AXP(R)
Stock Fund
AXP Stock Fund seeks to provide shareholders with current income and growth of
capital.
Prospectus
Nov. 29, 2004
Please note that this Fund:
o is not a bank deposit
o is not federally insured
o is not endorsed by any bank or government agency
o is not guaranteed to achieve its goal
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
Table of Contents
TAKE A CLOSER LOOK AT:
The Fund 3p
Goal 3p
Principal Investment Strategies 3p
Principal Risks 4p
Past Performance 5p
Fees and Expenses 7p
Investment Manager 8p
Other Securities and
Investment Strategies 10p
Buying and Selling Shares 10p
Valuing Fund Shares 11p
Investment Options 11p
Purchasing Shares 13p
Transactions Through Third Parties 15p
Sales Charges 15p
Exchanging/Selling Shares 19p
Distributions and Taxes 23p
Master/Feeder Structure 25p
Financial Highlights 26p
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2p --- AXP STOCK FUND --- 2004 PROSPECTUS
The Fund
GOAL
AXP Stock Fund (the Fund) seeks to provide shareholders with current income and
growth of capital. Because any investment involves risk, achieving this goal
cannot be guaranteed.
The Fund seeks to achieve its goal by investing all of its assets in a master
portfolio rather than by directly investing in and managing its own portfolio of
securities. The master portfolio has the same goal and investment policies as
the Fund.
PRINCIPAL INVESTMENT STRATEGIES
The Fund's assets primarily are invested in common stocks and securities
convertible into common stocks. Under normal market conditions, at least 80% of
the Fund's net assets are invested in these securities. In pursuit of its income
objective, the Fund will invest in income-producing equity securities (such as
convertible securities and preferred stocks) and short-term debt instruments
(such as commercial paper). The Fund will provide shareholders with at least 60
days' notice of any change in the 80% policy.
In pursuit of the Fund's goal, American Express Financial Corporation (AEFC),
the Fund's investment manager, uses two different approaches to the selection of
equity investments.
With respect to approximately 75% of the Fund's portfolio, AEFC uses a
traditional stock selection methodology and chooses investments by:
o Considering opportunities and risks by reviewing overall market conditions
and industry outlook.
o Identifying market trends that AEFC believes will lead to good long-term
growth potential.
o Identifying companies with strong, sustainable earnings growth based on:
o effective management, as demonstrated by overall performance,
o competitive market position, and
o financial strength.
o Focusing on those companies that AEFC considers to be "blue chips." Blue chip
stocks are issued by companies with a market capitalization of at least $1
billion, an established management, a history of consistent earnings and a
leading position within their respective industries.
o Identifying investments that contribute to portfolio diversification.
o Identifying income-producing securities.
In evaluating whether to sell a security, AEFC considers, among other factors,
whether:
o The security is overvalued relative to other potential investments.
o The security has reached AEFC's price objective.
o The company has met AEFC's earnings and/or growth expectations.
o Political, economic or other events could affect the company's performance.
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3p --- AXP STOCK FUND --- 2004 PROSPECTUS
With respect to approximately 25% of the Fund's portfolio, AEFC uses proprietary
quantitative methods based on sophisticated statistical analysis and chooses
investments by:
The universe of stocks from which AEFC selects the Fund's investments will be
those included in the Fund's benchmark, the Standard & Poor's 500 Index (S&P 500
Index). Through extensive analysis of the domestic equity markets, AEFC has
identified characteristics of certain stocks that have historically outperformed
their benchmarks. The Fund will hold both growth and value stocks.
Characteristics used to select stocks for the Fund include:
o Superior growth characteristics such as:
o strong earnings growth,
o positive earnings that exceed expectations published by third-party
business analysts,
o consistency of earnings, and
o strong positive price trend.
o Superior value characteristics based on analysis of current stock prices
relative to estimates of future prices.
In selecting the stocks from the S&P 500 Index for the Fund's portfolio, AEFC
employs a rigorous process for evaluating the relationship between the risk
associated with each security and its potential for positive returns. This
process includes factors such as:
o Limits on positions relative to the benchmark through overweighting or
underweighting.
o Limits on sector and industry allocations relative to the benchmark.
o Limits on size of holdings relative to market liquidity.
Unusual Market Conditions
During unusual market conditions, the Fund may invest more of its assets in
money market securities than during normal market conditions. Although the Fund
primarily will invest in these securities to avoid losses, this type of
investing also could prevent the Fund from achieving its investment objective.
During these times, AEFC may make frequent securities trades that could result
in increased fees, expenses, and taxes.
PRINCIPAL RISKS
Please remember that with any mutual fund investment you may lose money.
Principal risks associated with an investment in the Fund include:
Issuer Risk
Market Risk
Management Risk
Issuer Risk
An issuer, or the value of its stocks or bonds, may perform poorly. Poor
performance may be caused by poor management decisions, competitive pressures,
breakthroughs in technology, reliance on suppliers, labor problems or shortages,
corporate restructurings, fraudulent disclosures or other factors.
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4p --- AXP STOCK FUND --- 2004 PROSPECTUS
Market Risk
The market value of securities may drop, and you may lose money. Market risk may
affect a single issuer, sector of the economy, industry, or the market as a
whole. The market value of all securities may move up and down, sometimes
rapidly and unpredictably. The Fund does not attempt to time the market.
Management Risk
AEFC's management strategy will influence performance significantly. The
quantitative methodology employed by AEFC has been extensively tested using
historical securities market data, but has not been used to manage open-end
mutual funds over a long period of time. There can be no assurance that the
methodology will enable the Fund to achieve its goal.
PAST PERFORMANCE
The following bar chart and table indicate the risks and variability of
investing in the Fund by showing:
o how the Fund's performance has varied for each full calendar year shown on
the chart below, and
o how the Fund's average annual total returns compare to recognized indexes.
How the Fund has performed in the past (before and after taxes) does not
indicate how the Fund will perform in the future.
CLASS A PERFORMANCE
(based on calendar years)
- -2.86% +25.73% +19.41% +25.26% +19.28% +16.61% -7.40% -13.91% -22.23% +26.21%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
During the period shown in the bar chart, the highest return for a calendar
quarter was +19.31% (quarter ended Dec. 31, 1998) and the lowest return for a
calendar quarter was -15.21% (quarter ended Sept. 30, 2002).
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart; if reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown above because of
differences in expenses.
The Fund's Class A year-to-date return at Sept. 30, 2004 was -1.38%.
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5p --- AXP STOCK FUND --- 2004 PROSPECTUS
Average Annual Total Returns (as of Dec. 31, 2003)
Since Since
1 year 5 years 10 years inception (B&Y) inception (C)
Stock:
Class A
Return before taxes +18.96% -2.97% +6.48% N/A N/A
Return after taxes on distributions +18.77% -4.26% +3.99% N/A N/A
Return after taxes on distributions
and sale of fund shares +12.54% -2.91% +4.27% N/A N/A
Class B
Return before taxes +21.23% -2.72% N/A +6.98%(a) N/A
Class C
Return before taxes +25.21% N/A N/A N/A -6.84%(b)
Class Y
Return before taxes +26.41% -1.67% N/A +7.95%(a) N/A
S&P 500 Index
(reflects no deduction for fees, expenses or taxes) +28.68% -0.57% +11.07% +11.39%(c) -5.97%(d)
Lipper Large-Cap Core Funds Index +24.80% -1.08% +9.27% +9.85%(c) -6.89%(d)
(a) Inception date was March 20, 1995.
