UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4646
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AXP CALIFORNIA TAX-EXEMPT TRUST
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(Exact name of registrant as specified in charter)
50606 AXP Financial Center, Minneapolis, Minnesota 55474
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(Address of principal executive offices) (Zip code)
Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810, Minneapolis, MN 55402-3268
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(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 330-9283
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Date of fiscal year end: 6/30
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Date of reporting period: 12/31
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AXP(R) California Tax-Exempt Fund
AXP(R) Massachusetts Tax-Exempt Fund
AXP(R) Michigan Tax-Exempt Fund
AXP(R) Minnesota Tax-Exempt Fund
AXP(R) New York Tax-Exempt Fund
AXP(R) Ohio Tax-Exempt Fund
Semiannual Report
for the Period Ended
Dec. 31, 2004
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.
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds
Table of Contents
Fund Snapshot 3-9
AXP California Tax-Exempt Fund 3
AXP Massachusetts Tax-Exempt Fund 4
AXP Michigan Tax-Exempt Fund 5
AXP Minnesota Tax-Exempt Fund 6
AXP New York Tax-Exempt Fund 7
AXP Ohio Tax-Exempt Fund 8
Performance Summary 10-21
AXP California Tax-Exempt Fund 10
AXP Massachusetts Tax-Exempt Fund 12
AXP Michigan Tax-Exempt Fund 14
AXP Minnesota Tax-Exempt Fund 16
AXP New York Tax-Exempt Fund 18
AXP Ohio Tax-Exempt Fund 20
Questions & Answers
with Portfolio Management 22
Investments in Securities 26-63
AXP California Tax-Exempt Fund 26
AXP Massachusetts Tax-Exempt Fund 33
AXP Michigan Tax-Exempt Fund 38
AXP Minnesota Tax-Exempt Fund 43
AXP New York Tax-Exempt Fund 53
AXP Ohio Tax-Exempt Fund 59
Financial Statements 64
Notes to Financial Statements 71
Fund Expenses Example 98
Proxy Voting 102
(logo) Dalbar
American Express(R) Funds' reports to shareholders have been awarded the
Communications Seal from Dalbar Inc., an independent financial services research
firm. The Seal recognizes communications demonstrating a level of excellence in
the industry.
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2 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Fund Snapshot AT DEC. 31, 2004
AXP California Tax-Exempt Fund
PORTFOLIO MANAGER
Portfolio manager Since Years in industry
Dave Kerwin, CFA* 8/04 19
* The Fund is managed by a team of portfolio managers led by Dave Kerwin.
FUND OBJECTIVE
For California investors, this Fund seeks to provide a high level of income
generally exempt from federal income tax as well as from the respective state
and local taxes.
Inception dates by class
A: 8/18/86 B: 3/20/95 C: 6/26/00
Ticker symbols by class
A: ICALX B: ACABX C: --
Total net assets $215.1 million
Number of holdings 106
Effective maturity(1) 17.4 years
Effective duration(2) 7.3 years
Weighted average bond rating(3) AA
(1) Effective maturity measures a bond's maturity, which takes into
consideration the possibility that the issuer may call the bond before its
maturity date.
(2) Effective duration measures the sensitivity of a security's price to
parallel shifts in the yield curve (the graphical depiction of the levels
of interest rates from two years out to 30 years). Positive duration means
that as rates rise, the price decreases, and negative duration means that
as rates rise, the price increases.
(3) Weighted average bond rating represents the average credit quality of the
underlying bonds in the portfolio.
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
DURATION
SHORT INT. LONG
X X HIGH
X X MEDIUM QUALITY
LOW
CREDIT QUALITY SUMMARY
Percentage of portfolio assets excluding cash equivalents
AAA bonds 53.7%
AA bonds 7.5
A bonds 25.4
BBB bonds 7.2
Non-investment grade bonds 6.2
Individual security ratings are based on information from Standard & Poor's
Corp. and Moody's Investors Service. If a rating is unavailable, the rating is
determined through an internal analysis, if appropriate. 2.8% of the portfolio
rating above was determined through internal analysis.
INSURED/NON-INSURED COMPOSITION
Percentage of portfolio assets
Insured 52.8%
Non-insured 47.2
Certain income may be subject to the alternative minimum tax or state or local
tax.
Fund holdings are subject to change.
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3 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Fund Snapshot AT DEC. 31, 2004
AXP Massachusetts Tax-Exempt Fund
PORTFOLIO MANAGER
Portfolio manager Since Years in industry
Dave Kerwin, CFA* 8/04 19
* The Fund is managed by a team of portfolio managers led by Dave Kerwin.
FUND OBJECTIVE
For Massachusetts investors, this Fund seeks to provide a high level of income
generally exempt from federal income tax as well as from respective state and
local tax.
Inception dates by class
A: 7/2/87 B: 3/20/95 C: 6/26/00
Ticker symbols by class
A: IDMAX B: AXMBX C: --
Total net assets $80.1 million
Number of holdings 54
Effective maturity(1) 14.4 years
Effective duration(2) 6.5 years
Weighted average bond rating(3) AAA
(1) Effective maturity measures a bond's maturity, which takes into
consideration the possibility that the issuer may call the bond before its
maturity date.
(2) Effective duration measures the sensitivity of a security's price to
parallel shifts in the yield curve (the graphical depiction of the levels
of interest rates from two years out to 30 years). Positive duration means
that as rates rise, the price decreases, and negative duration means that
as rates rise, the price increases.
(3) Weighted average bond rating represents the average credit quality of the
underlying bonds in the portfolio.
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
DURATION
SHORT INT. LONG
X X HIGH
X X MEDIUM QUALITY
LOW
CREDIT QUALITY SUMMARY
Percentage of portfolio assets excluding cash equivalents
AAA bonds 70.1%
AA bonds 22.2
A bonds 1.4
BBB bonds 5.0
Non-investment grade bonds 1.3
Individual security ratings are based on information from Standard & Poor's
Corp. and Moody's Investors Service. If a rating is unavailable, the rating is
determined through an internal analysis, if appropriate.
INSURED/NON-INSURED COMPOSITION
Percentage of portfolio assets
Insured 54.6%
Non-insured 45.4
Certain income may be subject to the alternative minimum tax or state or local
tax.
Fund holdings are subject to change.
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4 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Fund Snapshot AT DEC. 31, 2004
AXP Michigan Tax-Exempt Fund
PORTFOLIO MANAGER
Portfolio manager Since Years in industry
Dave Kerwin, CFA* 8/04 19
* The Fund is managed by a team of portfolio managers led by Dave Kerwin.
FUND OBJECTIVE
For Michigan investors, this Fund seeks to provide a high level of income
generally exempt from federal income tax as well as from the respective state
and local tax.
Inception dates by class
A: 7/2/87 B: 3/20/95 C: 6/26/00
Ticker symbols by class
A: INMIX B: -- C: --
Total net assets $62.7 million
Number of holdings 59
Effective maturity(1) 14.1 years
Effective duration(2) 6.6 years
Weighted average bond rating(3) AA
(1) Effective maturity measures a bond's maturity, which takes into
consideration the possibility that the issuer may call the bond before its
maturity date.
(2) Effective duration measures the sensitivity of a security's price to
parallel shifts in the yield curve (the graphical depiction of the levels
of interest rates from two years out to 30 years). Positive duration means
that as rates rise, the price decreases, and negative duration means that
as rates rise, the price increases.
(3) Weighted average bond rating represents the average credit quality of the
underlying bonds in the portfolio.
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
DURATION
SHORT INT. LONG
X X HIGH
X X MEDIUM QUALITY
LOW
CREDIT QUALITY SUMMARY
Percentage of portfolio assets excluding cash equivalents
AAA bonds 60.0%
AA bonds 28.0
A bonds 5.9
BBB bonds 2.1
Non-investment grade bonds 4.0
Individual security ratings are based on information from Standard & Poor's
Corp. and Moody's Investors Service. If a rating is unavailable, the rating is
determined through an internal analysis, if appropriate. 5.5% of the portfolio
rating above was determined through internal analysis.
INSURED/NON-INSURED COMPOSITION
Percentage of portfolio assets
Insured 50.6%
Non-insured 49.4
Certain income may be subject to the alternative minimum tax or state or local
tax.
Fund holdings are subject to change.
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5 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Fund Snapshot AT DEC. 31, 2004
AXP Minnesota Tax-Exempt Fund
PORTFOLIO MANAGER
Portfolio manager Since Years in industry
Dave Kerwin, CFA* 8/04 19
* The Fund is managed by a team of portfolio managers led by Dave Kerwin.
FUND OBJECTIVE
For Minnesota investors, this Fund seeks to provide a high level of income
generally exempt from federal income tax as well as from the respective state
and local tax.
Inception dates by class
A: 8/18/86 B: 3/20/95 C: 6/26/00
Ticker symbols by class
A: IMNTX B: IDSMX C: --
Total net assets $416.4 million
Number of holdings 158
Effective maturity(1) 12.1 years
Effective duration(2) 6.8 years
Weighted average bond rating(3) AA
(1) Effective maturity measures a bond's maturity, which takes into
consideration the possibility that the issuer may call the bond before its
maturity date.
(2) Effective duration measures the sensitivity of a security's price to
parallel shifts in the yield curve (the graphical depiction of the levels
of interest rates from two years out to 30 years). Positive duration means
that as rates rise, the price decreases, and negative duration means that
as rates rise, the price increases.
(3) Weighted average bond rating represents the average credit quality of the
underlying bonds in the portfolio.
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
DURATION
SHORT INT. LONG
X X HIGH
X X MEDIUM QUALITY
LOW
CREDIT QUALITY SUMMARY
Percentage of portfolio assets excluding cash equivalents
AAA bonds 65.6%
AA bonds 17.5
A bonds 5.0
BBB bonds 4.7
Non-investment grade bonds 7.2
Individual security ratings are based on information from Standard & Poor's
Corp. and Moody's Investors Service. If a rating is unavailable, the rating is
determined through an internal analysis, if appropriate. 8.2% of the portfolio
rating above was determined through internal analysis.
INSURED/NON-INSURED COMPOSITION
Percentage of portfolio assets
Insured 37.5%
Non-insured 62.5
Certain income may be subject to the alternative minimum tax or state or local
tax.
Fund holdings are subject to change.
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6 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Fund Snapshot AT DEC. 31, 2004
AXP New York Tax-Exempt Fund
PORTFOLIO MANAGER
Portfolio manager Since Years in industry
Dave Kerwin, CFA* 8/04 19
* The Fund is managed by a team of portfolio managers led by Dave Kerwin.
FUND OBJECTIVE
For New York investors, this Fund seeks to provide a high level of income
generally exempt from federal income tax as well as from the respective state
and local taxes.
Inception dates by class
A: 8/18/86 B: 3/20/95 C: 6/26/00
Ticker symbols by class
A: INYKX B: -- C: --
Total net assets $94.0 million
Number of holdings 75
Effective maturity(1) 15.5 years
Effective duration(2) 6.4 years
Weighted average bond rating(3) AA
(1) Effective maturity measures a bond's maturity, which takes into
consideration the possibility that the issuer may call the bond before its
maturity date.
(2) Effective duration measures the sensitivity of a security's price to
parallel shifts in the yield curve (the graphical depiction of the levels
of interest rates from two years out to 30 years). Positive duration means
that as rates rise, the price decreases, and negative duration means that
as rates rise, the price increases.
(3) Weighted average bond rating represents the average credit quality of the
underlying bonds in the portfolio.
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
DURATION
SHORT INT. LONG
X X HIGH
X X MEDIUM QUALITY
LOW
CREDIT QUALITY SUMMARY
Percentage of portfolio assets excluding cash equivalents
AAA bonds 48.5%
AA bonds 32.3
A bonds 14.6
BBB bonds 1.1
Non-investment grade bonds 3.5
Individual security ratings are based on information from Standard & Poor's
Corp. and Moody's Investors Service. If a rating is unavailable, the rating is
determined through an internal analysis, if appropriate. 3.5% of the portfolio
rating above was determined through internal analysis.
INSURED/NON-INSURED COMPOSITION
Percentage of portfolio assets
Insured 47.6%
Non-insured 52.4
Certain income may be subject to the alternative minimum tax or state or local
tax.
Fund holdings are subject to change.
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7 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Fund Snapshot AT DEC. 31, 2004
AXP Ohio Tax-Exempt Fund
PORTFOLIO MANAGER
Portfolio manager Since Years in industry
Dave Kerwin, CFA* 8/04 19
* The Fund is managed by a team of portfolio managers led by Dave Kerwin.
FUND OBJECTIVE
For Ohio investors, this Fund seeks to provide a high level of income generally
exempt from federal income tax as well as from the respective state and local
taxes.
Inception dates by class
A: 7/2/87 B: 3/20/95 C: 6/26/00
Ticker symbols by class
A: IOHIX B: -- C: --
Total net assets $65.1 million
Number of holdings 55
Effective maturity(1) 13.3 years
Effective duration(2) 6.3 years
Weighted average bond rating(3) AA
(1) Effective maturity measures a bond's maturity, which takes into
consideration the possibility that the issuer may call the bond before its
maturity date.
(2) Effective duration measures the sensitivity of a security's price to
parallel shifts in the yield curve (the graphical depiction of the levels
of interest rates from two years out to 30 years). Positive duration means
that as rates rise, the price decreases, and negative duration means that
as rates rise, the price increases.
(3) Weighted average bond rating represents the average credit quality of the
underlying bonds in the portfolio.
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
DURATION
SHORT INT. LONG
X X HIGH
X X MEDIUM QUALITY
LOW
CREDIT QUALITY SUMMARY
Percentage of portfolio assets excluding cash equivalents
AAA bonds 57.3%
AA bonds 32.4
A bonds 5.1
BBB bonds 3.4
Non-investment grade bonds 1.8
Individual security ratings are based on information from Standard & Poor's
Corp. and Moody's Investors Service. If a rating is unavailable, the rating is
determined through an internal analysis, if appropriate. 3.4% of the portfolio
rating above was determined through internal analysis.
INSURED/NON-INSURED COMPOSITION
Percentage of portfolio assets
Insured 53.4%
Non-insured 46.6
Certain income may be subject to the alternative minimum tax or state or local
tax.
Fund holdings are subject to change.
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8 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Yield Snapshot
AXP California Tax-Exempt Fund
SEC YIELDS
Class A Class B Class C
At Dec. 31, 2004 2.99% 2.38% 2.38%
The Securities and Exchange Commission (SEC) yield is calculated by dividing
anticipated net investment income during a 31-day period by the public offering
price (POP) per share on the last day of the period, and converting the results
to yearly figures. See Average Annual Total Returns on page 11 for additional
performance information.
AXP Massachusetts Tax-Exempt Fund
SEC YIELDS
Class A Class B Class C
At Dec. 31, 2004 2.72% 2.10% 2.10%
The Securities and Exchange Commission (SEC) yield is calculated by dividing
anticipated net investment income during a 31-day period by the public offering
price (POP) per share on the last day of the period, and converting the results
to yearly figures. See Average Annual Total Returns on page 13 for additional
performance information.
AXP Michigan Tax-Exempt Fund
SEC YIELDS
Class A Class B Class C
At Dec. 31, 2004 2.76% 2.14% 2.14%
The Securities and Exchange Commission (SEC) yield is calculated by dividing
anticipated net investment income during a 31-day period by the public offering
price (POP) per share on the last day of the period, and converting the results
to yearly figures. See Average Annual Total Returns on page 15 for additional
performance information.
AXP Minnesota Tax-Exempt Fund
SEC YIELDS
Class A Class B Class C
At Dec. 31, 2004 2.98% 2.38% 2.38%
The Securities and Exchange Commission (SEC) yield is calculated by dividing
anticipated net investment income during a 31-day period by the public offering
price (POP) per share on the last day of the period, and converting the results
to yearly figures. See Average Annual Total Returns on page 17 for additional
performance information.
AXP New York Tax-Exempt Fund
SEC YIELDS
Class A Class B Class C
At Dec. 31, 2004 2.82% 2.20% 2.20%
The Securities and Exchange Commission (SEC) yield is calculated by dividing
anticipated net investment income during a 31-day period by the public offering
price (POP) per share on the last day of the period, and converting the results
to yearly figures. See Average Annual Total Returns on page 19 for additional
performance information.
AXP Ohio Tax-Exempt Fund
SEC YIELDS
Class A Class B Class C
At Dec. 31, 2004 2.60% 1.97% 1.97%
The Securities and Exchange Commission (SEC) yield is calculated by dividing
anticipated net investment income during a 31-day period by the public offering
price (POP) per share on the last day of the period, and converting the results
to yearly figures. See Average Annual Total Returns on page 21 for additional
performance information.
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9 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
[bar chart]
AXP CALIFORNIA TAX-EXEMPT FUND
PERFORMANCE COMPARISON
For the six-month period ended Dec. 31, 2004
(bar 1) (bar 2) (bar 3) (bar 4)
+5.29% +5.75% +5.19% +5.44%
(bar 1) AXP California Tax-Exempt Fund Class A (excluding sales charge)
(bar 2) Lehman Brothers California Municipal Bond Index(1) (unmanaged)
(bar 3) Lehman Brothers Municipal Bond Index(2) (unmanaged)
(bar 4) Lipper California Municipal Debt Funds Index(3)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by calling (800) 862-7919 or visiting
www.americanexpress.com/funds.
(1) The Lehman Brothers California Municipal Bond Index, an unmanaged index, is
a subset of the Lehman Brothers Municipal Bond Index. The index is made up
of investment-grade, tax-exempt, and fixed-rate bonds issued in the state
of California. All securities have effective maturities greater than one
year and are selected from issues larger than $50 million.
(2) The 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.
(3) The Lipper California Municipal Debt Funds Index includes the 30 largest
municipal debt funds in California tracked by Lipper Inc. The index's
returns include net reinvested dividends.
The 4.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
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10 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
AXP California Tax-Exempt Fund
AVERAGE ANNUAL TOTAL RETURNS
Class A Class B Class C
(Inception dates) (8/18/86) (3/20/95) (6/26/00)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4)
at Dec. 31, 2004
6 months* +5.29% +0.29% +4.90% -0.10% +4.69% +3.69%
1 year +4.47% -0.50% +3.88% -0.09% +3.68% +3.68%
3 years +5.29% +3.59% +4.50% +3.58% +4.49% +4.49%
5 years +6.36% +5.34% +5.57% +5.41% N/A N/A
10 years +5.90% +5.39% N/A N/A N/A N/A
Since inception +6.10% +5.82% +4.59% +4.59% +5.11% +5.11%
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 4.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
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11 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
[bar chart]
AXP MASSACHUSETTS TAX-EXEMPT FUND
PERFORMANCE COMPARISON
For the six-month period ended Dec. 31, 2004
(bar 1) (bar 2) (bar 3) (bar 4)
+4.97% +5.07% +5.19% +4.97%
(bar 1) AXP Massachusetts Tax-Exempt Fund Class A (excluding sales charge)
(bar 2) Lehman Brothers Massachusetts Municipal Bond Index(1) (unmanaged)
(bar 3) Lehman Brothers Municipal Bond Index(2) (unmanaged)
(bar 4) Lipper Massachusetts Municipal Debt Funds Index(3)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by calling (800) 862-7919 or visiting
www.americanexpress.com/funds.
(1) The Lehman Brothers Massachusetts Municipal Bond Index, an unmanaged index,
is a subset of the Lehman Brothers Municipal Bond Index. The index is made
up of investment-grade, tax-exempt, and fixed-rate bonds issued in the
state of Massachusetts. All securities have effective maturities greater
than one year and are selected from issues larger than $50 million.
(2) The 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.
(3) The Lipper Massachusetts Municipal Debt Funds Index includes the 10 largest
municipal debt funds in Massachusetts tracked by Lipper Inc. The index's
returns include reinvested dividends.
The 4.75% sales charge applicable to Class A shares of the Fund is not
reflected in the bar chart. If reflected, returns would be lower than those
shown. The performance of other classes may vary from that shown because of
differences in expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
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12 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
AXP Massachusetts Tax-Exempt Fund
AVERAGE ANNUAL TOTAL RETURNS
Class A Class B Class C
(Inception dates) (7/2/87) (3/20/95) (6/26/00)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4)
at Dec. 31, 2004
6 months* +4.97% -0.01% +4.56% -0.44% +4.57% +3.57%
1 year +3.92% -1.01% +3.13% -0.87% +3.15% +3.15%
3 years +4.84% +3.15% +4.05% +3.11% +4.05% +4.05%
5 years +5.93% +4.91% +5.14% +4.97% N/A N/A
10 years +5.70% +5.19% N/A N/A N/A N/A
Since inception +6.07% +5.78% +4.37% +4.37% +5.02% +5.02%
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 4.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
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13 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
[bar chart]
AXP MICHIGAN TAX-EXEMPT FUND
PERFORMANCE COMPARISON
For the six-month period ended Dec. 31, 2004
(bar 1) (bar 2) (bar 3) (bar 4)
+4.42% +4.86% +5.19% +4.60%
(bar 1) AXP Michigan Tax-Exempt Fund Class A (excluding sales charge)
(bar 2) Lehman Brothers Michigan Municipal Bond Index(1) (unmanaged)
(bar 3) Lehman Brothers Municipal Bond Index(2) (unmanaged)
(bar 4) Lipper Michigan Municipal Debt Funds Index(3)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by calling (800) 862-7919 or visiting
www.americanexpress.com/funds.
(1) The Lehman Brothers Michigan Municipal Bond Index, an unmanaged index, is a
subset of the Lehman Brothers Municipal Bond Index. The index is made up of
investment-grade, tax-exempt, and fixed-rate bonds issued in the state of
Michigan. All securities have effective maturities greater than one year
and are selected from issues larger than $50 million.
(2) The 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.
(3) The Lipper Michigan Municipal Debt Funds Index includes the 10 largest
municipal debt funds in Michigan tracked by Lipper Inc. The index's returns
include reinvested dividends.
The 4.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
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14 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
AXP Michigan Tax-Exempt Fund
AVERAGE ANNUAL TOTAL RETURNS
Class A Class B Class C
(Inception dates) (7/2/87) (3/20/95) (6/26/00)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4)
at Dec. 31, 2004
6 months* +4.42% -0.55% +4.02% -0.98% +4.02% +3.02%
1 year +3.88% -1.06% +3.10% -0.90% +3.09% +3.09%
3 years +5.39% +3.70% +4.60% +3.67% +4.59% +4.59%
5 years +6.08% +5.05% +5.28% +5.12% N/A N/A
10 years +5.73% +5.22% N/A N/A N/A N/A
Since inception +6.23% +5.93% +4.41% +4.41% +5.27% +5.27%
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 4.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
- --------------------------------------------------------------------------------
15 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
[bar chart]
AXP MINNESOTA TAX-EXEMPT FUND
PERFORMANCE COMPARISON
For the six-month period ended Dec. 31, 2004
(bar 1) (bar 2) (bar 3) (bar 4)
+4.58% +4.85% +5.19% +4.57%
(bar 1) AXP Minnesota Tax-Exempt Fund Class A (excluding sales charge)
(bar 2) Lehman Brothers Minnesota Municipal Bond Index(1) (unmanaged)
(bar 3) Lehman Brothers Municipal Bond Index(2) (unmanaged)
(bar 4) Lipper Minnesota Municipal Debt Funds Index(3)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by calling (800) 862-7919 or visiting
www.americanexpress.com/funds.
