4.99% 5.17% 5.32%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 4% 7% 5% 9% 8%
- - - - -
Total return(e) 8.64% .04% 1.72% 8.13% 7.81%
---- --- ---- ---- ----
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
Net asset value, beginning of period $5.11 $5.39 $5.56 $5.42 $5.30
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .23 .24 .23 .24 .25
Net gains (losses) (both realized and unrealized) .17 (.28) (.17) .14 .12
--- ---- ---- --- ---
Total from investment operations .40 (.04) .06 .38 .37
--- ---- --- --- ---
Less distributions:
Dividends from net investment income (.23) (.24) (.23) (.24) (.25)
---- ---- ---- ---- ----
Net asset value, end of period $5.28 $5.11 $5.39 $5.56 $5.42
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $18 $16 $17 $13 $8
--- --- --- --- --
Ratio of expenses to average daily net assets(c) 1.70% 1.69% 1.56% 1.57% 1.59%
---- ---- ---- ---- ----
Ratio of net investment income (loss)
to average daily net assets 4.28% 4.53% 4.25% 4.43% 4.58%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 4% 7% 5% 9% 8%
- - - - -
Total return(e) 7.83% (.71%) .96% 7.32% 7.00%
---- ---- --- ---- ----
</TABLE>
See accompanying notes to financial highlights.
--------------------------------------------------------------------------------
40 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Special Tax-Exempt Series Trust
AXP Massachusetts Tax-Exempt Fund
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000(b)
Net asset value, beginning of period $5.11 $5.10
----- -----
Income from investment operations:
Net investment income (loss) .23 --
Net gains (losses) (both realized and unrealized) .17 .01
--- ---
Total from investment operations .40 .01
--- ---
Less distributions:
Dividends from net investment income (.23) --
---- ---
Net asset value, end of period $5.28 $5.11
----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $1 $--
-- ---
Ratio of expenses to average daily net assets(c) 1.70% 1.69%(d)
---- ----
Ratio of net investment income (loss)
to average daily net assets 4.30% 4.53%(d)
---- ----
Portfolio turnover rate (excluding short-term securities) 4% 7%
- -
Total return(e) 7.84% .20%
---- ---
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) Total return does not reflect payment of a sales charge.
--------------------------------------------------------------------------------
41 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Special Tax-Exempt Series Trust
AXP Michigan Tax-Exempt Fund
<TABLE>
<CAPTION>
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.09 $5.38 $5.57 $5.44 $5.36
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .27 .27 .28 .29 .29
Net gains (losses) (both realized and unrealized) .18 (.29) (.17) .13 .08
--- ---- ---- --- ---
Total from investment operations .45 (.02) .11 .42 .37
--- ---- --- --- ---
Less distributions:
Dividends from net investment income (.27) (.27) (.28) (.29) (.29)
Distributions from realized gains -- -- (.02) -- --
---- ---- --- --- ---
Total distributions (.27) (.27) (.30) (.29) (.29)
---- ---- ---- ---- ----
Net asset value, end of period $5.27 $5.09 $5.38 $5.57 $5.44
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $67 $65 $77 $77 $77
--- --- --- --- ---
Ratio of expenses to average daily net assets(c) .95% .89% .83% .82% .81%
--- --- --- --- ---
Ratio of net investment income (loss)
to average daily net assets 5.09% 5.30% 5.00% 5.19% 5.38%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 4% 12% 20% 10% 21%
- -- -- -- --
Total return(e) 8.90% (.14%) 1.92% 7.66% 7.12%
---- ---- ---- ---- ----
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
Net asset value, beginning of period $5.09 $5.38 $5.57 $5.44 $5.36
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .23 .23 .24 .25 .25
Net gains (losses) (both realized and unrealized) .18 (.29) (.17) .13 .08
--- ---- ---- --- ---
Total from investment operations .41 (.06) .07 .38 .33
--- ---- --- --- ---
Less distributions:
Dividends from net investment income (.23) (.23) (.24) (.25) (.25)
Distributions from realized gains -- -- (.02) -- --
--- --- ---- --- ----
Total distributions (.23) (.23) (.26) (.25) (.25)
---- ---- ---- ---- ----
Net asset value, end of period $5.27 $5.09 $5.38 $5.57 $5.44
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $6 $6 $7 $5 $4
-- -- -- -- --
Ratio of expenses to average daily net assets(c) 1.70% 1.64% 1.59% 1.57% 1.56%
---- ---- ---- ---- ----
Ratio of net investment income (loss)
to average daily net assets 4.34% 4.55% 4.25% 4.44% 4.65%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 4% 12% 20% 10% 21%
- -- -- -- --
Total return(e) 8.09% (.92%) 1.17% 6.86% 6.32%
---- ---- ---- ---- ----
</TABLE>
See accompanying notes to financial highlights.
--------------------------------------------------------------------------------
42 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Special Tax-Exempt Series Trust
AXP Michigan Tax-Exempt Fund
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000(b)
Net asset value, beginning of period $5.09 $5.08
----- -----
Income from investment operations:
Net investment income (loss) .22 --
Net gains (losses) (both realized and unrealized) .18 .01
--- ---
Total from investment operations .40 .01
--- ---
Less distributions:
Dividends from net investment income (.22) --
---- ---
Net asset value, end of period $5.27 $5.09
----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $-- $--
--- ---
Ratio of expenses to average daily net assets(c) 1.70% 1.64%(d)
---- ----
Ratio of net investment income (loss)
to average daily net assets 4.36% 4.23%(d)
---- ----
Portfolio turnover rate (excluding short-term securities) 4% 12%
- --
Total return(e) 8.02% .20%
---- ---
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) Total return does not reflect payment of a sales charge.
--------------------------------------------------------------------------------
43 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Special Tax-Exempt Series Trust
AXP Minnesota Tax-Exempt Fund
<TABLE>
<CAPTION>
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.00 $5.26 $5.41 $5.30 $5.20
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .28 .29 .29 .30 .31
Net gains (losses) (both realized and unrealized) .14 (.27) (.15) .11 .10
--- ---- ---- --- ---
Total from investment operations .42 .02 .14 .41 .41
--- --- --- --- ---
Less distributions:
Dividends from net investment income (.28) (.28) (.29) (.30) (.31)
---- ---- ---- ---- ----
Net asset value, end of period $5.14 $5.00 $5.26 $5.41 $5.30
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $357 $340 $406 $385 $376
---- ---- ---- ---- ----
Ratio of expenses to average daily net assets(c) .84% .82% .78% .75% .75%
--- --- --- --- ---
Ratio of net investment income (loss)
to average daily net assets 5.45% 5.68% 5.37% 5.61% 5.81%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 4% 18% 13% 8% 14%
- -- -- - --
Total return(e) 8.53% .60% 2.62% 7.96% 8.06%
---- --- ---- ---- ----
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
Net asset value, beginning of period $5.00 $5.26 $5.41 $5.30 $5.20
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .24 .25 .25 .26 .27
Net gains (losses) (both realized and unrealized) .14 (.26) (.15) .11 .10
--- ---- ---- --- ---
Total from investment operations .38 (.01) .10 .37 .37
--- ---- --- --- ---
Less distributions:
Dividends from net investment income (.24) (.25) (.25) (.26) (.27)
---- ---- ---- ---- ----
Net asset value, end of period $5.14 $5.00 $5.26 $5.41 $5.30
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $53 $44 $46 $31 $22
--- --- --- --- ---
Ratio of expenses to average daily net assets(c) 1.60% 1.58% 1.54% 1.50% 1.50%
---- ---- ---- ---- ----
Ratio of net investment income (loss)
to average daily net assets 4.70% 4.94% 4.61% 4.86% 5.05%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 4% 18% 13% 8% 14%
- -- -- - --
Total return(e) 7.72% (.16%) 1.85% 7.17% 7.23%
---- ---- ---- ---- ----
</TABLE>
See accompanying notes to financial highlights.
--------------------------------------------------------------------------------
44 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Special Tax-Exempt Series Trust
AXP Minnesota Tax-Exempt Fund
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000(b)
Net asset value, beginning of period $5.00 $4.99
----- -----
Income from investment operations:
Net investment income (loss) .24 --
Net gains (losses) (both realized and unrealized) .14 .01
--- ---
Total from investment operations .38 .01
--- ---
Less distributions:
Dividends from net investment income (.24) --
---- ---
Net asset value, end of period $5.14 $5.00
----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $2 $--
-- ---
Ratio of expenses to average daily net assets(c) 1.59% 1.58%(d)
---- ----
Ratio of net investment income (loss)
to average daily net assets 4.74% 4.94%(d)
---- ----
Portfolio turnover rate (excluding short-term securities) 4% 18%
- --
Total return(e) 7.75% .20%
---- ---
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) Total return does not reflect payment of a sales charge.
--------------------------------------------------------------------------------
45 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Special Tax-Exempt Series Trust
AXP New York Tax-Exempt Fund
<TABLE>
<CAPTION>
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.92 $5.15 $5.29 $5.15 $5.06
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .25 .27 .25 .27 .28
Net gains (losses) (both realized and unrealized) .20 (.23) (.14) .14 .09
--- ---- ---- --- ---
Total from investment operations .45 .04 .11 .41 .37
--- --- --- --- ---
Less distributions:
Dividends from net investment income (.25) (.27) (.25) (.27) (.28)
---- ---- ---- ---- ----
Net asset value, end of period $5.12 $4.92 $5.15 $5.29 $5.15
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $88 $85 $102 $105 $108
--- --- ---- ---- ----
Ratio of expenses to average daily net assets(c) .91% .88% .82% .79% .81%
--- --- --- --- ---
Ratio of net investment income (loss)
to average daily net assets 4.90% 5.27% 4.93% 5.22% 5.55%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 13% 11% 8% 10% 12%
-- -- - -- --
Total return(e) 9.28% .77% 2.04% 8.20% 7.60%
---- --- ---- ---- ----
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
Net asset value, beginning of period $4.92 $5.15 $5.29 $5.15 $5.06
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .21 .23 .21 .23 .25
Net gains (losses) (both realized and unrealized) .20 (.23) (.14) .14 .09
--- ---- ---- --- ---
Total from investment operations .41 -- .07 .37 .34
--- --- --- --- ---
Less distributions:
Dividends from net investment income (.21) (.23) (.21) (.23) (.25)
---- ---- ---- ---- ----
Net asset value, end of period $5.12 $4.92 $5.15 $5.29 $5.15
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $16 $13 $14 $10 $8
--- --- --- --- --
Ratio of expenses to average daily net assets(c) 1.66% 1.63% 1.57% 1.55% 1.56%
---- ---- ---- ---- ----
Ratio of net investment income (loss)
to average daily net assets 4.14% 4.54% 4.20% 4.47% 4.81%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 13% 11% 8% 10% 12%
-- -- - -- --
Total return(e) 8.47% .01% 1.28% 7.35% 6.80%
---- --- ---- ---- ----
</TABLE>
See accompanying notes to financial highlights.
--------------------------------------------------------------------------------
46 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Special Tax-Exempt Series Trust
AXP New York Tax-Exempt Fund
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000(b)
Net asset value, beginning of period $4.92 $4.91
----- -----
Income from investment operations:
Net investment income (loss) .21 --
Net gains (losses) (both realized and unrealized) .19 .01
--- ---
Total from investment operations .40 .01
--- ---
Less distributions:
Dividends from net investment income (.21) --
---- ---
Net asset value, end of period $5.11 $4.92
----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $-- $--
--- ---
Ratio of expenses to average daily net assets(c) 1.66% 1.63%(d)
---- ----
Ratio of net investment income (loss)
to average daily net assets 4.09% 4.54%(d)
---- ----
Portfolio turnover rate (excluding short-term securities) 13% 11%
-- --
Total return(e) 8.26% .20%
---- ---
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) Total return does not reflect payment of a sales charge.
--------------------------------------------------------------------------------
47 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Special Tax-Exempt Series Trust
AXP Ohio Tax-Exempt Fund
<TABLE>
<CAPTION>
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.13 $5.36 $5.50 $5.38 $5.28
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .27 .27 .27 .29 .29
Net gains (losses) (both realized and unrealized) .14 (.23) (.14) .12 .10
--- ---- ---- --- ---
Total from investment operations .41 .04 .13 .41 .39
--- --- --- --- ---
Less distributions:
Dividends from net investment income (.27) (.27) (.27) (.29) (.29)
---- ---- ---- ---- ----
Net asset value, end of period $5.27 $5.13 $5.36 $5.50 $5.38
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $67 $60 $69 $67 $67
--- --- --- --- ---
Ratio of expenses to average daily net assets(c) .93% .88% .88% .83% .83%
--- --- --- --- ---
Ratio of net investment income (loss)
to average daily net assets 4.98% 5.31% 5.02% 5.22% 5.46%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 3% 13% 5% 10% 9%
- -- - -- -
Total return(e) 7.95% .91% 2.50% 7.79% 7.43%
---- --- ---- ---- ----
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000 1999 1998 1997
Net asset value, beginning of period $5.13 $5.36 $5.50 $5.38 $5.28
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .23 .23 .23 .24 .25
Net gains (losses) (both realized and unrealized) .14 (.23) (.14) .13 .10
--- ---- ---- --- ---
Total from investment operations .37 -- .09 .37 .35
--- ---- --- --- ---
Less distributions:
Dividends from net investment income (.23) (.23) (.23) (.25) (.25)
---- ---- ---- ---- ----
Net asset value, end of period $5.27 $5.13 $5.36 $5.50 $5.38
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $8 $7 $8 $5 $4
-- -- -- -- --
Ratio of expenses to average daily net assets(c) 1.68% 1.64% 1.63% 1.59% 1.59%
---- ---- ---- ---- ----
Ratio of net investment income (loss)
to average daily net assets 4.23% 4.55% 4.27% 4.47% 4.74%
---- ---- ---- ---- ----
Portfolio turnover rate (excluding short-term securities) 3% 13% 5% 10% 9%
- -- - -- -
Total return(e) 7.15% .14% 1.75% 6.98% 6.62%
---- --- ---- ---- ----
</TABLE>
See accompanying notes to financial highlights.
--------------------------------------------------------------------------------
48 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Special Tax-Exempt Series Trust
AXP Ohio Tax-Exempt Fund
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2001 2000(b)
Net asset value, beginning of period $5.13 $5.12
----- -----
Income from investment operations:
Net investment income (loss) .22 --
Net gains (losses) (both realized and unrealized) .15 .01
--- ---
Total from investment operations .37 .01
--- ---
Less distributions:
Dividends from net investment income (.22) --
---- ---
Net asset value, end of period $5.28 $5.13
----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $1 $--
-- ---
Ratio of expenses to average daily net assets(c) 1.68% 1.64%(d)
---- ----
Ratio of net investment income (loss)
to average daily net assets 4.26% 4.55%(d)
---- ----
Portfolio turnover rate (excluding short-term securities) 3% 13%
- --
Total return(e) 7.27% .20%
---- ---
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) Total return does not reflect payment of a sales charge.