(b) Inception date was June 26, 2000.
(c) Measurement period started April 1, 1995.
(d) Measurement period started July 1, 2000.
Before-Tax Returns
This table shows total returns from hypothetical investments in Class A, Class
B, Class C and Class Y shares of the Fund. These returns are compared to the
indexes shown for the same periods. The performance of different classes varies
because of differences in sales charges and fees. Past performance for Class Y
for the periods prior to March 20, 1995 may be calculated based on the
performance of Class A, adjusted to reflect differences in sales charges, but
not differences in annual Fund operating expenses.
After-Tax Returns
After-tax returns are shown only for Class A shares. After-tax returns for the
other classes will vary. After-tax returns are calculated using the highest
historical individual federal marginal income tax rate and do not reflect the
impact of state and local taxes. Actual after-tax returns will depend on your
tax situation and most likely will differ from the returns shown in the table.
If you hold your shares in a tax-deferred account, such as a 401(k) plan or an
IRA, the after-tax returns do not apply to you since you will not incur taxes
until you begin to withdraw from your account.
The return after taxes on distributions for a period may be the same as the
return before taxes for the same period if there are no distributions or if the
distributions are small. The return after taxes on distributions and sale of
Fund shares for a period may be greater than the return before taxes for the
same period if there was a tax loss realized on sale of Fund shares. The benefit
of the tax loss (since it can be used to offset other gains) may result in a
higher return.
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6p --- AXP STOCK FUND --- 2004 PROSPECTUS
For purposes of this calculation we assumed:
o the maximum sales charge for Class A shares,
o sales at the end of the period and deduction of the applicable contingent
deferred sales charge (CDSC) for Class B shares,
o no sales charge for Class C shares,
o no sales charge for Class Y shares, and
o no adjustments for taxes paid by an investor on the reinvested income and
capital gains.
The S&P 500 Index, an unmanaged index of common stocks, is frequently used as a
general measure of market performance. The index reflects reinvestment of all
distributions and changes in market prices, but excludes brokerage commissions
or other fees.
The Lipper Large-Cap Core Funds Index, published by Lipper Inc., includes the 30
largest funds that are generally similar to the Fund, although some funds in the
index may have somewhat different investment policies or objectives.
FEES AND EXPENSES
Fund investors pay various expenses. The table below describes the fees and
expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Class A Class B Class C Class Y
Maximum sales charge (load) imposed on purchases(a)
(as a percentage of offering price) 5.75% none none none
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of purchase) none(b) 5% 1%(c) none
Annual Fund Operating Expenses(d) (expenses that are deducted from Fund assets)
As a percentage of average daily net assets: Class A Class B Class C Class Y
Management fees(e) 0.46% 0.46% 0.46% 0.46%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00%
Other expenses(f) 0.18% 0.21% 0.21% 0.27%
Total 0.89% 1.67% 1.67% 0.73%
(a) This charge may be reduced depending on the value of your total investments
in American Express Funds. See "Sales Charges."
(b) For Class A purchases over $1,000,000 on which no sales charge is assessed,
a 1% sales charge applies if you sell your shares less than one year after
purchase.
(c) For Class C purchases, a 1% sales charge applies if you sell your shares
less than one year after purchase.
(d) Both in this table and the following example fund operating expenses
include expenses charged by both the Fund and its Master Portfolio as
described under "Investment Manager."
(e) Includes the impact of a performance incentive adjustment fee that
decreased the management fee by 0.03% for the most recent fiscal year.
(f) Other expenses include an administrative services fee, a shareholder
service fee for Class Y, a transfer agency fee and other nonadvisory
expenses.
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7p --- AXP STOCK FUND --- 2004 PROSPECTUS
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
Assume you invest $10,000 and the Fund earns a 5% annual return each year. Also
assume that the operating expenses remain the same each year. You would pay the
following expenses if you redeem all of your shares at the end of the time
periods indicated:
1 year 3 years 5 years 10 years
Class A(a) $661 $843 $1,040 $1,612
Class B $570(b) $827(b) $1,008(b) $1,773(c)
Class C $170 $527 $ 908 $1,981
Class Y $ 75 $234 $ 407 $ 910
(a) Includes a 5.75% sales charge.
(b) Includes the applicable CDSC.
(c) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
You would pay the following expenses if you did not redeem your shares:
1 year 3 years 5 years 10 years
Class A(a) $661 $843 $1,040 $1,612
Class B $170 $527 $ 908 $1,773(b)
Class C $170 $527 $ 908 $1,981
Class Y $ 75 $234 $ 407 $ 910
(a) Includes a 5.75% sales charge.
(b) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
These examples do not represent actual expenses, past or future. Actual expenses
may be higher or lower than those shown.
INVESTMENT MANAGER
The Fund's assets are invested in Equity Portfolio (the Portfolio), which is
managed by AEFC.
Mike Kennedy, CFA, Vice President and Senior Equity Portfolio Manager
o Managed the Portfolio since 1999.
o Joined AEFC in 1985.
o Began investment career in 1970.
o MBA, Loyola University of Chicago.
Dimitris J. Bertsimas, Portfolio Manager
o Joined AEFC as a consulting portfolio manager in 2002.
o Co-founded Dynamic Ideas, LLC, a consulting firm specializing in the
development of quantitative tools for the asset management industry, where he
served as Managing Partner, 1999 to 2002. Currently, Boeing Professor of
Operations Research, Sloan School of Management and the Operations Research
Center, MIT.
o Began investment career as a consultant to asset managers in 1993; became
portfolio manager in 2002.
o MS and Ph.D., MIT.
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8p --- AXP STOCK FUND --- 2004 PROSPECTUS
Gina K. Mourtzinou, Portfolio Manager
o Joined AEFC as a portfolio manager in 2002.
o Co-founded Dynamic Ideas, LLC, a consulting firm specializing in the
development of quantitative tools for the asset management industry, where
she served as Vice President of Research and Analytics, 1999 to 2002.
o Began investment career as a consultant to asset managers in 1996; became
portfolio manager in 2002.
o Ph.D., MIT.
Scott Mullinix, CFA, Associate Portfolio Manager
o Managed the Portfolio since 2004.
o Rejoined AEFC in 2004, having previously spent time with AEFC as portfolio
manager, 2001 to 2002 and as an associate portfolio manager, 1999 to 2001.
o Analyst, Deephaven Capital LLC, a domestic-based hedge fund firm, May 2002 to
May 2004.
o Began investment career in 1989.
o MBA, University of Minnesota.
AEFC
The Portfolio pays AEFC a fee for managing its assets. The Fund pays its
proportionate share of the fee. Under the Investment Management Services
Agreement, the fee for the most recent fiscal year was 0.46% of the Portfolio's
average daily net assets, including an adjustment under the terms of a
performance incentive arrangement. The maximum adjustment (increase or decrease)
is 0.12% of the Portfolio's average net assets on an annual basis. Under the
agreement, the Portfolio also pays taxes, brokerage commissions, and nonadvisory
expenses. AEFC or an affiliate may make payments from its own resources, which
include profits from management fees paid by the Portfolio, to compensate
broker-dealers or other persons for providing distribution assistance. AEFC,
located at 200 AXP Financial Center, Minneapolis, Minnesota 55474, is a
wholly-owned subsidiary of American Express Company, a financial services
company with headquarters at American Express Tower, World Financial Center, New
York, New York 10285. In addition to managing investments for all of the AXP
funds, subsidiaries also provide investment management and related services such
as separate account asset management, institutional trust and custody, and
employee benefit plan administration, as well as investment products.