(1) The Lehman Brothers Minnesota Municipal Bond Index, an unmanaged index, is
a subset of the Lehman Brothers Municipal Bond Index. The index is made up
of investment-grade, tax-exempt, and fixed-rate bonds issued in the state
of Minnesota. All securities have effective maturities greater than one
year and are selected from issues larger than $50 million.
(2) The 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.
(3) The Lipper Minnesota Municipal Debt Funds Index includes the 10 largest
municipal debt funds in Minnesota tracked by Lipper Inc. The index's
returns include reinvested dividends.
The 4.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
- --------------------------------------------------------------------------------
16 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
AXP Minnesota Tax-Exempt Fund
AVERAGE ANNUAL TOTAL RETURNS
Class A Class B Class C
(Inception dates) (8/18/86) (3/20/95) (6/26/00)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4)
at Dec. 31, 2004
6 months* +4.58% -0.38% +4.19% -0.81% +4.19% +3.19%
1 year +3.60% -1.31% +2.83% -1.16% +2.83% +2.83%
3 years +5.46% +3.76% +4.67% +3.75% +4.60% +4.60%
5 years +6.24% +5.21% +5.45% +5.29% N/A N/A
10 years +5.95% +5.43% N/A N/A N/A N/A
Since inception +6.25% +5.97% +4.67% +4.67% +5.31% +5.31%
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 4.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
- --------------------------------------------------------------------------------
17 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
[bar chart]
AXP NEW YORK TAX-EXEMPT FUND
PERFORMANCE COMPARISON
For the six-month period ended Dec. 31, 2004
(bar 1) (bar 2) (bar 3) (bar 4)
+4.38% +5.04% +5.19% +4.82%
(bar 1) AXP New York Tax-Exempt Fund Class A (excluding sales charge)
(bar 2) Lehman Brothers New York Municipal Bond Index(1) (unmanaged)
(bar 3) Lehman Brothers Municipal Bond Index(2) (unmanaged)
(bar 4) Lipper New York Municipal Debt Funds Index(3)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by calling (800) 862-7919 or visiting
www.americanexpress.com/funds.
(1) The Lehman Brothers New York Municipal Bond Index, an unmanaged index, is a
subset of the Lehman Brothers Municipal Bond Index. The index is made up of
investment-grade, tax-exempt, and fixed-rate bonds issued in the state of
New York. All securities have effective maturities greater than one year
and are selected from issues larger than $50 million.
(2) The 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.
(3) The Lipper New York Municipal Debt Funds Index includes the 30 largest
municipal debt funds in New York tracked by Lipper Inc. The index's returns
include reinvested dividends.
The 4.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
- --------------------------------------------------------------------------------
18 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
AXP New York Tax-Exempt Fund
AVERAGE ANNUAL TOTAL RETURNS
Class A Class B Class C
(Inception dates) (8/18/86) (3/20/95) (6/26/00)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4)
at Dec. 31, 2004
6 months* +4.38% -0.59% +3.98% -1.02% +3.98% +2.98%
1 year +3.50% -1.41% +2.72% -1.23% +2.72% +2.72%
3 years +5.51% +3.82% +4.72% +3.80% +4.72% +4.72%
5 years +6.28% +5.25% +5.48% +5.32% N/A N/A
10 years +5.71% +5.19% N/A N/A N/A N/A
Since inception +5.98% +5.70% +4.47% +4.47% +5.28% +5.28%
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 4.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
- --------------------------------------------------------------------------------
19 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
[bar chart]
AXP OHIO TAX-EXEMPT FUND
PERFORMANCE COMPARISON
For the six-month period ended Dec. 31, 2004
(bar 1) (bar 2) (bar 3) (bar 4)
+4.53% +4.80% +5.19% +5.17%
(bar 1) AXP Ohio Tax-Exempt Fund Class A (excluding sales charge)
(bar 2) Lehman Brothers Ohio Municipal Bond Index(1) (unmanaged)
(bar 3) Lehman Brothers Municipal Bond Index(2) (unmanaged)
(bar 4) Lipper Ohio Municipal Debt Funds Index(3)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by calling (800) 862-7919 or visiting
www.americanexpress.com/funds.
(1) The Lehman Brothers Ohio Municipal Bond Index, an unmanaged index, is a
subset of the Lehman Brothers Municipal Bond Index. The index is made up of
investment-grade, tax-exempt, and fixed-rate bonds issued in the state of
Ohio. All securities have effective maturities greater than one year and
are selected from issues larger than $50 million.
(2) The 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.
(3) The Lipper Ohio Municipal Debt Funds Index includes the 10 largest
municipal debt funds in Ohio tracked by Lipper Inc. The index's returns
include reinvested dividends.
The 4.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
- --------------------------------------------------------------------------------
20 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Performance Summary
AXP Ohio Tax-Exempt Fund
AVERAGE ANNUAL TOTAL RETURNS
Class A Class B Class C
(Inception dates) (7/2/87) (3/20/95) (6/26/00)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4)
at Dec. 31, 2004
6 months* +4.53% -0.43% +4.14% -0.86% +4.14% +3.14%
1 year +3.17% -1.74% +2.38% -1.62% +2.38% +2.38%
3 years +4.75% +3.06% +3.96% +3.02% +3.95% +3.95%
5 years +5.76% +4.74% +4.97% +4.80% N/A N/A
10 years +5.58% +5.07% N/A N/A N/A N/A
Since inception +6.05% +5.76% +4.28% +4.28% +4.71% +4.71%
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 4.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
- --------------------------------------------------------------------------------
21 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Below, Portfolio Manager David Kerwin discusses the Funds' positioning and
results for the first half of the current fiscal year. On Aug. 20, 2004, Mr.
Kerwin assumed leadership of the Funds' portfolio management team.
Q: How did American Express Funds' state tax-exempt funds perform for the six
months ended Dec. 31, 2004?
A: All Fund returns are for Class A shares, excluding sales charge. All returns
are for the six months ended Dec. 31, 2004.
o AXP California Tax-Exempt Fund gained 5.29%, compared to the Lipper
California Municipal Debt Funds Index, which rose 5.44%. The Lehman
Brothers California Municipal Bond Index returned 5.75% for the same
period.
o AXP Massachusetts Tax-Exempt Fund rose 4.97%, tracking the Lipper
Massachusetts Municipal Debt Funds Index, which also rose 4.97%. The
Lehman Brothers Massachusetts Municipal Bond Index returned 5.07% for
the same period.
o AXP Michigan Tax-Exempt Fund gained 4.42%, compared to the Lipper
Michigan Municipal Debt Funds Index, which produced a total return of
4.60%. The Lehman Brothers Michigan Municipal Bond Index returned 4.86%
for the same period.
o AXP Minnesota Tax-Exempt Fund increased 4.58%, edging out the Lipper
Minnesota Municipal Debt Funds Index, which gained 4.57%. The Lehman
Brothers Minnesota Municipal Bond Index returned 4.85% for the same
period.
o AXP New York Tax-Exempt Fund advanced 4.38%, while the Lipper New York
Municipal Debt Funds Index increased 4.82%. The Lehman Brothers New York
Municipal Bond Index returned 5.04% for the same period.
o AXP Ohio Tax-Exempt Fund rose 4.53%, while the Lipper Ohio Municipal
Debt Funds Index gained 5.17%. The Lehman Brothers Ohio Municipal Bond
Index returned 4.80% for the same period.
A broad barometer applicable to each of the Funds, the Lehman Brothers
Municipal Bond Index, gained 5.19% for the same six-month period.
Q: What factors most significantly affected performance during the annual
period?
A: We are pleased to report that each Fund provided positive returns during a
rising interest rate environment. Results for AXP Massachusetts Tax-Exempt
Fund and AXP Minnesota Tax-Exempt Fund were in line with their peer group
indices. However, during the semiannual period, some of the Funds had strong
exposure to the intermediate segment of the municipal yield curve, and this
negatively affected their relative results. We believed bond prices would
decline amid a
- --------------------------------------------------------------------------------
22 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Questions & Answers
(begin callout quote)> Several Funds benefited from a reduction in exposure to
shorter-term bonds as the yield curve flattended. (end callout quote)
(begin callout quote)> We intend to maintain our focus on seeking
higher-quality securities with good structure and on further
diversifying the portfolios.(end callout quote)
tightening Federal Reserve Board (Fed) monetary policy. Instead, most
municipal bond prices rose, and long-term bonds rose by a greater degree
than intermediate-term bonds. Specifically, the positive price impact of a
strong bond market over the semiannual period was greater on 20- to 30-year
higher quality municipal bonds than on the intermediate segment, where
several Funds such as AXP Ohio Tax-Exempt Fund had relatively greater
exposure.
AXP California Tax-Exempt Fund and AXP New York Tax-Exempt Fund were also
hurt by their avoidance of non-enhanced municipal tobacco bonds. This
municipal fixed income sector significantly outpaced the Lehman Brothers
Municipal Bond Index for the semiannual period. Other factors detracting
from AXP California Tax-Exempt Fund's relative performance were a relatively
lower exposure to bonds rated BBB, which overall outperformed higher-quality
bonds during the six-month period, and a relatively higher position in cash,
which meant the Fund did not fully participate in the municipal bond rally
of July and August.
Finally, AXP California Tax-Exempt Fund as well as the state tax-exempt
funds focusing on Massachusetts, Michigan and Minnesota were hurt a bit by
exposure to non-investment grade or non-rated bonds, which did not rally
during the third quarter as much as investment grade bonds did.
On the positive side, several Funds benefited from a reduction in exposure
to shorter-term bonds as the yield curve flattened and this part of the
curve underperformed. At the same time, we also changed the mix of our
exposure on the front-end of the yield curve by selectively adding
"mandatory put bonds" and high-quality zero coupon bonds, both of which
offer significant additional yield. Mandatory put bonds, sometimes known as
mandatory tenders, contain a
- --------------------------------------------------------------------------------
23 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Questions & Answers
(graph)
>> How changes in interest rates affect bond prices
If interest rates increase, then bond prices decline
(teeter totter graph illustration)
If interest rates decrease, then bond prices increase.
provision that a holder of the bonds must surrender the security to the
issuer or its agent for purchase, usually at par, at some date prior to the
final stated maturity. Zero coupon municipal bonds are securities that make
no periodic interest payments but are sold at a deep discount from their
face value and mature at par. The accretion of the bonds' price from a
discount to par is usually considered as tax-exempt income for the Fund.
Most of the Funds benefited from exposure to bonds that were advance
refunded during the period; the only exceptions were AXP Minnesota
Tax-Exempt Fund and AXP New York Tax-Exempt Fund. Advance refunding is a
procedure in which a bond issuer floats a second bond at a lower interest
rate, and the proceeds from the sale of the second bond are safely invested,
usually in Treasury securities which, in turn, are held in escrow
collateralizing the first bond. Given that the advance refunded bonds
become, essentially, fully tax-exempt U.S. Treasury securities and no longer
represent the credit risk profile of the original borrower, they often
increase in value -- sometimes significantly.
Also boosting several Funds' performance was the sale of select below
investment grade credits when the securities appreciated in price to the
targets we had established for them. The relative performance of AXP
California Tax-Exempt Fund was also helped by its position in California
general obligation tax-exempt bonds. Having increased the Fund's position in
these bonds before the ratings upgrades took effect, the Fund benefited from
their subsequent strong performance.
Q: What changes did you make to the Funds and how are they currently
positioned?
A: Besides reducing exposure to short-term bonds as the municipal yield curve
flattened during the semiannual period, we also aggressively sought
opportunities to selectively sell non-rated and below investment grade
securities in each portfolio and replace these holdings with A to BBB-rated
bonds that still offer
- --------------------------------------------------------------------------------
24 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Questions & Answers
higher yields than the highest quality bonds (i.e., AAA-rated), but with
better liquidity and risk characteristics.
To help manage risk, we also diversified by maturity, among sectors, type of
obligation and structural attributes such as coupon and call features. We
strongly believe that a disciplined adherence to portfolio diversification
-- across multiple parameters -- should help to reduce the volatility and
risks associated with interest rate movements.
We opportunistically sought to reduce the portfolios' exposure to bonds that
are subject to the alternative minimum tax (AMT) and generally avoided
purchasing any bonds subject to the AMT during the semiannual period. As
more and more investors become subject to the tax, we believe this is going
to become an increasingly important advantage for our shareholders.
In AXP California Tax-Exempt Fund, we established a modest exposure to
non-enhanced municipal tobacco bonds. Not only does this municipal fixed
income sector offer significant yield currently, but initiating this
position also should help us to reduce portfolio volatility relative to both
its benchmark index and its peers and to further diversify the structural
attributes of each portfolio. We also incrementally added to this Fund's
position in California general obligation tax-exempt bonds during the
period.
Q: How do you intend to manage the Funds in the coming months?
A: We believe the U.S. economy will continue to expand, and the Fed may
increase interest rates more vigorously than the market currently
anticipates, despite its December statement that "inflation and longer-term
inflation expectations remain well contained." Typically, rising rates are
negative for the bond market. However municipal bonds have historically
weathered this environment better than taxable bonds over time. It is
important to note that we do not make significant Fund management decisions
based on interest rate forecasts, but rather stick to our discipline of
staying fully invested to maintain a high level of tax-exempt income.
Given this view, we plan to maintain a neutral duration in the portfolios
relative to their respective Lehman benchmark index for the near term. We
also intend to maintain our focus on seeking higher-quality securities with
good structure and on further diversifying the portfolios. In those Funds
where applicable, we also intend to seek opportunities to increase holdings
in non-enhanced municipal tobacco bonds. Each Fund's emphasis continues to
be on generating a high level of income generally exempt from federal income
tax as well as from the respective state and local taxes.
- --------------------------------------------------------------------------------
25 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Investments in Securities
AXP California Tax-Exempt Fund
Dec. 31, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Municipal bonds(96.1%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
ABAG Finance Authority for Nonprofit Corporations
Certificate of Participation
National Center for International Schools Project
Series 1996
05-01-26 7.38% $2,200,000 $2,275,218
ABAG Finance Authority for Nonprofit Corporations
Revenue Bonds
San Diego Hospital Association
Series 2001A
08-15-20 6.13 2,500,000 2,700,475
Alhambra City Elementary School District
Unlimited General Obligation Bonds
Capital Appreciation
Zero Coupon
Series 1999A (FSA)
09-01-22 5.95 1,055,000(f) 446,497
Anaheim Public Financing Authority
Revenue Bonds
Capital Appreciation
Public Improvements Project
Zero Coupon
Series 1997C (FSA)
09-01-25 5.61 2,170,000(f) 753,055
Anaheim Union High School District
Unlimited General Obligation Bonds
Series 2002A (FSA)
08-01-16 5.38 1,550,000 1,742,913
Beaumont Financing Authority
Revenue Bonds
Series 2000A
09-01-32 7.38 1,955,000 2,075,995
Beverly Hills Public Financing Authority
Revenue Bonds
Capital Improvements Project
Series 1998A
06-01-23 5.00 3,000,000 3,110,040
California Educational Facilities Authority
Revenue Bonds
Stanford University
Series 1997N
12-01-27 5.20 1,000,000 1,045,970
California Educational Facilities Authority
Revenue Bonds
University of Southern California
Series 2003A
10-01-33 5.00 2,000,000 2,054,200
California Health Facilities Financing Authority
Revenue Bonds
Catholic Healthcare West
Series 2004G
07-01-23 5.25 3,500,000 3,602,760
California Health Facilities Financing Authority
Revenue Bonds
Sutter Health
Series 1999A (MBIA)
08-15-28 5.35 2,500,000 2,628,600
California Infrastructure & Economic Development Bank
Revenue Bonds
American Center for Wine, Food & Arts
Series 1999 (ACA)
12-01-19 5.70 2,500,000 2,657,525
California Rural Home Mortgage Finance Authority
Revenue Bonds
Mortgage-backed Securities Program
Series 1997A-2
(GNMA/FNMA/FHLMC) A.M.T.
09-01-29 7.00 160,000 163,459
California Rural Home Mortgage Finance Authority
Revenue Bonds
Mortgage-backed Securities Program
Series 1998B-5 (GNMA/FNMA/FHLMC) A.M.T.
12-01-29 6.35 125,000 126,395
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
26 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP California Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
California State Department of Transportation
Revenue Bonds
Federal Highway Grant
Series 2004A (FGIC)
02-01-33 5.00% $1,000,000 $1,016,740
California State Department of Water Resources
Revenue Bonds
Series 2002A (MBIA)
05-01-09 5.25 3,200,000 3,545,824
05-01-10 5.25 3,000,000 3,354,660
05-01-15 6.00 2,000,000 2,327,440
California State Public Works Board
Revenue Bonds
Department of General Services
Capital East End
Series 2002A
12-01-06 5.00 1,000,000 1,049,270
California Statewide Communities Development Authority
Revenue Bonds
Thomas Jefferson School of Law Project
Series 2001
10-01-31 7.75 2,500,000 2,677,975
Cerritos Public Financing Authority
Tax Allocation Bonds
Redevelopment Project
Series 2002A (AMBAC)
11-01-24 5.00 2,000,000 2,134,040
City of Redlands
Refunding Bonds
Certificate of Participation
Series 2003 (AMBAC)
09-01-12 5.00 1,100,000 1,228,700
Commonwealth of Puerto Rico
Unlimited General Obligation Bonds
Public Improvement
Series 2004A
07-01-24 5.00 1,000,000(c) 1,039,050
Commonwealth of Puerto Rico
Unlimited General Obligation Refunding Bonds
Public Improvement
Series 2001A (XLCA)
07-01-17 5.50 1,000,000(c) 1,160,220
Contra Costa County
Revenue Bonds
Cypress Meadows Project
Series 1998E A.M.T.
09-01-28 7.00 2,000,000(b,j) 1,995,800
County of Riverside
Certificate of Participation
Series 1998 (MBIA)
12-01-21 5.00 1,530,000 1,610,922
County of San Diego
Certificate of Participation
Series 1993 Inverse Floater (AMBAC)
09-01-07 9.22 3,200,000(g) 3,731,328
Desert Sands Unified School District
Refunding Bonds
Certificate of Participation
Series 2003 (MBIA)
03-01-17 5.25 1,135,000 1,259,510
Encinitas Union School District
Unlimited General Obligation Bonds
Capital Appreciation
Zero Coupon
Series 1996 (MBIA)
08-01-15 5.85 2,500,000(f) 1,592,750
Fontana Unified School District
Pre-refunded Unlimited General Obligation Bonds
Series 1995C (FGIC)
05-01-20 6.15 3,470,000 3,844,482
Fontana Unified School District
Unlimited General Obligation Bonds
Convertible Capital Appreciation
Series 1997D (FGIC)
05-01-22 5.75 2,000,000 2,242,580
Golden State Tabacco Securitization Corporation
Revenue Bonds
Series 2003A-1
06-01-33 6.25 750,000 750,953
06-01-39 6.75 750,000 752,333
Golden State Tobacco Securitization Corporation
Revenue Bonds
Enhanced Asset-backed
Series 2003B (FGIC)
06-01-28 5.38 2,500,000 2,633,225
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
27 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP California Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Inglewood Redevelopment Agency
Refunding Tax Allocation Bonds
Merged Redevelopment Project
Series 1998A (AMBAC)
05-01-23 5.25% $1,100,000 $1,241,988
La Palma Community Development Commission
Refunding Tax Allocation Bonds
La Palma Community Development Project #1
Series 2001 (ACA)
06-01-21 5.50 1,830,000 1,933,212
Lake Elsinore Public Financing Authority
Revenue Bonds
Series 1997F
09-01-20 7.10 2,815,000 3,039,862
Lancaster Redevelopment Agency
Refunding Tax Allocation Bonds
Combined Redevelopment Project Areas
Series 2003 (MBIA)
08-01-17 5.13 1,840,000 2,062,272
Los Angeles County Public Works Financing Authority
Revenue Bonds
Multiple Capital Facilities Project
Series 1997V-B (AMBAC)
12-01-29 5.13 1,000,000 1,042,420
Los Angeles County Sanitation Districts Financing Authority
Revenue Bonds
Capital Project
Series 2003A (FSA)
10-01-13 5.00 2,000,000 2,233,660
Los Angeles Department of Water & Power
Revenue Bonds
Power System
Series 2003B (FSA)
07-01-16 5.13 1,460,000 1,611,490
07-01-17 5.13 2,315,000 2,544,602
Los Angeles Harbor Department
Revenue Bonds
Series 1988 Escrowed to Maturity
10-01-18 7.60 965,000 1,222,008
Los Angeles Unified School District
Certificate of Participation
Multiple Properties Project
Series 2002B (FSA)
10-01-08 5.00 1,000,000 1,092,040
Los Angeles Unified School District
Certificate of Participation
Multiple Properties Project
Series 2002B Escrowed to Maturity (FSA)
10-01-06 5.00 1,000,000 1,049,060
Los Angeles Unified School District
General Obligation Bonds
Series 2001A (FSA)
07-01-21 5.00 2,000,000 2,128,380
Menlo Park
Unlimited General Obligation Bonds
Series 2002
08-01-32 5.30 1,900,000 2,002,619
Metropolitan Water District of Southern California
Pre-refunded Revenue Bonds
Series 1997A
07-01-26 5.00 3,000,000 3,267,060
Mountain View Los Altos Union High School District
Pre-refunded Unlimited General Obligation Bonds
Series 1995A
08-01-15 5.75 1,200,000 1,250,388
Oxnard School District
Unlimited General Obligation Refunding Bonds
Series 2001A (MBIA)
08-01-30 5.75 2,575,000 2,961,379
Paramount Redevelopment Agency
Tax Allocation Bonds
Redevelopment Project Area #1
Series 2003 (MBIA)
08-01-15 5.00 2,000,000 2,184,840
Pittsburg Redevelopment Agency
Tax Allocation Bonds
Los Medanos Community Development Project
Zero Coupon
Series 1999 (AMBAC)
08-01-24 6.05 2,100,000(f) 773,304
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
28 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP California Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Port of Oakland
Revenue Bonds
Series 1997G (MBIA) A.M.T.
11-01-25 5.38% $3,080,000 $3,241,792
Port of Oakland
Revenue Bonds
Series 2000K (FGIC) A.M.T.