--------------------------------------------------------------------------------
49 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Investments in Securities
AXP California Tax-Exempt Fund
June 30, 2001
(Percentages represent value of investments compared to net assets)
Municipal bonds (90.0%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
ABAG Financial Authority
for Nonprofit Corporations
Certificates of Participation
International School Series 1996
05-01-26 7.38% $2,200,000 $2,342,164
ABAG Financial Authority
for Nonprofit Corporations
Revenue Bonds San Diego
Hospital Association
Series 2001A
08-15-20 6.13 1,000,000 1,008,070
Alhambra City Elementary School District
Los Angeles County Election of 1999
General Obligation Bonds Zero Coupon
Series 1999A (FSA Insured)
09-01-22 5.95 1,055,000(e) 329,002
Alta Loma School District Unlimited Tax
Capital Appreciation General
Obligation Bonds
Zero Coupon Series 1999A (FGIC Insured)
08-01-23 5.69 2,600,000(e) 765,960
Anaheim Public Financing Authority
Lease Capital Appreciation Improvement
Revenue Bonds Zero Coupon Series 1997C
(FSA Insured)
09-01-25 5.61 2,170,000(e) 559,079
Anaheim Public Financing Authority
Revenue Bonds Electric Utilities
San Juan 2nd Series 1993 (FGIC Insured)
10-01-22 5.75 11,100,000 11,357,965
Arcade Certificates of Participation
Water District Revenue Bonds
Series 1997 (FGIC Insured)
11-01-27 5.00 1,200,000 1,146,336
Beaumont Financing Authority
Local Agency Revenue Bonds
Series 2000A
09-01-32 7.38 2,000,000 2,080,620
Brea Public Financing Authority
Water Refunding Bonds
Series 1998 (FGIC Insured)
07-01-21 4.75 1,000,000 935,470
Brea Redevelopment Agency
Tax Allocation Refunding Bonds
Redevelopment Project AB
Series 1993 (MBIA Insured)
08-01-17 5.50 1,800,000 1,831,500
Burbank Redevelopment Agency
Tax Allocation Bonds
Golden State Series 1993A
12-01-23 6.00 2,000,000 2,052,080
Community Development Authority
Health Facilities Unihealth America
Certificate of Participation Series 1993
Inverse Floater (AMBAC Insured)
10-01-11 7.63 5,000,000(f) 5,906,250
Contra Costa County
Residential Rent Facility
Multi-family Housing Revenue Bonds
Cypress Meadows Series 1998E A.M.T.
09-01-28 7.00 2,000,000 1,728,420
El Monte Department Public
Social Services Facility
Certificates of Participation
Series 1999 (AMBAC Insured)
06-01-30 4.75 1,500,000 1,354,005
Encinitas Unified School District
Unlimited General Obligation Bonds
Zero Coupon Series 1996 (MBIA Insured)
08-01-15 5.85 2,500,000(e) 1,216,250
08-01-16 5.85 1,000,000(e) 454,830
Folsom Special Tax Refunding Bonds
Community Facilities District #10
Series 1999
09-01-24 7.00 3,000,000 3,220,890
Fontana Redevelopment Agency
Refunding Certificates of Participation
Police Facility Series 1993
04-01-16 5.63 4,500,000 4,567,140
Fontana Unified School District
San Bernardino County General Obligation
Convertible Capital Appreciation Bonds
Series 1995C (FGIC Insured)
05-01-20 6.15 3,470,000 3,749,196
Fontana Unified School District
Unlimited Tax General Obligation Bonds
Series1997D (FGIC Insured)
05-01-22 5.75 2,000,000 2,112,120
Foothill/Eastern Transportation
Corridor Agency Toll Road
Senior Lien Revenue Bonds
Series 1995A
01-01-34 6.00 1,775,000 1,978,539
Fresno Unified School District Fresno
County Refunding General Obligation
Bonds Series 1999C (MBIA Insured)
08-01-22 5.90 2,000,000 2,222,260
Garden Grove Agency
Community Development
Tax Allocation Refunding Bonds
Garden Grove Community
Series 1993
10-01-23 5.88 3,000,000 3,009,180
Garden Grove Certificates of Participation
Bahia Village/Emerald Isle
Series 1993 (FSA Insured)
08-01-23 5.70 2,660,000 2,719,664
Hemet Redevelopment Agency
Tax Allocation Bonds
Series 1999A (AMBAC Insured)
09-15-28 4.75 2,390,000 2,169,618
Infrastructure & Economic
Development Bank
Revenue Bonds
American Center for Wine, Foods & Arts
Series 1999 (ACA Insured)
12-01-19 5.70 2,500,000 2,502,975
Inglewood Redevelopment Agency
Revenue Bonds Series 1998A
(AMBAC Insured)
05-01-23 5.25 1,100,000 1,125,894
Intercommunity Hospital Finance Authority
Certificates of Participation Series 1998
(ACA Insured)
11-01-19 5.25 2,000,000 1,902,640
Irwindale Redevelopment Agency Sub Lien
Tax Allocation Bonds Series 1996
12-01-19 7.00 1,700,000 1,836,986
Janesville Union School District
Lassen County General Obligation Bonds
Series 1996
08-01-21 6.45 860,000(d) 903,464
La Mirada Redevelopment Agency
Special Tax Refunding Revenue Bonds
Community Facilities District #89-1
Series 1998
10-01-20 5.70 1,000,000 969,680
Lake Elsinore Public Finance Authority
Local Agency Revenue Bonds
Series 1997F
09-01-20 7.10 2,975,000 3,172,213
Lake Elsinore Public Finance Authority Tax
Allocation Revenue Bonds Series 1999A
09-01-30 5.50 2,500,000 2,398,250
Lake Elsinore Redevelopment Agency
Community Facilities District #90
Tuscany Hills Public Improvements
Special Tax Parity Bonds Series 1999A
10-01-24 6.05 2,000,000 1,984,980
Lake Elsinore School Finance Authority
Revenue Bonds Series 1997
09-01-19 6.13 1,235,000 1,266,159
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
50 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP California Tax-Exempt Fund
Municipal bonds (continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Las Virgenes Unified School District
Los Angeles County Capital Appreciation
General Obligation Bonds Zero Coupon
Series 1999 (FSA Insured)
11-01-21 5.67% $1,800,000(e) $590,004
11-01-22 5.68 2,300,000(e) 710,700
11-01-23 5.68 2,945,000(e) 855,699
Los Angeles County Schools Regionalized
Business Services Pooled Financing Program
Certificate of Participation Zero Coupon
Series 1999A (AMBAC Insured)
08-01-27 5.97 2,410,000(e) 551,697
Los Angeles Department of Water & Power
Revenue Bonds Series 2001A
(FSA Insured)
07-01-18 5.25 2,000,000 2,027,980
Los Angeles Department of Water & Power
Waterworks Refunding Revenue Bonds
2nd Issue Series1993
(Secondary FGIC Insured)
05-15-18 4.50 3,000,000 2,768,970
Los Angeles Multi-family Housing
Revenue Bonds Park Parthenia
Series 1986 (GNMA Insured)
A.M.T.
01-20-22 7.40 1,000,000 1,012,660
Los Angeles Single Family Home
Mortgage Revenue Bonds
Series 1991A (GNMA & FNMA Insured)
A.M.T.
06-01-25 6.88 705,000 719,304
Los Angeles State Harbor Revenue Bonds
Series 1988 Escrowed to Maturity
10-01-18 7.60 1,000,000 1,245,070
Los Angeles State Harbor Revenue Bonds
Series 1996B (MBIA Insured) A.M.T.
11-01-19 5.38 2,000,000 2,023,420
11-01-23 5.38 1,300,000 1,285,739
Los Angeles Unified School District
General Obligation Bonds Series 2001A
(FSA Insured)
07-01-21 5.00 2,000,000 1,960,360
Millbrae Residential Facility
Revenue Bonds Magnolia of Millbrae
Series 1997A A.M.T.
09-01-27 7.38 2,500,000 2,462,600
Modesto Irrigation District Finance Authority
Refunding Revenue Bonds Domestic Water
Series 1998D (AMBAC Insured)
09-01-22 4.75 2,000,000 1,863,280
Northern California Transmission Select
Auction Variable Rate Security &
Residual Interest Revenue Bonds
Series 1993 (MBIA Insured)
04-29-24 5.50 4,500,000(h) 4,591,530
Novato Community Facility District #1
Vintage Oaks Public Improvement
Special Tax Refunding Bonds
Series 1994
08-01-21 7.25 2,000,000 2,120,440
Orange County Special Tax
Community Facilities Pre-refunded Bonds
Aliso Veijo District 88-1
Series 1992A
08-15-18 7.35 3,000,000 3,213,930
Pittsburg Infrastructure Finance Authority
Reassessment Revenue Improvement
Bonds Series 1998A
09-02-24 5.60 1,440,000 1,400,198
Pittsburg Redevelopment Agency
Tax Allocation Bonds Los Medanos
Community Development Zero Coupon
Series 1999 (AMBAC Insured)
08-01-24 6.05 2,100,000(e) 576,240
Pleasanton Joint Powers Financing Authority
Reassessment Revenue Bonds
Series 1993A
09-02-12 6.15 1,765,000 1,840,948
Port of Oakland Refunding Revenue Bonds
Series 1997G (MBIA Insured) A.M.T.
11-01-25 5.38 3,080,000 3,086,930
Poway Unified School District Special Tax
Refunding Bonds Community Facilities
District #1 Series 1998 (MBIA Insured)
10-01-23 4.75 2,500,000 2,318,275
Rancho Mirage Joint Powers
Finance Authority
Certificate of Participation
Eisenhower Memorial Hospital
Series 1992
03-01-22 7.00 4,250,000 4,457,443
Redding Redevelopment Agency
Tax Allocation Refunding Bonds
Canby Hilltop Cypress
Series 1993D (CGIC Insured)
09-01-23 5.00 4,700,000 4,558,765
Redwood City Elementary School
District Capital Appreciation
General Obligation Bonds
San Mateo County Zero Coupon
Series 1997 (FGIC Insured)
08-01-20 5.65 5,475,000(e) 1,929,116
Richmond Elementary School District
Lassen County General Obligation Bonds
Series 1996
08-01-21 6.50 649,000 680,042
Richmond Joint Powers Financing Authority
Lease & Gas Tax Refunding Revenue Bonds
Series 1995A
05-15-13 5.25 2,000,000 2,043,860
Riverside County Certificates of Participation
Series 1998 (MBIA Insured)
12-01-21 5.00 1,530,000 1,495,483
Rural Home Mortgage Financing Authority
Single Family Mortgage Revenue Bonds
2nd Series 1997A (GNMA Insured) A.M.T.
09-01-29 7.00 1,425,000 1,608,953
Rural Home Mortgage Financing Authority
Single Family Mortgage Revenue Bonds
5th Series 1998B (FNMA/GNMA Insured)
A.M.T.
12-01-29 6.35 1,455,000 1,597,139
Sacramento Cogeneration Authority
Pre-refunded Revenue Bonds
Procter & Gamble Series 1995
07-01-10 6.38 500,000 565,010
Sacramento Cogeneration Authority
Un-refunded Revenue Bonds
Procter & Gamble Series 1995
07-01-10 6.38 500,000(d) 535,805
Sacramento Municipal Utility District
Pre-refunded Bonds
Series1991Y (MBIA Insured)
09-01-19 6.75 3,400,000 3,491,868
Sacramento Power Authority Cogeneration
Revenue Bonds Campbell Soup
Series 1995
07-01-22 6.00 1,000,000 1,041,110
San Diego Convention Center Expansion
Financing Authority Revenue Bonds
Series 1998A (AMBAC Insured)
04-01-28 4.75 3,250,000 2,961,108
San Diego County Capital Asset Lease
Certificate of Participation Series 1993
Inverse Floater (AMBAC Insured)
09-01-07 7.47 3,200,000(f) 3,692,000
San Diego County Water Authority
Revenue Bonds Certificates of
Participation
Series 1998A (FGIC Insured)
05-01-24 4.50 6,475,000 5,736,721
San Diego Water Utility Systems
Undivided Interest Revenue Bonds
Series 1998 (FGIC Insured)
08-01-28 4.75 2,695,000 2,447,087
San Francisco City & County
Airport Commission
International Airport
Refunding Revenue Bonds
Issue 20 2nd Series 1998
05-01-26 4.50 2,250,000 1,965,218
San Francisco City & County
Airport Commission
International Airport
Revenue Bonds Issue 15B
2nd Series 1998 (MBIA Insured)
05-01-25 4.50 1,500,000 1,323,750
San Jose Redevelopment Agency
Merged Area Redevelopment
Tax Allocation Bonds
Series 1993 (MBIA Insured)
08-01-24 4.75 3,055,000 2,817,290
San Jose Redevelopment Agency
Merged Area Redevelopment
Tax Allocation Bonds
Series 1999 (AMBAC Insured)
08-01-23 4.75 3,000,000 2,764,230
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
51 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP California Tax-Exempt Fund
Municipal bonds (continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
San Jose Redevelopment Agency
Merged Area Tax Allocation Bonds
Series 1993 Inverse Floater
(MBIA Insured)
08-01-14 7.20% $3,000,000(f) $3,161,250
San Juan Unified School District
Unlimited Tax General Obligation Bonds
Zero Coupon Series 1999
08-01-21 5.68 820,000(d,e) 272,494
08-01-23 5.70 1,820,000(d,e) 536,172
08-01-24 5.70 1,810,000(e) 503,397
San Ramon Certificate of Participation
Refunding Bonds Series 2001
(AMBAC Insured)
03-01-21 5.00 1,835,000 1,794,428
San Ysidro School District
General Obligation Bonds
San Diego County
Series 1997 (AMBAC Insured)
08-01-21 6.13 1,000,000 1,126,160
Santa Clara County Mountain View Los Altos
Union High School District Unlimited Tax
General Obligation Bonds Series 1995A
08-01-15 5.75 1,200,000 1,265,988
Santa Cruz Certificate of Participation
Series 1987
08-01-07 8.38 950,000 954,294
Santa Monica-Malibu Unified School District
Capital Appreciation General Obligation
Bonds Los Angeles County Zero Coupon
Series 1999 (FGIC Insured)
08-01-22 5.38 7,300,000(e) 2,286,944
South Tahoe Joint Powers
Financing Authority
Refunding Revenue Bonds
Series 1995B
10-01-20 6.25 2,700,000 2,769,795
Southern California Metropolitan Water
District Waterworks Revenue Bonds
Series 1997A
07-01-26 5.00 3,700,000 3,532,390
Southern California Public Power Authority
Transmission Special Bonds
Series 1992
07-01-12 6.00 2,700,000 2,810,592
State Department Water Resource
Water Systems Revenue Bonds
Center Valley Series 1993L
12-01-23 5.50 3,000,000 3,032,430
State Department Water Resource
Water Systems Revenue Bonds
Center Valley Series 1995O
12-01-18 4.75 2,000,000 1,906,420
State Educational Facilities Authority
Revenue Bonds Keck Graduate
Institute of Applied Life Sciences
Series 2000
06-01-20 6.63 1,490,000 1,588,578
State Educational Facilities Authority
Revenue Bonds Pomona College
Series 1992
02-15-17 6.00 3,000,000 3,109,710
State Educational Facilities Authority
Revenue Bonds Series 1997B
04-01-21 6.30 1,000,000 1,045,360
State for Previous Veterans Unlimited
General Obligation Bonds
Series 2000B A.M.T.