AEFC also serves as investment manager to the AXP Portfolio Builder Series, a
group of six affiliated funds-of-funds (Portfolio Builder Funds) that provide
asset-allocation services to shareholders by investing in shares of other AXP
Funds, including the Fund. The Fund may experience relatively large purchases or
redemptions from the Portfolio Builder Funds. Although AEFC seeks to minimize
the impact of these transactions by structuring them over a reasonable period of
time, the Fund may experience increased expenses as it buys and sells portfolio
securities to manage transactions for the Portfolio Builder Fund. In addition,
because the Portfolio Builder Funds may own a substantial portion of the Fund, a
redemption by the Portfolio Builder Funds could cause the Fund's expense ratio
to increase as the Fund's fixed costs would be spread over a smaller asset base.
AEFC monitors expense levels and is committed to offering funds that are
competitively priced. AEFC will report to the Fund's Board of Directors on the
steps it has taken to manage any potential conflicts.
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9p --- AXP STOCK FUND --- 2004 PROSPECTUS
The Fund operates under an order from the Securities and Exchange Commission
that permits AEFC, subject to the approval of the Board of Directors, to appoint
a subadviser or change the terms of a subadvisory agreement for the Fund without
first obtaining shareholder approval. The order permits the Fund to add or
change unaffiliated subadvisers or the fees paid to subadvisers from time to
time without the expense and delays associated with obtaining shareholder
approval of the change.
OTHER SECURITIES AND INVESTMENT STRATEGIES
The Fund may invest in other securities and may use other investment strategies
that are not principal investment strategies. The Fund's policies permit
investment in other instruments, such as debt obligations rated C or higher,
foreign securities and money market securities. Additionally, the Fund may use
derivative instruments, such as futures, options and forward contracts, to
produce incremental earnings, to hedge existing positions and to increase
flexibility. Even though the Fund's policies permit the use of derivatives in
this manner, the portfolio manager is not required to use derivatives.
For more information on strategies and holdings, see the Fund's Statement of
Additional Information (SAI) and its annual and semiannual reports.
Buying and Selling Shares
The public offering price for Class A shares of the Fund is the net asset value
(NAV) plus a sales charge, and for Class B, C, and Y shares, the NAV. In
addition to buying and selling shares through the Fund's distributor, American
Express Financial Advisors Inc. (the Distributor), you may buy or sell shares
through third parties, including 401(k) plans, banks, brokers, and investment
advisers. Where authorized by the Fund, orders in good form are priced using the
NAV next determined after your order is placed with the third party. Good form
or good order means that your instructions have been received in the form
required by the Distributor. This may include, for example, providing the fund
name and account number, the amount of the transaction and all required
signatures. For more information, refer to the sections on "Purchasing Shares"
and "Exchanging/Selling Shares," or contact your financial advisor. If you buy
or redeem shares through a third party, consult that firm to determine whether
your order will be priced at the time it is placed with the third party or at
the time it is placed with the Fund. The third party may charge a fee for its
services.
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10p --- AXP STOCK FUND --- 2004 PROSPECTUS
VALUING FUND SHARES
The NAV is the value of a single share of the Fund. The NAV is determined by
dividing the value of the Fund's assets, minus any liabilities, by the number of
shares outstanding. AEFC calculates the NAV as of the close of business on the
New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day
that the NYSE is open.
The Fund's securities are valued primarily on the basis of market quotations.
However, securities will be valued at fair value if reliable quotations are not
readily available. Securities also will be valued at fair value if their value
has been materially affected by events after the close of the primary exchanges
or markets on which they trade and before the NAV is calculated. This occurs
most commonly with foreign securities, but may occur in other cases. The Board
has adopted fair value procedures for pricing securities under certain
circumstances. These procedures are used (1) when market prices for securities
are not readily available, (2) when available prices are deemed unreliable, or
(3) when a significant event has occurred that is not reflected in available
prices. The fair value of a security is likely to be different from the quoted
or published price. Fair value procedures are approved by the Fund's Board of
Directors. Certain short-term securities are valued at amortized cost. Foreign
investments are valued in U.S. dollars. Some of the Fund's securities may be
listed on foreign exchanges that trade on weekends or other days when the Fund
does not price its shares. In that event, the net asset value of the Fund's
shares may change on days when shareholders will not be able to purchase or
redeem the Fund's shares.
INVESTMENT OPTIONS
1. Class A shares are sold to the public with a sales charge at the time of
purchase and an annual distribution (12b-1) fee of 0.25%.
2. Class B shares are sold to the public with a contingent deferred sales
charge (CDSC) and an annual distribution fee of 1.00%.
3. Class C shares are sold to the public without a sales charge at the time of
purchase and with an annual distribution fee of 1.00% shares sold less than
a year after purchases are subject to a CDSC.
4. Class Y shares are sold to qualifying institutional investors without a
sales charge or distribution fee. Please see the SAI for information on
eligibility to purchase Class Y shares.
The Fund also offers an additional class of shares, Class I, exclusively to
certain institutional investors. Class I shares are made available through a
separate prospectus supplement provided to investors eligible to purchase the
shares.
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11p --- AXP STOCK FUND --- 2004 PROSPECTUS
Investment options summary
The Fund offers different classes of shares. There are differences among the
fees and expenses for each class. Not everyone is eligible to buy every class.
After determining which classes you are eligible to buy, decide which class best
suits your needs. Your financial advisor can help you with this decision.
The following table shows the key features of each class:
- ------------------ --------------- -------------- --------------- --------------
Class A Class B Class C Class Y
- ------------------ --------------- -------------- --------------- --------------
Availability Available to Available to Available to Limited to
all investors. all all investors. qualifying
investors. institutional
investors.
- ------------------ --------------- -------------- --------------- --------------
Initial Sales Yes. Payable No. Entire No. Entire No. Entire
Charge at time of purchase purchase purchase
purchase. price is price is price is
Lower sales invested in invested in invested in
charge for shares of shares of the shares of the
larger the Fund. Fund. Fund.
investments.
- ------------------ --------------- -------------- --------------- --------------
Deferred Sales On purchases Maximum 5% 1% CDSC None.
Charge over CDSC during applies if
$1,000,000, the first you sell your
1% CDSC year shares less
applies if decreasing than one year
you sell your to 0% after after
shares less six years. purchase.
than one year
after
purchase.
- ------------------ --------------- -------------- --------------- --------------
Distribution Yes.* 0.25% Yes.* 1.00% Yes.* 1.00% Yes. 0.10%
and/or
Shareholder
Service Fee
- ------------------ --------------- -------------- --------------- --------------
Conversion to N/A Yes, No. No.
Class A automatically
in ninth
calendar
year of
ownership.