11-01-18 5.63 1,000,000 1,089,650
Puerto Rico Public Finance Corporation
Revenue Bonds
Commonwealth Appropriation
Series 2004A (MBIA)
08-01-29 5.25 1,000,000(c,h) 1,107,450
Richmond Joint Powers Financing Authority
Refunding Revenue Bonds
Lease & Gas Tax
Series 1995A
05-15-13 5.25 2,000,000 1,985,520
Sacramento City Financing Authority
Revenue Bonds
City Hall & Redevelopment Projects
Series 2002A (FSA)
12-01-19 5.38 1,580,000 1,757,624
Sacramento Cogeneration Authority
Pre-refunded Revenue Bonds
Procter & Gamble Project
Series 1995
07-01-10 6.38 500,000 520,920
Sacramento Municipal Utility District
Refunding Revenue Bonds
Series 2003S (FSA)
11-15-10 5.00 2,500,000 2,789,575
San Bernardino Joint Powers Financing Authority
Refunding Tax Allocation Bonds
Series 2002
04-01-26 6.63 2,000,000 2,075,940
San Diego Public Water Facilities Financing Authority
Revenue Bonds
Series 2002 (MBIA)
08-01-26 5.00 2,500,000 2,577,750
San Francisco Bay Area Rapid Transit District
Revenue Bonds
Series 2001 (AMBAC)
07-01-36 5.13 2,000,000 2,056,060
San Francisco City & County Airports Commission
Refunding Revenue Bonds
2nd Series 2001B-27 (FGIC)
05-01-16 5.25 2,170,000 2,378,450
San Francisco State Building Authority
Revenue Bonds
San Francisco Civic Center Complex
Series 1996A (AMBAC)
12-01-16 5.25 2,000,000 2,146,860
San Jose Financing Authority
Revenue Bonds
Civic Center Project
Series 2002B (AMBAC)
06-01-37 5.00 3,000,000 3,057,480
San Juan Unified School District
Unlimited General Obligation Bonds
Capital Appreciation
Zero Coupon
Series 1999 (FSA)
08-01-21 5.68 820,000(f) 369,410
08-01-24 5.70 1,810,000(f) 679,347
San Mateo County Community College District
Unlimited General Obligation Bonds
Election of 2001
Series 2002A (FGIC)
09-01-18 5.38 1,000,000 1,118,510
San Ramon
Refunding Bonds
Certificate of Participation
Series 2001 (AMBAC)
03-01-21 5.00 1,835,000 1,932,842
Santa Clara Valley Transportation Authority
Revenue Bonds
Series 2004A (AMBAC)
04-01-36 5.50 1,500,000(h) 1,579,590
Santa Maria Joint Union High School District
Unlimited General Obligation Bonds
Election of 2000
Series 2003B (FSA)
08-01-27 5.00 3,000,000 3,132,690
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
29 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP California Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
South Tahoe Joint Powers Financing Authority
Refunding Revenue Bonds
Redevelopment Project Area #1
Series 1995B
10-01-20 6.25% $2,700,000 $2,833,137
Southern California Public Power Authority
Revenue Bonds
Series 1992
07-01-12 6.00 100,000 100,551
State of California
Unlimited General Obligation Bonds
Series 2000
05-01-19 5.63 3,000,000 3,359,820
10-01-25 5.38 2,500,000 2,666,625
State of California
Unlimited General Obligation Bonds
Series 2001
06-01-11 5.50 2,825,000 3,188,069
03-01-31 5.13 2,500,000 2,556,075
06-01-31 5.13 2,500,000 2,558,075
State of California
Unlimited General Obligation Bonds
Series 2002
02-01-15 6.00 1,000,000 1,176,240
State of California
Unlimited General Obligation Bonds
Series 2003
02-01-10 5.00 1,000,000 1,092,450
02-01-21 5.25 2,500,000 2,689,125
02-01-29 5.25 2,500,000 2,596,500
02-01-32 5.00 2,500,000 2,541,750
State of California
Unlimited General Obligation Bonds
Series 2004
03-01-14 5.25 2,000,000 2,242,100
04-01-34 5.25 2,200,000 2,286,328
State of California
Unlimited General Obligation Bonds
Series 2004 (FGIC)
02-01-33 5.00 2,500,000 2,569,675
State of California
Unlimited General Obligation Bonds
Series 2004A
01-01-11 5.25 5,000,000 5,578,249
State of California
Unlimited General Obligation Bonds
Series 2004B
07-01-23 5.00 2,500,000(h) 2,702,350
State of California
Unlimited General Obligation Bonds
Various Purpose
Series 2003
11-01-22 5.00 2,000,000 2,095,780
11-01-23 5.13 2,500,000 2,634,925
11-01-24 5.13 2,000,000 2,097,480
State of California
Unlimited General Obligation Bonds
Veterans
Series 2000B A.M.T.
12-01-12 4.95 2,250,000 2,324,768
12-01-13 5.05 1,435,000 1,487,722
12-01-14 5.15 2,535,000 2,613,484
State of California
Unlimited General Obligation Refunding Bonds
Series 2002
02-01-30 5.25 2,500,000 2,598,600
Stockton
Revenue Bonds
Mortgage-backed Securities Program
Series 1990A (GNMA/FNMA/FHLMC) A.M.T.
02-01-23 7.50 40,000 42,772
University of California
Revenue Bonds
Multiple Purpose
Series 2000K (FGIC)
09-01-20 5.00 1,010,000 1,064,712
University of California
Revenue Bonds
Multiple Purpose Projects
Series 2003Q (FSA)
09-01-18 5.00 2,000,000 2,151,760
Walnut Energy Center Authority
Revenue Bonds
Series 2004A (AMBAC)
01-01-29 5.00 2,500,000 2,572,925
01-01-34 5.00 1,000,000 1,021,780
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
30 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP California Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
West Contra Costa Unified School District
Unlimited General Obligation Bonds
Election of 2000
Series 2003C (FGIC)
08-01-06 3.00% $1,985,000 $2,010,626
08-01-12 4.00 1,000,000 1,049,280
Western Hills Water District
Special Tax Bonds
Diablo Grande Community Facilities #1
Series 2001
09-01-31 6.88 1,000,000 1,047,330
Whittier Union High School District
Unlimited General Obligation Bonds
Election of 1999
Series 2003D (FSA)
08-01-28 5.00 2,615,000 2,693,921
Total municipal bonds
(Cost: $198,070,498) $206,813,931
Municipal notes (1.5%)
Issue(d,e,h,i) Effective Amount Value(a)
yield payable at
maturity
California Housing Finance Agency
Revenue Bonds
Home Mortgage
V.R.D.N. Series 2002B (Lloyds TSB Bank)
FSA A.M.T.
08-01-33 2.30% $1,600,000 $1,600,000
State of California
Unlimited General Obligation Bond
Daily-Kindergarten University
V.R.D.N. Series 2004B-1
(Citibank N.A./State Street Bank & Trust/
National Australia Bank)
05-01-34 2.16 1,600,000 1,600,000
Total municipal notes
(Cost: $3,200,000) $3,200,000
Total investments in securities
(Cost: $201,270,498)(k) $210,013,931
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the
financial statements.
(b) Non-income producing. For long-term debt securities, item
identified is in default as to payment of interest and/or
principal.
(c) Municipal obligations include debt obligations issued by or on behalf of
states, territories, possessions, or sovereign nations within the
territorial boundaries of the United States. The securities represented
1.5% of net assets at Dec. 31, 2004.
(d) The following abbreviations may be used in the portfolio
descriptions:
A.M.T. -- Alternative Minimum Tax -- At of Dec. 31, 2004, the
value of securities subject to alternative minimum
tax represented 6.8% 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
- --------------------------------------------------------------------------------
31 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP California Tax-Exempt Fund
Notes to investments in securities (continued)
(e) 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 Guaranty Insurance Company
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FHLMC -- Federal Home Loan Mortgage Corporation
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- MBIA Insurance Corporation
XLCA -- XL Capital Assurance
(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 the LIBOR (London InterBank
Offering Rate) Index. Interest rate disclosed is the rate in
effect on Dec. 31, 2004. At Dec. 31, 2004, the value of inverse
floaters represented 1.7% of net assets.
(h) Interest rate varies either based on a predetermined schedule or
to reflect current market conditions; rate shown is the effective
rate on Dec. 31, 2004.
(i) The Fund is entitled to receive principal and interest from the
party within parentheses after a day or a week's notice or upon
maturity. The maturity date disclosed represents the final
maturity. Interest rate varies to reflect current market
conditions; rate shown is the effective rate on Dec. 31, 2004.
(j) Identifies issues considered to be illiquid as to their
marketability (see Note 1 to the financial statements).
Information concerning such security holdings at Dec. 31, 2004, is
as follows:
Security Acquisition date Cost
Contra Costa County
Revenue Bonds
Cypress Meadows Project
Series 1998E A.M.T.
7.00% 2028 09-21-98 $2,000,000
(k) At Dec. 31, 2004, the cost of securities for federal income tax
purposes was approximately $201,270,000 and the approximate
aggregate gross unrealized appreciation and depreciation based on
that cost was:
Unrealized appreciation $8,925,000
Unrealized depreciation (181,000)
--------
Net unrealized appreciation $8,744,000
----------
How to find information about the Fund's portfolio holdings
(i) The Fund files its complete schedule of portfolio holdings with
the Securities and Exchange Commission (Commission) for the first
and third quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC (information
on the operations of the Public Reference Room may be obtained by
calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed
in its annual and semiannual shareholder reports and in its
filings on Form N-Q, can be found at www.americanexpress.com/funds.
- --------------------------------------------------------------------------------
32 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Investments in Securities
AXP Massachusetts Tax-Exempt Fund
Dec. 31, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Municipal bonds(97.4%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Boston Metropolitan District
Unlimited General Obligation
Refunding Bonds
Series 2002A
12-01-11 5.13% $2,050,000 $2,284,643
City of Boston
Revenue Bonds
Series 2004A
11-01-22 5.00 1,000,000 1,061,310
City of Boston
Unlimited General Obligation
Refunding Bonds
Series 2003A (MBIA)
02-01-07 2.63 2,185,000 2,197,935
02-01-23 5.00 1,000,000 1,054,960
City of Springfield
Limited General Obligation Bonds
State Qualified
Series 2003 (MBIA)
01-15-20 5.25 1,405,000 1,545,823
Commonwealth of Massachusetts
Limited General Obligation
Refunding Bonds
Series 1997A (AMBAC)
08-01-10 5.75 2,185,000 2,489,960
Commonwealth of Massachusetts
Limited General Obligation
Refunding Bonds
Series 2002B
02-01-06 5.00 2,000,000 2,059,200
Commonwealth of Massachusetts
Limited General Obligation Bonds
Consolidated Loan
Series 2002C (FSA)
11-01-15 5.50 2,500,000 2,878,875
Commonwealth of Massachusetts
Limited General Obligation Bonds
Consolidated Loan
Series 2002E
01-01-10 5.50 3,000,000 3,350,999
Commonwealth of Massachusetts
Pre-refunded Limited
General Obligation Bonds
Consolidated Loan
Series 2002A (FGIC)
01-01-14 5.00 2,500,000 2,727,925
Commonwealth of Massachusetts
Pre-refunded Limited
General Obligation Bonds
Consolidated Loan
Series 2002C
11-01-30 5.25 2,000,000 2,239,040
Commonwealth of Massachusetts
Pre-refunded Unlimited
General Obligation Bonds
Consolidated Loan
Series 2003D
10-01-22 5.25 1,000,000 1,125,910
Commonwealth of Massachusetts
Revenue Bonds
Grant Anticipation Notes
Series 1998A (FSA)
06-15-09 5.25 1,500,000 1,652,115
Commonwealth of Massachusetts
Special Obligation Bonds
Refunding Notes
Federal Highway Grant Anticipation
Series 2003A (FSA)
12-15-14 5.00 1,000,000 1,098,590
Freetown Lakeville Regional School District
Unlimited General Obligation Bonds
Series 2003 (MBIA)
01-01-13 5.00 1,865,000 2,063,977
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
33 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Massachusetts Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Massachusetts Bay Transportation Authority
Refunding Revenue Bonds
Series 1992B
03-01-16 6.20% $1,500,000 $1,784,490
Massachusetts Development Finance Agency
Pre-refunded Revenue Bonds
Briarwood
Series 2001B
12-01-30 8.25 750,000 964,140
Massachusetts Development Finance Agency
Revenue Bonds
1st Mortgage Berkshire Retirement
Series 1999
07-01-29 5.63 1,250,000 1,241,100
Massachusetts Development Finance Agency
Revenue Bonds
Boston University
Series 1999P
05-15-29 6.00 1,400,000 1,576,624
Massachusetts Development Finance Agency
Revenue Bonds
Devens Electric System
Series 2001
12-01-30 6.00 1,000,000 1,066,120
Massachusetts Development Finance Agency
Revenue Bonds
Massachusetts College of Pharmacy
Series 1999B
07-01-20 6.63 1,000,000 1,106,260
Massachusetts Development Finance Agency
Revenue Bonds
May Institute Issue
Series 1999
(Radian Group Financial Guaranty)
09-01-29 5.75 1,000,000 1,067,730
Massachusetts Development Finance Agency
Revenue Bonds
SeMass System
Series 2001B (MBIA) A.M.T.
01-01-05 5.00 2,000,000 2,000,166
Massachusetts Education Loan Authority
Revenue Bonds
Issue E
Series 1994B (AMBAC) A.M.T.
01-01-12 6.00 325,000 331,396
Massachusetts Health & Educational Facilities Authority
Revenue Bonds
Boston College
Series 2003N
06-01-06 4.00 1,000,000 1,023,780
06-01-21 5.25 1,000,000 1,088,450
Massachusetts Health & Educational Facilities Authority
Revenue Bonds
Harvard University
Series 2002FF
07-15-37 5.13 3,000,000 3,126,330
Massachusetts Health & Educational Facilities Authority
Revenue Bonds
Massachusetts Institute of Technology
Series 2003L
07-01-13 5.00 1,000,000 1,113,220
Massachusetts Health & Educational Facilities Authority
Revenue Bonds
Massachusetts Institute of Technology
Series 2004M
07-01-25 5.25 1,000,000 1,132,930
Massachusetts Health & Educational Facilities Authority
Revenue Bonds
New England Medical Center Hospital
Series 2002H (FGIC)
05-15-08 5.00 1,655,000 1,785,877
Massachusetts Health & Educational Facilities Authority
Revenue Bonds
Williams College
Series 2003H
07-01-33 5.00 1,750,000 1,793,785
Massachusetts Housing Finance Agency
Revenue Bonds
Single Family
Series 2003-98 A.M.T.
06-01-23 4.88 985,000 980,814
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
34 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Massachusetts Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Massachusetts Municipal Wholesale Electric Company
Revenue Bonds
Nuclear Project #5
Series 2001A (MBIA)
07-01-10 5.00% $1,000,000 $1,094,690
Massachusetts State College Building Authority
Refunding Revenue Bonds
Series 2003B (XLCA)
05-01-07 5.00 1,080,000 1,142,014
05-01-08 5.00 1,130,000 1,217,236
Massachusetts State Industrial Finance Agency
Revenue Bonds
Marina Bay LLC Project
Series 1997 A.M.T.
12-01-27 7.50 1,000,000 1,018,830
Massachusetts State Industrial Finance Agency
Revenue Bonds
Tufts University
Series 1998H (MBIA)
02-15-28 4.75 1,000,000 1,004,400
Massachusetts State Port Authority
Revenue Bonds
Series 2003A (MBIA)
07-01-18 5.00 1,000,000 1,077,340
Massachusetts State Water Pollution Abatement
Revenue Bonds
Pool Program
Series 2004-10
08-01-34 5.00 1,000,000 1,025,980
Massachusetts State Water Pollution Abatement
Revenue Bonds
Pre-refunded Pool Program
Series 2002-8
08-01-20 5.00 1,475,000 1,631,350
Massachusetts State Water Pollution Abatement
Revenue Bonds
Un-refunded Balance Pool Program
Series 2002-8
08-01-20 5.00 25,000 26,585
Massachusetts State Water Resources Authority
Refunding Revenue Bonds
Series 1998B (FSA)
08-01-11 5.50 1,930,000 2,192,403
Massachusetts State Water Resources Authority
Revenue Bonds
Series 1992A (FGIC)
07-15-19 6.50 2,000,000 2,462,920
Massachusetts State Water Resources Authority
Revenue Bonds
Series 2004D (MBIA)
08-01-27 4.75 1,000,000 1,012,620
Puerto Rico Electric Power Authority
Revenue Bonds
Series 1998DD (FSA)
07-01-13 5.13 1,000,000(c) 1,091,430
Puerto Rico Electric Power Authority
Revenue Bonds
Series 2002A Inverse Floater
(MBIA)
07-01-17 7.36 1,500,000(b,c) 2,013,180
Southeastern Massachusetts University Building Authority
Pre-refunded Revenue Bonds
Series 1995A (AMBAC)
05-01-16 5.75 1,250,000 1,290,063
University of Massachusetts Building Authority
Refunding Revenue Bonds
Series 2003-1 (AMBAC)
11-01-21 5.25 1,000,000 1,099,120
University of Massachusetts Building Authority
Revenue Bonds
Series 1976 Escrowed to Maturity
05-01-11 7.50 65,000 74,570
Westfield
Limited General Obligation Refunding Bonds
Series 2003 (MBIA)
09-01-12 5.00 1,000,000 1,113,420
09-01-17 5.00 940,000 1,018,716
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
35 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Massachusetts Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Woods Hole Martha's Vineyard &
Nantucket Steamship Authority
Unlimited General Obligation Bonds
Series 2004B (MBIA)
03-01-20 5.00% $750,000 $810,105
Worcester
Limited General Obligation Bonds
Series 2001A (FGIC)
08-15-12 5.50 1,400,000 1,580,656
Total municipal bonds
(Cost: $75,420,566) $78,012,102
Municipal note (1.1%)
Issuer(e,f,g) Effective Amount Value(a)
yield payable at
maturity
Massachusetts Health & Educational Facilities Authority
Revenue Bonds
Capital Asset Program
V.R.D.N. Series 1985E (Fleet National Bank)
01-01-35 2.15% $860,000 $860,000
Total municipal note
(Cost: $860,000) $860,000
Total investments in securities
(Cost: $76,280,566)(h) $78,872,102
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the
financial statements.
(b) 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 Dec. 31, 2004. At Dec. 31, 2004, the value of
inverse floaters represented 2.5% of net assets.
(c) Municipal obligations include debt obligations issued by or on
behalf of states, territories, possessions, or sovereign nations
within the territorial boundaries of the United States. The
securities represented 3.9% of net assets at Dec. 31, 2004.
(d) 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 Guaranty Insurance Company
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FHLMC -- Federal Home Loan Mortgage Corporation
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- MBIA Insurance Corporation
XLCA -- XL Capital Assurance
- --------------------------------------------------------------------------------
36 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Massachusetts Tax-Exempt Fund
Notes to investments in securities (continued)
(e) The following abbreviations may be used in the portfolio
descriptions:
A.M.T. -- Alternative Minimum Tax -- At Dec. 31, 2004, the
value of securities subject to alternative minimum
tax represented 5.4% 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
(f) The Fund is entitled to receive principal and interest from the
party within parentheses after a day or a week's notice or upon
maturity. The maturity date disclosed represents the final
maturity. Interest rate varies to reflect current market
conditions; rate shown is the effective rate on Dec. 31, 2004.
(g) Interest rate varies either based on a predetermined schedule or
to reflect current market conditions; rate shown is the effective
rate on Dec. 31, 2004.
(h) At Dec. 31, 2004, the cost of securities for federal income tax
purposes was approximately $76,281,000 and the approximate
aggregate gross unrealized appreciation and depreciation based on
that cost was:
Unrealized appreciation $2,713,000
Unrealized depreciation (122,000)
--------
Net unrealized appreciation $2,591,000
----------
How to find information about the Fund's portfolio holdings
(i) The Fund files its complete schedule of portfolio holdings with
the Securities and Exchange Commission (Commission) for the first
and third quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC (information
on the operations of the Public Reference Room may be obtained by
calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed
in its annual and semiannual shareholder reports and in its
filings on Form N-Q, can be found at www.americanexpress.com/funds.