12-01-12 4.95 2,250,000 2,244,083
12-01-13 5.05 1,435,000 1,429,705
12-01-14 5.15 2,535,000 2,525,671
State General Obligation Bonds
Series 2000
05-01-30 5.75 2,000,000 2,065,060
State Public Works Board
California Community Colleges Lease
Pre-refunded Revenue Bonds
Series 1994
03-01-19 7.00 2,000,000 2,230,340
State Public Works Board Lease
Revenue Bonds
Department of Correction Substance Abuse
Treatment Facility & State Prison Corcoran
Series 1996A (AMBAC Insured)
01-01-21 5.25 1,870,000 1,867,737
State University Multi-purpose
Revenue Bonds
Series 2000K (FGIC Insured)
09-01-20 5.00 1,830,000 1,803,245
State University Refunding Revenue Bonds
Series 1993C (AMBAC Insured)
09-01-23 5.00 2,000,000 1,929,720
State Unlimited Tax General
Obligation Bonds Series 1993
(FGIC Insured)
09-01-23 4.75 1,075,000 993,074
Statewide Community Development
Authority Revenue Certificates of
Participation St. Joseph Health
System Group Series 1994
07-01-15 6.50 5,500,000 6,122,875
Statewide Community Development
Authority Multi-family Housing
Revenue Bonds Magnolia City Lights
Series 1999X A.M.T.
07-01-30 6.65 1,600,000 1,448,080
Stockton Single Family Mortgage
Revenue Bonds Series 1990A
(GNMA Insured) A.M.T.
02-01-23 7.50 70,000 73,854
Upland Certificate of Participation
Water System Refunding Bonds
Series 1992 (FGIC Insured)
08-01-16 6.60 1,000,000 1,049,100
Vallejo Certificates of Participation
Touro University Series 1999
06-01-29 7.38 2,000,000 2,067,280
West Sacramento Financing Authority
Special Tax Revenue Bonds
Series 1999F
09-01-29 6.10 3,000,000 2,890,470
Windsor Civic Center Joint Powers Financing
Authority Lease Revenue Bonds
Series 2001A (FSA Insured)
10-01-24 5.00 2,555,000 2,466,265
Total municipal bonds
(Cost: $215,204,178) $230,720,782
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
52 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP California Tax-Exempt Fund
Municipal notes (6.9%)
Issuer(b,c,g) Effective Amount Value(a)
yield payable at
maturity
Irvine Ranch Water District Revenue Bonds
Series 1985 V.R.
10-01-05 3.10% $1,600,000 $1,600,000
Irvine Ranch Water District Revenue Bonds
Series 1991 V.R.
08-01-16 3.10 300,000 300,000
Orange County Improvement District #88
Special Assessment Bonds V.R.
09-02-18 3.05 1,000,000 1,000,000
Orange County Improvement District #88-1
Special Assessment Bonds
Series 1988 V.R.
09-02-18 3.05 2,500,000 2,500,000
State Health Facilities Financing Authority
Revenue Bonds
Adventist Health Systems Series 1998A
V.R. (MBIA Insured)
09-01-28 3.05 2,300,000 2,300,000
State Health Facilities Financing Authority
Revenue Bonds
Adventist Health Systems
Series 1998B V.R.
09-01-28 3.05 700,000 700,000
State Health Facilities Financing Authority
Revenue Bonds
Sutter Health Series 1996B V.R.
03-01-12 3.10 700,000 700,000
Statewide Community
Development Authority
Certificates of Participation Series 1998 V.R.
04-01-28 3.00 3,700,000 3,700,000
Statewide Community
Development Authority
Certificate of Participation
John Muir/Mt Diablo Health
Series 1997 V.R.
08-15-27 3.00 3,700,000 3,700,000
Statewide Community
Development Authority
Certificate of Participation
Sutter Health Group Series 1995 V.R.
07-01-15 3.10 1,200,000 1,200,000
Total municipal notes
(Cost: $17,700,000) $17,700,000
Total investments in securities
(Cost: $232,904,178)(i) $248,420,782
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) The following abbreviations may be used in the portfolio security
descriptions to identify the insurer of the issue:
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(c) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of June 30, 2001, the value of
securities subject to alternative minimum tax represented 9.07%
of net assets.
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
T.A.N. -- Tax Anticipation Note
T.R.A.N. -- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B. -- Variable Rate Demand Bond
V.R.D.N. -- Variable Rate Demand Note
(d) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Sale contracts
Municipal Bonds, Sept. 2001 $27,000,000
(e) For zero coupon bonds, the interest rate disclosed represents the
annualized effective yield on the date of acquisition.
(f) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a
decline (increase) in market short-term rates. Interest rate disclosed is
the rate in effect on June 30, 2001. As of June 30, 2001, the value of
inverse floater securities represented 5.0% of net assets.
(g) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parentheses, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies
to reflect current market conditions; rate shown is the effective rate on
June 30, 2001.
(h) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on June 30,
2001.
(i) At June 30, 2001, the cost of securities for federal income tax purposes
was $232,904,178 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $16,663,868
Unrealized depreciation (1,147,264)
----------
Net unrealized appreciation $15,516,604
-----------
--------------------------------------------------------------------------------
53 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Investments in Securities
AXP Massachusetts Tax-Exempt Fund
June 30, 2001
(Percentages represent value of investments compared to net assets)
Municipal bonds (89.2%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Bay Transportation Authority
General Transportation System
Refunding Revenue Bonds Series 1992B
03-01-16 6.20% $1,500,000 $1,719,240
Bay Transportation Authority
Pre-refunded Revenue Bonds
Series 1992B (FSA Insured)
03-01-21 5.50 15,000 15,589
Boston City Hospital
Refunding Revenue Bonds
Series 1993B (FHA Insured)
02-15-23 5.75 3,000,000 3,008,520
Boston General Obligation Refunding Bonds
Series 1993A (AMBAC Insured)
02-01-09 5.65 1,500,000 1,562,055
Boston Industrial Development
Financing Authority Revenue Bonds
Massachusetts College of Pharmacy
Series 1994A (Connie Lee Insured)
10-01-26 5.25 1,000,000 971,320
Boston Pre-refunded General
Obligation Bonds
Series 1991A (MBIA Insured)
07-01-11 6.75 500,000 510,110
Boston Water & Sewer Commission
General Pre-refunded Revenue Bonds
Senior Series 1991A (FGIC Insured)
11-01-18 7.00 1,000,000 1,034,400
Boston Water & Sewer Commission
General Revenue Bonds
Series 1998D (FGIC Insured)
11-01-22 4.75 1,000,000 920,310
Haverhill City Unlimited Tax General
Obligation Bonds Series 1997
(FGIC Insured)
06-15-17 5.00 250,000 250,320
Health & Educational Facilities Authority
Pre-refunded Revenue Bonds
Brigham & Women's
Hospital Series 1991D
07-01-24 6.75 1,000,000 1,020,220
Health & Educational Facilities Authority
Pre-refunded Revenue Bonds
Charlton Memorial
Hospital Series 1991B
07-01-13 7.25 1,750,000 1,785,420
Health & Educational Facilities Authority
Pre-refunded Revenue Bonds
New England
Deaconess Hospital Series 1992D
04-01-12 6.63 1,000,000 1,048,940
Health & Educational Facilities Authority
Pre-refunded Revenue Bonds
Newton Wellesley
Hospital Series 1991D (MBIA Insured)
07-01-15 7.00 1,000,000 1,020,230
Health & Educational Facilities Authority
Pre-refunded Revenue Bonds Northeastern
University Series 1992E (MBIA Insured)
10-01-22 6.55 1,000,000 1,056,990
Health & Educational Facilities Authority
Refunding Revenue Bonds
Beth Israel Hospital Series 1989E
07-01-09 7.00 300,000 300,006
07-01-14 7.00 250,000 244,135
Health & Educational Facilities Authority
Revenue Bonds Berkshire Health Systems
Series 1994C
10-01-11 5.90 900,000 903,969
Health & Educational Facilities Authority
Revenue Bonds Cape Cod Health System
Series 1993A (Connie Lee Insured)
11-15-21 5.25 2,500,000 2,469,050
Health & Educational Facilities Authority
Revenue Bonds Holyoke Hospital
Series 1994B
07-01-15 6.50 1,000,000 931,380
Health & Educational Facilities Authority
Revenue Bonds Suffolk University
Series 1992B (Connie Lee Insured)
07-01-22 6.35 2,495,000 2,576,537
Industrial Finance Agency
Assumption College Revenue Bonds
Series 1996 (Connie Lee Insured)
07-01-26 6.00 1,000,000 1,051,260
Industrial Finance Agency
Hampshire College
Revenue Bonds Series 1997
10-01-17 5.80 1,105,000 1,087,762
Industrial Finance Agency
Pollution Control Refunding Revenue
Bonds Eastern Edison
Series 1993
08-01-08 5.88 2,000,000 2,075,400
Industrial Finance Agency
Resource Recovery Revenue Bonds
SEMASS Series 1991A
07-01-15 9.00 1,500,000 1,548,285
Mansfield Pre-refunded General Obligation
Bonds Series 1991 (AMBAC Insured)
01-15-11 6.70 1,000,000 1,041,450
Municipal Wholesale Electric Power
Supply System Pre-refunded Revenue
Bonds Series 1992B
07-01-17 6.75 1,395,000 1,477,975
Municipal Wholesale Electric Power
Supply System Refunding Revenue Bonds
Series 1994B (MBIA Insured)
07-01-11 4.75 1,750,000 1,774,885
Municipal Wholesale Electric Power
Supply System Revenue Bonds Special
Parts & Inflows Series 1993
(AMBAC Insured)
07-01-18 5.45 1,600,000 1,612,208
Nantucket General Obligation Bonds
Series 1991
12-01-11 6.80 1,000,000 1,036,900
Route 3 North Transportation
Improvement Lease Bonds
Inverse Floater Series 2000
(MBIA Insured)
06-15-19 9.06 500,000(e) 542,470
Southeastern University Building
Refunding Revenue Bonds
Series 1995A (AMBAC Insured)
05-01-16 5.75 1,250,000 1,307,813
State Development Finance Agency
Private School Revenue Bonds
Series 1998
11-01-18 5.88 500,000 418,645
State Development Finance Agency
Refunding Revenue Bonds
Briarwood Retirement Community
Series 2001B
12-01-30 8.25 750,000 733,718
State Development Finance Agency
Revenue Bonds 1st Mortgage
Berkshire Retirement Community
Lennox Series 1999
07-01-29 5.63 1,500,000 1,229,430
State Development Finance Agency
Revenue Bonds Boston University
Series 1999P
05-15-29 6.00 1,400,000 1,490,804
State Development Finance Agency
Revenue Bonds Devens Electric System
Series 2001
12-01-30 6.00 1,000,000 1,001,610
State Development Finance Agency
Revenue Bonds Landmank School
Series 1999 (Asset Guaranty)
06-01-29 5.25 1,000,000 957,620
State Development Finance Agency
Revenue Bonds Massachusetts
College of Pharmacy Series 1999B
07-01-20 6.63 1,000,000 1,042,930
See accompanying notes to investments in securities.
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54 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Massachusetts Tax-Exempt Fund
Municipal bonds (continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
State Development Finance Agency
Revenue Bonds Suffolk University
Series 1999
07-01-29 5.85% $1,000,000 $990,480
State Development Finance Agency
Revenue Bonds The May Institute Issue
Series 1999 (Asset Guaranty)
09-01-29 5.75 1,000,000 1,014,520
State Development Finance Authority
Revenue Bonds Boston Biomedical
Research Institute Series 1999
02-01-29 5.75 1,000,000 920,460
State Education Loan Authority
Educational Loan Revenue Bonds
Issue E Series 1994B
(AMBAC Insured) A.M.T.
01-01-12 6.00 680,000 715,353
State Health & Education Facilities Authority
College Revenue Bonds Brandeis University
Series 1998I (MBIA Insured)
10-01-28 4.75 2,000,000 1,824,200
State Health & Education Facilities Authority
Hospital Revenue Bonds Harvard Pilgrim
Health Series 1998A (FSA Insured)
07-01-22 4.75 1,000,000 911,900
State Health & Education Facilities Authority
Hospital Revenue Bonds Milford-Whitinsville
Regional Hospital Series 1998C
07-15-28 5.38 1,065,000 808,367
State Health & Education Facilities Authority
Pre-refunded Revenue Bonds
Boston College Series 1991J
(FGIC Insured)
07-01-21 6.63 1,940,000 1,979,207
State Health & Education Facilities Authority
Pre-refunded Revenue Bonds
Melrose-Wakefield Hospital Series 1992B
07-01-16 6.38 1,000,000 1,085,510
State Health & Education Facilities Authority
Pre-refunded Revenue Bonds
Series 1992D (MBIA Insured)
07-01-22 6.50 495,000 523,121
State Health & Education Facilities Authority
Refunding Revenue Bonds
Christopher House Series 1999A
01-01-29 6.88 1,000,000 900,000
State Health & Education Facilities Authority
Refunding Revenue Bonds Caritas Christi
Obligated Group Series 1999A
07-01-15 5.70 1,000,000 917,700
State Health & Education Facilities Authority
Revenue Bonds Boston College Series 1998L
06-01-31 4.75 1,000,000 895,330
State Health & Education Facilities Authority
Revenue Bonds Learning Center for
Deaf Children Series 1999C
07-01-29 6.13 1,000,000 850,210
State Health & Education Facilities Authority
Revenue Bonds North Adams
Regional Hospital Series 1996C
07-01-18 6.63 1,000,000 978,580
State Health & Education Facilities Authority
Revenue Bonds South Shore Hospital
Series 1999F
07-01-29 5.75 1,000,000 963,660
State Health & Education Facilities Authority
Revenue Bonds Southcoast Health System
Series 1998A (MBIA Insured)
07-01-27 4.75 1,000,000 897,270
State Health & Education Facilities Authority
Revenue Bonds Valley Regional Health
System Series 1994C (Connie Lee Insured)
07-01-18 5.75 1,000,000 1,026,180
State Health & Education Facilities Authority
Un-refunded Revenue Bonds
Boston College
Series 1991J (FGIC Insured)
07-01-21 6.63 60,000 61,331
State Health & Education Facilities Authority
Un-refunded Revenue Bonds
Series 1992D (MBIA Insured)
07-01-22 6.50 505,000 526,210
State Housing Authority Residential
Development Bonds Series 1992A
(FNMA Insured)
11-15-11 6.88 1,000,000 1,044,790
State Industrial Finance Agency
Assisted Living Facility
Revenue Bonds Marina Bay LLC
Series 1997 A.M.T.
12-01-27 7.50 1,000,000 979,670
State Industrial Finance Agency
Assisted Living Facility
Revenue Bonds Newton Group
Properties LLC Series 1997 A.M.T.