- ------------------ --------------- -------------- --------------- --------------
* The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act
of 1940 that allows it to pay distribution and servicing-related expenses
for the sale of Class A, Class B and Class C shares. Because these fees are
paid out of the Fund's assets on an on-going basis, the fees may cost
long-term shareholders more than paying other types of sales charges
imposed by some mutual funds.
Should you purchase Class A, Class B or Class C shares?
If your investments in American Express mutual funds total $100,000 or more,
Class A shares may be the better option because the sales charge is reduced for
larger purchases. If you qualify for a waiver of the sales charge, Class A
shares will be the best option.
If you invest less than $100,000, consider how long you plan to hold your
shares. Class B shares have a higher annual distribution fee than Class A shares
and a CDSC for six years. Class B shares convert to Class A shares in the ninth
calendar year of ownership. Class B shares purchased through reinvested
dividends and distributions also will convert to Class A shares in the same
proportion as the other Class B shares.
Class C shares also have a higher annual distribution fee than Class A shares.
Class C shares have no sales charge if you hold the shares for one year or
longer. Unlike Class B shares, Class C shares do not convert to Class A. As a
result, you will pay a 1% distribution fee for as long as you hold Class C
shares. If you choose a deferred sales charge option (Class B or Class C),
generally you should consider Class B shares if you intend to hold your shares
for more than six years. Consider Class C shares if you intend to hold your
shares less than six years. To help you determine what investment is best for
you, consult your financial advisor.
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12p --- AXP STOCK FUND --- 2004 PROSPECTUS
PURCHASING SHARES
To purchase shares through entities other than the Distributor, please consult
your selling agent. The following section explains how you can purchase shares
from the Distributor.
If you do not have an existing American Express mutual fund account, you will
need to establish a brokerage account. Your financial advisor will help you fill
out and submit an application. Once your account is set up, you can choose among
several convenient ways to invest.
When you purchase, your order will be priced at the next NAV calculated after
your order is accepted by the Fund. If your application does not specify which
class of shares you are purchasing, we will assume you are investing in Class A
shares.
Important: When you open an account, you must provide your correct Taxpayer
Identification Number (TIN), which is either your Social Security or Employer
Identification number.
If you do not provide and certify the correct TIN, you could be subject to
backup withholding of 28% of taxable distributions and proceeds from certain
sales and exchanges. You also could be subject to further penalties, such as:
o a $50 penalty for each failure to supply your correct TIN,
o a civil penalty of $500 if you make a false statement that results in no
backup withholding, and
o criminal penalties for falsifying information.
You also could be subject to backup withholding, if the IRS notifies us to do
so, because you failed to report required interest or dividends on your tax
return.
How to determine the correct TIN
For this type of account: Use the Social Security or Employer
Identification number of:
- -------------------------------------- ----------------------------------------
Individual or joint account The individual or one of the owners
listed on the joint account
- -------------------------------------- ----------------------------------------
Custodian account of a minor The minor
(Uniform Gifts/Transfers to Minors
Act)
- -------------------------------------- ----------------------------------------
A revocable living trust The grantor-trustee (the person who
puts the money into the trust)
- -------------------------------------- ----------------------------------------
An irrevocable trust, pension trust The legal entity (not the personal
or estate representative or trustee, unless no
legal entity is designated in the
account title)
- -------------------------------------- ----------------------------------------
Sole proprietorship or single-owner The owner
LLC
- -------------------------------------- ----------------------------------------
Partnership or multi-member LLC The partnership
- -------------------------------------- ----------------------------------------
Corporate or LLC electing corporate The corporation
status on Form 8837
- -------------------------------------- ----------------------------------------
Association, club or tax-exempt The organization
organization
- -------------------------------------- ----------------------------------------
For details on TIN requirements, contact your financial advisor to obtain a copy
of federal Form W-9, "Request for Taxpayer Identification Number and
Certification." You also may obtain the form on the Internet at www.irs.gov.
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13p --- AXP STOCK FUND --- 2004 PROSPECTUS
Methods of purchasing shares
By mail
Once your account has been established, send your check to:
American Express Funds
70200 AXP Financial Center
Minneapolis, MN 55474
Minimum amounts
Initial investment: $2,000*
Additional investments: $500**
Account balances: $300
Qualified account balances: none
If your Fund account balance falls below $300 for any reason, including a market
decline, you will be asked to increase it to $300 or establish a scheduled
investment plan. If you do not do so within 30 days, your shares can be sold and
the proceeds mailed to you.
* $1,000 for tax qualified accounts.
** $100 minimum add-on for existing mutual fund accounts outside of a brokerage
account (direct at fund accounts).
By scheduled investment plan
Minimum amounts
Initial investment: $2,000*
Additional investments: $100**
Account balances: none (on a scheduled investment plan with
monthly payments)
If your Fund account balance is below $2,000, you must make payments at least
monthly.
* $100 for direct at fund accounts.
** $50 minimum per payment for qualified accounts in a direct at fund account.
By wire or electronic funds transfer
Please contact your financial advisor or selling agent for specific
instructions.
Minimum wire purchase amount: $1,000 or new account minimum, as applicable.
By telephone
If you have a brokerage account, you may use the money in your account to make
initial and subsequent purchases.
To place your order, call:
(800) 297-7378 for brokerage accounts
(800) 967-4377 for wrap accounts
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14p --- AXP STOCK FUND --- 2004 PROSPECTUS
TRANSACTIONS THROUGH THIRD PARTIES
You may buy or sell shares through certain 401(k) plans, banks, broker-dealers,
financial advisors or other investment professionals. These organizations may
charge you a fee for this service and may have different policies. Some policy
differences may include different minimum investment amounts, exchange
privileges, fund choices and cutoff times for investments. The Fund and the
Distributor are not responsible for the failure of one of these organizations to
carry out its obligations to its customers. Some organizations may receive
compensation from the Distributor or its affiliates for shareholder
recordkeeping and similar services. Where authorized by the Fund, some
organizations may designate selected agents to accept purchase or sale orders on
the Fund's behalf. To buy or sell shares through third parties or to determine
if there are policy differences, please consult your selling agent. For other
information related to buying or selling shares, please refer to the appropriate
section in the prospectus.
SALES CHARGES
Class A -- initial sales charge alternative
When you purchase Class A shares, you pay a sales charge as shown in the
following table:
Sales charge as percentage of:
Total market value Public offering price* Net amount invested
Up to $49,999 5.75% 6.10%
$50,000-$99,999 4.75 4.99
$100,000-$249,999 3.50 3.63
$250,000-$499,999 2.50 2.56
$500,000-$999,999 2.00 2.04
$1,000,000 or more 0.00 0.00
* Offering price includes the sales charge.
You may be able to reduce the sales charge on Class A shares, based on the
combined market value of your accounts.
The current market values of the following investments are eligible to be added
together for purposes of determining the sales charge on your purchase:
o Your current investment in this Fund, and
o Previous investments you and members of your primary household group have
made in Class A, Class B or Class C shares in this and other American Express
mutual funds, provided your investment was subject to a sales charge.
o Your primary household group consists of you, your spouse or domestic
partner, and your unmarried children under age 21 sharing a mailing
address. For purposes of this policy a domestic partner is an individual
who shares your primary residence and with whom you own joint property. If
you or any member of your primary household group elects to separate from
the primary household group (for example, by asking that account statements
be sent to separate addresses), your assets will no longer be combined for
purposes of reducing your sales charge.