- --------------------------------------------------------------------------------
37 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Investments in Securities
AXP Michigan Tax-Exempt Fund
Dec. 31, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Municipal bonds(97.6%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Allegan Hospital Finance Authority
Refunding Revenue Bonds
Allegan General Hospital
Series 1999
11-15-21 7.00% $1,000,000 $1,030,750
Allen Park Public School District
Unlimited General Obligation Bonds
School Building & Site
Series 2003
(Qualified School Bond Loan Fund)
05-01-12 5.00 1,000,000 1,102,890
05-01-18 5.00 1,000,000 1,078,220
Anchor Bay School District
Unlimited General Obligation Bonds
School Building & Site
Series 2003
(Qualified School Bond Loan Fund)
05-01-29 5.00 1,000,000 1,031,600
Chippewa Valley Schools
Unlimited General Obligation Refunding Bonds
Series 2003
(Qualified School Bond Loan Fund)
05-01-21 5.00 745,000 791,831
Commonwealth of Puerto Rico
Unlimited General Obligation Bonds
Public Improvement
Series 2004A
07-01-24 5.00 500,000(c) 519,525
Concord Academy/Boyne
Certificate of Participation
Series 1998
10-01-19 7.00 965,000 958,940
Detroit
Pre-refunded Revenue Bonds
Second Lien
Series 1995A (MBIA)
07-01-25 5.50 500,000 513,595
Detroit
Pre-refunded Unlimited General
Obligation Bonds
Series 1995A
04-01-15 6.80 1,000,000 1,021,800
Detroit
Revenue Bonds
Senior Lien
Series 2003A (MBIA)
07-01-34 5.00 1,375,000 1,408,426
Detroit
Revenue Bonds
Series 2003B (MBIA)
07-01-32 5.25 1,500,000 1,585,140
Detroit
Unlimited General Obligation Bonds
Series 2001A-1 (MBIA)
04-01-15 5.38 1,000,000 1,112,270
Detroit City School District
Unlimited General Obligation Bonds
School Building & Site Improvement
Series 2003B (FGIC)
(Qualified School Bond Loan Fund)
05-01-11 5.25 1,000,000 1,118,270
Dickinson County Economic Development Corporation
Refunding Revenue Bonds
International Paper Company Projects
Series 2004A
11-01-18 4.80 500,000 504,260
Eastern Michigan University
Refunding Revenue Bonds
Series 2003A (FGIC)
06-01-28 5.00 1,000,000 1,027,580
Genesee County
Limited General Obligation Bonds
Sewer Disposal System #3
Series 1996A (AMBAC)
04-01-15 5.40 1,000,000 1,055,530
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
38 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Michigan Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Goodrich Area School District
Unlimited General Obligation Bonds
Series 2003B
(Qualified School Bond Loan Fund)
05-01-27 5.00% $1,000,000 $1,039,710
Grand Rapids Building Authority
Revenue Bonds
Series 2002A (AMBAC)
10-01-17 5.50 1,270,000 1,429,817
Howell Public Schools
Unlimited General Obligation Bonds
School Building & Site
Series 2003
(Qualified School Bond Loan Fund)
05-01-29 5.00 1,000,000 1,031,600
Hudsonville Public Schools
Unlimited General Obligation Refunding Bonds
Series 1997 (FGIC)
(Qualified School Bond Loan Fund)
05-01-27 5.15 1,000,000 1,019,480
Jackson
Limited General Obligation Bonds
Capital Appreciation
Downtown Development
Zero Coupon
Series 2001 (FSA)
06-01-21 5.58 1,450,000(b) 684,299
L'Anse Creuse Public Schools
Unlimited General Obligation Refunding Bonds
Building & Site
Series 2003
(Qualified School Bond Loan Fund)
05-01-11 4.00 1,000,000 1,045,430
Lakeshore Public Schools
Unlimited General Obligation Refunding Bonds
Series 2000
(Qualified School Bond Loan Fund)
05-01-09 5.00 1,400,000 1,528,688
Lansing Community College
Limited General Obligation Bonds
Series 2002 (FGIC)
05-01-12 5.00 1,000,000 1,106,990
Lawton Community Schools
Unlimited General Obligation Bonds
Series 2001
(Qualified School Bond Loan Fund)
05-01-31 5.00 1,000,000 1,021,370
Lincoln Park School District
Pre-refunded Unlimited General
Obligation Bonds
Series 1996 (FGIC)
(Qualified School Bond Loan Fund)
05-01-26 5.90 1,000,000 1,059,130
Manchester Community Schools
Unlimited General Obligation Refunding Bonds
Building & Site
Series 2001
(Qualified School Bond Loan Fund)
05-01-26 5.00 1,400,000 1,449,742
Michigan Municipal Bond Authority
Revenue Bonds
Clean Water State Revolving Fund
Series 2002
10-01-07 5.25 1,000,000 1,076,180
10-01-20 5.38 1,000,000 1,109,640
10-01-21 5.38 1,000,000 1,103,980
Michigan Public Power Agency
Refunding Revenue Bonds
Belle River Project
Series 2002A (MBIA)
01-01-09 5.25 2,000,000 2,194,019
Michigan State Building Authority
Refunding Revenue Bonds
Facilities Program
Series 2003 II (MBIA)
10-15-29 5.00 1,000,000 1,030,740
Michigan State Building Authority
Revenue Bonds
Facilities Program
Series 2000 I
10-15-16 5.25 1,000,000 1,092,410
Michigan State Building Authority
Revenue Bonds
Facilities Program
Series 2001 I
10-15-08 5.50 500,000 553,540
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
39 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Michigan Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Michigan State Building Authority
Revenue Bonds
State Police Communications System
Series 2002 Escrowed to Maturity
10-01-07 4.00% $1,000,000 $1,043,760
Michigan State Hospital Finance Authority
Revenue Bonds
Oakwood Obligated Group
Series 2003
11-01-18 5.50 1,000,000 1,072,460
Michigan State South Central Power Agency
Refunding Revenue Bonds
Series 2002 (AMBAC)
11-01-10 5.00 2,000,000 2,206,519
Michigan Strategic Fund
Refunding Revenue Bonds
Detroit Edison
Series 1990BB (MBIA)
07-15-08 7.00 1,000,000 1,145,210
Michigan Strategic Fund
Refunding Revenue Bonds
The Oxford Institute
Series 1987A Escrowed to Maturity
08-15-05 7.88 25,000 25,890
Plymouth-Canton Community School District
Unlimited General Obligation Refunding Bonds
Series 2003
(Qualified School Bond Loan Fund)
05-01-15 5.25 600,000 671,076
Pontiac Tax Increment Finance Authority
Refunding Revenue Bonds
Tax Increment
Development Area #2
Series 2002 (ACA)
06-01-22 5.63 1,000,000 1,057,880
Puerto Rico Public Buildings Authority
Refunding Revenue Bonds
Government Facilities
Series 2002C (XLCA)
07-01-13 5.50 1,000,000(c) 1,156,110
Redford Township
Pre-refunded Limited General
Obligation Bonds
Series 1995 (MBIA)
04-01-16 5.25 1,450,000 1,505,695
Saline Area Schools
Unlimited General Obligation Bonds
Series 2000A
(Qualified School Bond Loan Fund)
05-01-09 4.75 1,000,000 1,081,790
South Lyon Community Schools
Unlimited General Obligation Bonds
School Building & Site
Series 2003 (FGIC)
05-01-28 5.00 1,000,000 1,029,280
Southfield Public Schools
Unlimited General Obligation Bonds
School Building & Site
Series 2003A
(Qualified School Bond Loan Fund)
05-01-22 5.25 1,025,000 1,125,532
State of Michigan
Unlimited General Obligation Bonds
Environmental Programs
Series 2003A
05-01-10 5.00 1,000,000 1,100,250
Summit Academy
Certificate of Participation
Series 1998
08-01-18 7.00 500,000 493,500
Summit Academy North Public School Academy
Certificate of Participation
Series 2001
07-01-30 7.38 750,000 786,818
Van Buren Township Downtown Development Authority
Tax Allocation Bonds
Series 1994
10-01-16 8.40 920,000 945,401
Warren Consolidated School District
Unlimited General Obligation Bonds
School Building & Site
Series 2003 (FGIC)
05-01-13 5.00 875,000 970,340
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
40 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Michigan Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Waverly Community School
Pre-refunded Unlimited General
Obligation Bonds
Series 2000 (FGIC)
05-01-17 5.25% $1,000,000 $1,116,650
Wayne State University
Revenue Bonds
Series 1999 (FGIC)
11-15-19 5.25 1,000,000 1,077,630
Western Michigan University
Refunding Revenue Bonds
Series 2003 (MBIA)
11-15-23 4.25 1,000,000 979,610
Western Township Utilities Authority
Limited General Obligation Bonds
Series 2002 (FGIC)
01-01-08 5.00 1,500,000 1,609,140
Williamston Community School District
Unlimited General Obligation Bonds
Series 1996 (MBIA)
(Qualified School Bond Loan Fund)
05-01-25 5.50 1,000,000 1,154,040
Wyandotte City School District
Unlimited General Obligation Refunding Bonds
Building & Site
Series 2002
(Qualified School Bond Loan Fund)
05-01-14 5.38 1,250,000 1,396,750
Total municipal bonds
(Cost: $59,048,561) $61,188,723
Municipal notes (1.3%)
Issue(d,e,f,g) Effective Amount Value(a)
yield payable at
maturity
Detroit
Revenue Bonds
Senior Lien
V.R.D.N. Series 2003B
(Dexia Credit Local) FSA
07-01-33 2.15% $300,000 $300,000
University of Michigan
Refunding Revenue Bonds
V.R.D.N. Series 1992A
12-01-19 2.15 500,000 500,000
Total municipal notes
(Cost: $800,000) $800,000
Total investments in securities
(Cost: $59,848,561)(h) $61,988,723
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the
financial statements.
(b) For zero coupon bonds, the interest rate disclosed represents the
annualized effective yield on the date of acquisition.
(c) Municipal obligations include debt obligations issued by or on
behalf of states, territories, possessions, or sovereign nations
within the territorial boundaries of the United States. The
securities represented 2.7% of net assets at Dec. 31, 2004.
- --------------------------------------------------------------------------------
41 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Michigan Tax-Exempt Fund
Notes to investments in securities (continued)
(d) 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 Guaranty Insurance Company
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FHLMC -- Federal Home Loan Mortgage Corporation
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- MBIA Insurance Corporation
XLCA -- XL Capital Assurance
(e) The following abbreviations may be used in the portfolio
descriptions:
A.M.T. -- Alternative Minimum Tax
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
(f) Interest rate varies either based on a predetermined schedule or
to reflect current market conditions; rate shown is the effective
rate on Dec. 31, 2004.
(g) The Fund is entitled to receive principal and interest from the
party within parentheses after a day or a week's notice or upon
maturity. The maturity date disclosed represents the final
maturity.
(h) At Dec. 31, 2004, the cost of securities for federal income tax
purposes was approximately $59,849,000 and the approximate
aggregate gross unrealized appreciation and depreciation based on
that cost was:
Unrealized appreciation $2,162,000
Unrealized depreciation (22,000)
-------
Net unrealized appreciation $2,140,000
----------
How to find information about the Fund's portfolio holdings
(i) The Fund files its complete schedule of portfolio holdings with
the Securities and Exchange Commission (Commission) for the first
and third quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC (information
on the operations of the Public Reference Room may be obtained by
calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed
in its annual and semiannual shareholder reports and in its
filings on Form N-Q, can be found at www.americanexpress.com/funds.
- --------------------------------------------------------------------------------
42 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Investments in Securities
AXP Minnesota Tax-Exempt Fund
Dec. 31, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Municipal bonds(95.5%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Anoka County Housing & Redevelopment Authority
Revenue Bonds
Epiphany Assisted Living LLC Project
Series 1999
12-01-29 7.40% $3,560,000(i) $3,161,280
Anoka County Housing & Redevelopment Authority
Unlimited General Obligation Bonds
Housing Development
Series 2004 (AMBAC)
02-01-34 5.00 1,355,000 1,371,409
Anoka-Hennepin Independent School District #11
Unlimited General Obligation Bonds
Series 2001A
(School District Credit Enhancement Program)
02-01-09 5.00 1,040,000 1,133,735
02-01-10 5.00 1,000,000 1,094,420
02-01-13 5.00 4,175,000 4,524,322
02-01-15 5.00 1,990,000 2,136,205
02-01-16 5.00 2,000,000 2,132,340
Austin Housing & Redevelopment Authority
Revenue Bonds
Courtyard Residence Project
Series 2000A
01-01-32 7.25 2,000,000 2,129,400
Bloomington Independent School District #271
Unlimited General Obligation Bonds
Building
Series 1999B
(School District Credit Enhancement Program)
02-01-15 5.00 1,500,000 1,602,270
Bloomington Independent School District #271
Unlimited General Obligation Bonds
Series 2001A (FSA)
(School District Credit Enhancement Program)
02-01-24 5.13 2,000,000 2,122,160
Buffalo Independent School District #877
Unlimited General Obligation Refunding Bonds
Series 1999 (MBIA)
(School District Credit Enhancement Program)
02-01-18 4.80 1,710,000 1,774,553
Carlton
Revenue Bonds
Inter-Faith Social Services Income Project
Series 2000
04-01-29 7.75 2,000,000 2,124,560
Centennial Independent School District #12
Unlimited General Obligation Refunding Bonds
Series 2002B (FSA)
(School District Credit Enhancement Program)
02-01-05 4.00 1,445,000 1,447,395
City of Breckenridge
Revenue Bonds
Catholic Health Initiatives
Series 2004A
05-01-30 5.00 4,000,000 4,080,400
City of Brooklyn Center
Refunding Revenue Bonds
Four Courts Apartments Project
Series 1995B A.M.T.
06-15-09 7.58 2,110,000 2,107,890
City of Chaska
Unlimited General Obligation Refunding Bonds
Tax Increment
Series 2003B (AMBAC)
12-01-06 3.00 1,245,000 1,262,766
City of Minneapolis
Revenue Bonds
Fairview Health Services
Series 2002B (MBIA)
05-15-14 5.50 2,050,000 2,334,110
05-15-15 5.50 2,160,000 2,444,321
05-15-16 5.50 2,200,000 2,475,880
05-15-17 5.50 1,295,000 1,450,271
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
43 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Minnesota Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
City of Minneapolis
Unlimited General Obligation Bonds
Convention Center
Series 2002
12-01-12 5.00% $1,500,000 $1,635,765
City of Minneapolis
Unlimited General Obligation Bonds
Convention Center
Series 2002A
12-01-07 5.00 3,670,000 3,928,698
12-01-08 5.00 4,315,000 4,697,136
City of Minneapolis
Unlimited General Obligation Bonds
Various Purpose
Series 2001
12-01-11 5.00 3,035,000 3,361,080
City of Sartell
Revenue Bonds
Foundation for Health Care Project
Series 1999A
09-01-29 6.63 1,000,000 1,024,110
City of Sartell
Revenue Bonds
Foundation for Health Care Project
Series 2001A
09-01-30 8.00 1,000,000 1,070,230
City of St. Paul
Refunding Revenue Bonds
Series 2003D (AMBAC)
12-01-08 4.00 3,500,000 3,698,135
City of St. Paul
Unlimited General Obligation Bonds
Capital Improvement
Series 2003A
03-01-09 3.50 1,875,000 1,936,538
City of Vadnais Heights
Refunding Revenue Bonds
Cottages of Vadnais Heights
Series 1997 A.M.T.
07-15-09 7.00 1,080,000 1,088,942
Commonwealth of Puerto Rico
Unlimited General Obligation Bonds
Public Improvement
Series 2001 (FSA)
07-01-16 5.50 1,500,000(c) 1,756,965
County of Anoka
Limited General Obligation Refunding Bonds
Capital Improvement
Series 2001C (MBIA)
02-01-09 4.60 2,960,000 3,184,930
County of Ramsey
Unlimited General Obligation Refunding Bonds
Capital Improvement Plan
Series 2002B
02-01-10 5.25 2,150,000 2,386,672
02-01-13 5.25 3,560,000 3,918,492
02-01-14 5.25 3,840,000 4,202,458
County of Washington
Unlimited General Obligation Bonds
Capital Improvement Plan
Series 2000A
02-01-20 5.50 1,000,000 1,100,970
Eden Prairie
Refunding Revenue Bonds
Sterling Ponds Project
Series 1999A A.M.T.
12-01-29 6.25 5,320,000 4,910,945
Eden Prairie
Refunding Revenue Bonds
Sterling Ponds Project
Series 1999B A.M.T.
12-01-29 6.25 515,000 475,402
Edina Independent School District #273
Unlimited General Obligation Bonds
Series 2004
02-01-12 4.00 3,700,000 3,857,361
02-01-22 4.25 3,000,000 3,001,950
02-01-23 4.50 3,000,000 3,054,810
02-01-24 4.50 3,400,000 3,459,806
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
44 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Minnesota Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Elk River Independent School District #728
Unlimited General Obligation Bonds
Series 2002 II Inverse Floater
(FSA)
(School District Credit Enhancement Program)
02-01-18 9.20% $1,200,000(h) $1,588,872
02-01-19 9.20 1,150,000(h) 1,504,936
02-01-20 9.20 950,000(h) 1,230,725
02-01-21 9.22 1,285,000(h) 1,648,848
Elk River Independent School District #728
Unlimited General Obligation Bonds
Series 2002A (FSA)
(School District Credit Enhancement Program)
02-01-16 5.00 3,000,000 3,272,130
Hastings Housing & Redevelopment Authority
Revenue Bonds
Arbor Oaks Assisted Living Project
Series 2000A
01-01-32 8.25 2,000,000(i) 2,023,300
Hennepin County
Unlimited General Obligation Bonds
Series 2003
12-01-06 4.00 2,000,000 2,066,780
12-01-23 4.75 2,000,000 2,061,640
Hopkins Independent School District #270
Unlimited General Obligation Refunding Bonds
Series 2002B
(School District Credit Enhancement Program)
02-01-09 4.00 2,925,000 3,076,427
02-01-14 5.25 3,680,000 4,023,123
Lake Superior Independent School District #381
Unlimited General Obligation Bonds
Building
Series 2002A (FSA)
(School District Credit Enhancement Program)
04-01-13 5.00 1,795,000 1,986,168
Lakeville Independent School District #194
Unlimited General Obligation Bonds
Series 1997A
(School District Credit Enhancement Program)
02-01-22 5.13 2,400,000 2,499,096
Mankato
Unlimited General Obligation Bonds
Improvement
Series 2001A (FGIC)
02-01-05 3.50 1,065,000 1,066,352
Maplewood
Revenue Bonds
Care Institute
Series 1994
01-01-24 7.75 3,775,000(b,i) 2,453,750
Marshall Independent School District #413
Unlimited General Obligation Bonds
Series 2003A (FSA)
(School District Credit Enhancement Program)
02-01-19 4.13 1,560,000 1,567,597
Metropolitan Council Minneapolis-St. Paul
Metropolitan Area
Unlimited General Obligation Bonds
Transportation
Series 2002C
02-01-08 5.00 3,240,000 3,493,984
02-01-09 5.00 3,240,000 3,537,270
Metropolitan Council Minneapolis-St. Paul
Metropolitan Area
Unlimited General Obligation Refunding Bonds
Waste Water Treatment
Series 2003A
03-01-07 4.00 5,000,000 5,184,050
Minneapolis & St. Paul
Housing & Redevelopment Authority
Revenue Bonds
HealthPartners Obligation Group Project
Series 2003
12-01-10 5.25 1,050,000 1,118,954
12-01-12 5.25 1,000,000 1,065,130
12-01-15 5.13 1,500,000 1,570,350
12-01-16 5.25 1,250,000 1,315,300
Minneapolis & St. Paul
Housing & Redevelopment Authority
Revenue Bonds
HealthSpan
Series 1993A (AMBAC)
11-15-18 4.75 10,500,000 10,683,749
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
45 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Minnesota Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Minneapolis & St. Paul Metropolitan Airports Commission
Revenue Bonds
Series 1998A (AMBAC)
01-01-24 5.20% $4,000,000 $4,153,440
Minneapolis & St. Paul Metropolitan Airports Commission
Revenue Bonds
Series 1999B (FGIC) A.M.T.
01-01-16 5.63 2,920,000 3,180,260
Minneapolis & St. Paul Metropolitan Airports Commission
Revenue Bonds
Series 2001B (FGIC) A.M.T.
01-01-16 5.75 2,940,000 3,244,496
Minneapolis & St. Paul Metropolitan Airports Commission
Revenue Bonds
Series 2001C (FGIC)
01-01-18 5.50 2,000,000 2,211,020
01-01-32 5.25 7,000,000 7,310,239
Minneapolis Community Development Agency
Revenue Bonds
Limited Tax - Common Bond Fund
Series 1996-1
06-01-11 6.00 980,000 1,023,590
Minneapolis Community Development Agency
Revenue Bonds
Limited Tax - Common Bond Fund
Series 1997A-7
06-01-12 5.50 250,000 266,685
Minneapolis Community Development Agency
Revenue Bonds
Limited Tax - Common Bond Fund
Series 2001A-2 A.M.T.
06-01-19 5.88 1,000,000 1,079,780
Minneapolis Special School District #1
Certificate of Participation
Series 1998B
(School District Credit Enhancement Program)
02-01-07 4.10 1,000,000 1,036,210
Minneapolis Special School District #1
Refunding Revenue Bonds
Certificate of Participation
Series 2002B (FSA)
(School District Credit Enhancement Program)
02-01-10 5.00 1,000,000 1,098,870
02-01-11 5.00 1,040,000 1,149,793
Minneapolis Special School District #1
Unlimited General Obligation Bonds
Series 2001 (FSA)
(School District Credit Enhancement Program)
02-01-09 5.00 1,325,000 1,446,026
Minneapolis Special School District #1
Unlimited General Obligation Refunding Bonds
Series 2003 (FSA)
(School District Credit Enhancement Program)
02-01-07 3.00 2,000,000 2,029,780
Minnesota Agricultural & Economic Development Board
Revenue Bonds
Health Care System
Series 2000A
11-15-22 6.38 5,000,000 5,494,800
11-15-29 6.38 3,000,000 3,277,470
Minnesota Agricultural & Economic Development Board
Revenue Bonds
Health Care System - Benedictine Health
Series 1999A (MBIA)
02-15-16 4.75 1,000,000 1,050,780
Minnesota Business Academy
Taxable Capital Appreciation Notes
Zero Coupon Series 2002
06-30-07 6.01 292,000(g,i) 250,997
Minnesota Higher Education Facilities Authority
Revenue Bonds
Macalester College
6th Series 2004B
03-01-17 5.00 2,395,000 2,598,000
Minnesota Higher Education Facilities Authority
Revenue Bonds
University of St. Thomas
5th Series 2004Y
10-01-34 5.25 2,800,000 2,914,576
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
46 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Minnesota Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Minnesota Housing Finance Agency
Revenue Bonds
Series 2002R II
Inverse Floater A.M.T.
07-01-33 9.86% $1,705,000(h) $1,836,115
Minnesota Housing Finance Agency
Revenue Bonds
Single Family Mortgage
Series 1996J A.M.T.
07-01-21 5.60 145,000 148,606
Minnesota Housing Finance Agency
Revenue Bonds
Single Family Mortgage
Series 1997K A.M.T.
01-01-26 5.75 1,420,000 1,450,899
Minnesota Public Facilities Authority
Revenue Bonds
Series 1998A
03-01-11 5.00 2,500,000 2,672,725
Minnesota Public Facilities Authority
Revenue Bonds
Series 2001A
03-01-05 4.00 1,500,000 1,504,972
03-01-08 5.00 3,000,000 3,238,440
03-01-20 5.00 4,000,000 4,230,320
Minnesota Public Facilities Authority
Revenue Bonds
Series 2002B
03-01-10 5.00 2,500,000 2,748,375
03-01-13 5.25 2,500,000 2,823,100
03-01-14 5.25 2,500,000 2,835,875
Minnesota State Municipal Power Agency
Revenue Bonds
Series 2004A
10-01-29 5.13 3,500,000 3,609,410
Monticello Big Lake Community Hospital District
Revenue Bonds
Health Care Facilities
Series 1998A
(Radian Group Financial Guaranty)
12-01-19 5.75 1,600,000 1,755,632
New Brighton
Revenue Bonds
Polynesian Village Apartments Project
Series 1995B A.M.T.