09-01-27 8.00 1,160,000 1,208,302
State Industrial Finance Agency
College Revenue Bonds
Tufts University Series 1998H
(MBIA Insured)
02-15-28 4.75 1,000,000 913,830
State Industrial Finance Agency
Miscellaneous Revenue Bonds
Cambridge Friends School
Series 1998
09-01-28 5.80 700,000 664,685
State Industrial Finance Agency
School Bonds St. John's
High School of Worcester County
Series 1998
06-01-28 5.35 500,000 457,895
State Turnpike Authority Metro Highway
System Senior Lien Revenue Bonds
Toll Road Series 1997A (MBIA Insured)
01-01-37 5.00 2,000,000 1,838,840
State Water Resource Authority
Pre-refunded Revenue Bonds
Series 1992A (MBIA Insured)
07-15-22 5.50 1,100,000 1,131,669
Taunton General Obligation Refunding Notes
Series 1999 (FSA Insured)
05-01-19 4.75 1,000,000 952,950
University of Massachusetts
Building Authority
Revenue Bonds Series 1976
Escrowed to Maturity
05-01-11 7.50 90,000 104,388
Water Resource Authority General
Pre-refunded Revenue Bonds
Series 1991A
12-01-19 6.50 1,000,000 1,035,890
Water Resource Authority General
Revenue Bonds Series 1993B
(MBIA Insured)
03-01-22 5.00 1,000,000 972,310
Total municipal bonds
(Cost: $72,884,995) $74,874,714
Municipal notes (8.9%)
Issuer(c,d) Effective Amount Value(a)
yield payable at
maturity
State Health & Education Facility
Authority Revenue Bonds
Capital Asset V.R. Series 1985C
07-01-05 3.30% $1,200,000 $1,200,000
State Health & Education Facility
Authority Revenue Bonds
Capital Asset V.R. Series 1985E
01-01-35 3.25 6,285,000 6,285,000
Total municipal notes
(Cost: $7,485,000) $7,485,000
Total investments in securities
(Cost: $80,369,995)(f) $82,359,714
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
55 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Massachusetts Tax-Exempt Fund
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) The following abbreviations may be used in the portfolio security
descriptions to identify the insurer of the issue:
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(c) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of June 30, 2001, the value of
securities subject to alternative minimum tax represented 3.46%
of net assets.
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
T.A.N. -- Tax Anticipation Note
T.R.A.N. -- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B. -- Variable Rate Demand Bond
V.R.D.N. -- Variable Rate Demand Note
(d) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parentheses, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies
to reflect current market conditions; rate shown is the effective rate on
June 30, 2001.
(e) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a
decline (increase) in market short-term rates. Interest rate disclosed is
the rate in effect on June 30, 2001. As of June 30, 2001, the value of
inverse floater securities represented 0.6% of net assets.
(f) At June 30, 2001, the cost of securities for federal income tax purposes
was $80,369,995 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $ 3,319,429
Unrealized depreciation (1,329,710)
----------
Net unrealized appreciation $ 1,989,719
-----------
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56 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Investments in Securities
AXP Michigan Tax-Exempt Fund
June 30, 2001
(Percentages represent value of investments compared to net assets)
Municipal bonds (94.0%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Allegan Hospital Finance Authority
Refunding Revenue Bonds
Allegan General Hospital Series 1999
11-15-21 7.00% $1,000,000 $981,820
Auburn Hills Limited Tax General Obligation
Street Improvement Bonds Series 1989
05-01-04 6.00 200,000 202,942
Battle Creek Calhoun County Downtown
Development Authority
Pre-refunded Bonds
Series 1994
05-01-22 7.65 1,250,000 1,411,963
Big Rapids Public School District
Unlimited General Obligation Bonds
Series 1999 (FSA Insured)
05-01-25 4.75 1,500,000 1,368,165
Central University Revenue Bonds
Series 1997 (FGIC Insured)
10-01-26 5.50 750,000 816,480
Central University Revenue Bonds
Series 1998 (FGIC Insured)
10-01-27 5.00 1,000,000 953,970
Chippewa County Hospital Financial
Authority Hospital
Refunding Revenue Bonds
Chippewa County War Memorial Hospital
Series 1997B
11-01-14 5.63 500,000 452,215
Chippewa Valley School District
Unlimited Tax
General Obligation Bonds
Series 1993 (FGIC Insured)
05-01-21 5.00 1,000,000 972,950
Concord Academy
Certificate of Participation
Series 1998
10-01-19 7.00 1,000,000 936,450
Detroit Downtown Development Authority
Development Area Project #1 Junior Lien
Tax Increment Refunding Bonds
Series 1996D
07-01-25 6.50 1,000,000 1,138,590
Detroit Sewer Disposal
Pre-refunded Revenue Bonds
Series 1993 (FGIC Insured)
07-01-23 5.70 1,600,000 1,696,480
Detroit Sewer Disposal
Unrefunded Revenue Bonds
Series 1993 (FGIC Insured)
07-01-23 5.70 400,000 407,580
Detroit Unlimited Tax
General Obligation Bonds
Series 1995A
04-01-15 6.80 1,000,000 1,120,590
Detroit Water Supply System Second Lien
Revenue Bonds Series 1995A
(MBIA Insured)
07-01-25 5.50 1,500,000 1,512,375
Eaton Rapids Public Schools
Unlimited Tax General Obligation
Refunding Bonds Series 1999
(MBIA Insured)
05-01-25 4.75 1,000,000 912,230
Farmington Hills Hospital Finance Authority
Revenue Bonds Botsford General Hospital
Series 1992A (MBIA Insured)
02-15-22 6.50 1,500,000 1,564,980
Ferris State University Board of Trustees
General Refunding Revenue Bonds
Series 1995 (MBIA Insured)
10-01-20 5.25 1,000,000 1,003,100
Fowlerville Community Schools
Unlimited Tax General Obligation
Refunding Bonds Series 1999
(FSA Insured)
05-01-26 4.75 1,310,000 1,190,869
Garden City Hospital Finance Authority
Hospital Revenue Bonds Series 1998A
09-01-17 5.75 1,000,000 722,950
Genesee County General Obligation Bonds
Sewer Disposal System Series 1996A
(AMBAC Insured)
04-01-15 5.40 1,000,000 1,028,840
Gogebic County Hospital Finance Authority
Hospital Refunding Revenue Bonds
Grandview Health System Series 1999
10-01-16 5.88 1,000,000 895,420
Grand Ledge Public Schools
Unlimited Tax General Obligation
Refunding Bonds Eaton, Clinton & Ionia
Counties Series 1995 (MBIA Insured)
05-01-24 5.38 2,000,000 2,009,279
Grand Rapids Community College
Limited Tax General Obligation Bonds
Series 1996 (MBIA Insured)
05-01-19 5.38 1,000,000 1,013,330
Grand Rapids Sanitary Sewer System
Refunding Revenue Bonds
Series 1998A (FGIC Insured)
01-01-28 4.75 1,000,000 906,340
Grand Rapids Tax Increment
Revenue Bonds Series 1994
(MBIA Insured)
06-01-24 6.88 380,000 417,601
Iosco County Water Supply System
Limited Tax General Obligation Bonds
Series 1990 (AMBAC Insured)
05-01-08 5.50 175,000 179,237
05-01-09 5.50 200,000 204,760
05-01-10 5.50 200,000 204,678
Jackson General Obligation Capital
Appreciation Downtown Development
Bonds Zero Coupon Series 2001
(FSA Insured)
06-01-21 5.58 1,450,000(e) 496,756
Lake Orion School District
General Obligation Bonds
Series 1995 (AMBAC Insured)
05-01-20 5.50 1,000,000 1,014,750
Lincoln Park School District Wayne County
School Building & Site Unlimited Tax
Pre-refunded General Obligation Bonds
Series 1996 (FGIC Insured)
05-01-26 5.90 1,000,000 1,102,170
Midland County Economic Development
Authority Unlimited Tax General Obligation
Refunding Revenue Bonds
Series 2000A A.M.T.
07-23-09 6.88 1,000,000 1,022,880
Muskegon Heights Public Schools
Unlimited Tax General Obligation Bonds
Series 1999 (MBIA Insured)
05-01-29 5.00 750,000 713,205
Ovid-Elsie School District Unlimited Tax
General Obligation Bonds
Series 1995 (MBIA Insured)
05-01-21 5.60 1,000,000 1,081,910
Plymouth Educational Center
Certificates of Participation
Series 1999
07-01-29 7.00 1,250,000 1,198,350
Plymouth-Canton Community School District
Unlimited Tax General Obligation Bonds
Series 1999 (FSA Insured)
05-01-23 4.75 1,000,000 919,920
Redford General Obligation Bonds
Series 1995 (MBIA Insured)
04-01-16 5.25 1,450,000 1,471,185
Richmond Limited Obligation
Refunding Revenue Bonds
KMart Series 1994
01-01-07 6.63 530,000 537,409
Romulus Township School District
Unlimited Tax General Obligation
Refunding Bonds Series 1993
(FGIC Insured)
05-01-22 5.75 2,500,000 2,557,549
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
57 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Michigan Tax-Exempt Fund
Municipal bonds (continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Schoolcraft Community School District
Unlimited Tax General Obligation
Pre-refunded Bonds Series 1996
05-01-26 5.38% $295,000 $317,190
Schoolcraft Community School District
Unlimited Tax General Obligation Bonds
Series 1996
05-01-26 5.38 705,000 758,030
South Redford School District
Unlimited Tax General Obligation
Pre-refunded Bonds Series 1996
05-01-22 5.50 310,000 335,324
South Redford School District
Unlimited Tax General Obligation Bond
Series 1996
05-01-22 5.50 690,000 700,253
State Building Authority
Refunding Revenue Bonds
Series 1991I
10-01-20 6.25 2,200,000 2,263,469
State Hospital Finance Authority
Hospital Pre-refunded Revenue Bonds
McLaren Obligated Group Series 1991A
09-15-21 7.50 1,750,000 1,802,185
State Hospital Finance Authority
Hospital Refunding Revenue Bonds
Detroit Medical Center Series 1988
08-15-12 8.13 40,000 40,032
State Hospital Finance Authority
Hospital Refunding Revenue Bonds
Detroit Medical Center Series 1993A
08-15-13 6.25 1,200,000 1,198,884
State Hospital Finance Authority
Hospital Refunding Revenue Bonds
Memorial Healthcare Center
Obligated Group Series 1999
11-15-21 5.88 1,000,000 914,100
State Hospital Finance Authority
Refunding Revenue Bonds
Presbyterian Villages Obligated Group
Series 1995
01-01-25 6.50 1,000,000 921,210
State Hospital Finance Authority
Revenue Bonds
Presbyterian Villages of Michigan
Obligated Group Series 1997
01-01-25 6.38 700,000 637,203
State Hospital Finance Authority
Revenue Bonds Central Michigan
Community Hospital Series 1996
10-01-27 6.25 1,000,000 855,290
State Municipal Bond Authority
Revenue Bonds Public School Academy
YMCA Service Learning Series 2001
10-01-21 7.63 750,000 754,628
State Public Power Agency Belle River
Refunding Revenue Bonds Series 1993A
01-01-18 5.25 1,000,000 1,000,000
State Strategic Fund Limited Tax Obligation
Refunding Revenue Bonds
Detroit Edison Series 1990BB
(MBIA Insured)
07-15-08 7.00 1,000,000 1,166,540
State Strategic Fund Limited Tax Obligation
Refunding Revenue Bonds
Detroit Edison Series 1992BB
(FGIC Insured)
02-15-16 6.50 1,500,000 1,557,555
State Strategic Fund Limited Tax Obligation
Refunding Revenue Bonds
Ford Motor Series 1991A
02-01-06 7.10 1,650,000 1,849,947
State Strategic Fund Limited Tax Obligation
Refunding Revenue Bonds
Oxford Institute Series 1987A
Escrowed to Maturity
08-15-05 7.88 115,000 124,769
State Strategic Fund Nursing Home
Revenue Bonds Holland Home
Series 1998
11-15-28 5.75 1,000,000 857,200
State Trunk Line Bonds
Series 1994A (FGIC Insured)
11-15-20 5.75 1,065,000 1,163,544
State Trunk Line Bonds
Series 1998A (MBIA Insured)
11-01-20 4.75 1,000,000 935,040
State University Revenue Bonds
Series 1992A
08-15-22 5.50 560,000 576,722
Summit Academy Certificates of
Participation Junior High School Facility
Series 1999
09-01-29 7.00 695,000 800,480
Summit Academy Certificates of
Participation Series 1998
08-01-18 7.00 1,110,000 1,048,573
Summit Academy Certificates of
Participation Series 2001
07-01-30 7.38 750,000 748,658
Taylor Tax Increment Finance
Authority Bonds
Series 2001 (FSA Insured)
05-01-19 5.00 1,000,000 973,460
Troy City Downtown Development Authority
County of Oakland Development Bonds
Series 1995A (Asset Guaranty)
11-01-18 6.38 1,500,000 1,599,885
Van Buren Township
Tax Increment Revenue Bonds
Series 1994
10-01-16 8.40 995,000 1,089,734
Wayne County Charter Airport Revenue
Bonds Detroit Metropolitan Airport
Series 1990A (AMBAC Insured) A.M.T.
12-01-20 7.00 1,080,000 1,104,581
Wayne County Charter Airport Revenue
Bonds Detroit Metropolitan Airport
Series 1998B (MBIA Insured)
12-01-23 4.88 1,000,000 932,170
Wayne County Charter Airport Revenue
Bonds Detroit Metropolitan Airport
Series 1998A (MBIA Insured) A.M.T.
12-01-28 5.00 1,000,000 937,770
Wayne State University Revenue Bonds
University Board of Governors Series 1999
(FGIC Insured)
11-15-29 5.13 1,000,000 968,700
Total municipal bonds
(Cost: $65,533,571) $69,275,394
Municipal notes (4.6%)
Issuer(c,d) Effective Amount Value(a)
yield payable at
maturity
Royal Oak Michigan Refunding
Revenue Bonds William
Beaumont Hospital V.R. Series 1997L
01-01-27 3.50% $300,000 $300,000
University of Michigan Hospital
Refunding Revenue Bonds V.R. Series 1995A
12-01-27 3.30 2,500,000 2,500,000
University of Michigan Hospital
Refunding Revenue Bonds V.R. Series 1998A
12-01-21 3.30 600,000 600,000
Total municipal notes
(Cost: $3,400,000) $3,400,000
Total investments in securities
(Cost: $68,933,571)(f) $72,675,394
See accompanying notes to investments in securities.
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58 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Michigan Tax-Exempt Fund
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) The following abbreviations may be used in the portfolio security
descriptions to identify the insurer of the issue:
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(c) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of June 30, 2001, the value of
securities subject to alternative minimum tax represented 4.16%
of net assets.
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
T.A.N. -- Tax Anticipation Note
T.R.A.N. -- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B. -- Variable Rate Demand Bond
V.R.D.N. -- Variable Rate Demand Note
(d) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parentheses, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies
to reflect current market conditions; rate shown is the effective rate on
June 30, 2001.
(e) For zero coupon bonds, the interest rate disclosed represents the
annualized effective yield on the date of acquisition.