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15p --- AXP STOCK FUND --- 2004 PROSPECTUS
The following accounts are eligible to be included in determining the sales
charge on your purchase:
o Individual or joint accounts held directly at the Fund;
o Individual or joint accounts held through American Express Brokerage;
o Roth and traditional IRAs, SEPs, SIMPLEs and TSCAs, provided they are
invested in Class A, Class B or Class C shares that are subject to a sales
charge and are not part of a group billing as described under "Other Class A
sales charge policies";
o UGMA/UTMA accounts for which you, your spouse, or your domestic partner is
parent or guardian of the minor child;
o Revocable trust accounts for which you or a member of your primary household
group, individually, is the beneficiary;
o Accounts held in the name of your, your spouse's, or your domestic partner's
sole proprietorship or single owner limited liability company or S
corporation; and
o Qualified retirement plan assets, provided that you are the sole owner of the
business sponsoring the plan, are the sole participant (other than a spouse)
in the plan, and have no intention of adding participants to the plan.
The following accounts are not eligible to be included in determining the sales
charge on your purchase:
o Accounts of pension and retirement plans with multiple participants, such as
401(k) plans (which are combined to reduce the sales charge for the entire
pension or retirement plan and therefore are not used to reduce the sales
charge for your individual accounts);
o Investments in AXP Tax-Free Money Fund;
o Investments in Class A shares where the sales charge is waived, for example,
purchases through wrap accounts, including American Express Strategic
Portfolio Service Advantage (SPS);
o Investments in Class D, Class E, or Class Y shares;
o Investments in 529 plans, donor advised funds, variable annuities, variable
life insurance products, wrap accounts or managed separate accounts; and
o Charitable and irrevocable trust accounts.
If you purchase American Express mutual fund shares through different channels,
for example, through a firm other than the Distributor, and you want to include
those assets toward a reduced sales charge, you must inform the Distributor in
writing about the other accounts when placing your purchase order. When placing
your purchase order, you must provide the Distributor with your most recent
account statement and contact information regarding the other accounts. A
selling agent other than the Distributor may require additional information.
Unless you provide the Distributor or your financial advisor with information
about all of the accounts that may count toward a sales charge reduction, there
can be no assurance that you will receive all of the reductions for which you
may be eligible.
For more information on rights of accumulation, please see the SAI.
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16p --- AXP STOCK FUND --- 2004 PROSPECTUS
Other Class A sales charge policies
o Group billing: Purchases made through a payroll deduction program offered by
an employer retirement plan that has elected to take advantage of the
Distributor's group billing service, may be added together to reduce sales
charges for all shares purchased through the plan.
o Letter of Intent: If you intend to invest $50,000 or more over a period of 13
months, you can reduce the sales charges in Class A by completing a letter of
intent form and filing it with the Distributor. The letter of intent may
apply to purchases made up to 90 days before it is received in good order by
the Distributor. Your holdings in American Express mutual funds acquired more
than 90 days before receipt of your signed letter of intent in the
Distributor's corporate office will not be counted towards the completion of
the letter of intent. If purchasing shares in a brokerage account or through
a third party, you must request the reduced sales charge when you buy shares.
If you do not complete and file the form, or do not request the reduced sales
charge at the time of purchase, you will not be eligible for the reduced
sales charge. For more details, please contact your financial advisor or see
the SAI.
Waivers of the sales charge for Class A shares
Sales charges do not apply to:
o current or retired board members, officers or employees of the Fund or AEFC
or its subsidiaries, their spouses or domestic partners, children and
parents.
o current or retired American Express financial advisors, employees of
financial advisors, their spouses or domestic partners, children and parents.
o registered representatives and other employees of brokers, dealers or other
financial institutions having a sales agreement with the Distributor,
including their spouses, domestic partners, children and parents.
o qualified employee benefit plans offering participants daily access to
American Express mutual funds. Eligibility must be determined in advance. For
assistance, please contact your financial advisor. Participants in certain
qualified plans where the initial sales charge is waived may be subject to a
deferred sales charge of up to 4%.
o shareholders who have at least $1 million in American Express mutual funds.
If the investment is sold less than one year after purchase, a CDSC of 1%
will be charged.
o direct rollovers from American Express Retirement Services, provided that the
rollover involves a transfer of Class Y shares in this Fund to Class A shares
in this Fund.
o purchases made:
o with dividend or capital gain distributions from this Fund or from the same
class of another American Express mutual fund,
o through or under a wrap fee product or other investment product sponsored
by the Distributor or another authorized broker-dealer, investment advisor,
bank or investment professional,
o within the University of Texas System ORP,
o within a segregated separate account offered by Nationwide Life Insurance
Company or Nationwide Life and Annuity Insurance Company,
o through or under a subsidiary of AEFC offering Personal Trust Services'
Asset-Based pricing alternative.
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17p --- AXP STOCK FUND --- 2004 PROSPECTUS
o shareholders whose original purchase was in a Strategist fund merged into an
American Express fund in 2000.
o repurchases. You can change your mind after requesting a sale and use all or
part of the proceeds to purchase new shares in the same account from which
you sold. If you reinvest in Class A, you will purchase the new shares at NAV
rather than the offering price on the date of a new purchase. To take
advantage of this waiver, send a written request within 90 days of the date
your sale request was processed and include your account number. This
privilege may be limited or withdrawn at any time and use of this option may
have tax consequences.
Policies related to reducing or waiving the sales charge may be modified or
withdrawn at any time.
Unless you provide the Distributor or your financial advisor with information
about all of the factors that may count toward a waiver of the sales charge,
there can be no assurance that you will receive all of the waivers for which you
may be eligible.
You also may view this information about sales charges and breakpoints free of
charge on the Fund's website. Go to www.americanexpress.com/funds and click on
the hyperlink "Sales Charge Discount Information."
Class B and Class C -- contingent deferred sales charge (CDSC) alternative
For Class B, the CDSC is based on the sale amount and the number of calendar
years -- including the year of purchase -- between purchase and sale. The
following table shows how CDSC percentages on sales decline after a purchase:
If the sale is made during the: The CDSC percentage rate is:
First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%
For Class C, a 1% CDSC is charged if you sell your shares less than one year
after purchase.
For both Class B and Class C, if the amount you are selling causes the value of
your investment to fall below the cost of the shares you have purchased, the
CDSC is based on the lower of the cost of those shares purchased or market
value. Because the CDSC is imposed only on sales that reduce your total purchase
payments, you never have to pay a CDSC on any amount that represents
appreciation in the value of your shares, income earned by your shares, or
capital gains.
In addition, the CDSC on your sale, if any, will be based on your oldest
purchase payment. The CDSC on the next amount sold will be based on the next
oldest purchase payment.
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18p --- AXP STOCK FUND --- 2004 PROSPECTUS
Example
Assume you had invested $10,000 in Class B shares and that your investment had
appreciated in value to $12,000 after 3 1/2 years, including reinvested
dividends and capital gain distributions. You could sell up to $2,000 worth of
shares without paying a CDSC ($12,000 current value less $10,000 purchase
amount). If you sold $2,500 worth of shares, the CDSC would apply to the $500
representing part of your original purchase price. The CDSC rate would be 3%
because the sale was made during the fourth year after the purchase.