07-15-09 7.75 2,355,000 2,358,603
Northern Municipal Power Agency
Refunding Revenue Bonds
Capital Appreciation
Zero Coupon
Series 1989A (AMBAC)
01-01-10 3.80 2,000,000(g) 1,696,200
Northern Municipal Power Agency
Refunding Revenue Bonds
Series 1998B (AMBAC)
01-01-20 4.75 5,000,000 5,158,950
Northern Municipal Power Agency
Revenue Bonds
Series 1997 (FSA)
01-01-08 5.50 1,250,000 1,362,250
Northern Municipal Power Agency
Revenue Bonds
Series 1998 (FSA)
01-01-14 5.38 1,100,000 1,211,804
Olmsted County
Unlimited General Obligation Refunding Bonds
Resource Recovery
Series 2002A
02-01-05 4.00 1,900,000 1,903,150
Olmsted County Housing & Redevelopment Authority
Refunding Revenue Bonds
Series 2002B
02-01-05 4.00 1,215,000 1,217,014
Osseo Independent School District #279
Unlimited General Obligation Bonds
School Building
Series 2000A
(School District Credit Enhancement Program)
02-01-13 5.75 3,200,000 3,629,088
02-01-14 5.75 1,100,000 1,245,695
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
47 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Minnesota Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Osseo Independent School District #279
Unlimited General Obligation Bonds
Series 2002A (FSA)
(School District Credit Enhancement Program)
02-01-11 5.00% $1,570,000 $1,735,745
02-01-12 5.00 3,455,000 3,831,906
02-01-15 5.25 3,585,000 3,974,940
Osseo Independent School District #279
Unlimited General Obligation Refunding Bonds
Series 2001B
(School District Credit Enhancement Program)
02-01-09 5.00 2,860,000 3,117,772
Prior Lake Independent School District #719
Unlimited General Obligation Bonds
Series 2002A (FGIC)
(School District Credit Enhancement Program)
02-01-05 4.00 640,000 641,061
Puerto Rico Electric Power Authority
Revenue Bonds
Series 1998DD (FSA)
07-01-13 5.13 3,000,000(c) 3,274,290
Puerto Rico Electric Power Authority
Revenue Bonds
Series 2003NN (MBIA)
07-01-32 5.00 2,820,000(c) 2,922,592
Puerto Rico Public Finance Corporation
Revenue Bonds
Commonwealth Appropriation
Series 2004A (MBIA)
08-01-29 5.25 2,000,000(c,j) 2,214,900
Richfield
Refunding Revenue Bonds
Richfield Senior Housing Project
Series 2004A
12-01-39 6.63 1,650,000 1,654,505
Shakopee
Revenue Bonds
St. Francis Regional Medical Center
Series 2004
09-01-25 5.10 3,300,000 3,352,602
Southern Minnesota Municipal Power Agency
Revenue Bonds
Capital Appreciation
Zero Coupon
Series 1994A (MBIA)
01-01-19 6.67 17,000,000(g) 9,147,019
Southern Minnesota Municipal Power Agency
Revenue Bonds
Series 2002A (AMBAC)
01-01-17 5.25 6,000,000 6,812,940
Southern Minnesota Municipal Power Agency
Revenue Bonds
Series 2003A (MBIA)
01-01-11 5.00 5,500,000 6,067,160
St. Cloud Housing & Redevelopment Authority
Revenue Bonds
State University Foundation Project
Series 2002
05-01-18 5.13 3,000,000 3,235,920
St. Paul Housing & Redevelopment Authority
Refunding Revenue Bonds
FNMA Mortgage-backed Securities Program
Series 1995 (FNMA)
03-01-28 6.80 405,000 414,173
St. Paul Housing & Redevelopment Authority
Revenue Bonds
Community of Peace Academy Project
Series 2001A
12-01-30 7.88 2,390,000 2,579,288
St. Paul Housing & Redevelopment Authority
Revenue Bonds
Lyngblomsten Care Center Housing Project
Series 1993
11-01-06 7.13 380,000 383,542
11-01-17 7.13 1,545,000 1,555,877
St. Paul Housing & Redevelopment Authority
Revenue Bonds
Minnesota Business Academy Project
Series 2000
03-01-30 8.00 3,675,000(i) 3,358,987
See accompanying notes to investments in securities.
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48 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Minnesota Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
St. Paul Housing & Redevelopment Authority
Revenue Bonds
Rental - Lyngblomsten Housing Project
Series 1993
11-01-24 7.00% $1,720,000 $1,717,936
St. Paul Port Authority
Revenue Bonds
Office Building at Cedar Street
Series 2003
12-01-23 5.00 5,000,000 5,305,900
12-01-27 5.13 5,000,000 5,272,050
State of Minnesota
Unlimited General Obligation Bonds
Series 1996
11-01-06 6.00 3,530,000 3,763,615
State of Minnesota
Unlimited General Obligation Bonds
Series 2001
10-01-10 5.00 5,000,000 5,548,450
10-01-15 5.00 4,455,000 4,850,069
State of Minnesota
Unlimited General Obligation Bonds
Series 2002
08-01-06 5.00 5,000,000 5,215,100
08-01-10 5.00 4,075,000 4,514,530
11-01-15 5.25 3,575,000 4,030,991
State of Minnesota
Unlimited General Obligation Refunding Bonds
Various Purpose
Series 1998
11-01-08 5.00 1,170,000 1,280,425
Steele County
Revenue Bonds
Elderly Housing Project
Series 2000
06-01-30 6.88 2,205,000 2,414,960
Suburban Hennepin Regional Park District
Unlimited General Obligation Bonds
Series 2001
02-01-05 4.50 1,025,000 1,027,092
Todd Morrison Cass & Wadena Counties
United Hospital District
Unlimited General Obligation Bonds
Health Care Facilities-Lakewood
Series 2004
12-01-34 5.00 2,500,000 2,501,825
University of Minnesota
Revenue Bonds
Residual
Inverse Floater Series 2002
07-01-21 9.87 4,500,000(h) 6,802,290
University of Minnesota
Revenue Bonds
Series 1996A
07-01-13 5.75 2,000,000 2,321,640
Western Minnesota Municipal Power Agency
Refunding Revenue Bonds
Series 1996A (AMBAC)
01-01-06 6.25 1,285,000 1,335,244
Western Minnesota Municipal Power Agency
Revenue Bonds
Series 2003A (MBIA)
01-01-26 5.00 7,250,000 7,580,092
01-01-30 5.00 7,665,000 7,924,996
White Bear Lake Independent School District #624
Unlimited General Obligation Refunding Bonds
School Building
Series 2002C (FSA)
(School District Credit Enhancement Program)
02-01-08 5.00 1,310,000 1,412,285
02-01-09 5.00 1,375,000 1,500,593
White Bear Lake Independent School District #624
Unlimited General Obligation Refunding Bonds
Series 2002B (FGIC)
(School District Credit Enhancement Program)
02-01-13 5.00 1,405,000 1,545,219
02-01-14 5.00 1,480,000 1,617,980
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
49 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Minnesota Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(d,e)
Willmar
Unlimited General Obligation Bonds
Rice Memorial Hospital Project
Series 2002 (FSA)
02-01-11 5.00% $1,025,000 $1,129,038
02-01-12 5.00 1,120,000 1,236,962
02-01-13 5.00 1,200,000 1,328,268
Total municipal bonds
(Cost: $383,785,758) $397,606,417
Municipal notes (3.1%)
Issue(e,f) Effective Amount payable Value(a)
yield at maturity
City of Brooklyn Center
Refunding Revenue Bonds
Brookdale Corporation II Project
V.R.D.N. Series 2001 (U.S. Bank)
12-01-14 2.27% $100,000(j) $100,000
City of Plymouth
Refunding Revenue Bonds
Parkside Apartments Project
V.R.D.N. Series 2003
04-15-33 2.00 1,780,000(j) 1,780,000
Cohasset
Refunding Revenue Bonds
Minnesota Power & Light Company Project
V.R.D.N. Series 1997B
(ABN Amro Bank)
06-01-13 2.22 700,000(j) 700,000
Mankato
Revenue Bonds
Housing-Highland
V.R.D.N. Series 1997
(LaSalle Bank)
05-01-27 2.27 900,000(j) 900,000
Minnesota Higher Education Facilities Authority
Revenue Bonds
St. Olaf College
V.R.D.N. 5th Series 2000H
(Harris Trust & Savings Bank)
10-01-30 2.22 1,585,000(j) 1,585,000
Minnesota Higher Education Facilities Authority
Revenue Bonds
St. Olaf College
V.R.D.N. 5th Series 2002M1
(Harris Trust & Savings Bank)
10-01-32 2.22 400,000(j) 400,000
Minnesota School District Capital Equipment
Borrowing Program
Unlimited Government Obligation Notes
AID Anticipation Certificates
Series 2004A
School District Credit Enhancement Program
09-02-05 2.03 3,000,000 3,018,810
Southern Minnesota Municipal Power Authority
C.P.
01-06-05 1.78 2,000,000 2,000,000
St. Louis Park
Revenue Bonds
Catholic Finance Corporation-Benilde
V.R.D.N. Series 2000 (Allied Irish Bank)
10-01-25 2.02 1,070,000(j) 1,070,000
Wadena
Revenue Bonds
Homecrest Industries Project
V.R.D.N. Series 1999
(U.S. Bank) A.M.T.
08-01-19 2.10 1,150,000(j) 1,150,000
Total municipal notes
(Cost: $12,713,952) $12,703,810
Total investments in securities
(Cost: $396,499,710)(k) $410,310,227
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
50 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
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) Non-income producing. For long-term debt securities, item
identified is in default as to payment of interest and/or
principal.
(c) Municipal obligations include debt obligations issued by or on
behalf of states, territories, possessions, or sovereign nations
within the territorial boundaries of the United States. The
securities represented 2.4% of net assets at Dec. 31, 2004.
(d) 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 Guaranty Insurance Company
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FHLMC -- Federal Home Loan Mortgage Corporation
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- MBIA Insurance Corporation
XLCA -- XL Capital Assurance
(e) The following abbreviations may be used in the portfolio
descriptions:
A.M.T. -- Alternative Minimum Tax -- At of Dec. 31, 2004, the
value of securities subject to alternative minimum
tax represented 5.5% 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
(f) The Fund is entitled to receive principal and interest from the
party within parentheses after a day or a week's notice or upon
maturity. The maturity date disclosed represents the final
maturity.
(g) For zero coupon bonds, the interest rate disclosed represents the
annualized effective yield on the date of acquisition.
(h) 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 Dec. 31, 2004. At Dec. 31, 2004, the value of
inverse floaters represented 3.5% of net assets.
- --------------------------------------------------------------------------------
51 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Minnesota Tax-Exempt Fund
Notes to investments in securities (continued)
(i) Identifies issues considered to be illiquid as to their
marketability (see Note 1 to the financial statements).
Information concerning such security holdings at Dec. 31, 2004, is
as follows:
Security Acquisition Cost
dates
Anoka County Housing & Redevelopment Authority
Revenue Bonds
Epiphany Assisted Living LLC Project
Series 1999
7.40% 2029 11-22-99 $3,519,786
Hastings Housing & Redevelopment Authority
Revenue Bonds
Arbor Oaks Assisted Living Project
Series 2000A
8.25% 2032 09-11-00 2,000,000
Maplewood
Revenue Bonds
Care Institute
Series 1994
7.75% 2024 03-02-94 3,677,432
Minnesota Business Academy
Taxable Capital Appreciation Notes
Zero Coupon Series 2002
6.01% 2007 09-30-02 251,815
St. Paul Housing & Redevelopment Authority
Revenue Bonds
Minnesota Business Academy Project
Series 2000
8.00% 2030 03-09-00 3,580,099
(j) Interest rate varies either based on a predetermined schedule or
to reflect current market conditions; rate shown is the effective
rate on Dec. 31, 2004.
(k) At Dec. 31, 2004, the cost of securities for federal income tax
purposes was approximately $396,500,000 and the approximate
aggregate gross unrealized appreciation and depreciation based on
that cost was:
Unrealized appreciation $16,348,000
Unrealized depreciation (2,538,000)
----------
Net unrealized appreciation $13,810,000
-----------
How to find information about the Fund's portfolio holdings
(i) The Fund files its complete schedule of portfolio holdings with
the Securities and Exchange Commission (Commission) for the first
and third quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC (information
on the operations of the Public Reference Room may be obtained by
calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed
in its annual and semiannual shareholder reports and in its
filings on Form N-Q, can be found at www.americanexpress.com/funds.
- --------------------------------------------------------------------------------
52 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Investments in Securities
AXP New York Tax-Exempt Fund
Dec. 31, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Municipal bonds(97.5%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(b,c)
Albany Municipal Water Finance Authority
Revenue Bonds
Series 2003A (MBIA)
12-01-14 5.00% $2,550,000 $2,731,815
Battery Park City Authority
Senior Revenue Bonds
Series 2003A
11-01-22 5.25 1,000,000 1,093,650
City of New York
Pre-refunded Unlimited General Obligation Bonds
Series 1996J
02-15-19 5.88 155,000 163,678
City of New York
Unlimited General Obligation Bonds
Series 2000 II Inverse Floater (FGIC)
05-15-16 10.91 830,000(g) 1,173,247
City of New York
Unlimited General Obligation Bonds
Series 2002C (XLCA)
03-15-12 5.00 1,000,000 1,096,620
City of New York
Unlimited General Obligation Bonds
Series 2002E
08-01-16 5.75 2,000,000 2,236,340
City of New York
Unlimited General Obligation Bonds
Series 2003I
03-01-27 5.38 2,000,000 2,109,860
City of New York
Unlimited General Obligation Bonds
Series 2003J
06-01-18 5.50 2,000,000 2,200,300
06-01-20 5.50 2,000,000 2,191,360
City of New York
Unlimited General Obligation Bonds
Series 2004D
11-01-34 5.00 1,000,000 1,013,880
City of Yonkers
Unlimited General Obligation Bonds
Series 2001B (AMBAC)
12-15-07 3.88 1,010,000 1,052,097
Commonwealth of Puerto Rico
Unlimited General Obligation Bonds
Public Improvement
Series 2004A
07-01-24 5.00 500,000(d) 519,525
County of Erie
Unlimited General Obligation Bonds
Series 1995B (FGIC)
06-15-25 5.50 700,000 720,895
County of Monroe
Unlimited General Obligation Refunding Bonds
Public Improvement
Series 1996 (MBIA)
03-01-15 6.00 1,250,000 1,490,313
Erie County Industrial Development Agency
Revenue Bonds
City of Buffalo Project
Series 2003 (FSA)
05-01-06 4.00 1,000,000 1,023,310
Erie County Water Authority
Refunding Revenue Bonds
Series 1990A Escrowed to Maturity
(AMBAC)
12-01-08 6.00 1,765,000 1,917,655
Long Island Power Authority
Revenue Bonds
Series 1998-8 (AMBAC)
04-01-09 5.25 1,000,000 1,098,920
Long Island Power Authority
Revenue Bonds
Series 2003B
06-01-05 5.00 2,000,000 2,022,600
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
53 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP New York Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(b,c)
Metropolitan Transportation Authority
Pre-refunded Revenue Bonds
Series 1998A (FGIC)
04-01-28 4.75% $1,000,000 $1,103,500
Metropolitan Transportation Authority
Refunding Revenue Bonds
Series 2002A (AMBAC)
11-15-19 5.50 1,000,000 1,130,500
Metropolitan Transportation Authority
Revenue Bonds
Series 2001A (FGIC)
11-15-31 5.00 1,000,000 1,024,430
Metropolitan Transportation Authority
Revenue Bonds
Series 2002A (FSA)
11-15-26 5.50 1,500,000 1,641,930
New York City Municipal Water Finance Authority
Pre-refunded Revenue Bonds
Series 1996B (MBIA)
06-15-26 5.75 180,000 191,016
New York City Municipal Water Finance Authority
Revenue Bonds
Refunded Balance
Series 1996B (MBIA)
06-15-26 5.75 320,000 338,781
New York City Municipal Water Finance Authority
Revenue Bonds
Series 2002A
06-15-29 5.00 1,000,000 1,020,520
New York City Municipal Water Finance Authority
Revenue Bonds
Series 2004A
06-15-39 5.00 1,000,000 1,017,300
New York City Transitional Finance Authority
Pre-refunded Revenue Bonds
Future Tax
Series 2001C
02-01-08 5.50 155,000 169,725
New York City Transitional Finance Authority
Pre-refunded Revenue Bonds
Future Tax
Series 2001C Escrowed to Maturity
02-01-08 5.50 280,000 306,600
New York City Transitional Finance Authority
Pre-refunded Revenue Bonds
Future Tax Secured
Series 1999C
05-01-25 5.50 440,000 498,084
New York City Transitional Finance Authority
Revenue Bonds
Future Tax Secured
Series 2004C
02-01-33 5.00 1,000,000 1,020,430
New York City Transitional Finance Authority
Un-refunded Revenue Bonds
Future Tax
Series 1999C
05-01-25 5.50 560,000 609,823
New York City Transitional Finance Authority
Un-refunded Revenue Bonds
Future Tax
Series 2001C
02-01-08 5.50 1,065,000 1,163,193
New York City Trust for Cultural Resources
Revenue Bonds
Museum of American Folk Art
Series 2000 (ACA)
07-01-22 6.00 1,000,000 1,081,080
New York Local Government Assistance Corporation
Revenue Bonds
Capital Appreciation
Zero Coupon
Series 1993C (MBIA)
04-01-14 3.65 1,000,000(f) 701,150
New York Mortgage Agency
Revenue Bonds
Series II 2002B
Inverse Floater A.M.T.
04-01-32 9.55 1,000,000(g) 1,048,810
New York Power Authority
Revenue Bonds
Series 2000A
11-15-30 5.25 1,000,000 1,043,960
New York State Dormitory Authority
Pre-refunded Revenue Bonds
Series 1990B
05-15-11 7.50 415,000 498,315
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
54 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP New York Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(b,c)
New York State Dormitory Authority
Revenue Bonds
Brooklyn Law School
Series 2003B (XLCA)
07-01-30 5.13% $1,000,000 $1,042,260
New York State Dormitory Authority
Revenue Bonds
Catholic Health L.I. Obligation Group
Series 2004
07-01-27 5.00 1,000,000 1,004,500
New York State Dormitory Authority
Revenue Bonds
City University System Consolidated
Series 1993A
07-01-13 5.75 3,000,000 3,393,180
New York State Dormitory Authority
Revenue Bonds
City University System Consolidated
Series 1997-1
07-01-17 5.25 3,000,000 3,193,890
New York State Dormitory Authority
Revenue Bonds
City University System Consolidated
4th Generation
Series 2003A (MBIA)
07-01-09 5.25 1,500,000 1,658,670
New York State Dormitory Authority
Revenue Bonds
Memorial Sloan-Kettering Center
Series 2003-1 (MBIA)
07-01-21 5.00 1,000,000 1,060,290
New York State Dormitory Authority
Revenue Bonds
Montefiore Hospital
Series 2004 (FGIC/FHA)
08-01-19 5.00 735,000 791,000
New York State Dormitory Authority
Revenue Bonds
Pratt Institute
Series 1999
(Radian Group Financial Guaranty)
07-01-20 6.00 1,500,000 1,682,865
New York State Dormitory Authority
Revenue Bonds
School Districts Financing
Series 2002D (MBIA)
10-01-07 5.00 3,380,000 3,615,213
New York State Dormitory Authority
Revenue Bonds
St. Thomas Aquinas
Series 1998
(Radian Group Financial Guaranty)
07-01-14 5.00 1,125,000 1,184,996
New York State Dormitory Authority
Revenue Bonds
Series 2002B (AMBAC)
11-15-26 5.25 1,000,000(h) 1,111,970
New York State Dormitory Authority
Un-refunded Revenue Bonds
Series 1990B
05-15-11 7.50 1,485,000 1,721,650
New York State Energy Research
& Development Authority
Revenue Bonds
New York State Electric & Gas
Series 1985B (MBIA)
10-15-15 4.00 1,000,000 1,006,630
New York State Energy Research
& Development Authority
Revenue Bonds
Residual Certificates
Series 2000-379 Inverse Floater (MBIA)
01-01-21 9.91 330,000(g) 379,154
New York State Environmental Facilities Corporation
Revenue Bonds
Revolving Funds
New York City Municipal Water Project
Series 2002B
06-15-31 5.00 1,000,000 1,029,390
New York State Environmental Facilities Corporation
Revenue Bonds
Revolving Funds
New York City Municipal Water Project
Series 2002K
06-15-28 5.00 1,000,000 1,033,220
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
55 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP New York Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(b,c)
New York State Environmental Facilities Corporation
Revenue Bonds
State Water Revolving Fund
Series 1990A
06-15-12 7.50% $295,000 $295,971
New York State Thruway Authority
Refunding Revenue Bonds
Series 1998E (MBIA)
01-01-25 5.00 1,000,000 1,030,230
New York State Thruway Authority
Revenue Bonds
Series 1997D
01-01-21 5.25 2,000,000 2,115,860
New York State Thruway Authority
Revenue Bonds
Series 2004A (MBIA)
04-01-19 5.00 1,000,000 1,079,760
New York State Thruway Authority
Revenue Bonds
Transportation
Series 2003A (MBIA)
03-15-22 5.00 1,000,000 1,057,760
New York State Urban Development Corporation
Pre-refunded Revenue Bonds
Correctional Capital Facilities
Series 1995-5 (MBIA)
01-01-25 5.50 750,000 765,000
New York State Urban Development Corporation
Revenue Bonds
Series 2002A (XLCA)
01-01-11 5.25 1,000,000 1,113,800
New York State Urban Development Corporation
Revenue Bonds
Series 2002C (XLCA)
01-01-09 4.00 1,545,000 1,624,660
Niagara Falls Public Water Authority
Revenue Bonds
Series 2003A (MBIA)
07-15-28 5.50 1,000,000 1,045,450
Port Authority of New York & New Jersey
Revenue Bonds
5th Installment Special Project
Series 1996-4 A.M.T.
10-01-19 6.75 1,500,000 1,564,695
Port Authority of New York & New Jersey
Revenue Bonds
Consolidated 134th
Series 2004
07-15-34 5.00 1,000,000 1,023,840
Puerto Rico Public Finance Corporation
Revenue Bonds
Commonwealth Appropriation
Series 2004A (MBIA)
08-01-29 5.25 1,000,000(d,h) 1,107,450
Sales Tax Asset Receivable Corporation
Revenue Bonds
Series 2004A (AMBAC)
10-15-29 5.00 1,000,000 1,035,130
State of New York
Unlimited General Obligation Bonds
Series 2003A
03-15-08 4.00 2,000,000 2,096,520
Suffolk County Industrial Development Agency
Revenue Bonds
1st Mortgage Jeffersons Ferry
Series 1999A
11-01-28 7.25 1,500,000 1,603,305
Syracuse
Unlimited General Obligation Bonds
Public Improvements
Series 2002C (FGIC) A.M.T.
01-01-05 4.25 1,150,000 1,150,073
Tobacco Settlement Financing Authority
Revenue Bonds
Series 2003C-1
06-01-15 5.50 1,000,000 1,088,950
Triborough Bridge & Tunnel Authority
Refunding Revenue Bonds
General Purpose
Series 2002B
11-15-10 5.00 2,000,000 2,205,540
11-15-29 5.13 1,000,000 1,032,920
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
56 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP New York Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(b,c)
Triborough Bridge & Tunnel Authority
Revenue Bonds
Convention Center Project
Series 1990E
01-01-11 6.00% $1,145,000 $1,311,746
Total municipal bonds
(Cost: $87,890,655) $91,722,750
Municipal notes (1.2%)
Issue(b,c,e,h) Effective Amount Value(a)
yield payable at
maturity
Long Island Power Authority
Revenue Bonds
V.R.D.N. Series 1998-1B
(State Street Bank & Trust)
05-01-33 2.20% $1,000,000 $1,000,000
New York City Municipal Water Finance Authority
Revenue Bonds
V.R.D.N. Series 1994G
(FGIC)
06-15-24 2.15 100,000 100,000
Total municipal notes
(Cost: $1,100,000) $1,100,000
Total investments in securities
(Cost: $88,990,655)(i) $92,822,750
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 Guaranty Insurance Company
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FHLMC -- Federal Home Loan Mortgage Corporation
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- MBIA Insurance Corporation
XLCA -- XL Capital Assurance
(c) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- At of Dec. 31, 2004, the
value of securities subject to alternative minimum
tax represented 4.0% 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
- --------------------------------------------------------------------------------
57 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP New York Tax-Exempt Fund
Notes to investments in securities (continued)
(d) Municipal obligations include debt obligations issued by or on
behalf of states, territories, possessions, or sovereign nations
within the territorial boundaries of the United States. The
securities represented 1.7% of net assets at Dec. 31, 2004.