(f) At June 30, 2001, the cost of securities for federal income tax purposes
was $68,933,571 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $ 4,765,394
Unrealized depreciation (1,023,571)
----------
Net unrealized appreciation $ 3,741,823
-----------
--------------------------------------------------------------------------------
59 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Investments in Securities
AXP Minnesota Tax-Exempt Fund
June 30, 2001
(Percentages represent value of investments compared to net assets)
Municipal bonds (90.6%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Albert Lea Independent School District #241
Unlimited Tax General Obligation Bonds
Series 1998 (MBIA Insured)
02-01-16 4.80% $1,555,000 $1,523,309
Anoka County Housing & Redevelopment
Authority Revenue Bonds
Epiphany Assisted Living LLC
Series 1999
12-01-29 7.40 3,560,000 3,429,241
Austin Housing & Redevelopment Authority
Revenue Bonds Courtyard Residence
Series 2000A
01-01-32 7.25 3,000,000 3,058,980
Becker Solid Waste Disposal Facility
Revenue Bonds Liberty Paper
Series 1994B A.M.T.
08-01-15 9.00 3,625,000 3,683,508
Bemidji Hospital Facilities1st Mortgage
Pre-refunded Revenue Bonds
North Country Health Services
Series 1991A
09-01-21 7.00 1,755,000 1,802,841
Bloomington Housing & Redevelopment
Authority Housing Revenue Bonds
Senior Summerhouse Bloomington
Series 1998
05-01-35 6.13 3,400,000 2,789,088
Brooklyn Center Tax Credit Investor
Refunding Revenue Bonds Four Courts
Apartments Series 1995B A.M.T.
06-15-09 7.58 2,450,000 2,455,390
Buffalo Independent School District #877
Unlimited Tax General Obligation
Refunding Bonds Series 1999
(MBIA Insured)
02-01-18 4.80 1,710,000 1,640,386
Carlton Health Care & Housing Facilities
Revenue Bonds Inter-Faith Social Services
Series 2000
04-01-29 7.75 2,500,000 2,450,700
Chaska Multi-family Housing
Revenue Bonds West Suburban
Housing Partners Series 1999 A.M.T.
09-01-19 5.75 175,000(e) 157,659
03-01-31 5.88 2,115,000 1,842,546
Duluth Economic Development Authority
Health Care Facilities Revenue Bonds
BSM Properties Series 1998A
12-01-28 5.88 500,000(e) 407,000
Eden Prairie Housing Development Authority
Refunding Revenue Bonds Eden Commons
Series 1990 (FHA Insured)
03-01-25 8.25 5,845,000 5,881,122
Eden Prairie Multi-family Housing
Refunding Revenue Bonds
Sterling Ponds Series 1999A
A.M.T.
12-01-29 6.25 5,215,000 4,806,926
Eden Prairie Multi-family Housing
Refunding Revenue Bonds
Sterling Ponds Series 1999B A.M.T.
12-01-29 6.25 670,000 617,573
Edina Multi-family Housing
Pre-refunded Revenue Bonds
Walker Assisted Living Series 1991
09-01-31 9.00 6,570,000 6,833,260
Faribault Rice & Goodhue Counties
Independent School District #656
General Obligation School Building
Bonds Series 1995 (FSA Insured)
06-01-15 5.75 6,900,000 7,323,522
Faribault Single Family Housing Mortgage
Refunding Revenue Bonds Series 1991A
12-01-11 7.50 480,000 493,502
Farmington Independent School
District #192
Unlimited Tax General Obligation Capital
Appreciation School Building Bonds
Zero Coupon Series 1998B (FSA Insured)
02-01-15 5.30 2,070,000 1,008,815
Fergus Falls Health Care Facilities
Revenue Bonds LRHC Long-term
Care Facility Series 1995
12-01-25 6.50 1,500,000 1,462,320
Fridley Senior Housing Revenue Bonds
Banfill Crossing Homes Series 1999
09-01-34 6.75 3,090,000 2,914,952
Golden Valley Governmental Facilities
Local Government Information
Systems Association Revenue Bonds
Series 1997
12-01-17 6.10 1,125,000 1,131,109
Golden Valley Revenue Bonds
Covenant Retirement Communities
Series 1999A
12-01-29 5.50 6,250,000 5,715,000
Harmony Multi-family Housing
Refunding Revenue Bonds
Zedakah Foundation
Series 1997A
09-01-20 5.95 1,240,000 1,249,449
Hastings Healthcare Tax-Exempt
Nursing Home Revenue Bonds
Regina Medical Center Series 1998
(ACA Insured)
09-15-28 5.30 4,100,000 3,700,291
Hastings Housing & Redevelopment
Authority Housing & Health Care
Revenue Bonds Arbor Oaks
Assisted Living Series 2000A
01-01-32 8.25 2,000,000 2,010,300
Hennepin County Lease
Pre-refunded Revenue
Certificates of Participation
Series 1991A
05-15-17 6.80 7,250,000 7,361,360
Hopkins Pre-refunded Revenue Bonds
Blake School Series 1994
09-01-24 6.70 3,120,000 3,417,118
Hubbard County Solid Waste Disposal
Revenue Bonds Potlatch
Series 1989 A.M.T.
08-01-13 7.38 5,610,000 5,613,927
International Falls Solid Waste Disposal
Refunding Revenue Bonds
Boise Cascade Series 1999 A.M.T.
12-01-29 6.85 4,000,000 4,124,360
Lakeville Independent School District #194
General Obligation Series 1997A
02-01-22 5.13 2,400,000 2,368,344
Little Canada Multi-family Housing
Revenue Bonds Little Canada
Series 1996 A.M.T.
02-01-27 7.00 3,725,000 3,646,626
Little Canada Multi-family Housing
Revenue Bonds Housing
Alternatives Development Company
Series 1997A
12-01-27 6.25 4,900,000 4,548,474
Mahtomedi Multi-family Housing
Refunding Revenue Bonds
Briarcliff Series 1996 A.M.T.
06-01-36 7.35 2,215,000 2,232,676
Maplewood Elder Care Facilities
Revenue Bonds Care Institute
Series 1994
01-01-24 7.75 3,775,000 3,403,616
Maplewood Multi-family Housing
Refunding Revenue Bonds
Carefree Cottages of Maplewood III
Series 1995 A.M.T.
11-01-32 7.20 2,875,000 2,832,766
Minneapolis & St. Paul Housing &
Redevelopment Authority
Health Care System
Revenue Bonds Healthspan
Series 1993A (AMBAC Insured)
11-15-18 4.75 13,500,000 12,619,124
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
60 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Minnesota Tax-Exempt Fund
Municipal bonds (continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Minneapolis & St. Paul Housing &
Redevelopment Authority
Health Care System
Revenue Bonds Group Health Plan
Series 1992
12-01-13 6.75% $10,500,000 $10,695,299
Minneapolis & St. Paul Metropolitan
Airports Commission
Special Facilities Revenue Bonds
Northwest Airlines Series 2001A A.M.T
04-01-25 7.00 2,000,000 1,910,820
Minneapolis Community Development
Agency Limited Tax Supported
Development General Obligation Bonds
Common Bond Fund 7th Series 1997A
06-01-12 5.50 250,000 258,308
Minneapolis Community Development
Agency Limited Tax Supported
Development Revenue Bonds
Common Bond Fund
2nd Series 1998A A.M.T.
06-01-16 5.20 290,000 271,721
06-01-19 5.25 500,000 483,630
Minneapolis Community Development
Agency Limited Tax Supported
Development Revenue Bonds
Common Bond Fund 1st Series 1996
06-01-11 6.00 980,000 1,030,970
Minneapolis Community Development
Agency Limited Tax Supported
Development Revenue Bonds
Common Bond Fund 5th Series 1997
12-01-27 5.70 420,000 415,174
Minneapolis Community Development
Agency Limited Tax Supported
Refunding Revenue Bonds
Series 2001 2-A A.M.T.
06-01-19 5.88 1,000,000 1,013,750
Minneapolis Nursing Home
Revenue Bonds Walker
Cityview & Southview
Series 1992
07-01-22 8.50 5,125,000 5,550,836
Minneapolis Parking Ramp
Unlimited General Obligation
Bonds Series 1998
12-01-26 4.75 2,160,000 2,020,788
Minneapolis Special School District #1
Certificates of Participation
Series 1998A (FGIC Insured)
02-01-19 4.75 2,000,000 1,872,020
Minnetonka Senior Housing
Revenue Bonds
Westridge Senior Housing
Series 1997
09-01-27 7.00 1,775,000 1,707,976
Moorhead Economic Development
Authority Multi-family Housing
Development Refunding Revenue
Bonds Eventide Senior Housing
Series 1999B
06-01-19 5.90 500,000 423,110
06-01-29 6.00 1,400,000 1,155,728
New Brighton Tax Credit Investor
Revenue Bonds
Polynesian Village Apartments
Series 1995B A.M.T.
07-15-09 7.75 2,355,000 2,433,327
New Hope Housing & Healthcare Facilities
Revenue Bonds Minnesota
Masonic Home
North Ridge Series 1999
03-01-29 5.88 5,750,000 4,769,510
North St. Paul & Maplewood Independent
School District #622 General Obligation
Refunding Bonds Series 1996A
02-01-25 5.13 2,910,000 2,857,125
Northern Minnesota Municipal
Power Agency
Electric System Refunding
Revenue Bonds
Series 1998B (AMBAC Insured)
01-01-20 4.75 5,000,000 4,685,500
Oakdale Multi-family Housing Refunding
Revenue Bonds Oakdale Village
Apartments Series 1998 A.M.T.
11-01-28 6.00 3,650,000 3,256,202
Olmsted County Health Care Facilities
Refunding Revenue Bonds
Olmsted Medical Center
Series 1998
07-01-19 5.55 1,125,000(e) 967,286
Park Rapids Independent School
District #309
Unlimited Tax General Obligation Bonds
Series 1999 (MBIA Insured)
02-01-21 4.75 3,000,000 2,810,700
Plymouth Multi-family Housing
Revenue Bonds Harbor Lane Apartments
Series 1993 (Asset Guaranty) A.M.T.
09-01-13 5.90 2,325,000 2,393,402
Princeton Independent School
District #477 General Obligation
Bonds Series 1997 (FSA Insured)
02-01-24 5.13 1,000,000 983,530
Richfield Independent School
District #280 General Obligation
Bonds Series 1993 Inverse Floater
(FGIC Insured)
02-01-10 5.30 6,600,000(g) 6,690,948
02-01-12 5.35 5,020,000(g) 5,159,807
Richfield Multi-family Housing
Refunding Revenue Bonds
Village Shores Apartments
Series 1996
08-01-31 7.63 2,955,000 2,960,437
Richfield Senior Housing
Revenue Bonds Series 2000A
02-01-35 7.75 3,000,000 3,006,120
Robbinsdale Multi-family Housing
Revenue Bonds Copperfield Hill
Series 1996A
12-01-31 7.35 3,260,000 3,209,111
Rochester Health Care Facility
Revenue Bonds Mayo Foundation
Series 1992
11-15-19 4.95 5,000,000 4,807,700
Rochester Multi-family
Housing Development
Revenue Bonds Civic Square Series 1991
(FHA Insured) A.M.T.
07-15-31 7.45 4,255,000 4,385,501
Rochester Multi-family
Housing Development
Revenue Bonds Wedum
Shorewood Campus
Series 1999
06-01-36 6.60 5,000,000 4,384,900
Roseville Housing Facilities Nursing Home
Refunding Revenue Bonds
College Properties Series 1998
10-01-28 5.88 5,000,000 4,136,250
Sartell Health Care & Housing Facilities
Nursing Home Revenue Bonds
Series 2001A
09-01-30 8.00 1,000,000 1,004,210
Sartell Health Care & Housing Facilities
Revenue Bonds The Foundation for
Health Care Continuums Series 1999A
09-01-29 6.63 3,000,000 2,646,120
Shoreview Senior Housing
Revenue Bonds Series 1996
02-01-26 7.25 3,200,000 3,138,592
Southeastern Minnesota Multi-county
Housing & Redevelopment Authority
Winona County Unlimited Tax
General Obligation Bonds Series 1997
01-01-28 5.35 1,170,000 1,151,432
Southern Minnesota Municipal
Power Agency
Power Supply System
Pre-refunded Revenue
Bonds Series 1992A Escrowed to Maturity
(MBIA Insured)
01-01-18 5.75 1,970,000 2,083,827
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
61 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Minnesota Tax-Exempt Fund
Municipal bonds (continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Southern Minnesota Municipal
Power Agency
Power Supply System Revenue Bonds
Zero Coupon Series 1994A (MBIA Insured)
01-01-19 6.67% $19,500,000(f) $7,725,119
01-01-22 6.88 12,000,000(f) 3,984,120
01-01-24 6.08 5,150,000(f) 1,522,083
Southern Minnesota Municipal
Power Agency
Revenue Bonds Series 1992A
01-01-18 5.75 1,895,000 1,930,437
Southern Minnesota Municipal
Power Agency
Revenue Bonds Series 1993A
(MBIA Insured)
01-01-16 4.75 9,165,000 8,848,073
Spring Park Health Care Facilities
Pre-refunded Revenue Bonds Twin Birch
Health Care Center Series 1991
08-01-11 8.25 1,780,000 1,823,717
St. Cloud Certificates of Participation
Series 1997
12-01-17 5.90 400,000(e) 407,220
St. Cloud Hospital Facility
Pre-refunded Revenue Bonds
St. Cloud Hospital Series 1990B
(AMBAC Insured)
07-01-20 7.00 3,000,000 3,060,690
St. Cloud Hospital Facility
Refunding Revenue Bonds
Series 1993C (AMBAC Insured)
10-01-20 5.30 1,515,000 1,514,864
St. Louis Park Health Care Facilities
Revenue Bonds Healthsystem Minnesota
Obligated Group Series 1993A
(AMBAC Insured)
07-01-23 5.20 3,250,000 3,191,500
St. Louis Park Health Care Facilities
Revenue Bonds Healthsystem Minnesota
Obligated Group Series 1994
Inverse Floater (AMBAC Insured)
07-01-13 6.67 7,000,000(g) 7,043,750
St. Louis Park Multi-family
Housing Refunding
Revenue Bonds Park Boulevard Towers
Series 1996
04-01-31 7.00 3,925,000 3,941,132
St. Paul Housing &
Redevelopment Authority
Health Care Facilities Revenue Bonds
Lyngblomsten Care Center Series 1993
11-01-06 7.13 750,000 750,885
11-01-17 7.13 1,775,000 1,727,270
St. Paul Housing &
Redevelopment Authority
Health Care Facilities Revenue Bonds
Lyngblomsten Multi-family
Rental Housing
Series 1993
11-01-24 7.00 1,845,000 1,811,513
St. Paul Housing &
Redevelopment Authority
Health Care Facilities Revenue Bonds
Regions Hospital Series 1998
05-15-28 5.30 2,375,000 2,044,400
St. Paul Housing &
Redevelopment Authority
Lease Revenue Bonds
Community of Peace Academy
Series 2001A
12-01-30 7.88 2,390,000 2,413,948
St. Paul Housing &
Redevelopment Authority
Lease Revenue Bonds
Minnesota Business Academy
Series 2000
03-01-30 8.00 3,775,000 3,818,413
St. Paul Housing &
Redevelopment Authority
Sales Tax Revenue Bonds Civic Center
Escrowed to Maturity Series 1993
(MBIA Insured)
11-01-23 5.55 7,500,000 7,732,274
St. Paul Housing &
Redevelopment Authority
Single Family Housing
Mortgage Refunding
Revenue Mortgage-backed Bonds
Middle Income Series 1995
(FNMA Insured)
03-01-28 6.80 3,345,000 3,561,723
St. Paul Independent School District #625
Certificates of Participation Series 1999A
02-01-19 4.75 1,000,000 949,600
St. Paul Port Authority Revenue Bonds
Hotel Facilities Radisson Kellogg
2nd Series 1999
08-01-29 7.38 3,500,000 3,482,815
St. Paul Port Authority Unlimited Tax
General Obligation Bonds
Series 1994
03-01-24 5.13 4,770,000 4,722,348
State Agricultural & Economic Development
Board Health Care Facilities
Facilities Refunding
Revenue Bonds Benedictine Health System
St. Mary's Health System Duluth Clinic
Obligated Group Series 1999A
(MBIA Insured)
02-15-23 5.00 1,795,000 1,733,898
State Agricultural & Economic Development
Board Health Care Facilities
Revenue Bonds
Benedictine Health Series 1999A
(MBIA Insured)
02-15-16 4.75 1,000,000 955,430
State General Obligation
Various Purpose Pre-refunded
Bonds Series 1991
08-01-11 6.70 6,000,000 6,021,180
State Higher Education Facilities Authority
Gustavus Adolphus College
Revenue Bonds 4th Series 1998X
10-01-24 4.80 2,340,000 2,118,355
State Higher Education Facilities Authority
Northwestern College of Chiropractic
Mortgage Revenue Bonds 4th
Series 1999Z
10-01-13 5.20 275,000 270,672
State Housing Finance Agency
Single Family Housing Mortgage
Pre-refunded Revenue Bonds Series 1994L
A.M.T.