Waivers of the sales charge for Class B and Class C shares
The CDSC will be waived on sales of shares:
o in the event of the shareholder's death,
o held in trust for an employee benefit plan, or
o held in IRAs or certain qualified plans if American Express Trust Company is
the custodian, such as Keogh plans, tax-sheltered custodial accounts or
corporate pension plans, provided that the shareholder is:
o at least 59 1/2 years old AND
o taking a retirement distribution (if the sale is part of a transfer to an
IRA or qualified plan, or a custodian-to-custodian transfer, the CDSC will
not be waived) OR
o selling under an approved substantially equal periodic payment
arrangement.
EXCHANGING/SELLING SHARES
To sell or exchange shares held with entities other than the Distributor, please
consult your selling agent. The following section explains how you can exchange
or sell shares held with the Distributor.
Exchanges
You may exchange your Fund shares at no charge for shares of the same class of
any other publicly offered American Express mutual fund. Exchanges into AXP
Tax-Free Money Fund may only be made from Class A shares. For complete
information on the other fund, including fees and expenses, read that fund's
prospectus carefully. Your exchange will be priced at the next NAV calculated
after we receive your transaction request in good order.
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The Fund's Board of Directors has adopted a policy that is designed to detect
and deter market timing. Market timing is frequent or short-term trading
activity intended to profit at the expense of other shareholders by selling
shares of a fund shortly after purchase. Market timing may adversely impact the
Fund's performance by preventing the portfolio managers from fully investing the
assets of the Fund or by increasing the Fund's transaction costs. The Fund seeks
to enforce this policy through the Distributor and its transfer agent as
follows:
o The Fund tries to distinguish market timing from trading that it believes is
not harmful, such as periodic rebalancing for purposes of asset allocation or
dollar cost averaging. Under the Fund's procedures, there is no set number of
transactions in the Fund that constitutes market timing. Even one purchase
and subsequent sale by related accounts may be market timing. Generally, the
Fund seeks to restrict the exchange privilege of an investor who makes more
than three exchanges into or out of the Fund in any 90-day period. Accounts
held by a retirement plan or financial intermediary for the benefit of its
participants or clients, which typically engage in daily transactions, are
not subject to this limit. The Distributor does seek the assistance of
retirement plans and financial intermediaries in applying similar
restrictions on the sub-accounts of their participants or clients.
o If an investor's trading activity is determined to be market timing or
otherwise harmful to existing shareholders, the Fund may modify or
discontinue the investor's exchange privileges or may reject the investor's
purchases or exchanges, including purchases or exchanges accepted by a
retirement plan or other financial intermediary. The Fund may treat accounts
it believes to be under common control as a single account for these
purposes, although it may not be able to identify all such accounts.
o Although the Fund does not knowingly permit market timing, it cannot
guarantee that it will be able to identify and restrict all short-term
trading activity. The Fund receives purchase and sale orders through
retirement plans and financial intermediaries where market timing activity
may not always be successfully detected.
Other exchange policies:
o Exchanges must be made into the same class of shares of the new fund.
o If your exchange creates a new account, it must satisfy the minimum
investment amount for new purchases.
o Once we receive your exchange request, you cannot cancel it.
o Shares of the new fund may not be used on the same day for another exchange.
o If your shares are pledged as collateral, the exchange will be delayed until
written approval is received from the secured party.
Selling Shares
You may sell your shares at any time. The payment will be mailed within seven
days after your request is received in good order.
When you sell shares, the amount you receive may be more or less than the amount
you invested. Your sale price will be the next NAV calculated after your request
is received in good order by the Fund, minus any applicable CDSC.
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20p --- AXP STOCK FUND --- 2004 PROSPECTUS
You can change your mind after requesting a sale and use all or part of the
proceeds to purchase new shares in the same account from which you sold. If you
reinvest in Class A, you will purchase the new shares at NAV rather than the
offering price on the date of a new purchase. If you reinvest in Class B or
Class C, any CDSC you paid on the amount you are reinvesting also will be
reinvested. To take advantage of this waiver, send a written request within 90
days of the date your sale request was processed and include your account
number. This privilege may be limited or withdrawn at any time and use of this
option may have tax consequences.
The Fund reserves the right to redeem in kind.
For more details and a description of other sales policies, please see the SAI.
If you decide to sell your shares within 30 days of a telephoned-in address
change, a written request is required.
Important: If you request a sale of shares you recently purchased by a check or
money order that is not guaranteed, the Fund will wait for your check to clear.
It may take up to 10 days from the date of purchase before payment is made.
Payment may be made earlier if your bank provides evidence satisfactory to the
Fund and the Distributor that your check has cleared.
Ways to request an exchange or sale of shares
By regular or express mail
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
Include in your letter:
o your account number
o the name of the fund(s)
o the class of shares to be exchanged or sold
o your Social Security number or Employer Identification number
o the dollar amount or number of shares you want to exchange or sell
o specific instructions regarding delivery or exchange destination
o signature(s) of registered account owner(s) (All signatures may be required.
Contact your financial advisor for more information.)
o any paper certificates of shares you hold
Payment will be mailed to the address of record and made payable to the names
listed on the account, unless your request specifies differently and is signed
by all owners.
The express mail delivery charges you pay will vary depending on domestic or
international delivery instructions.
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21p --- AXP STOCK FUND --- 2004 PROSPECTUS
By telephone
(800) 297-7378 for brokerage accounts
(800) 862-7919 for direct at fund accounts
(800) 967-4377 for wrap accounts
o The Fund and the Distributor will use reasonable procedures to confirm
authenticity of telephone exchange or sale requests.
o Telephone exchange and sale privileges automatically apply to all accounts
except custodial, corporate or qualified retirement accounts. You may request
that these privileges NOT apply by writing the Distributor. Each registered
owner must sign the request.
o Acting on your instructions, your financial advisor may conduct telephone
transactions on your behalf.
o Telephone privileges may be modified or discontinued at any time.
Minimum sale amount: $100
Maximum sale amount: $100,000
By wire
You can wire money from your account to your bank account. Contact your
financial advisor or the Distributor at the above numbers for additional
information.
o Minimum amount: $1,000
o Pre-authorization is required.
o A service fee may be charged against your account for each wire sent.
By scheduled payout plan
o Minimum payment: $100*
o Contact your financial advisor or the Distributor to set up regular payments.
o Purchasing new shares while under a payout plan may be disadvantageous
because of the sales charges.
* Minimum is $50 in a direct at fund account.
Electronic transactions
The ability to initiate transactions via the internet may be unavailable or
delayed at certain times (for example, during periods of unusual market
activity). The Fund and the Distributor are not responsible for any losses
associated with unexecuted transactions. In addition, the Fund and the
Distributor are not responsible for any losses resulting from unauthorized
transactions if reasonable security measures are followed to validate the
investor's identity. The Fund may modify or discontinue electronic privileges at
any time.