(e) The Fund is entitled to receive principal and interest from the
party within parentheses after a day or a week's notice or upon
maturity. The maturity date disclosed represents the final
maturity.
(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 Dec. 31, 2004. At Dec. 31, 2004, the value of
inverse floaters represented 2.8% of net assets.
(h) Interest rate varies either based on a predetermined schedule or
to reflect current market conditions; rate shown is the effective
rate on Dec. 31, 2004.
(i) At Dec. 31, 2004, the cost of securities for federal income tax
purposes was approximately $88,991,000 and the approximate
aggregate gross unrealized appreciation and depreciation based on
that cost was:
Unrealized appreciation $3,934,000
Unrealized depreciation (102,000)
--------
Net unrealized appreciation $3,832,000
----------
How to find information about the Fund's portfolio holdings
(i) The Fund files its complete schedule of portfolio holdings with
the Securities and Exchange Commission (Commission) for the first
and third quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC (information
on the operations of the Public Reference Room may be obtained by
calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed
in its annual and semiannual shareholder reports and in its
filings on Form N-Q, can be found at www.americanexpress.com/funds.
- --------------------------------------------------------------------------------
58 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Investments in Securities
AXP Ohio Tax-Exempt Fund
Dec. 31, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Municipal bonds(98.5%)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(b,c)
Bowling Green State University
Revenue Bonds
Series 2003 (AMBAC)
06-01-12 5.00% $1,145,000 $1,268,752
Brookville Local School District
Unlimited General Obligation Bonds
Series 2003 (FSA)
12-01-18 5.25 1,000,000 1,102,290
Cincinnati City School District
Limited General Obligation Bonds
School Improvement
Series 2002 (FSA)
06-01-09 5.00 1,355,000 1,482,424
06-01-21 5.25 2,600,000 2,836,730
City of Cincinnati
Unlimited General Obligation Bonds
Series 2000
12-01-16 5.25 1,000,000 1,093,720
City of Cleveland
Revenue Bonds
Series 2002K (FGIC)
01-01-10 5.00 2,000,000 2,188,900
City of Hamilton
Refunding Revenue Bonds
Series 2003 (FSA)
10-15-12 5.00 1,230,000 1,368,781
Cleveland City School District
Revenue Bonds
Revenue Anticipation Notes
Series 1997 (AMBAC)
06-01-07 5.75 2,000,000 2,157,600
Cleveland State University
Revenue Bonds
Series 2003A (FGIC)
06-01-15 5.00 1,000,000 1,093,900
Columbus
Unlimited General Obligation Bonds
Series 1999-2
06-15-15 5.75 1,000,000 1,134,340
Columbus City School District
Unlimited General Obligation Bonds
School Facilities Construction & Improvement
Series 2003 (FGIC)
12-01-11 5.00 1,000,000 1,109,400
County of Cuyahoga
Limited General Obligation Bonds
Series 1993
05-15-13 5.60 500,000 555,580
County of Cuyahoga
Refunding Revenue Bonds
Judson Retirement Community
Series 1996A
11-15-18 7.25 1,000,000 1,058,220
County of Cuyahoga
Refunding Revenue Bonds
Series 2003A
01-01-17 6.00 1,000,000 1,146,630
01-01-32 6.00 1,000,000 1,089,400
County of Cuyahoga
Revenue Bonds
Canton Project
Series 2000
01-01-30 7.50 1,000,000 1,121,740
County of Montgomery
Revenue Bonds
Catholic Health Initiatives
Series 2004A
05-01-30 5.00 750,000 759,428
05-01-32 5.00 500,000 505,165
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
59 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Ohio Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(b,c)
Dayton City School District
Unlimited General Obligation Bonds
School Facilities Construction & Improvement
Series 2003A (FGIC)
12-01-27 5.00% $1,250,000 $1,296,838
12-01-31 5.00 1,000,000 1,027,580
Dayton City School District
Unlimited General Obligation Bonds
School Facilities Construction & Improvement
Series 2003D (FGIC)
12-01-17 5.00 1,000,000 1,080,390
12-01-19 5.00 1,000,000 1,075,190
Franklin County
Refunding & Improvement Revenue Bonds
Lutheran Senior City Project
Series 1999
12-15-28 6.13 1,250,000 1,124,650
Franklin County
Refunding Revenue Bonds
OhioHealth Corporation
Series 2003C
05-15-24 5.25 1,000,000 1,053,150
Hamilton County Convention Facilities Authority
Revenue Bonds
First Lien
Series 2004 (FGIC)
12-01-33 5.00 1,000,000 1,028,680
Jackson
Revenue Bonds
Consolidated Health System
Jackson Hospital
Series 1999
(Radian Group Financial Guaranty)
10-01-20 6.13 1,000,000 1,117,950
Kenston Local School District
Unlimited General Obligation Bonds
School Improvement
Series 2003 (MBIA)
12-01-16 5.00 1,000,000 1,087,870
Lakewood
Limited General Obligation Bonds
Series 2003
12-01-19 5.00 1,515,000 1,607,445
Lakota Local School District
Pre-refunded Unlimited General Obligation Bonds
Series 1994 (AMBAC)
12-01-14 6.25 2,000,000 2,075,680
Licking County Joint Vocational School District
Unlimited General Obligation Bonds
School Facilities Construction & Improvement
Series 2002 (MBIA)
12-01-08 5.00 1,110,000 1,207,869
Licking Heights Local School District
Unlimited General Obligation
Series 2004 (FGIC)
12-01-28 5.00 1,000,000 1,034,080
Ohio Municipal Electric Generation Agency
Refunding Revenue Bonds
Joint Venture 5 Certificates
Series 2004 (AMBAC)
02-15-24 4.75 750,000 767,235
Ohio State Air Quality Development Authority
Refunding Revenue Bonds
JMG Funding Limited Partnership Project
Series1994 (AMBAC) A.M.T.
04-01-29 6.38 500,000 512,990
Ohio State Building Authority
Pre-refunded Revenue Bonds
State Facilities Adult Correctional
Series 1999A
10-01-16 5.50 1,000,000 1,133,490
Ohio State Building Authority
Refunding Revenue Bonds
State Facilities Adult Correctional
Series 2001A (FSA)
10-01-14 5.50 1,000,000 1,123,550
Ohio State Building Authority
Refunding Revenue Bonds
Workers Compensation Facilities
Series 2003A
04-01-06 5.00 1,000,000 1,033,130
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
60 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Ohio Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(b,c)
Ohio State Building Authority
Revenue Bonds
Facilities Administration Building Fund Projects
Series 1993A
10-01-07 5.60% $1,500,000 $1,624,785
Ohio State Building Authority
Revenue Bonds
Juvenile Correctional Building
Series 2003
04-01-08 4.00 1,580,000 1,654,260
Ohio State Higher Educational Facility Commission
Revenue Bonds
Oberlin College
Series 1999
10-01-29 5.00 1,000,000 1,017,890
Ohio State Higher Educational Facility Commission
Revenue Bonds
Xavier University Project
Series 2003 (FGIC)
05-01-08 4.00 500,000 522,775
Ohio State University
Revenue Bonds
Series 2002A
12-01-05 3.50 500,000 506,240
Ohio State University
Revenue Bonds
Series 2003B
06-01-06 2.25 1,000,000 1,000,400
Puerto Rico Electric Power Authority
Revenue Bonds
Series 1998DD (FSA)
07-01-13 5.13 1,000,000(d) 1,091,430
State of Ohio
Unlimited General Obligation Bonds
Common Schools
Series 2003C
03-15-10 5.00 1,000,000 1,100,550
State of Ohio
Unlimited General Obligation Bonds
Common Schools Capital Facilities
Series 2001A
06-15-13 5.00 1,500,000 1,630,770
State of Ohio
Unlimited General Obligation Bonds
Common Schools Capital Facilities
Series 2001B
09-15-20 5.00 1,000,000 1,065,420
State of Ohio
Unlimited General Obligation Bonds
Conservation Projects
Series 2002A
09-01-09 4.00 1,115,000 1,176,481
State of Ohio
Unlimited General Obligation Bonds
Higher Education
Series 2003A
05-01-11 5.00 1,000,000 1,105,860
Summit County
Limited General Obligation Bonds
Series 2003
12-01-18 5.25 1,490,000 1,665,015
Toledo City School District
Unlimited General Obligation Bonds
School Facilities Improvement
Series 2003 (FSA)
(School District Credit Enhancement Program)
12-01-15 5.00 1,000,000 1,098,630
University of Akron
Revenue Bonds
Series 2003A (AMBAC)
01-01-22 5.00 1,595,000 1,681,943
University of Cincinnati
Revenue Bonds
Series 2001A (FGIC)
06-01-14 5.50 1,000,000 1,126,140
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
61 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Ohio Tax-Exempt Fund
Municipal bonds(continued)
Name of Coupon Principal Value(a)
issuer and rate amount
title of
issue(b,c)
Warren County
Limited General Obligation Bonds
Series 1992
12-01-12 6.10% $500,000 $565,500
West Muskingum Local School District
Unlimited General Obligation Bonds
School Facilities Construction & Improvement
Series 2003 (FGIC)
12-01-30 5.00 1,000,000 1,029,650
Total municipal bonds
(Cost: $62,603,791) $64,124,506
Municipal note (0.8%)
Issue(c,e) Effective Amount payable Value(a)
yield at maturity
State of Ohio
Revenue Bonds
VP Exploration & Oil Project
V.R.D.N. Series 2001 A.M.T.
08-01-34 2.23% $500,000 $500,000
Total municipal note
(Cost: $500,000) $500,000
Total investments in securities
(Cost: $63,103,791)(f) $64,624,506
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
62 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
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 Guaranty Insurance Company
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FHLMC -- Federal Home Loan Mortgage Corporation
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- MBIA Insurance Corporation
XLCA -- XL Capital Assurance
(c) The following abbreviations may be used in the portfolio
descriptions:
A.M.T. -- Alternative Minimum Tax -- At of Dec. 31, 2004, the
value of securities subject to alternative minimum
tax represented 1.6% 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) Municipal obligations include debt obligations issued by or on
behalf of states, territories, possessions, or sovereign nations
within the territorial boundaries of the United States. The
securities represented 1.7% of net assets at Dec. 31, 2004.
(e) Interest rate varies to reflect current market conditions; rate
shown is the effective rate on Dec. 31, 2004.
(f) At Dec. 31, 2004, the cost of securities for federal income tax
purposes was approximately $63,104,000 and the approximate
aggregate gross unrealized appreciation and depreciation based on
that cost was:
Unrealized appreciation $1,722,000
Unrealized depreciation (201,000)
--------
Net unrealized appreciation $1,521,000
----------
How to find information about the Fund's portfolio holdings
(i) The Fund files its complete schedule of portfolio holdings with
the Securities and Exchange Commission (Commission) for the first
and third quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC (information
on the operations of the Public Reference Room may be obtained by
calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed
in its annual and semiannual shareholder reports and in its
filings on Form N-Q, can be found at www.americanexpress.com/funds.
- --------------------------------------------------------------------------------
63 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Financial Statements
Statements of assets and liabilities
AXP State Tax-Exempt Funds
California Massachusetts Michigan
Tax-Exempt Tax-Exempt Tax-Exempt
Dec. 31, 2004 (Unaudited) Fund Fund Fund
Assets
Investments in securities, at value (Note 1)
(identified cost $201,270,498, $76,280,566
and $59,848,561) $210,013,931 $78,872,102 $61,988,723
Cash in bank on demand deposit 45,409 69,538 118,618
Capital shares receivable 27,218 500 19,474
Accrued interest receivable 3,000,363 1,265,681 740,472
Receivable for investment securities sold 2,259,202 -- --
------------ ----------- -----------
Total assets 215,346,123 80,207,821 62,867,287
------------ ----------- -----------
Liabilities
Dividends payable to shareholders 188,179 59,914 53,772
Capital shares payable -- 9,990 80,625
Accrued investment management services fee 2,757 1,027 805
Accrued distribution fee 1,905 956 591
Accrued transfer agency fee 90 61 22
Accrued administrative services fee 235 87 69
Other accrued expenses 33,949 27,624 33,091
------------ ----------- -----------
Total liabilities 227,115 99,659 168,975
------------ ----------- -----------
Net assets applicable to outstanding shares $215,119,008 $80,108,162 $62,698,312
============ =========== ===========
Represented by
Shares of beneficial interest -- $.01 par value (Note 1) $ 413,002 $ 148,001 $ 117,788
Additional paid-in capital 206,159,950 77,412,501 60,585,995
Undistributed net investment income 28,627 94,169 4
Accumulated net realized gain (loss) (226,004) (138,045) (145,637)
Unrealized appreciation (depreciation) on investments 8,743,433 2,591,536 2,140,162
------------ ----------- -----------
Total -- representing net assets applicable to outstanding shares $215,119,008 $80,108,162 $62,698,312
============ =========== ===========
Net assets applicable to outstanding shares: Class A $193,668,624 $60,111,810 $54,733,158
Class B $ 18,168,247 $18,626,279 $ 6,072,347
Class C $ 3,282,137 $ 1,370,073 $ 1,892,807
Outstanding shares of beneficial interest: Class A shares 37,181,048 11,105,764 10,282,871
Class B shares 3,489,741 3,441,161 1,140,362
Class C shares 629,368 253,221 355,558
Net asset value per share: Class A $ 5.21 $ 5.41 $ 5.32
Class B $ 5.21 $ 5.41 $ 5.32
Class C $ 5.21 $ 5.41 $ 5.32
------------ ----------- -----------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
64 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Statements of assets and liabilities
AXP State Tax-Exempt Funds
Minnesota New York Ohio
Tax-Exempt Tax-Exempt Tax-Exempt
Dec. 31, 2004 (Unaudited) Fund Fund Fund
Assets
Investments in securities, at value (Note 1)
(identified cost $396,499,710, $88,990,655
and $63,103,791) $410,310,227 $92,822,750 $64,624,506
Cash in bank on demand deposit 63,367 52,693 3,141
Capital shares receivable 1,197 761 1,001
Accrued interest receivable 6,427,201 1,263,687 576,067
Receivable for investment securities sold 108,004 -- --
------------ ----------- -----------
Total assets 416,909,996 94,139,891 65,204,715
------------ ----------- -----------
Liabilities
Dividends payable to shareholders 339,203 78,040 49,836
Capital shares payable 106,748 1,654 5,000
Accrued investment management services fee 5,239 1,208 835
Accrued distribution fee 4,096 923 659
Accrued transfer agency fee 604 11 18
Accrued administrative services fee 433 103 71
Other accrued expenses 70,741 24,054 22,957
------------ ----------- -----------
Total liabilities 527,064 105,993 79,376
------------ ----------- -----------
Net assets applicable to outstanding shares $416,382,932 $94,033,898 $65,125,339
============ =========== ===========
Represented by
Shares of beneficial interest -- $.01 par value (Note 1) $ 780,664 $ 182,915 $ 122,714
Additional paid-in capital 401,432,079 90,081,271 63,710,024
Undistributed net investment income 347,627 8,246 40,090
Accumulated net realized gain (loss) (Note 5) 12,045 (70,629) (268,204)
Unrealized appreciation (depreciation) on investments 13,810,517 3,832,095 1,520,715
------------ ----------- -----------
Total -- representing net assets applicable to outstanding shares $416,382,932 $94,033,898 $65,125,339
============ =========== ===========
Net assets applicable to outstanding shares: Class A $355,355,178 $80,307,255 $54,616,722
Class B $ 51,732,139 $12,141,892 $ 8,358,939
Class C $ 9,295,615 $ 1,584,751 $ 2,149,678
Outstanding shares of beneficial interest: Class A shares 66,625,459 15,621,371 10,291,382
Class B shares 9,698,244 2,361,938 1,575,091
Class C shares 1,742,699 308,234 404,946
Net asset value per share: Class A $ 5.33 $ 5.14 $ 5.31
Class B $ 5.33 $ 5.14 $ 5.31
Class C $ 5.33 $ 5.14 $ 5.31
------------ ----------- -----------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
65 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Statements of operations
AXP State Tax-Exempt Funds
California Massachusetts Michigan
Tax-Exempt Tax-Exempt Tax-Exempt
Six months ended Dec. 31, 2004 (Unaudited) Fund Fund Fund
Investment income
Income:
Interest $ 4,905,269 $1,659,667 $1,404,258
----------- ---------- ----------
Expenses (Note 2):
Investment management services fee 515,191 192,411 150,990
Distribution fee
Class A 245,233 75,991 69,958
Class B 97,408 97,663 31,634
Class C 17,803 7,753 9,782
Transfer agency fee 42,019 24,672 17,269
Incremental transfer agency fee
Class A 3,788 1,918 1,494
Class B 814 943 360
Class C 264 150 164
Administrative services fees and expenses 46,223 16,827 13,090
Compensation of board members 4,149 4,149 4,149
Custodian fees 9,400 7,360 4,596
Printing and postage 11,015 4,600 4,843
Registration fees 17,755 17,110 14,353
Audit fees 9,750 9,125 9,125
Other 3,124 2,352 2,081
----------- ---------- ----------
Total expenses 1,023,936 463,024 333,888
Expenses waived/reimbursed by AEFC (Note 2) -- (22,663) (19,715)
----------- ---------- ----------
1,023,936 440,361 314,173
Earnings credits on cash balances (Note 2) (1,940) (957) (1,205)
----------- ---------- ----------
Total net expenses 1,021,996 439,404 312,968
----------- ---------- ----------
Investment income (loss) -- net 3,883,273 1,220,263 1,091,290
----------- ---------- ----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) 946,080 292,999 253,814
Net change in unrealized appreciation (depreciation) on investments 6,140,678 2,424,719 1,483,259
----------- ---------- ----------
Net gain (loss) on investments 7,086,758 2,717,718 1,737,073
----------- ---------- ----------
Net increase (decrease) in net assets resulting from operations $10,970,031 $3,937,981 $2,828,363
=========== ========== ==========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
66 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Statements of operations
AXP State Tax-Exempt Funds
Minnesota New York Ohio
Tax-Exempt Tax-Exempt Tax-Exempt
Six months ended Dec. 31, 2004 (Unaudited) Fund Fund Fund
Investment income
Income:
Interest $ 8,915,350 $2,058,174 $1,374,153
----------- ---------- ----------
Expenses (Note 2):
Investment management services fee 969,740 225,596 160,852
Distribution fee
Class A 447,985 101,559 71,767
Class B 269,377 64,662 43,923
Class C 47,257 9,085 11,241
Transfer agency fee 101,175 25,702 18,834
Incremental transfer agency fee
Class A 8,729 2,220 1,562
Class B 2,490 674 477
Class C 684 134 194
Administrative services fees and expenses 85,105 19,889 14,061
Compensation of board members 4,815 4,149 4,149
Custodian fees 14,115 5,795 4,950
Printing and postage 71,240 4,785 5,160
Registration fees 6,751 16,115 12,820
Audit fees 10,625 9,375 9,125
Other 6,348 1,122 992
----------- ---------- ----------
Total expenses 2,046,436 490,862 360,107
Expenses waived/reimbursed by AEFC (Note 2) -- (15,261) (17,007)
----------- ---------- ----------
2,046,436 475,601 343,100
Earnings credits on cash balances (Note 2) (10,645) (1,180) (777)
----------- ---------- ----------
Total net expenses 2,035,791 474,421 342,323
----------- ---------- ----------
Investment income (loss) -- net 6,879,559 1,583,753 1,031,830
----------- ---------- ----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) 656,389 267,276 443,647
Net change in unrealized appreciation (depreciation) on investments 11,065,444 2,281,078 1,542,460
----------- ---------- ----------
Net gain (loss) on investments 11,721,833 2,548,354 1,986,107
----------- ---------- ----------
Net increase (decrease) in net assets resulting from operations $18,601,392 $4,132,107 $3,017,937
=========== ========== ==========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
67 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
AXP State Tax-Exempt Funds
California Tax-Exempt Fund Massachusetts Tax-Exempt Fund
Dec. 31, 2004 June 30, 2004 Dec. 31, 2004 June 30, 2004
Six months ended Year ended Six months ended Year ended
(Unaudited) (Unaudited)
Operations and distributions
Investment income (loss) -- net $ 3,883,273 $ 9,492,210 $ 1,220,263 $ 2,864,585
Net realized gain (loss) on investments 946,080 4,271,954 292,999 118,188
Net change in unrealized appreciation
(depreciation) on investments 6,140,678 (13,639,192) 2,424,719 (3,402,425)
------------ ------------ ----------- ------------
Net increase (decrease) in net assets
resulting from operations 10,970,031 124,972 3,937,981 (419,652)
------------ ------------ ----------- ------------
Distributions to shareholders from:
Net investment income
Class A (3,608,601) (8,492,465) (966,570) (2,172,737)
Class B (285,222) (769,181) (234,872) (567,432)
Class C (52,173) (139,214) (18,701) (44,866)
Net realized gain
Class A (2,650,310) (2,563,129) (266,380) (758,405)
Class B (248,451) (291,280) (82,558) (259,092)
Class C (42,197) (48,764) (6,105) (20,647)
------------ ------------ ----------- ------------
Total distributions (6,886,954) (12,304,033) (1,575,186) (3,823,179)
------------ ------------ ----------- ------------
Share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 10,614,420 15,901,451 3,826,068 6,412,052
Class B shares 313,319 1,083,627 384,857 1,359,509
Class C shares 390,057 1,207,521 38,846 674,999
Reinvestment of distributions at net asset value
Class A shares 4,685,721 8,050,801 1,005,268 2,473,261
Class B shares 448,720 873,630 246,951 680,143
Class C shares 85,963 177,893 22,979 61,014
Payments for redemptions
Class A shares (19,432,135) (56,069,227) (5,873,496) (19,003,431)
Class B shares (Note 2) (4,347,613) (6,190,835) (3,200,407) (4,718,999)
Class C shares (Note 2) (988,791) (2,345,662) (348,745) (824,274)
------------ ------------ ----------- ------------
Increase (decrease) in net assets
from share transactions (8,230,339) (37,310,801) (3,897,679) (12,885,726)
------------ ------------ ----------- ------------
Total increase (decrease) in net assets (4,147,262) (49,489,862) (1,534,884) (17,128,557)
Net assets at beginning of period 219,266,270 268,756,132 81,643,046 98,771,603
------------ ------------ ----------- ------------
Net assets at end of period $215,119,008 $219,266,270 $80,108,162 $ 81,643,046
============ ============ =========== ============
Undistributed net investment income $ 28,627 $ 91,350 $ 94,169 $ 94,049
------------ ------------ ----------- ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
68 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
AXP State Tax-Exempt Funds
Michigan Tax-Exempt Fund Minnesota Tax-Exempt Fund
Dec. 31, 2004 June 30, 2004 Dec. 31, 2004 June 30, 2004
Six months ended Year ended Six months ended Year ended
(Unaudited) (Unaudited)
Operations and distributions
Investment income (loss) -- net $ 1,091,290 $ 2,515,023 $ 6,879,559 $ 15,515,294
Net realized gain (loss) on investments 253,814 119,015 656,389 2,656,487
Net change in unrealized appreciation
(depreciation) on investments 1,483,259 (2,736,651) 11,065,444 (16,925,059)
----------- ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations 2,828,363 (102,613) 18,601,392 1,246,722
----------- ------------ ------------ ------------
Distributions to shareholders from:
Net investment income
Class A (979,221) (2,226,533) (6,030,159) (13,145,714)
Class B (85,199) (231,859) (704,189) (1,780,915)
Class C (26,792) (56,704) (123,672) (262,576)
Net realized gain
Class A (261,330) (939,726) (1,142,029) --
Class B (28,921) (124,142) (166,188) --
Class C (9,068) (28,159) (29,795) --
----------- ------------ ------------ ------------
Total distributions (1,390,531) (3,607,123) (8,196,032) (15,189,205)
----------- ------------ ------------ ------------
Share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 3,288,945 3,929,167 26,867,466 31,708,550
Class B shares 132,746 465,780 1,088,932 3,586,678
Class C shares 135,788 626,081 1,015,353 3,068,043
Reinvestment of distributions at net asset value
Class A shares 996,032 2,623,733 5,796,891 10,715,648
Class B shares 78,190 261,994 727,281 1,489,197
Class C shares 31,387 73,298 129,937 228,169
Payments for redemptions
Class A shares (6,548,147) (17,160,945) (33,387,450) (76,911,886)
Class B shares (Note 2) (1,389,951) (2,429,975) (10,798,919) (11,748,894)
Class C shares (Note 2) (276,697) (819,029) (1,303,886) (3,005,495)
----------- ------------ ------------ ------------
Increase (decrease) in net assets
from share transactions (3,551,707) (12,429,896) (9,864,395) (40,869,990)
----------- ------------ ------------ ------------
Total increase (decrease) in net assets (2,113,875) (16,139,632) 540,965 (54,812,473)
Net assets at beginning of period 64,812,187 80,951,819 415,841,967 470,654,440
----------- ------------ ------------ ------------
Net assets at end of period $62,698,312 $ 64,812,187 $416,382,932 $415,841,967
=========== ============ ============ ============
Undistributed (excess of distributions over)
net investment income $ 4 $ (74) $ 347,627 $ 326,088
----------- ------------ ------------ ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
69 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
AXP State Tax-Exempt Funds
New York Tax-Exempt Fund Ohio Tax-Exempt Fund
Dec. 31, 2004 June 30, 2004 Dec. 31, 2004 June 30, 2004
Six months ended Year ended Six months ended Year ended
(Unaudited) (Unaudited)
Operations and distributions
Investment income (loss) -- net $ 1,583,753 $ 3,491,957 $ 1,031,830 $ 2,294,258
Net realized gain (loss) on investments 267,276 1,237,352 443,647 (246,174)
Net change in unrealized appreciation
(depreciation) on investments 2,281,078 (5,118,869) 1,542,460 (2,801,314)
----------- ------------ ----------- ------------
Net increase (decrease) in net assets
resulting from operations 4,132,107 (389,560) 3,017,937 (753,230)
----------- ------------ ----------- ------------
Distributions to shareholders from:
Net investment income
Class A (1,387,859) (2,982,840) (898,235) (1,917,434)
Class B (170,875) (443,612) (104,169) (277,749)
Class C (24,088) (58,190) (26,675) (61,732)
Net realized gain
Class A (958,523) (1,792,067) -- (822,499)
Class B (144,685) (349,327) -- (159,181)
Class C (18,926) (45,440) -- (35,511)
----------- ------------ ----------- ------------
Total distributions (2,704,956) (5,671,476) (1,029,079) (3,274,106)
----------- ------------ ----------- ------------
Share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 4,618,655 5,308,394 2,109,031 5,179,041
Class B shares 281,695 1,490,534 279,153 915,169
Class C shares 163,175 860,606 99,723 463,974
Reinvestment of distributions at net asset value
Class A shares 1,984,617 4,083,913 679,641 2,178,569
Class B shares 245,886 611,810 78,850 347,672
Class C shares 41,811 97,082 24,910 94,195
Payments for redemptions
Class A shares (6,501,765) (22,699,309) (6,255,254) (14,186,759)
Class B shares (Note 2) (3,671,583) (3,905,116) (2,162,885) (3,712,886)
Class C shares (Note 2) (619,215) (1,130,447) (331,436) (1,192,556)
----------- ------------ ----------- ------------
Increase (decrease) in net assets
from share transactions (3,456,724) (15,282,533) (5,478,267) (9,913,581)
----------- ------------ ----------- ------------
Total increase (decrease) in net assets (2,029,573) (21,343,569) (3,489,409) (13,940,917)
Net assets at beginning of period 96,063,471 117,407,040 68,614,748 82,555,665
----------- ------------ ----------- ------------
Net assets at end of period $94,033,898 $ 96,063,471 $65,125,339 $ 68,614,748
=========== ============ =========== ============
Undistributed net investment income $ 8,246 $ 7,315 $ 40,090 $ 37,339
----------- ------------ ----------- ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
70 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Notes to Financial Statements
AXP State Tax-Exempt Funds
(Unaudited as to Dec. 31, 2004)
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.