07-01-20 6.70 710,000 742,355
State Housing Finance Agency
Single Family Housing Mortgage
Revenue Bonds Series 1992A
07-01-16 6.95 1,925,000 1,975,300
State Housing Finance Agency
Single Family Housing Mortgage
Revenue Bonds Series 1996J
A.M.T.
07-01-21 5.60 440,000 443,106
State Housing Finance Agency
Single Family Housing Mortgage
Revenue Bonds Series 1997K
A.M.T.
01-01-26 5.75 2,935,000 2,978,203
State Public Facilities Authority Water
Pollution Control Revenue Bonds
Series 1998A
03-01-16 4.75 3,500,000 3,413,095
State University Board of Regents
General Obligation Bonds
Inverse Floater Series 1993A
08-15-03 5.67 5,000,000(g) 5,231,250
State University Board of Regents
General Obligation Bonds Series 1996A
07-01-21 5.50 12,500,000 13,219,374
State University Board of
Regents Refunding
Revenue Bonds Series 1986A
Escrowed to Maturity
02-01-11 6.00 4,625,000 4,638,043
Steele County Health Care Facilities
Revenue Bonds Elderly Housing Project
Series 2000
06-01-30 6.88 2,205,000 2,319,550
Vadnais Heights Multi-family Housing
Refunding Revenue Bonds
Cottages of Vadnais Heights
Series 1995 A.M.T.
12-01-31 7.00 3,070,000 3,020,420
Vadnais Heights Multi-family Housing
Tax Credit Revenue Bonds
Series 1997 A.M.T.
07-15-09 7.00 1,080,000 1,064,988
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
62 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Minnesota Tax-Exempt Fund
Municipal bonds (continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Washington County Housing &
Redevelopment Authority Refunding
Revenue Bonds Woodbury
Multi-family Housing Series 1996
12-01-23 6.95% $1,895,000 $1,882,095
Western Minnesota Municipal
Power Agency Refunding
Revenue Bonds Series 1987A
(MBIA Insured)
01-01-15 5.50 6,250,000 6,252,750
Western Minnesota Municipal
Power Agency Refunding
Revenue Bonds Series 1987A
01-01-15 5.50 5,000,000 5,001,200
Windom Independent School District #177
Unlimited Tax General Obligation Bonds
Series 1999
02-01-24 4.75 2,195,000 2,015,888
Woodbury Senior Housing
Revenue Bonds Summer House
of Woodbury Series 1999
07-01-34 6.40 5,145,000 4,882,091
Total municipal bonds
(Cost: $364,150,324) $373,475,984
Municipal notes (7.7%)
Issuer(c,d) Annualized Amount Value(a)
yield on date payable at
of purchase maturity
Cohasset Revenue Bonds
(Minnesota Power & Light)
V.R. Series 1997B
06-01-13 3.50% $700,000(h) $700,000
06-01-20 3.50 1,000,000(h) 1,000,000
Cohasset Revenue Bonds
(Minnesota Power & Light)
V.R.D.N. Series 1997A
06-01-20 3.50 5,045,000(h) 5,045,000
Cohasset Revenue Bonds
(Minnesota Power & Light)
V.R.D.N. Series 1997B
06-01-13 3.50 815,000(h) 815,000
Cohasset Revenue Bonds
(Minnesota Power & Light)
V.R.D.N. Series 1997D
06-01-13 3.50 100,000(h) 100,000
Duluth Health Facilities Revenue Bonds
Miller-Dwan Medical Center V.R.
Series 1997
06-01-19 3.50 8,550,000(h) 8,550,000
Minneapolis & St. Paul Housing &
Health Care Facilities Revenue Bonds
Presbyterian Homes V.R. Series 1999B
09-01-29 3.50 1,490,000(h) 1,490,000
Minneapolis & St. Paul Housing &
Redevelopment Authority
Health Care System
Revenue Bonds
Children's Hospital V.R. Series 1995B
08-15-25 3.55 9,920,000(h) 9,920,000
Rochester Health Care Facility
Revenue Bonds (Mayo Clinic)
C.P. Series 2000B
07-11-01 2.60 1,000,000 1,000,000
State Higher Education Facilities Authority
Revenue Bonds St. Olaf College
V.R. 5th Series 2000H
10-01-30 3.50 3,000,000(h) 3,000,000
Total municipal notes
(Cost: $31,620,000) $31,620,000
Total investments in securities
(Cost: $395,770,324)(i) $405,095,984
See accompanying notes to investments in securities.
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63 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Minnesota Tax-Exempt Fund
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) The following abbreviations may be used in the portfolio security
descriptions to identify the insurer of the issue:
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(c) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of June 30, 2001, the value of
securities subject to alternative minimum tax represented
13.69% of net assets.
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
T.A.N. -- Tax Anticipation Note
T.R.A.N. -- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B. -- Variable Rate Demand Bond
V.R.D.N. -- Variable Rate Demand Note
(d) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parentheses, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies
to reflect current market conditions; rate shown is the effective rate on
June 30, 2001.
(e) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Sale contracts
Municipal Bonds, Sept. 2001 $25,000,000
(f) For zero coupon bonds, the interest rate disclosed represents the
annualized effective yield on the date of acquisition.
(g) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a
decline (increase) in market short-term rates. Interest rate disclosed is
the rate in effect on June 30, 2001. As of June 30, 2001, the value of
inverse floater securities represented 5.9% of net assets.
(h) Interest rate disclosed is the rate in effect on June 30, 2001.
(i) At June 30, 2001, the cost of securities for federal income tax purposes
was $395,770,324 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $17,264,983
Unrealized depreciation (7,939,323)
----------
Net unrealized appreciation $ 9,325,660
-----------
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64 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Investments in Securities
AXP New York Tax-Exempt Fund
June 30, 2001
(Percentages represent value of investments compared to net assets)
Municipal bonds (89.9%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Albany County Airport Authority
Airport Revenue Bonds
Series 1997 (FSA Insured) A.M.T.
12-15-19 5.50% $250,000 $256,970
Broome County
Certificates of Participation
Public Safety Facilities
Series 1994 (MBIA Insured)
04-01-22 5.25 1,300,000 1,300,975
Buffalo Municipal Water Finance Authority
Water System Revenue Bonds
Series 1995 (FGIC Insured)
07-01-25 5.00 1,000,000(g) 966,100
Erie County Unlimited Tax
General Obligation Bonds
Series 1995B (FGIC Insured)
06-15-25 5.50 700,000 713,860
Erie County Water Authority
Water Works System
Revenue Bonds Series 1990A
Escrowed to Maturity (AMBAC Insured)
12-01-08 6.00 1,765,000 1,949,584
Huntington Housing Authority
Senior Housing Facilities
Revenue Bonds
Gurwin Jewish Senior Residences
Series 1999A
05-01-39 6.00 1,750,000 1,460,743
Kenmore Housing Authority
Multi-family Housing Revenue Bonds
State University Buffalo Student
Apartments Series 1999A
(Asset Guaranty)
08-01-24 5.50 1,000,000 1,010,750
Long Island Power Authority
Electronic Systems Revenue Bonds
Sub Series 1998A (AMBAC Insured)
04-01-09 5.25 1,000,000 1,070,870
Metropolitan Transportation Authority
Commuter Facilities Service Contract
Refunding Revenue Bonds
5th Series 1991
07-01-16 6.50 1,775,000 1,812,648
Metropolitan Transportation Authority
Dedicated Tax Revenue Bonds
Series 1998A (FGIC Insured)
04-01-28 4.75 1,000,000 932,290
Metropolitan Transportation Authority
Transportation Facilities Revenue Bonds
Series 1998A (MBIA Insured)
07-01-24 4.75 1,500,000 1,410,030
Monroe County Airport Authority
Airport Refunding Revenue Bonds
Greater Rochester International Airport
Series 1999 (MBIA Insured) A.M.T.
01-01-16 5.88 1,500,000 1,657,155
Mount Vernon Industrial Development
Agency Civic Facilities Revenue Bonds
Wartburg Senior Housing Meadowview
Series 1999
06-01-29 6.20 1,000,000 847,760
New York
Unlimited General Obligation Bonds
Series 1997D
08-01-03 5.25 1,000,000 1,042,100
New York City Health & Hospital
Revenue Bonds Series 1993A
02-15-20 6.30 870,000 931,822
New York City Industrial Development
Agency Civic Facilities
Refunding
Revenue & Improvement
Bonds Lighthouse International
Series 1998
(MBIA Insured)
07-01-23 4.50 200,000 176,680
New York City Industrial Development
Agency Civic Facilities
Revenue Bonds
Riverdale Country School
Series 1997 (MBIA Insured)
06-01-17 5.25 1,000,000 1,018,110
New York City Industrial Development
Agency Civic Facilities
Revenue Bonds
Rockefeller Foundation Series 1993
07-01-23 5.38 2,000,000 2,026,920
New York City Industrial Development
Agency Civic Facilities
Revenue Bonds
Touro College Series 1999A
06-01-29 6.35 1,000,000 927,570
New York City Industrial Development
Agency Civic Facilities
Revenue Bonds
Trinity Episcopal School
Series 1997 (MBIA Insured)
06-15-27 5.25 1,000,000 997,580
New York City Industrial Development
Agency Civic Facilities
Revenue Bonds
YMCA Series 1997
08-01-16 5.80 1,000,000 990,230
New York City Municipal Water
Finance Authority Water & Sewer System
Revenue Bonds Series 1993
Inverse Floater (MBIA Insured)
06-15-09 6.73 2,000,000(f) 2,147,500
New York City Municipal Water
Finance Authority Water & Sewer System
Revenue Bonds Series 1996B
(MBIA Insured)
06-15-26 5.75 500,000 522,255
New York City Transitional Cultural
Resources Revenue Bonds Museum of
American Folk Art Series 2000
(ACA Insured)
07-01-22 6.00 1,000,000 1,028,010
New York City Transitional Finance
Authority Future Secured
Sales Tax Revenue Bonds
Series 1998B
11-15-23 4.75 1,500,000 1,384,230
New York City Transitional
Finance Authority
Future Secured Sales Tax Revenue Bonds
Series 1999C
05-01-25 5.50 1,000,000 1,027,450
New York City Transitional
Finance Authority
Future Secured Sales Tax Revenue Bonds
Series 2001C
02-01-08 5.50 1,500,000 1,625,520
New York City Unlimited Tax
General Obligation Bonds
Series 1996G
02-01-17 5.75 1,000,000 1,042,180
New York City Unlimited Tax
General Obligation Bonds
Series 1996J
02-15-19 5.88 1,000,000 1,045,090
New York City Unlimited Tax
General Obligation Bonds
Series 1999I (MBIA Insured)
04-15-29 5.00 1,000,000 959,350
New York City Unlimited Tax
General Obligation Bonds
Series 2000R Inverse Floater
(FGIC Insured)
05-15-16 11.52 1,000,000(f) 1,223,830
New York City Unlimited Tax
General Obligation Pre-refunded
Revenue Bonds Series 1994B-1
08-15-16 7.00 1,500,000 1,679,970
See accompanying notes to investments in securities.
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65 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP New York Tax-Exempt Fund
Municipal bonds (continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
North Hempstead Unlimited Tax
General Obligation Various Purpose Bonds
Series 1998A (FGIC Insured)
01-15-23 4.75% $1,000,000 $933,480
Oneida County Industrial Development
Agency Civic Facilities Revenue Bonds
Mohawk Valley Handicapped Services
Series 1999 (ACA Insured)
03-15-19 5.30 500,000 476,765
Port Authority Special Obligation
Revenue Bonds KIAC Partners
4th Series 1996 A.M.T.
10-01-19 6.75 1,500,000 1,557,180
State Dormitory Authority
Revenue Bonds Frances Schervier Home
Series 1997 (Asset Guaranty)
07-01-17 5.50 1,000,000 1,019,440
State Dormitory Authority
College Revenue Bonds
Barnard College Series 1996
(AMBAC Insured)
07-01-16 5.25 1,140,000 1,164,647
State Dormitory Authority
College Revenue Bonds
Consolidated City University System
Series 1993A
07-01-13 5.75 3,000,000 3,336,059
State Dormitory Authority
College Revenue Bonds
Cooper Union Series 1996
(AMBAC Insured)
07-01-20 5.38 860,000 874,293
State Dormitory Authority
College Revenue Bonds
Culinary Institute of America
Series 1997 (MBIA Insured)
07-01-17 5.00 500,000 500,000
State Dormitory Authority
College Revenue Bonds
Long Island University
Series 1999 (Asset Guaranty)
09-01-28 5.25 1,400,000 1,384,894
State Dormitory Authority
College Revenue Bonds Siena College
Series 2001 (MBIA Insured)
07-01-03 4.25 330,000(e) 337,435
State Dormitory Authority
College Revenue Bonds
St. Thomas Aquinas College
Series 1998 (Asset Guaranty)
07-01-14 5.00 1,125,000 1,126,609
State Dormitory Authority
Pre-refunded College Revenue Bonds
Consolidated City University
System 3rd General Resolution
2nd Series 1994
(MBIA Insured)
07-01-19 6.25 1,500,000 1,629,660
State Dormitory Authority
Pre-refunded Revenue Bonds
Series 1990B
05-15-11 7.50 415,000 515,899
State Dormitory Authority
Revenue Bonds
Mount Sinai Health
Series 2000A
07-01-25 6.50 500,000 529,400
State Dormitory Authority
Revenue Bonds
NYACK Hospital
Series 1996
07-01-13 6.25 1,000,000 867,240
State Dormitory Authority
Revenue Bonds
Pratt Institute Series 1999
(Asset Guaranty)
07-01-20 6.00 1,500,000 1,609,635
State Dormitory Authority
Revenue Bonds
St. Francis Hospital
Series 1999A (MBIA Insured)
07-01-29 5.50 1,000,000 1,021,610
State Dormitory Authority
State University Educational Facilities
Refunding Revenue Bonds Series 1993A
(AMBAC Insured)
05-15-15 5.25 1,000,000 1,055,550
05-15-19 5.50 2,000,000 2,131,840
State Dormitory Authority
Un-refunded Revenue Bonds
Series 1990B
05-15-11 7.50 1,485,000 1,766,214
State Energy Research & Development
Authority Gas Facilities Revenue Bonds
Residual Certificates Series 2000
Inverse Floater (MBIA Insured)
01-01-21 10.47 400,000(f) 421,912
State Energy Research & Development
Authority Gas Facilities Revenue Bonds
Brooklyn Union Gas
Series 1996 (MBIA Insured)
01-01-21 5.50 1,000,000 1,021,910
State Energy Research & Development
Authority Pollution Control
Refunding Revenue Bonds
Rochester Gas & Electric
Series 1992B (MBIA Insured) A.M.T.