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22p --- AXP STOCK FUND --- 2004 PROSPECTUS
Distributions and Taxes
As a shareholder you are entitled to your share of the Fund's net income and net
gains. The Fund distributes dividends and capital gains to qualify as a
regulated investment company and to avoid paying corporate income and excise
taxes.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund's net investment income is distributed to you as dividends. Dividends
may be composed of qualifying dividend income, which is eligible for
preferential tax rates under current tax law, as well as other ordinary dividend
income, which may include non-qualifying dividends, interest income and
short-term capital gains. Capital gains are realized when a security is sold for
a higher price than was paid for it. Each realized capital gain or loss is
long-term or short-term depending on the length of time the Fund held the
security. Realized capital gains and losses offset each other. The Fund offsets
any net realized capital gains by any available capital loss carryovers. Net
short-term capital gains are included in net investment income. Net realized
long-term capital gains, if any, are distributed by the end of the calendar year
as capital gain distributions.
REINVESTMENTS
Dividends and capital gain distributions are automatically reinvested in
additional shares in the same class of the Fund, unless:
o you request distributions in cash, or
o you direct the Fund to invest your distributions in the same class of any
publicly offered American Express mutual fund for which you have previously
opened an account.
We reinvest the distributions for you at the next calculated NAV after the
distribution is paid.
If you choose cash distributions, you will receive cash only for distributions
declared after your request has been processed.
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23p --- AXP STOCK FUND --- 2004 PROSPECTUS
TAXES
Distributions are subject to federal income tax and may be subject to state and
local taxes in the year they are declared. You must report distributions on your
tax returns, even if they are reinvested in additional shares.
If you buy shares shortly before the record date of a distribution, you may pay
taxes on money earned by the Fund before you were a shareholder. You will pay
the full pre-distribution price for the shares, then receive a portion of your
investment back as a distribution, which may be taxable.
For tax purposes, an exchange is considered a sale and purchase, and may result
in a gain or loss. A sale is a taxable transaction. If you sell shares for less
than their cost, the difference is a capital loss. If you sell shares for more
than their cost, the difference is a capital gain. Your gain may be short term
(for shares held for one year or less) or long term (for shares held for more
than one year).
You may not create a tax loss, based on paying a sales charge, by exchanging
shares within 91 days of purchase. If you buy Class A shares and within 91 days
exchange into another fund, you may not include the sales charge in your
calculation of tax gain or loss on the sale of the first fund you purchased. The
sales charge may be included in the calculation of your tax gain or loss on a
subsequent sale of the second fund you purchased. For more information, see the
SAI.
Selling shares held in an IRA or qualified retirement account may subject you to
federal taxes, penalties and reporting requirements. Please consult your tax
advisor.
Important: This information is a brief and selective summary of some of the tax
rules that apply to this Fund. Because tax matters are highly individual and
complex, you should consult a qualified tax advisor.
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24p --- AXP STOCK FUND --- 2004 PROSPECTUS
Master/Feeder Structure
This Fund uses a master/feeder structure. This means that the Fund (a feeder
fund) invests all of its assets in the Portfolio (the master fund). The
master/feeder structure offers the potential for reduced costs because it
spreads fixed costs of portfolio management over a larger pool of assets. The
Fund may withdraw its assets from the Portfolio at any time if the Fund's board
determines that it is best. In that event, the board would consider what action
should be taken, including whether to hire an investment advisor to manage the
Fund's assets directly or to invest all of the Fund's assets in another pooled
investment entity. Here is an illustration of the structure:
Investors buy shares in the Fund
|
V
The Fund buys units in the Portfolio
|
V
The Portfolio invests in securities, such as stocks or bonds
Other feeders may include mutual funds and institutional accounts. These feeders
buy the Portfolio's securities on the same terms and conditions as the Fund and
pay their proportionate share of the Portfolio's expenses. However, their
operating costs and sales charges are different from those of the Fund.
Therefore, the investment returns for other feeders are different from the
returns of the Fund.
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25p --- AXP STOCK FUND --- 2004 PROSPECTUS
Financial Highlights
The financial highlights tables are intended to help you understand the Fund's
financial performance. Certain information reflects financial results for a
single Fund share. The total returns in the tables represent the rate that an
investor would have earned or lost on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by KPMG LLP, whose report, along with the Fund's financial statements,
is included in the annual report which, if not included with this prospectus, is
available upon request.
Class A
Per share income and capital changes(a)
Fiscal period ended Sept. 30, 2004 2003 2002 2001 2000
Net asset value, beginning of period $16.60 $14.47 $17.86 $27.12 $26.14
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) .20 .18 .17 .20 .19
Net gains (losses) (both realized and unrealized) 1.41 2.13 (3.39) (6.47) 4.11
------ ------ ------ ------ ------
Total from investment operations 1.61 2.31 (3.22) (6.27) 4.30
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (.19) (.18) (.17) (.18) (.18)
Distributions from realized gains -- -- -- (2.81) (3.14)
------ ------ ------ ------ ------
Total distributions (.19) (.18) (.17) (2.99) (3.32)
------ ------ ------ ------ ------
Net asset value, end of period $18.02 $16.60 $14.47 $17.86 $27.12
------ ------ ------ ------ ------
Ratios/supplemental data
Net assets, end of period (in millions) $1,596 $1,651 $1,599 $2,277 $3,358
Ratio of expenses to average daily net assets(b) .89% .92% .92% .87% .84%
Ratio of net investment income (loss) to average daily net assets 1.06% 1.12% .93% .88% .67%
Portfolio turnover rate (excluding short-term securities) 76% 68% 86% 87% 53%
Total return(c) 9.72% 16.03% (18.20%) (24.87%) 16.59%
(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) Total return does not reflect payment of a sales charge.
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Class B
Per share income and capital changes(a)
Fiscal period ended Sept. 30, 2004 2003 2002 2001 2000
Net asset value, beginning of period $16.44 $14.34 $17.70 $26.90 $25.97
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) .05 .06 .03 .01 --
Net gains (losses) (both realized and unrealized) 1.42 2.10 (3.36) (6.39) 4.07
------ ------ ------ ------ ------
Total from investment operations 1.47 2.16 (3.33) (6.38) 4.07
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (.05) (.06) (.03) (.01) --
Distributions from realized gains -- -- -- (2.81) (3.14)
------ ------ ------ ------ ------
Total distributions (.05) (.06) (.03) (2.82) (3.14)
------ ------ ------ ------ ------
Net asset value, end of period $17.86 $16.44 $14.34 $17.70 $26.90
------ ------ ------ ------ ------
Ratios/supplemental data
Net assets, end of period (in millions) $146 $190 $210 $306 $436
Ratio of expenses to average daily net assets(b) 1.67% 1.69% 1.69% 1.64% 1.60%
Ratio of net investment income (loss) to average daily net assets .27% .35% .15% .11% (.09%)
Portfolio turnover rate (excluding short-term securities) 76% 68% 86% 87% 53%
Total return(c) 8.91% 15.09% (18.84%) (25.48%) 15.73%
(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) Total return does not reflect payment of a sales charge.