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 transfer agency fees (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.
- --------------------------------------------------------------------------------
71 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
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.
Illiquids
At Dec. 31, 2004, investments in securities for California Tax-Exempt Fund and
Minnesota Tax-Exempt Fund included issues that are illiquid which the Funds
currently limit to 10% of net assets, at market value, at the time of purchase.
The aggregate value of such securities at Dec. 31, 2004, was $1,995,800 and
$11,248,314 representing 0.93% and 2.70% of net assets for California Tax-Exempt
Fund and Minnesota Tax-Exempt Fund, respectively. These securities are valued at
fair value according to methods selected in good faith by the board. According
to board guidelines, certain unregistered securities are determined to be liquid
and are not included within the 10% limitation specified above. Assets are
liquid if they can be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which the asset is valued by the
Fund.
Securities purchased on a forward-commitment basis
Delivery and payment for securities that have been purchased by the Funds on a
forward-commitment basis, including when-issued securities and other
forward-commitments, can take place one month or more after the transaction
date. During this period, such securities are subject to market fluctuations,
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
forward-commitments. At Dec. 31, 2004, there are no outstanding
forward-commitments for the Funds.
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.
- --------------------------------------------------------------------------------
72 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
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.
Swap transactions
To produce incremental earnings, to gain exposure to or protect itself from
market changes, the Funds may enter into swap agreements. Swaps are an agreement
between two parties to exchange periodic cash flows based on a specified amount
of principal. The net cash flow is generally the difference between a floating
market interest rate versus a fixed interest rate. The Funds may employ swaps to
synthetically add or subtract principal exposure to the municipal market.
Risks of entering into a swap include a lack of correlation between swaps and
the portfolio of municipal bonds the swaps are designed to hedge or replicate. A
lack of correlation may cause the swap to experience adverse changes in value
relative to expectations. In addition, swaps are subject to the risk of default
of a counterparty, and the risk of adverse movements in market interest rates
relative to the swap positions entered.
Swaps are valued daily and unrealized appreciation and depreciation is recorded.
The Funds will realize a gain or a loss when the swap is terminated. The Funds
did not enter into any swap agreements for the six months ended Dec. 31, 2004.
Guarantees and indemnifications
Under each Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to each Fund. In addition, certain of each Fund's contracts with its
service providers contain general indemnification clauses. Each Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against each Fund cannot be determined and each Fund has
no historical basis for predicting the likelihood of any such claims.
- --------------------------------------------------------------------------------
73 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Federal taxes
Each Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to shareholders. No provision for income or excise taxes
is thus required. 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 amortization of premium, market discount and
original issue discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
Each Fund has agreements with American Express Financial Corporation (AEFC) to
manage its portfolio and provide administrative services. Under an Investment
Management Services Agreement, AEFC determines which securities will be
purchased, held or sold. The management fee is a percentage of each Fund's
average daily net assets that declines from 0.47% to 0.38% annually as each
Fund's assets increase.
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 that declines from 0.04% to 0.02% annually as each Fund's
assets increase. 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.
- --------------------------------------------------------------------------------
74 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of each Fund or other
American Express mutual funds. Each Fund's liability for these amounts is
adjusted for market value changes and remains in each Fund until distributed in
accordance with the Plan.
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 $20.50
o Class B $21.50
o Class C $21.00
The incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the base fee of $18.50.
In addition, AECSC is entitled to charge an annual closed account fee of $5 per
inactive account, charged on a pro rata basis from the date the account becomes
inactive until the date the account is purged from the transfer agent system
generally within one year. However, the closed account fee is currently not
effective.
Each Fund has agreements with American Express Financial Advisors Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, each Fund pays a 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.
For the six months ended Dec. 31, 2004, AEFC and its affiliates waived certain
fees and expenses as follows:
Fund Class A Class B Class C
Massachusetts Tax-Exempt Fund 0.88% 1.64% 1.64%
Michigan Tax-Exempt Fund 0.88 1.64 1.64
New York Tax-Exempt Fund 0.87 1.63 1.63
Ohio Tax-Exempt Fund 0.88 1.64 1.64
- --------------------------------------------------------------------------------
75 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Of these waived fees and expenses, the class specific transfer agency fees
waived are as follows:
Percentage of average
Fund Amount daily net assets
Massachusetts Tax-Exempt Fund
Class A $14,674 0.04%
Class B 4,066 0.03
Class C 398 0.05
Michigan Tax-Exempt Fund
Class A 11,413 0.04
Class B 1,165 0.03
Class C 413 0.04
New York Tax-Exempt Fund
Class A 13,130 0.03
Class B 1,839 0.03
Class C 292 0.03
Ohio Tax-Exempt Fund
Class A 12,089 0.04
Class B 1,651 0.03
Class C 495 0.04
In addition, AEFC and its affiliates have agreed to waive certain fees and
expenses until June 30, 2005. Under this agreement, net expenses will not exceed
0.88% for Class A, 1.64% for Class B and 1.64% for Class C of the Fund's average
daily net assets for Massachusetts Tax-Exempt Fund, Michigan Tax-Exempt Fund,
New York Tax-Exempt Fund and Ohio Tax-Exempt Fund.
Sales charges received by the Distributor for distributing the Funds' shares for
the six months ended Dec. 31, 2004, are as follows:
Fund Class A Class B Class C
California Tax-Exempt Fund $ 86,834 $ 9,489 $ 717
Massachusetts Tax-Exempt Fund 29,715 18,575 283
Michigan Tax-Exempt Fund 36,314 9,694 544
Minnesota Tax-Exempt Fund 226,768 33,750 887
New York Tax-Exempt Fund 65,343 21,959 2,076
Ohio Tax-Exempt Fund 24,525 9,445 221
During the six months ended Dec. 31, 2004, 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 $ 1,940
Massachusetts Tax-Exempt Fund 957
Michigan Tax-Exempt Fund 1,205
Minnesota Tax-Exempt Fund 10,645
New York Tax-Exempt Fund 1,180
Ohio Tax-Exempt Fund 777
- --------------------------------------------------------------------------------
76 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
3. SECURITIES TRANSACTIONS
For the six months ended Dec. 31, 2004, 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 $23,672,729 $27,519,567
Massachusetts Tax-Exempt Fund 2,572,123 5,986,287
Michigan Tax-Exempt Fund 1,876,735 6,174,185
Minnesota Tax-Exempt Fund 25,159,235 33,617,084
New York Tax-Exempt Fund 12,412,777 13,772,775
Ohio Tax-Exempt Fund 10,948,062 15,184,553
Realized gains and losses are determined on an identified cost basis.
4. SHARE TRANSACTIONS
Transactions in shares for each Fund for the periods indicated are as follows:
California Tax-Exempt Fund
Six months ended Dec. 31, 2004
Class A Class B Class C
Sold 2,032,015 60,040 74,689
Issued for reinvested distributions 897,291 85,980 16,435
Redeemed (3,720,285) (834,678) (188,497)
---------- -------- --------
Net increase (decrease) (790,979) (688,658) (97,373)
---------- -------- --------
Year ended June 30, 2004
Class A Class B Class C
Sold 3,033,671 206,871 230,075
Issued for reinvested distributions 1,537,634 166,830 33,943
Redeemed (10,732,762) (1,184,067) (449,095)
----------- ---------- --------
Net increase (decrease) (6,161,457) (810,366) (185,077)
---------- -------- --------
Massachusetts Tax-Exempt Fund
Six months ended Dec. 31, 2004
Class A Class B Class C
Sold 710,456 71,032 7,192
Issued for reinvested distributions 185,877 45,672 4,252
Redeemed (1,089,503) (595,358) (64,501)
---------- -------- -------
Net increase (decrease) (193,170) (478,654) (53,057)
-------- -------- -------
Year ended June 30, 2004
Class A Class B Class C
Sold 1,191,577 251,911 124,956
Issued for reinvested distributions 459,165 126,234 11,326
Redeemed (3,531,720) (876,712) (154,180)
---------- -------- --------
Net increase (decrease) (1,880,978) (498,567) (17,898)
---------- -------- -------
- --------------------------------------------------------------------------------
77 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Michigan Tax-Exempt Fund
Six months ended Dec. 31, 2004
Class A Class B Class C
Sold 618,509 25,122 25,512
Issued for reinvested distributions 187,065 14,676 5,895
Redeemed (1,232,985) (263,319) (52,033)
---------- -------- -------
Net increase (decrease) (427,411) (223,521) (20,626)
-------- -------- -------
Year ended June 30, 2004
Class A Class B Class C
Sold 736,955 87,977 117,722
Issued for reinvested distributions 492,872 49,175 13,759
Redeemed (3,227,509) (459,337) (153,247)
---------- -------- --------
Net increase (decrease) (1,997,682) (322,185) (21,766)
---------- -------- -------
Minnesota Tax-Exempt Fund
Six months ended Dec. 31, 2004
Class A Class B Class C
Sold 5,072,350 204,355 191,396
Issued for reinvested distributions 1,087,630 136,483 24,380
Redeemed (6,286,450) (2,045,758) (245,339)
---------- ---------- --------
Net increase (decrease) (126,470) (1,704,920) (29,563)
-------- ---------- -------
Year ended June 30, 2004
Class A Class B Class C
Sold 5,989,136 678,333 581,550
Issued for reinvested distributions 2,028,244 281,844 43,186
Redeemed (14,563,010) (2,227,995) (570,516)
----------- ---------- --------
Net increase (decrease) (6,545,630) (1,267,818) 54,220
---------- ---------- ------
New York Tax-Exempt Fund
Six months ended Dec. 31, 2004
Class A Class B Class C
Sold 895,884 54,512 31,445
Issued for reinvested distributions 384,346 47,658 8,098
Redeemed (1,257,287) (714,149) (119,641)
---------- -------- --------
Net increase (decrease) 22,943 (611,979) (80,098)
------ -------- -------
Year ended June 30, 2004
Class A Class B Class C
Sold 1,018,559 285,671 164,025
Issued for reinvested distributions 784,799 117,555 18,658
Redeemed (4,372,625) (752,175) (218,063)
---------- -------- --------
Net increase (decrease) (2,569,267) (348,949) (35,380)
---------- -------- -------
- --------------------------------------------------------------------------------
78 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Ohio Tax-Exempt Fund
Six months ended Dec. 31, 2004
Class A Class B Class C
Sold 402,530 52,766 18,911
Issued for reinvested distributions 128,479 14,909 4,708
Redeemed (1,183,942) (412,873) (62,972)
---------- -------- -------
Net increase (decrease) (652,933) (345,198) (39,353)
-------- -------- -------
Year ended June 30, 2004
Class A Class B Class C
Sold 974,625 172,274 87,413
Issued for reinvested distributions 411,677 65,666 17,779
Redeemed (2,689,966) (708,242) (225,894)
---------- -------- --------
Net increase (decrease) (1,303,664) (470,302) (120,702)
---------- -------- --------
5. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, Ohio Tax-Exempt Fund had a capital loss
carry-over of $438,217 at June 30, 2004, that if not offset by capital gains
will expire in 2013. 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.
6. BANK BORROWINGS
Each Fund has a revolving credit agreement with a syndicate of banks headed by
The Bank of New York, whereby each Fund may borrow for the temporary funding of
shareholder redemptions or for other temporary or emergency purposes. The
agreement went into effect Sept. 21, 2004. Each Fund must maintain asset
coverage for borrowings of at least 300%. The agreement, which enables each Fund
to participate with other American Express mutual funds, permits borrowings up
to $500 million, collectively. Interest is charged to each Fund based on its
borrowings at a rate equal to either the higher of the Federal Funds Effective
Rate plus 0.50% or the Prime Lending Rate. Borrowings are payable within 60 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 0.09% per
annum. Prior to this agreement, each Fund had a revolving credit agreement that
permitted borrowings up to $500 million with Deutsche Bank. Each Fund had no
borrowings outstanding during the six months ended Dec. 31, 2004.
- --------------------------------------------------------------------------------
79 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
7. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating
each Fund's results.