05-15-32 6.50 2,500,000 2,576,300
State Energy Research & Development
Authority Solid Waste Disposal
Revenue Bonds
State Electric & Gas Company
Series 1993A (MBIA Insured) A.M.T.
12-01-28 5.70 3,000,000 3,056,670
State Environmental Facilities
State Water Revolving Fund
Pollution Control Revenue Bonds
Series 1990A
06-15-12 7.50 3,000,000 3,089,250
State Local Government Assistance
Sales Tax Refunding Revenue Bonds
Series 1997B (MBIA Insured)
04-01-20 4.88 1,000,000 962,440
State Local Government Assistance
Sales Tax Revenue Bonds
Series 1992C
04-01-22 5.50 1,500,000 1,503,705
State Medical Care Facilities
Finance Agency Mental Health Services
Revenue Bonds Series 1994A
(FSA Insured)
08-15-23 5.25 1,500,000 1,488,270
State Mortgage Agency Homeowner
Mortgage Refunding Revenue Bonds
Series 1991TT
04-01-15 7.50 760,000 776,188
State Mortgage Agency Homeowner
Mortgage Revenue Bonds 27th
Series 1992
04-01-15 6.90 3,000,000 3,105,390
State Urban Development
Capital Correctional Facilities
Refunding Lease Revenue Bonds
Series 1994A (FSA Insured)
01-01-21 5.25 2,500,000 2,503,950
State Urban Development
Capital Correctional Facilities
Revenue Bonds 5th Series 1995
(MBIA Insured)
01-01-25 5.50 750,000(g) 762,083
Suffolk County Industrial Development
Agency Continuing Care Retirement
Revenue Bonds
Jeffersons Ferry Series 1999A
11-01-28 7.25 1,500,000 1,560,645
Troy Municipal Assistance
General Obligation
Revenue Bonds
Series 1996A (MBIA Insured)
01-15-22 5.00 1,250,000 1,218,638
Ulster County Independent Development
Agency Civic Facilities Revenue Bonds
Benedictine Hospital Series 1999A
06-01-24 6.45 1,950,000 1,706,250
United Nations Development Senior Lien
Pre-refunded Revenue Bonds
Series 1992A
07-01-26 6.00 4,500,000 4,847,489
Utica Industrial Development Agency
Civic Facilities Revenue Bonds
Munson-Williams-Proctor
Series 1996A (MBIA Insured)
07-15-16 5.50 750,000 771,698
See accompanying notes to investments in securities.
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66 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP New York Tax-Exempt Fund
Municipal bonds (continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Westchester County Industrial Development
Agency Continuing Care Retirement
Revenue Bonds Hebrew Hospital
Senior Housing Series 2000A
07-01-30 7.38% $1,000,000 $999,870
Yonkers Unlimited Tax
General Obligation Bonds
Series 2001B (AMBAC Insured)
12-15-07 3.88 1,010,000 1,008,323
Total municipal bonds
(Cost: $88,804,546) $94,404,963
Municipal notes (8.9%)
Issuer(c,d) Effective Amount Value(a)
yield payable at
maturity
Long Island Power Authority
Electric Systems Revenue Bonds
V.R. Series 1998B-2
05-01-33 3.10% $200,000 $200,000
New York City Municipal Water
Finance Authority
Water & Sewer System Revenue Bonds
V.R. Series 1994G
06-15-24 3.10 7,600,000 7,600,000
New York City Transitional
Finance Authority
Future Secured Tax Revenue Bonds
V.R. Series 1998C
05-01-28 3.20 400,000 400,000
New York General Obligation Bonds
V.R. Series 1993A-7
08-01-20 3.15 1,100,000 1,100,000
Total municipal notes
(Cost: $9,300,000) $9,300,000
Total investments in securities
(Cost: $98,104,546)(h) $103,704,963
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) The following abbreviations may be used in the portfolio security
descriptions to identify the insurer of the issue:
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(c) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of June 30, 2001, the value of
securities subject to alternative minimum tax represented 8.67%
of net assets.
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
T.A.N. -- Tax Anticipation Note
T.R.A.N. -- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B. -- Variable Rate Demand Bond
V.R.D.N. -- Variable Rate Demand Note
(d) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parentheses, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies
to reflect current market conditions; rate shown is the effective rate on
June 30, 2001.
(e) At June 30, 2001, the cost of securities purchased, including interest
purchased, on a when-issued basis was $338,759.
(f) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a
decline (increase) in market short-term rates. Interest rate disclosed is
the rate in effect on June 30, 2001. As of June 30, 2001, the value of
inverse floater securities represented 3.6% of net assets.
(g) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Sale contracts
Municipal Bonds, Sept. 2001 $1,500,000
(h) At June 30, 2001, the cost of securities for federal income tax purposes
was $98,307,650 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $6,389,436
Unrealized depreciation (992,123)
--------
Net unrealized appreciation $5,397,313
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67 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Investments in Securities
AXP Ohio Tax-Exempt Fund
June 30, 2001
(Percentages represent value of investments compared to net assets)
Municipal bonds (91.6%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Akron Bath Copley Joint Township
Hospital District Revenue Bonds
Summa Hospital Series 1998A
11-15-24 5.38% $1,500,000 $1,257,510
Avon Lake General Obligation
Refunding Bonds Series 2001
(AMBAC Insured)
12-01-20 5.00 500,000(e) 490,840
Barberton Limited Tax Various Purpose
General Obligation Bonds Series 1989
12-01-09 7.35 630,000 638,474
Bellefontaine Hospital Facility
Refunding Revenue Bonds
Mary Rutan Health Association
of Logan County Series 1993
12-01-13 6.00 1,000,000 948,790
Buckeye Valley Local School District
School Improvement Unlimited Tax
General Obligation Bonds
Series 1995A (MBIA Insured)
12-01-20 5.25 1,000,000 1,005,370
Butler County Hospital Facility Improvement
Refunding Revenue Bonds
Fort Hamilton-Hughes Memorial Center
Series 1991
01-01-10 7.50 1,750,000 1,823,605
Carroll Water & Sewer District
Unlimited Tax General Obligation Bonds
Series 1998
12-01-10 6.25 415,000 426,309
Carroll Water & Sewer District
Water System Improvement Unlimited Tax
General Obligation Bonds Series 1996
12-01-10 6.25 895,000 919,774
Celina Local School District
Unlimited General Obligation Bonds
Series 1996 (FGIC Insured)
12-01-20 5.25 1,000,000 1,006,450
Cincinnati School District School
Improvement General Obligation
Bonds Series 2001 (MBIA Insured)
12-01-02 4.00 805,000 817,300
Clermont County Hospital Facility
Revenue Bonds Mercy Health System
Province of Cincinnati
Series 1989A (AMBAC Insured)
09-01-19 7.50 165,000 166,322
Cleveland Airport Systems Revenue Bonds
Series 1997A (FSA Insured) A.M.T.
01-01-17 5.13 1,000,000 988,940
Cleveland Waterworks Improvement
1st Mtge Refunding Revenue Bonds
Series F 1992B (AMBAC Insured)
01-01-16 6.25 1,000,000 1,033,620
Columbus Tax Increment Finance
Revenue Bonds Easton
Series 1999 (AMBAC Insured)
12-01-24 4.88 1,000,000 938,220
Coshocton County Solid Waste Disposal
Refunding Revenue Bonds
Stone Container Series 1992
08-01-13 7.88 1,000,000 1,020,970
Cuyahoga County Health Care Facilities
Refunding Revenue Bonds Judson
Retirement Community Series 1996A
11-15-18 7.25 1,000,000 1,023,330
Cuyahoga County Hospital
Facilities Revenue Bonds
Canton Series 2000
01-01-30 7.50 1,000,000 1,042,780
Cuyahoga County Hospital
Improvement Revenue Bonds
University Hospitals Health System
Series 1992 (AMBAC Insured)
01-15-11 6.50 500,000 520,075
Cuyahoga County Hospital
Refunding Revenue Bonds
Cleveland Clinic Foundation
Series 1992C (MBIA Insured)
11-15-11 5.50 1,500,000 1,547,385
Cuyahoga County Hospital
Revenue Bonds
Meridia Health System
Series 1991
08-15-23 7.00 1,000,000 1,025,360
Cuyahoga County Hospital
Revenue Bonds
Mount Sinai Medical Center
Series 1991 (AMBAC Insured)
11-15-21 6.63 600,000 620,706
Cuyahoga County Hospital
Revenue Bonds
University Hospitals Health System
Series 1999 (AMBAC Insured)
01-15-19 5.40 1,000,000 1,019,700
Cuyahoga County Limited Tax
General Obligation Bonds
Series 1993
05-15-13 5.60 500,000 545,240
Dayton Water System Refunding
Revenue Bonds Series 1999 (FSA Insured)
12-01-02 4.00 1,000,000 1,015,280
Delaware County Sewer Improvement
Limited Tax General Obligation Bonds
Series 1995
12-01-15 5.25 1,000,000 1,016,920
Dover Limited Tax Improvement
General Obligation Bonds
Municipal Sewer System
Series 1989
12-01-09 7.10 930,000 945,810
Erie County Hospital Improvement
Refunding Revenue Bonds
Firelands Community Hospital
Series 1992
01-01-15 6.75 2,000,000 2,052,620
Franklin County Health Care Facilities
Refunding Revenue Bonds
Lutheran Senior City Incorporated
Series 1999
12-15-28 6.13 1,250,000 1,043,600
Franklin County Multi-family Housing
Refunding Revenue Bonds
Jefferson Chase Apartments
Series 1998B A.M.T.
11-01-35 6.40 1,000,000 918,620
Franklin County Multi-family Housing
Refunding Revenue Bonds
West Bay Apartments Series 1998
A.M.T.
12-01-25 6.38 990,000 700,128
Hamilton County Hospital Facilities
Revenue Bonds Children's Hospital
Medical Center Series 1998G
(MBIA Insured)
05-15-28 4.75 500,000 452,910
Hamilton County Sales Tax
Revenue Bonds
Hamilton County Football
Series 1998A (MBIA Insured)
12-01-17 4.75 1,000,000 960,590
Hamilton County Sales Tax
Revenue Bonds
Hamilton County Football
Series 1998B (MBIA Insured)
12-01-27 5.00 1,000,000 959,070
Hilliard County School District
Unlimited Tax General Obligation Bonds
Series 1996A (FGIC Insured)
12-01-20 5.00 1,000,000 984,090
Jackson County Hospital Facilities
Revenue Bonds Consolidated
Health System
Jackson Hospital Series 1999
(Asset Guaranty)
10-01-20 6.13 1,000,000 1,056,170
Lakota Local School District Unlimited Tax
Improvement General Obligation Bonds
Series 1994 (AMBAC Insured)
12-01-14 6.25 2,000,000 2,216,539
See accompanying notes to investments in securities.
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68 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Ohio Tax-Exempt Fund
Municipal bonds (continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of issue(b,c)
Lorain County Hospital Facilities Refunding
Revenue Bonds EMH Regional Medical
Center Series 1995 (AMBAC Insured)
11-01-21 5.38% $2,000,000 $2,009,980
Lorain County Independent
Living & Hospital
Facilities Refunding Revenue Bonds
Elyria United Methodist Series 1996C
06-01-22 6.88 1,000,000 1,005,650
Mahoning Valley Sanitary District Water
Refunding Revenue Bonds
Series 1999 (FSA Insured)
11-15-18 5.75 1,000,000 1,057,370
Marion County Health Care Facilities
Improvement Refunding Revenue Bonds
United Church Homes Series 1993
11-15-10 6.38 885,000 853,813
Marysville Sewer System 1st Mortgage
Revenue Bonds Series 1988
(BIG Insured)
02-15-08 7.85 300,000 300,825
Marysville Water System Mortgage
Revenue Bonds
Series 1991 (MBIA Insured)
12-01-21 7.05 1,000,000 1,028,180
Montgomery County Hospital Facilities
Refunding Revenue Bonds
Kettering Medical Center Series 1999
04-01-22 6.75 1,000,000 1,004,110
Montgomery County Water
Revenue Bonds
Greater Moraine-Beavercreek District
Series 1992 (FGIC Insured)
11-15-17 6.25 1,000,000 1,037,640
North Olmstead County
General Obligation Bonds
Series 1996 (AMBAC Insured)
12-01-16 5.00 1,500,000 1,504,035
12-01-21 5.00 200,000 195,982
Oak Hills Local School District
Unlimited Tax General Obligation Bonds
Series 1997 (MBIA Insured)
12-01-25 5.13 1,000,000 981,510
Orrville Electric System
Refunding Revenue & Improvement
Mortgage Bonds Series 1997
(AMBAC Insured)
12-01-17 5.10 1,000,000 1,004,170
Rural Loraine County Water Authority
Water Resource Improvement
Pre-refunded Revenue Bonds
Series 1991 (AMBAC Insured)
10-01-11 7.00 1,000,000 1,020,810
Stark County Health Care Facilities
Refunding Revenue Bonds
Rose Lane Series 1998
(GNMA/FHA Insured)
07-20-33 5.45 215,000(e) 213,701
State Air Quality Development Authority
Refunding Revenue Bonds
JMG Funding Limited Partnership
Series 1994 (AMBAC Insured) A.M.T.
01-01-29 6.38 2,000,000 2,103,800
04-01-29 6.38 500,000 525,950
State Air Quality Development Authority
Revenue Bonds Columbus & Southern
Series 1985A (FGIC Insured)
12-01-20 6.38 1,000,000 1,039,810
State Department of Administrative Services
Certificate of Participation Ohio Center
Series 1998 (AMBAC Insured)
07-15-28 5.00 550,000 527,560
State Housing Finance Agency
Mortgage Revenue Bonds
Aristocrat South Board & Care
Series 1991A (FHA Insured) A.M.T.