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27p --- AXP STOCK FUND --- 2004 PROSPECTUS
Class C
Per share income and capital changes(a)
Fiscal period ended Sept. 30, 2004 2003 2002 2001 2000(b)
Net asset value, beginning of period $16.39 $14.30 $17.66 $26.88 $26.70
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) .06 .07 .04 .04 .05
Net gains (losses) (both realized and unrealized) 1.39 2.09 (3.36) (6.41) .17
------ ------ ------ ------ ------
Total from investment operations 1.45 2.16 (3.32) (6.37) .22
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (.05) (.07) (.04) (.04) (.04)
Distributions from realized gains -- -- -- (2.81) --
------ ------ ------ ------ ------
Total distributions (.05) (.07) (.04) (2.85) (.04)
------ ------ ------ ------ ------
Net asset value, end of period $17.79 $16.39 $14.30 $17.66 $26.88
------ ------ ------ ------ ------
Ratios/supplemental data
Net assets, end of period (in millions) $3 $3 $2 $2 $1
Ratio of expenses to average daily net assets(c) 1.67% 1.70% 1.71% 1.64% 1.60%(d)
Ratio of net investment income (loss) to average daily net assets .29% .32% .14% .16% .02%(d)
Portfolio turnover rate (excluding short-term securities) 76% 68% 86% 87% 53%
Total return(e) 8.87% 15.11% (18.84%) (25.47%) .81%(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 2000.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
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28p --- AXP STOCK FUND --- 2004 PROSPECTUS
Class Y
Per share income and capital changes(a)
Fiscal period ended Sept. 30, 2004 2003 2002 2001 2000
Net asset value, beginning of period $16.59 $14.46 $17.86 $27.13 $26.14
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) .23 .20 .20 .23 .23
Net gains (losses) (both realized and unrealized) 1.41 2.14 (3.40) (6.47) 4.13
------ ------ ------ ------ ------
Total from investment operations 1.64 2.34 (3.20) (6.24) 4.36
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (.22) (.21) (.20) (.22) (.23)
Distributions from realized gains -- -- -- (2.81) (3.14)
------ ------ ------ ------ ------
Total distributions (.22) (.21) (.20) (3.03) (3.37)
------ ------ ------ ------ ------
Net asset value, end of period $18.01 $16.59 $14.46 $17.86 $27.13
------ ------ ------ ------ ------
Ratios/supplemental data
Net assets, end of period (in millions) $438 $520 $490 $694 $981
Ratio of expenses to average daily net assets(b) .73% .76% .76% .71% .69%
Ratio of net investment income (loss) to average daily net assets 1.23% 1.28% 1.08% 1.04% .82%
Portfolio turnover rate (excluding short-term securities) 76% 68% 86% 87% 53%
Total return(c) 9.90% 16.23% (18.12%) (24.77%) 16.80%
(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) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
29p --- AXP STOCK FUND --- 2004 PROSPECTUS
This Fund, along with the other American Express mutual funds, is distributed by
American Express Financial Advisors Inc. and can be purchased from an American
Express financial advisor or from other authorized broker-dealers or third
parties. The Funds can be found under the "Amer Express" banner in most mutual
fund quotations.
Additional information about the Fund and its investments is available in the
Fund's Statement of Additional Information (SAI), and annual and semiannual
reports to shareholders. In the Fund's annual report, you will find a discussion
of market conditions and investment strategies that significantly affected the
Fund during its most recent fiscal year. The SAI is incorporated by reference in
this prospectus. For a free copy of the SAI, the annual report, or the
semiannual report, contact your selling agent or American Express Client Service
Corporation.
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
(800) 862-7919
TTY: (800) 846-4852
Web site address:
americanexpress.com/funds
You may review and copy information about the Fund, including the SAI, at the
Securities and Exchange Commission's (Commission) Public Reference Room in
Washington, D.C. (for information about the public reference room call
1-202-942-8090). Reports and other information about the Fund are available on
the EDGAR Database on the Commission's Internet site at (http://www.sec.gov).
Copies of this information may be obtained, after paying a duplicating fee, by
electronic request at the following E-mail address: publicinfo@sec.gov, or by
writing to the Public Reference Section of the Commission, Washington, D.C.
20549-0102.
Investment Company Act File #811-498
Ticker Symbol
Class A: INSTX Class B:IDSBX
Class C: -- Class Y:IDSYX
(logo)
AMERICAN
EXPRESS
(R)
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
S-6351-99 Y (11/04)
AXP(R) Stock Fund
Supplement to the Nov. 29, 2004 Prospectus
This supplement describes the Fund's Class I shares. The caption headings used
in this Supplement correspond to the caption headings used in the prospectus.
You may purchase Class I shares only if you are an eligible investor, as
described under the caption "Buying and Selling Shares" below.
PAST PERFORMANCE
Class I has not been in existence for a full calendar year, and therefore
performance information is not shown. The performance table is intended to
indicate some of the risks of investing in the Fund by showing changes in the
Fund's performance over time. Please note that you will find performance
returns, after the deduction of certain taxes, for other classes of shares of
the Fund, together with returns of one or more broad measures of market
performance, in the performance table of the prospectus.
Past performance for Class I for the period prior to March 4, 2004 may be
calculated based on the performance of Class A, adjusted to reflect differences
in sales charges, but not differences in annual operating expenses. The use of
blended performance (Class I performance blended with Class A performance for
periods before March 4, 2004) generally results in lower performance than Class
I shares would have achieved had they been offered for the entire period.
FEES AND EXPENSES
Fund investors pay various expenses. The table describes the fees and expenses
that you may pay if you buy and hold shares of the Fund. The table is
supplemented as follows:
Shareholder Fees (fees paid directly from your investment)
Class I
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) none
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of purchase) none
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
As a percentage of average daily net assets: Class I
Management fees(a) 0.46%
Distribution (12b-1) fees 0.00%
Other expenses(b) 0.06%
Total(c) 0.52%
(a) Includes the impact of a performance incentive adjustment fee that
decreased the Fund's management fee by 0.03% for the most recent fiscal
year.
(b) Other expenses include an administrative services fee and other nonadvisory
expenses.
Example
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The table is supplemented as
follows:
1 year 3 years 5 years 10 years
Class I $53 $167 $291 $656
BUYING AND SELLING SHARES
The description of Investment Options is supplemented as follows:
If you are an eligible investor, you may purchase Class I shares at net asset
value without an initial sales charge or CDSC on redemption. Class I shares do
not have annual distribution and service fees, and do not convert to any other
class of shares.
The following eligible investors may purchase Class I shares:
o Any fund distributed by American Express Financial Advisors Inc. (AEFA), if
the fund seeks to achieve its investment objective by investing primarily in
shares of the Fund and other American Express Funds.
In addition, AEFA, in its sole discretion, may accept investments from other
purchasers not listed above.
The discussion of buying and selling shares is supplemented as follows:
You may purchase, redeem or exchange Class I shares only through AEFA (see the
back cover of the prospectus for address and telephone number). You may exchange
your Class I shares only for Class I shares of another American Express Fund.
FINANCIAL HIGHLIGHTS
The Financial Highlights table is intended to help you understand the Fund's
financial performance. It is supplemented as follows:
Class I
Per share income and capital changes(a)
Fiscal period ended Sept. 30, 2004(b)
Net asset value, beginning of period $18.96
------
Income from investment operations:
Net investment income (loss) .20
Net gains (losses) (both realized and unrealized) (.96)
------
Total from investment operations (.76)
------
Less distributions:
Dividends from net investment income (.19)
------
Net asset value, end of period $18.01
------
Ratios/supplemental data
Net assets, end of period (in millions) $12
Ratio of expenses to average daily net assets(c) .52%(d)
Ratio of net investment income (loss) to average daily net assets 1.50%(d)
Portfolio turnover rate (excluding short-term securities) 76%
Total return(e) (4.03%)(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was March 4, 2004.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
S-6351-79 Y (11/04)