AXP California Tax-Exempt Fund
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(f) 2004 2003 2002 2001
Net asset value, beginning of period $5.11 $5.37 $5.23 $5.18 $5.03
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .09 .21 .23 .24 .25
Net gains (losses) (both realized and unrealized) .18 (.20) .14 .05 .15
----- ----- ----- ----- -----
Total from investment operations .27 .01 .37 .29 .40
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.10) (.21) (.23) (.24) (.25)
Distributions from realized gains (.07) (.06) -- -- --
----- ----- ----- ----- -----
Total distributions (.17) (.27) (.23) (.24) (.25)
----- ----- ----- ----- -----
Net asset value, end of period $5.21 $5.11 $5.37 $5.23 $5.18
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $194 $194 $237 $234 $231
Ratio of expenses to average daily net assets(b) .85%(c) .86% .85% .84% .85%
Ratio of net investment income (loss) to average daily net assets 3.61%(c) 4.03% 4.34% 4.56% 4.79%
Portfolio turnover rate (excluding short-term securities) 12% 30% 95% 16% 11%
Total return(d) 5.29%(e) .25% 7.26% 5.66% 8.00%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
80 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP California Tax-Exempt Fund
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(f) 2004 2003 2002 2001
Net asset value, beginning of period $5.11 $5.37 $5.23 $5.17 $5.03
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .07 .17 .19 .20 .21
Net gains (losses) (both realized and unrealized) .18 (.20) .14 .06 .14
----- ----- ----- ----- -----
Total from investment operations .25 (.03) .33 .26 .35
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.08) (.17) (.19) (.20) (.21)
Distributions from realized gains (.07) (.06) -- -- --
----- ----- ----- ----- -----
Total distributions (.15) (.23) (.19) (.20) (.21)
----- ----- ----- ----- -----
Net asset value, end of period $5.21 $5.11 $5.37 $5.23 $5.17
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $18 $21 $27 $27 $24
Ratio of expenses to average daily net assets(b) 1.60%(c) 1.61% 1.60% 1.59% 1.60%
Ratio of net investment income (loss) to average daily net assets 2.85%(c) 3.28% 3.58% 3.81% 3.99%
Portfolio turnover rate (excluding short-term securities) 12% 30% 95% 16% 11%
Total return(d) 4.90%(e) (.50%) 6.44% 5.07% 6.98%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
81 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP California Tax-Exempt Fund
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(f) 2004 2003 2002 2001
Net asset value, beginning of period $5.12 $5.38 $5.24 $5.18 $5.03
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .07 .17 .19 .20 .21
Net gains (losses) (both realized and unrealized) .17 (.20) .14 .06 .15
----- ----- ----- ----- -----
Total from investment operations .24 (.03) .33 .26 .36
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.08) (.17) (.19) (.20) (.21)
Distributions from realized gains (.07) (.06) -- -- --
----- ----- ----- ----- -----
Total distributions (.15) (.23) (.19) (.20) (.21)
----- ----- ----- ----- -----
Net asset value, end of period $5.21 $5.12 $5.38 $5.24 $5.18
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $3 $4 $5 $3 $1
Ratio of expenses to average daily net assets(b) 1.61%(c) 1.62% 1.61% 1.60% 1.60%
Ratio of net investment income (loss) to average daily net assets 2.85%(c) 3.27% 3.56% 3.86% 4.04%
Portfolio turnover rate (excluding short-term securities) 12% 30% 95% 16% 11%
Total return(d) 4.69%(e) (.50%) 6.43% 5.07% 7.20%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
82 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Massachusetts Tax-Exempt Fund
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.26 $5.51 $5.37 $5.28 $5.11
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .08 .18 .19 .22 .27
Net gains (losses) (both realized and unrealized) .18 (.19) .16 .09 .17
----- ----- ----- ----- -----
Total from investment operations .26 (.01) .35 .31 .44
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.09) (.18) (.19) (.22) (.27)
Distributions from realized gains (.02) (.06) (.02) -- --
----- ----- ----- ----- -----
Total distributions (.11) (.24) (.21) (.22) (.27)
----- ----- ----- ----- -----
Net asset value, end of period $5.41 $5.26 $5.51 $5.37 $5.28
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $60 $59 $73 $66 $65
Ratio of expenses to average daily net assets(b) .88%(c),(d) .88%(c) .88%(c) .91% .95%
Ratio of net investment income (loss) to average daily net assets 3.17%(d) 3.35% 3.57% 4.11% 5.04%
Portfolio turnover rate (excluding short-term securities) 3% 14% 141% 53% 4%
Total return(e) 4.97%(f) (.24%)(f) 6.73% 5.94% 8.64%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class A would have been 0.93% for the six
months ended Dec. 31, 2004 and 0.93% and 0.92% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
83 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Massachusetts Tax-Exempt Fund
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.26 $5.51 $5.37 $5.28 $5.11
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .06 .14 .15 .18 .23
Net gains (losses) (both realized and unrealized) .18 (.19) .16 .09 .17
----- ----- ----- ----- -----
Total from investment operations .24 (.05) .31 .27 .40
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.07) (.14) (.15) (.18) (.23)
Distributions from realized gains (.02) (.06) (.02) -- --
----- ----- ----- ----- -----
Total distributions (.09) (.20) (.17) (.18) (.23)
----- ----- ----- ----- -----
Net asset value, end of period $5.41 $5.26 $5.51 $5.37 $5.28
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $19 $21 $24 $24 $18
Ratio of expenses to average daily net assets(b) 1.64%(c),(d) 1.64%(c) 1.63%(c) 1.66% 1.70%
Ratio of net investment income (loss) to average daily net assets 2.41%(d) 2.59% 2.81% 3.34% 4.28%
Portfolio turnover rate (excluding short-term securities) 3% 14% 141% 53% 4%
Total return(e) 4.56%(f) (.99%)(f) 5.92% 5.15% 7.83%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class B would have been 1.68% for the six
months ended Dec. 31, 2004 and 1.69% and 1.68% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
84 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Massachusetts Tax-Exempt Fund
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.26 $5.51 $5.37 $5.28 $5.11
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .06 .14 .15 .18 .23
Net gains (losses) (both realized and unrealized) .18 (.19) .16 .09 .17
----- ----- ----- ----- -----
Total from investment operations .24 (.05) .31 .27 .40
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.07) (.14) (.15) (.18) (.23)
Distributions from realized gains (.02) (.06) (.02) -- --
----- ----- ----- ----- -----
Total distributions (.09) (.20) (.17) (.18) (.23)
----- ----- ----- ----- -----
Net asset value, end of period $5.41 $5.26 $5.51 $5.37 $5.28
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $1 $2 $2 $2 $1
Ratio of expenses to average daily net assets(b) 1.64%(c),(d) 1.64%(c) 1.64%(c) 1.66% 1.70%
Ratio of net investment income (loss) to average daily net assets 2.41%(d) 2.58% 2.88% 3.32% 4.30%
Portfolio turnover rate (excluding short-term securities) 3% 14% 141% 53% 4%
Total return(e) 4.57%(f) (.97%)(f) 5.91% 5.16% 7.84%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class C would have been 1.70%for the six
months ended Dec. 31, 2004 and 1.69% and 1.68% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
85 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Michigan Tax-Exempt Fund
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.21 $5.47 $5.33 $5.27 $5.09
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .09 .19 .22 .24 .27
Net gains (losses) (both realized and unrealized) .14 (.18) .19 .06 .18
----- ----- ----- ----- -----
Total from investment operations .23 .01 .41 .30 .45
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.09) (.19) (.22) (.24) (.27)
Distributions from realized gains (.03) (.08) (.05) -- --
----- ----- ----- ----- -----
Total distributions (.12) (.27) (.27) (.24) (.27)
----- ----- ----- ----- -----
Net asset value, end of period $5.32 $5.21 $5.47 $5.33 $5.27
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $55 $56 $70 $70 $67
Ratio of expenses to average daily net assets(b) .88%(c),(d) .88%(c) .88%(c) .92% .95%
Ratio of net investment income (loss) to average daily net assets 3.49%(d) 3.55% 4.06% 4.57% 5.09%
Portfolio turnover rate (excluding short-term securities) 3% 32% 113% 33% 4%
Total return(e) 4.42%(f) .19% 8.00% 5.83% 8.90%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class A would have been 0.94% for the six
months ended Dec. 31, 2004 and 0.94% and 0.93% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
86 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Michigan Tax-Exempt Fund
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.21 $5.47 $5.33 $5.27 $5.09
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .07 .15 .18 .20 .23
Net gains (losses) (both realized and unrealized) .14 (.18) .19 .06 .18
----- ----- ----- ----- -----
Total from investment operations .21 (.03) .37 .26 .41
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.07) (.15) (.18) (.20) (.23)
Distributions from realized gains (.03) (.08) (.05) -- --
----- ----- ----- ----- -----
Total distributions (.10) (.23) (.23) (.20) (.23)
----- ----- ----- ----- -----
Net asset value, end of period $5.32 $5.21 $5.47 $5.33 $5.27
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $6 $7 $9 $8 $6
Ratio of expenses to average daily net assets(b) 1.64%(c),(d) 1.63%(c) 1.63%(c) 1.67% 1.70%
Ratio of net investment income (loss) to average daily net assets 2.72%(d) 2.79% 3.28% 3.82% 4.34%
Portfolio turnover rate (excluding short-term securities) 3% 32% 113% 33% 4%
Total return(e) 4.02%(f) (.56%) 7.18% 5.04% 8.09%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class B would have been 1.69% for the six
monhs ended Dec. 31, 2004 and 1.70% and 1.69% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
87 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Michigan Tax-Exempt Fund
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.21 $5.47 $5.33 $5.27 $5.09
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .07 .15 .18 .20 .22
Net gains (losses) (both realized and unrealized) .14 (.18) .19 .06 .18
----- ----- ----- ----- -----
Total from investment operations .21 (.03) .37 .26 .40
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.07) (.15) (.18) (.20) (.22)
Distributions from realized gains (.03) (.08) (.05) -- --
----- ----- ----- ----- -----
Total distributions (.10) (.23) (.23) (.20) (.22)
----- ----- ----- ----- -----
Net asset value, end of period $5.32 $5.21 $5.47 $5.33 $5.27
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $2 $2 $2 $1 $--
Ratio of expenses to average daily net assets(b) 1.64%(c),(d) 1.64%(c) 1.63%(c) 1.66% 1.70%
Ratio of net investment income (loss) to average daily net assets 2.73%(d) 2.80% 3.27% 3.80% 4.36%
Portfolio turnover rate (excluding short-term securities) 3% 32% 113% 33% 4%
Total return(e) 4.02%(f) (.57%) 7.18% 5.05% 8.02%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class C would have been 1.70% for the six
months ended Dec. 31, 2004 and 1.70% and 1.69% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
88 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Minnesota Tax-Exempt Fund
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(f) 2004 2003 2002 2001
Net asset value, beginning of period $5.20 $5.37 $5.20 $5.14 $5.00
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .09 .19 .22 .25 .28
Net gains (losses) (both realized and unrealized) .15 (.17) .17 .06 .14
----- ----- ----- ----- -----
Total from investment operations .24 .02 .39 .31 .42
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.09) (.19) (.22) (.25) (.28)
Distributions from realized gains (.02) -- -- -- --
----- ----- ----- ----- -----
Total distributions (.11) (.19) (.22) (.25) (.28)
----- ----- ----- ----- -----
Net asset value, end of period $5.33 $5.20 $5.37 $5.20 $5.14
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $355 $347 $393 $375 $357
Ratio of expenses to average daily net assets(b) .85%(c) .84% .84% .83% .84%
Ratio of net investment income (loss) to average daily net assets 3.37%(c) 3.60% 4.26% 4.82% 5.45%
Portfolio turnover rate (excluding short-term securities) 6% 23% 73% 36% 4%
Total return(d) 4.58%(e) .32% 7.78% 6.15% 8.53%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
89 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Minnesota Tax-Exempt Fund
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(f) 2004 2003 2002 2001
Net asset value, beginning of period $5.20 $5.37 $5.20 $5.14 $5.00
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .07 .15 .18 .21 .24
Net gains (losses) (both realized and unrealized) .15 (.17) .17 .06 .14
----- ----- ----- ----- -----
Total from investment operations .22 (.02) .35 .27 .38
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.07) (.15) (.18) (.21) (.24)
Distributions from realized gains (.02) -- -- -- --
----- ----- ----- ----- -----
Total distributions (.09) (.15) (.18) (.21) (.24)
----- ----- ----- ----- -----
Net asset value, end of period $5.33 $5.20 $5.37 $5.20 $5.14
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $52 $59 $68 $64 $53
Ratio of expenses to average daily net assets(b) 1.61%(c) 1.59% 1.59% 1.59% 1.60%
Ratio of net investment income (loss) to average daily net assets 2.61%(c) 2.85% 3.48% 4.02% 4.70%
Portfolio turnover rate (excluding short-term securities) 6% 23% 73% 36% 4%
Total return(d) 4.19%(e) (.44%) 6.97% 5.36% 7.72%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
90 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Minnesota Tax-Exempt Fund
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(f) 2004 2003 2002 2001
Net asset value, beginning of period $5.20 $5.37 $5.20 $5.14 $5.00
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .07 .15 .18 .21 .24
Net gains (losses) (both realized and unrealized) .15 (.17) .17 .06 .14
----- ----- ----- ----- -----
Total from investment operations .22 (.02) .35 .27 .38
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.07) (.15) (.18) (.21) (.24)
Distributions from realized gains (.02) -- -- -- --
----- ----- ----- ----- -----
Total distributions (.09) (.15) (.18) (.21) (.24)
----- ----- ----- ----- -----
Net asset value, end of period $5.33 $5.20 $5.37 $5.20 $5.14
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $9 $9 $9 $5 $2
Ratio of expenses to average daily net assets(b) 1.61%(c) 1.60% 1.60% 1.59% 1.59%
Ratio of net investment income (loss) to average daily net assets 2.61%(c) 2.84% 3.44% 4.04% 4.74%
Portfolio turnover rate (excluding short-term securities) 6% 23% 73% 36% 4%
Total return(d) 4.19%(e) (.44%) 6.96% 5.36% 7.75%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
91 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP New York Tax-Exempt Fund
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.07 $5.36 $5.16 $5.12 $4.92
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .09 .18 .20 .22 .25
Net gains (losses) (both realized and unrealized) .13 (.18) .22 .04 .20
----- ----- ----- ----- -----
Total from investment operations .22 -- .42 .26 .45
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.09) (.18) (.20) (.22) (.25)
Distributions from realized gains (.06) (.11) (.02) -- --
----- ----- ----- ----- -----
Total distributions (.15) (.29) (.22) (.22) (.25)
----- ----- ----- ----- -----
Net asset value, end of period $5.14 $5.07 $5.36 $5.16 $5.12
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $80 $79 $97 $92 $88
Ratio of expenses to average daily net assets(b) .87%(c),(d) .88%(c) .88%(c) .90% .91%
Ratio of net investment income (loss) to average daily net assets 3.41%(d) 3.44% 3.88% 4.38% 4.90%
Portfolio turnover rate (excluding short-term securities) 14% 36% 91% 44% 13%
Total return(e) 4.38%(f) (.02%) 8.43% 5.26% 9.28%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class A would have been 0.90% for the six
months ended Dec. 31, 2004 and 0.93% and 0.90% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
92 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP New York Tax-Exempt Fund
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.07 $5.36 $5.16 $5.12 $4.92
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .07 .14 .16 .19 .21
Net gains (losses) (both realized and unrealized) .13 (.18) .22 .04 .20
----- ----- ----- ----- -----
Total from investment operations .20 (.04) .38 .23 .41
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.07) (.14) (.16) (.19) (.21)
Distributions from realized gains (.06) (.11) (.02) -- --
----- ----- ----- ----- -----
Total distributions (.13) (.25) (.18) (.19) (.21)
----- ----- ----- ----- -----
Net asset value, end of period $5.14 $5.07 $5.36 $5.16 $5.12
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $12 $15 $18 $18 $16
Ratio of expenses to average daily net assets(b) 1.63%(c),(d) 1.63%(c) 1.63%(c) 1.65% 1.66%
Ratio of net investment income (loss) to average daily net assets 2.64%(d) 2.69% 3.13% 3.60% 4.14%
Portfolio turnover rate (excluding short-term securities) 14% 36% 91% 44% 13%
Total return(e) 3.98%(f) (.78%) 7.61% 4.48% 8.47%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class B would have been 1.66% for the six
months ended Dec. 31, 2004 and 1.69% and 1.66% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
93 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP New York Tax-Exempt Fund
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.07 $5.36 $5.16 $5.11 $4.92
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .07 .14 .16 .19 .21
Net gains (losses) (both realized and unrealized) .13 (.18) .22 .05 .19
----- ----- ----- ----- -----
Total from investment operations .20 (.04) .38 .24 .40
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.07) (.14) (.16) (.19) (.21)
Distributions from realized gains (.06) (.11) (.02) -- --
----- ----- ----- ----- -----
Total distributions (.13) (.25) (.18) (.19) (.21)
----- ----- ----- ----- -----
Net asset value, end of period $5.14 $5.07 $5.36 $5.16 $5.11
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $2 $2 $2 $1 $--
Ratio of expenses to average daily net assets(b) 1.63%(c),(d) 1.63%(c) 1.64%(c) 1.66% 1.66%
Ratio of net investment income (loss) to average daily net assets 2.65%(d) 2.68% 3.07% 3.69% 4.09%
Portfolio turnover rate (excluding short-term securities) 14% 36% 91% 44% 13%
Total return(e) 3.98%(f) (.78%) 7.60% 4.68% 8.26%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class C would have been 1.66% for the six
months ended Dec. 31, 2004 and 1.69% and 1.66% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
94 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Ohio Tax-Exempt Fund
Class A
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.16 $5.43 $5.35 $5.27 $5.13
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .08 .17 .18 .22 .27
Net gains (losses) (both realized and unrealized) .15 (.20) .19 .08 .14
----- ----- ----- ----- -----
Total from investment operations .23 (.03) .37 .30 .41
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.08) (.17) (.18) (.22) (.27)
Distributions from realized gains -- (.07) (.11) -- --
----- ----- ----- ----- -----
Total distributions (.08) (.24) (.29) (.22) (.27)
----- ----- ----- ----- -----
Net asset value, end of period $5.31 $5.16 $5.43 $5.35 $5.27
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $55 $56 $67 $69 $67
Ratio of expenses to average daily net assets(b) .88%(c),(d) .88%(c) .88%(c) .91% .93%
Ratio of net investment income (loss) to average daily net assets 3.13%(d) 3.13% 3.40% 4.22% 4.98%
Portfolio turnover rate (excluding short-term securities) 17% 17% 194% 33% 3%
Total return(e) 4.53%(f) (.67%) 7.08% 5.87% 7.95%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class A would have been 0.93% for the six
months ended Dec. 31, 2004 and 0.95% and 0.92% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
95 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Ohio Tax-Exempt Fund
Class B
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.16 $5.43 $5.34 $5.27 $5.13
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .06 .13 .14 .18 .23
Net gains (losses) (both realized and unrealized) .15 (.20) .20 .07 .14
----- ----- ----- ----- -----
Total from investment operations .21 (.07) .34 .25 .37
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.06) (.13) (.14) (.18) (.23)
Distributions from realized gains -- (.07) (.11) -- --
----- ----- ----- ----- -----
Total distributions (.06) (.20) (.25) (.18) (.23)
----- ----- ----- ----- -----
Net asset value, end of period $5.31 $5.16 $5.43 $5.34 $5.27
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $8 $10 $13 $12 $8
Ratio of expenses to average daily net assets(b) 1.64%(c),(d) 1.63%(c) 1.63%(c) 1.66% 1.68%
Ratio of net investment income (loss) to average daily net assets 2.37%(d) 2.38% 2.62% 3.46% 4.23%
Portfolio turnover rate (excluding short-term securities) 17% 17% 194% 33% 3%
Total return(e) 4.14%(f) (1.43%) 6.47% 4.89% 7.15%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class B would have been 1.68% for the six
months ended Dec. 31, 2004 and 1.71% and 1.68% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
96 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Ohio Tax-Exempt Fund
Class C
Per share income and capital changes(a)
Fiscal period ended June 30, 2004(g) 2004 2003 2002 2001
Net asset value, beginning of period $5.16 $5.43 $5.35 $5.28 $5.13
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .06 .13 .14 .18 .22
Net gains (losses) (both realized and unrealized) .15 (.20) .19 .07 .15
----- ----- ----- ----- -----
Total from investment operations .21 (.07) .33 .25 .37
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.06) (.13) (.14) (.18) (.22)
Distributions from realized gains -- (.07) (.11) -- --
----- ----- ----- ----- -----
Total distributions (.06) (.20) (.25) (.18) (.22)
----- ----- ----- ----- -----
Net asset value, end of period $5.31 $5.16 $5.43 $5.35 $5.28
----- ----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $2 $2 $3 $1 $1
Ratio of expenses to average daily net assets(b) 1.64%(c),(d) 1.63%(c) 1.63%(c) 1.66% 1.68%
Ratio of net investment income (loss) to average daily net assets 2.37%(d) 2.38% 2.54% 3.45% 4.26%
Portfolio turnover rate (excluding short-term securities) 17% 17% 194% 33% 3%
Total return(e) 4.14%(f) (1.44%) 6.26% 4.89% 7.27%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class C would have been 1.69% for the six
months ended Dec. 31, 2004 and 1.71% and 1.68% for the years ended June 30,
2004 and 2003, respectively.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Dec. 31, 2004 (Unaudited).
- --------------------------------------------------------------------------------
97 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Fund Expenses Example
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, including management fees; distribution and service (12b-1) fees; and
other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended Dec. 31, 2004.
Actual Expenses
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
98 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP California Tax-Exempt Fund
Beginning Ending Expenses
account value account value paid during Annualized
July 1, 2004 Dec. 31, 2004 the period(a) expense ratio
Class A
Actual(b) $1,000 $1,052.90 $4.40 .85%
Hypothetical (5% return before expenses) $1,000 $1,020.92 $4.33 .85%
Class B
Actual(b) $1,000 $1,049.00 $8.26 1.60%
Hypothetical (5% return before expenses) $1,000 $1,017.14 $8.13 1.60%
Class C
Actual(b) $1,000 $1,046.90 $8.31 1.61%
Hypothetical (5% return before expenses) $1,000 $1,017.09 $8.19 1.61%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Dec. 31, 2004: +5.29%
for Class A, +4.90% for Class B and +4.69% for Class C.
AXP Massachusetts Tax-Exempt Fund
Beginning Ending Expenses
account value account value paid during Annualized
July 1, 2004 Dec. 31, 2004 the period(a) expense ratio
Class A
Actual(b) $1,000 $1,049.70 $4.55 .88%
Hypothetical (5% return before expenses) $1,000 $1,020.77 $4.48 .88%
Class B
Actual(b) $1,000 $1,045.60 $8.46 1.64%
Hypothetical (5% return before expenses) $1,000 $1,016.94 $8.34 1.64%
Class C
Actual(b) $1,000 $1,045.70 $8.46 1.64%
Hypothetical (5% return before expenses) $1,000 $1,016.94 $8.34 1.64%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Dec. 31, 2004: +4.97%
for Class A, +4.56% for Class B and +4.57% for Class C.
- --------------------------------------------------------------------------------
99 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP Michigan Tax-Exempt Fund
Beginning Ending Expenses
account value account value paid during Annualized
July 1, 2004 Dec. 31, 2004 the period(a) expense ratio
Class A
Actual(b) $1,000 $1,044.20 $4.53 .88%
Hypothetical (5% return before expenses) $1,000 $1,020.77 $4.48 .88%
Class B
Actual(b) $1,000 $1,040.20 $8.43 1.64%
Hypothetical (5% return before expenses) $1,000 $1,016.94 $8.34 1.64%
Class C
Actual(b) $1,000 $1,040.20 $8.43 1.64%
Hypothetical (5% return before expenses) $1,000 $1,016.94 $8.34 1.64%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Dec. 31, 2004: +4.42%%
for Class A, +4.02%% for Class B and +4.02% for Class C.
AXP Minnesota Tax-Exempt Fund
Beginning Ending Expenses
account value account value paid during Annualized
July 1, 2004 Dec. 31, 2004 the period(a) expense ratio
Class A
Actual(b) $1,000 $1,045.80 $4.38 .85%
Hypothetical (5% return before expenses) $1,000 $1,020.92 $4.33 .85%
Class B
Actual(b) $1,000 $1,041.90 $8.29 1.61%
Hypothetical (5% return before expenses) $1,000 $1,017.09 $8.19 1.61%
Class C
Actual(b) $1,000 $1,041.90 $8.29 1.61%
Hypothetical (5% return before expenses) $1,000 $1,017.09 $8.19 1.61%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Dec. 31, 2004: +4.58%
for Class A, +4.19% for Class B, +4.19% for Class C.
- --------------------------------------------------------------------------------
100 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
AXP New York Tax-Exempt Fund
Beginning Ending Expenses
account value account value paid during Annualized
July 1, 2004 Dec. 31, 2004 the period(a) expense ratio
Class A
Actual(b) $1,000 $1,043.80 $4.48 .87%
Hypothetical (5% return before expenses) $1,000 $1,020.82 $4.43 .87%
Class B
Actual(b) $1,000 $1,039.80 $8.38 1.63%
Hypothetical (5% return before expenses) $1,000 $1,016.99 $8.29 1.63%
Class C
Actual(b) $1,000 $1,039.80 $8.38 1.63%
Hypothetical (5% return before expenses) $1,000 $1,016.99 $8.29 1.63%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Dec. 31, 2004: +4.38%
for Class A, +3.98% for Class B, +3.98% for Class C.
AXP Ohio Tax-Exempt Fund
Beginning Ending Expenses
account value account value paid during Annualized
July 1, 2004 Dec. 31, 2004 the period(a) expense ratio
Class A
Actual(b) $1,000 $1,045.30 $4.54 .88%
Hypothetical (5% return before expenses) $1,000 $1,020.77 $4.48 .88%
Class B
Actual(b) $1,000 $1,041.40 $8.44 1.64%
Hypothetical (5% return before expenses) $1,000 $1,016.94 $8.34 1.64%
Class C
Actual(b) $1,000 $1,041.40 $8.44 1.64%
Hypothetical (5% return before expenses) $1,000 $1,016.94 $8.34 1.64%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Dec. 31, 2004: +4.53%
for Class A, +4.14% for Class B and +4.14% for Class C.
- --------------------------------------------------------------------------------
101 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
Proxy Voting
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
(800) 862-7919; by looking at the website americanexpress.com/funds; or by
searching the website of the Securities and Exchange Commission
http://www.sec.gov. You may view the Fund's voting record for all portfolio
companies whose shareholders meetings were completed the previous quarter on
americanexpress.com/funds or obtain a copy by calling the Fund's administrator,
Board Services Corporation, collect at (612) 330-9283. In addition, information
regarding how the Fund voted proxies relating to portfolio securities during the
most recent 12-month period ended June 30 is available at http://www.sec.gov.
- --------------------------------------------------------------------------------
102 -- AXP STATE TAX-EXEMPT FUNDS -- 2004 SEMIANNUAL REPORT
(logo)
AMERICAN
EXPRESS
(R)
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and is
not a broker-dealer.
Item 2. Code of Ethics. Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert. Not applicable for semi-annual
reports.
Item 4. Principal Accountant Fees and Services. Not applicable for
semi-annual reports.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. The complete schedule of investments is included in Item 1 of this
Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 10. Submission of matters to a vote of security holders. Not applicable.
Item 11. Controls and Procedures.
(a) Based upon their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing
date of this Form N-CSR, the registrant's Principal Financial
Officer and Principal Executive Officer have concluded that those
disclosure controls and procedures provide reasonable assurance
that the material information required to be disclosed by the
registrant on this report is recorded, processed, summarized and
reported within the time periods specified in the Securities and
Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over
financial reporting.
Item 12. Exhibits.
(a)(1) Not applicable for semi-annual reports.
(a)(2) Separate certification for the Registrant's principal
executive officer and principal financial officer, as required by
Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a)
under the Investment Company Act of 1940, are attached as
EX.99.CERT.
(a)(3) Not applicable.
(b) A certification by the Registrant's principal executive officer
and principal financial officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment
Company Act of 1940, is attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) AXP California Tax-Exempt Trust
By /s/ Paula R. Meyer
------------------
Paula R. Meyer
President and Principal Executive Officer
Date March 4, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Paula R. Meyer
------------------
Paula R. Meyer
President and Principal Executive Officer
Date March 4, 2005
By /s/ Jeffrey P. Fox
------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date March 4, 2005