08-01-31 7.30 1,500,000 1,546,095
State Municipal Electric Generation Agency
Revenue Bonds Joint Venture #5
Series 1993 (AMBAC Insured)
02-15-24 5.38 2,000,000 2,004,760
State Turnpike Commission Revenue
Bonds Series 1998B (FGIC Insured)
02-15-24 4.50 1,000,000 885,340
02-15-28 4.75 800,000 728,952
State Turnpike Revenue Bonds
Series 1994A
02-15-24 5.75 1,000,000 1,077,380
State Turnpike Revenue Bonds
Series 1996A (MBIA Insured)
02-15-26 5.50 1,000,000 1,091,400
State Valley School District School
Improvement Unlimited Tax
General Obligation Bonds
Counties of Adams & Highland
Series 1995 (MBIA Insured)
12-01-21 5.25 2,000,000 2,007,480
State Water Development Authority
Pollution Control Refunding Revenue
Bonds Cleveland Electric Illuminating
Series 1995
08-01-25 7.70 1,000,000 1,082,330
State Water Development Authority
Pollution Control Refunding Revenue
Bonds Toledo Edison Series 1994A
A.M.T.
10-01-23 8.00 1,000,000 1,082,590
State Water Development Authority
Refunding & Improvement
Revenue Bonds
Pure Water Series 1992
(AMBAC Insured)
12-01-18 5.50 750,000 759,750
State Water Development Authority
Solid Waste Disposal Revenue Bonds
Northstar BHP Steel Cargill
Series 1995 A.M.T.
09-01-20 6.30 500,000 518,005
Streetsboro City School District
School Improvement Unlimited
Tax General Obligation Bonds
Series 2001 (MBIA Insured)
12-01-25 5.00 1,000,000 963,110
Swanton Local School District School
Improvement Unlimited Tax
General Obligation Bonds Series 2001
(FGIC Insured)
12-01-02 3.10 550,000 551,562
University of Cincinnati
Certificates of Participation
Student Recreation Center
Series 1996 (MBIA Insured)
06-01-24 5.13 1,000,000 978,190
Warren County Various Purpose
Limited Tax General Obligation Bonds
Series 1992
12-01-12 6.10 500,000 571,780
Youngstown State University
General Receipts College Revenue Bonds
Series 1998 (AMBAC Insured)
12-15-16 4.75 1,000,000 974,330
Total municipal bonds
(Cost: $66,401,373) $69,387,367
Municipal notes (7.0%)
Issuer(c,d) Effective Amount Value(a)
yield payable at
maturity
State Air Quality Development Authority
Pollution Control Refunding
Revenue Bonds
Ohio Edison V.R. Series 2000C A.M.T.
09-01-18 3.45% $1,200,000 $1,200,000
State Air Quality Development Authority
Pollution Control Refunding
Revenue Bonds
Toledo Edison V.R. Series 2000A
04-01-24 3.30 2,600,000 2,600,000
12-01-26 2.65 1,000,000 1,000,000
State Water & Air Development Authority
Pollution Facilities Refunding
Revenue Bonds
Toledo Edison V.R. Series 2000A
04-01-24 3.30 500,000 500,000
Total municipal notes
(Cost: $5,300,000) $5,300,000
Total investments in securities
(Cost: $71,701,373)(f) $74,687,367
See accompanying notes to investments in securities.
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69 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Ohio Tax-Exempt Fund
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) The following abbreviations may be used in the portfolio security
descriptions to identify the insurer of the issue:
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(c) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of June 30, 2001, the value of
securities subject to alternative minimum tax represented
12.66% of net assets.
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
T.A.N. -- Tax Anticipation Note
T.R.A.N. -- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B. -- Variable Rate Demand Bond
V.R.D.N. -- Variable Rate Demand Note
(d) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parentheses, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies
to reflect current market conditions; rate shown is the effective rate on
June 30, 2001.
(e) Partially pledged as initial margin deposit on the following open interest
rate futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Sale contracts
Municipal Bonds, Sept. 2001 $1,500,000
(f) At June 30, 2001, the cost of securities for federal income tax purposes
was $71,701,373 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $3,860,660
Unrealized depreciation (874,666)
--------
Net unrealized appreciation $2,985,994
----------
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70 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Federal Income Tax Information
(Unaudited)
Each Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on your year-end statement.
AXP California Tax-Exempt Fund
Fiscal year ended June 30, 2001
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02337
Aug. 24, 2000 0.02151
Sept. 21, 2000 0.01904
Oct. 24, 2000 0.02289
Nov. 21, 2000 0.01940
Dec. 20, 2000 0.01974
Jan. 26, 2001 0.02467
Feb. 26, 2001 0.02048
March 26, 2001 0.01870
April 26, 2001 0.02048
May 24, 2001 0.01889
June 26, 2001 0.02204
Total distributions $0.25121
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.01993
Aug. 24, 2000 0.01825
Sept. 21, 2000 0.01606
Oct. 24, 2000 0.01941
Nov. 21, 2000 0.01644
Dec. 20, 2000 0.01665
Jan. 26, 2001 0.02066
Feb. 26, 2001 0.01712
March 26, 2001 0.01566
April 26, 2001 0.01713
May 24, 2001 0.01589
June 26, 2001 0.01851
Total distributions $0.21171
Class C
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.01831
Aug. 24, 2000 0.01833
Sept. 21, 2000 0.01631
Oct. 24, 2000 0.01926
Nov. 21, 2000 0.01648
Dec. 20, 2000 0.01683
Jan. 26, 2001 0.02067
Feb. 26, 2001 0.01715
March 26, 2001 0.01587
April 26, 2001 0.01724
May 24, 2001 0.01583
June 26, 2001 0.01858
Total distributions $0.21086
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June 30, 2001
was derived from interest on California municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should not be
included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax advisor about reporting this income for state
and local tax purposes.
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71 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Massachusetts Tax-Exempt Fund
Fiscal year ended June 30, 2001
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02449
Aug. 24, 2000 0.02257
Sept. 21, 2000 0.02014
Oct. 24, 2000 0.02436
Nov. 21, 2000 0.02042
Dec. 20, 2000 0.02098
Jan. 26, 2001 0.02580
Feb. 26, 2001 0.02294
March 26, 2001 0.02063
April 26, 2001 0.02283
May 24, 2001 0.02043
June 26, 2001 0.02244
Total distributions $0.26803
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02100
Aug. 24, 2000 0.01927
Sept. 21, 2000 0.01715
Oct. 24, 2000 0.02087
Nov. 21, 2000 0.01745
Dec. 20, 2000 0.01788
Jan. 26, 2001 0.02173
Feb. 26, 2001 0.01956
March 26, 2001 0.01758
April 26, 2001 0.01946
May 24, 2001 0.01742
June 26, 2001 0.01886
Total distributions $0.22823
Class C
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.01995
Aug. 24, 2000 0.01931
Sept. 21, 2000 0.01718
Oct. 24, 2000 0.02090
Nov. 21, 2000 0.01748
Dec. 20, 2000 0.01790
Jan. 26, 2001 0.02178
Feb. 26, 2001 0.01959
March 26, 2001 0.01759
April 26, 2001 0.01949
May 24, 2001 0.01743
June 26, 2001 0.01892
Total distributions $0.22752
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June 30, 2001
was derived from interest on Massachusetts municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should not be
included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax advisor about reporting this income for state
and local tax purposes.
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72 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Michigan Tax-Exempt Fund
Fiscal year ended June 30, 2001
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02356
Aug. 24, 2000 0.02266
Sept. 21, 2000 0.02027
Oct. 24, 2000 0.02403
Nov. 21, 2000 0.02045
Dec. 20, 2000 0.02117
Jan. 26, 2001 0.02720
Feb. 26, 2001 0.02306
March 26, 2001 0.02052
April 26, 2001 0.02304
May 24, 2001 0.02018
June 26, 2001 0.02252
Total distributions $0.26866
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02020
Aug. 24, 2000 0.01938
Sept. 21, 2000 0.01729
Oct. 24, 2000 0.02053
Nov. 21, 2000 0.01749
Dec. 20, 2000 0.01806
Jan. 26, 2001 0.02320
Feb. 26, 2001 0.01970
March 26, 2001 0.01746
April 26, 2001 0.01968
May 24, 2001 0.01716
June 26, 2001 0.01895
Total distributions $0.22910
Class C
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.01756
Aug. 24, 2000 0.01844
Sept. 21, 2000 0.01655
Oct. 24, 2000 0.01952
Nov. 21, 2000 0.01689
Dec. 20, 2000 0.01776
Jan. 26, 2001 0.02320
Feb. 26, 2001 0.02022
March 26, 2001 0.01749
April 26, 2001 0.01968
May 24, 2001 0.01716
June 26, 2001 0.01894
Total distributions $0.22341
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June 30, 2001
was derived from interest on Michigan municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should not be
included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax advisor about reporting this income for state
and local tax purposes.
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73 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Minnesota Tax-Exempt Fund
Fiscal year ended June 30, 2001
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02551
Aug. 24, 2000 0.02373
Sept. 21, 2000 0.02190
Oct. 24, 2000 0.02528
Nov. 21, 2000 0.02151
Dec. 20, 2000 0.02138
Jan. 26, 2001 0.02781
Feb. 26, 2001 0.02384
March 26, 2001 0.02124
April 26, 2001 0.02340
May 24, 2001 0.02076
June 26, 2001 0.02454
Total $0.28090
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 20, 2000 $0.00125
Total distributions $0.28215
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02210
Aug. 24, 2000 0.02049
Sept. 21, 2000 0.01896
Oct. 24, 2000 0.02185
Nov. 21, 2000 0.01859
Dec. 20, 2000 0.01836
Jan. 26, 2001 0.02388
Feb. 26, 2001 0.02055
March 26, 2001 0.01827
April 26, 2001 0.02012
May 24, 2001 0.01781
June 26, 2001 0.02105
Total $0.24203
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 20, 2000 $0.00125
Total distributions $0.24328
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74 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Class C
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02052
Aug. 24, 2000 0.02078
Sept. 21, 2000 0.01902
Oct. 24, 2000 0.02196
Nov. 21, 2000 0.01866
Dec. 20, 2000 0.01841
Jan. 26, 2001 0.02396
Feb. 26, 2001 0.02059
March 26, 2001 0.01833
April 26, 2001 0.02018
May 24, 2001 0.01787
June 26, 2001 0.02107
Total $0.24135
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 20, 2000 $0.00125
Total distributions $0.24260
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June 30, 2001
was derived from interest on Minnesota municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should not be
included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax advisor about reporting this income for state
and local tax purposes.
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75 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP New York Tax-Exempt Fund
Fiscal year ended June 30, 2001
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02410
Aug. 24, 2000 0.02147
Sept. 21, 2000 0.01950
Oct. 24, 2000 0.02311
Nov. 21, 2000 0.01944
Dec. 20, 2000 0.02002
Jan. 26, 2001 0.02433
Feb. 26, 2001 0.02131
March 26, 2001 0.01920
April 26, 2001 0.02043
May 24, 2001 0.01833
June 26, 2001 0.02092
Total $0.25216
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per Share
Dec. 20, 2000 $0.00045
Total distributions $0.25261
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02077
Aug. 24, 2000 0.01829
Sept. 21, 2000 0.01660
Oct. 24, 2000 0.01973
Nov. 21, 2000 0.01656
Dec. 20, 2000 0.01701
Jan. 26, 2001 0.02073
Feb. 26, 2001 0.01804
March 26, 2001 0.01625
April 26, 2001 0.01718
May 24, 2001 0.01541
June 26, 2001 0.01744
Total $0.21401
Taxable dividend -- income distribution taxable as dividend income.
Payable data Per share
Dec. 20, 2000 $0.00045
Total distributions $0.21446
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76 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
Class C
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.01904
Aug. 24, 2000 0.01799
Sept. 21, 2000 0.01661
Oct. 24, 2000 0.01975
Nov. 21, 2000 0.01661
Dec. 20, 2000 0.01714
Jan. 26, 2001 0.02074
Feb. 26, 2001 0.01802
March 26, 2001 0.01623
April 26, 2001 0.01715
May 24, 2001 0.01553
June 26, 2001 0.01741
Total $0.21222
Taxable dividend -- income distribution taxable dividend income.
Payable date Per share
Dec. 20, 2000 $0.00045
Total distributions $0.21267
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June 30, 2001
was derived from interest on New York municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should not be
included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax advisor about reporting this income for state
and local tax purposes.
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77 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP Ohio Tax-Exempt Fund
Fiscal year ended June 30, 2001
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02474
Aug. 24, 2000 0.02283
Sept. 21, 2000 0.02019
Oct. 24, 2000 0.02390
Nov. 21, 2000 0.02055
Dec. 20, 2000 0.02104
Jan. 26, 2001 0.02655
Feb. 26, 2001 0.02169
March 26, 2001 0.01999
April 26, 2001 0.02234
May 24, 2001 0.01939
June 26, 2001 0.02245
Total distributions $0.26566
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.02125
Aug. 24, 2000 0.01951
Sept. 21, 2000 0.01719
Oct. 24, 2000 0.02038
Nov. 21, 2000 0.01756
Dec. 20, 2000 0.01793
Jan. 26, 2001 0.02249
Feb. 26, 2001 0.01831
March 26, 2001 0.01695
April 26, 2001 0.01896
May 24, 2001 0.01637
June 26, 2001 0.01885
Total distributions $0.22575
Class C
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 24, 2000 $0.01942
Aug. 24, 2000 0.01858
Sept. 21, 2000 0.01655
Oct. 24, 2000 0.01947
Nov. 21, 2000 0.01679
Dec. 20, 2000 0.01719
Jan. 26, 2001 0.02235
Feb. 26, 2001 0.01805
March 26, 2001 0.01709
April 26, 2001 0.01923
May 24, 2001 0.01671
June 26, 2001 0.01890
Total distributions $0.22033
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June 30, 2001
was derived from interest on Ohio municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should not be
included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax advisor about reporting this income for state
and local tax purposes.
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78 AXP STATE TAX-EXEMPT FUNDS -- ANNUAL REPORT
<PAGE>
AXP State Tax-Exempt Funds
70100 AXP Financial Center
Minneapolis, MN 55474
americanexpress.com
Ticker Symbol
AXP California Tax-Exempt Fund Class A: ICALX Class B: N/A Class C: N/A
AXP Massachusetts Tax-Exempt Fund Class A: IDMAX Class B: N/A Class C: N/A
AXP Michigan Tax-Exempt Fund Class A: INMIX Class B: N/A Class C: N/A
AXP Minnesota Tax-Exempt Fund Class A: IMNTX Class B: IDSMX Class C: N/A
AXP New York Tax-Exempt Fund Class A: INYKX Class B: N/A Class C: N/A
AXP Ohio Tax-Exempt Fund Class A: IOHIX Class B: N/A Class C: 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.
(logo) American Express
S-6328 V (8/01)
</TEXT>
</DOCUMENT>