Riversource Investment Series, Inc. – ‘N-30D’ for 3/31/00

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Annual or Semi-Annual Report Mailed to Shareholders   —   Rule 30d-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-30D       Annual or Semi-Annual Report Mailed to                19    119K 
                          Shareholders                                           

Document Table of Contents

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                                                                 AXP(SM)
                                                                Mutual
                                                2000 SEMIANNUAL REPORT

(icon of) magnifying glass                                                      

American Express (R) Funds                                                      

AXP Mutual seeks to provide shareholders with a balance of growth of capital and
current income.                                                                 

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A Beneficial Balance                                                            

A balanced  portfolio isone of the building blocks of investment  planning.  And
balance  is what AXP  Mutual  is all  about.  This Fund  starts  with a focus on
stocks,  many of which are part of the who's who of corporate  America.  To help
balance the fluctuations  inherent in stocks,  as well as provide greater income
to investors,  bonds are added to the portfolio. The result: a fund that strives
to provide  income  above  that of a pure  stock  fund,  while  still  providing
potential for capital appreciation.                                             

CONTENTS                                                                        

From the Chairman                          3                                    
From the Portfolio Managers                3                                    
Fund Facts                                 5                                    
The 10 Largest Holdings                    6                                    
Financial Statements (Fund)                7                                    
Notes to Financial Statements (Fund)      10                                    
Financial Statements (Portfolio)          16                                    
Notes to Financial Statements (Portfolio) 19                                    
Investments in Securities                 24                                    

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(picture of) Arne H. Carlson                                                    
Arne H. Carlson                                                                 
Chariman of the board                                                           

From the Chairman                                                               

The financial  markets have always had their ups and downs, but in recent months
volatility  has become  more  frequent  and  intense.  While no one can say with
certainty what the markets will do, American Express Financial Corporation,  the
Fund's  investment  manager,  expects  economic  growth to  continue  this year,
accompanied  by a modest rise in long-term  interest  rates.  But no matter what
transpires,  this is a  great  time to  take a  close  look  at your  goals  and
investments. We encourage you to:                                               

o Consult  a  professional  investment  advisor  who can help  you cut  through 
mountains of data.                                                          

o Set financial  goals that extend beyond those  achievable  through  retirement
plans of your employer.                                                     

o Learn as much as you can about your current investments.                      

The  portfolio  managers'  letter that  follows  provides a review of the Fund's
investment  strategies and  performance.  The semiannual  report  contains other
valuable  information  as well. The Fund's  prospectus  describes its investment
objectives  and how it intends  to  achieve  those  objectives.  As  experienced
investors know, information is vital to making good investment decisions.       

So, take a moment and decide again whether the Fund's investment  objectives and
management  style  fit  with  your  other  investments  to help you  reach  your
financial  goals.  And make it a  practice  on a regular  basis to  assess  your
investment options.                                                             

Sincerely,                                                                      

Arne H. Carlson                                                                 

(picture of) Kurt Winters                                                       
Kurt Winters                                                                    
Portfolio manager                                                               

(picture of) Brad Stone                                                         
Brad Stone                                                                      
Portfolio manager                                                               

From the Portfolio Managers                                                     

Value stocks and bonds struggled for much of the past six months,  tempering the
performance of AXP Mutual. Still, the Fund's Class A shares generated a positive
total  return of 6.01%  (excluding  the sales  charge) for the first half of the
fiscal year -- October 1999 through March 2000.                                 

The period got off to a good start,  as reports of  still-benign  inflation  and
generally good corporate  profits buoyed  investors'  spirits.  The stock market
responded  with a solid advance in the fall that,  supported by fading  concerns
about the Y2K computer bug and increasing  excitement  about the Internet,  soon
turned into a roaring rally. The positive  momentum  continued  through 1999 and
into the early days of January.                                                 

A STRONG FINISH                                                                 

By that time, fear of potentially higher inflation and higher interest rates had
resurfaced.  Stocks reacted by retreating over the next several weeks.  But with
the characteristic resilience they've shown in recent years, stocks soon righted
themselves and rebounded sharply in March.                                      

While the Fund's  stock  holdings  roughly  followed  the pattern of the market,
their gains were less robust. The over-arching reason for the difference was the
Fund's  emphasis on value stocks,  which couldn't keep pace with the high-flying
Internet-related  growth stocks that powered the broad market. In addition,  the
Fund had a substantial exposure to industrial stocks, which suffered from rising
commodity prices, and financial services stocks, which weakened under the weight
of rising  interest  rates.  The Fund's energy and technology  holdings,  on the
other hand, performed well overall.                                             

The rising-rate  trend also made life difficult at times for the bond portion of
the  portfolio,  which included  corporate,  mortgage-backed  and U.S.  Treasury
issues.  (Rising  rates depress bond prices.) To mitigate the effect of the rate
rise,  we maintained a relatively  short  duration  among bonds.  (Duration is a
measure  of how  sensitive  the  bonds'  prices  are to  interest-rate  changes.
Generally, the longer the duration, the greater the sensitivity.)               

We  maintained  an asset mix of 60% to 65%  stocks,  30% to 35%  bonds  over the
period.  The only change of note consisted of lowering the exposure to financial
services and industrial stocks.                                                 

As we look toward the second half of the fiscal year,  we're  encouraged  by the
healthy gain of the Fund's stock holdings in March. While it's too early to draw
any firm conclusions, the upturn could be an indication of a "broadening out" in
the  market  -- that  is,  better  performance  from a wider  range  of  stocks,
especially  value issues.  On the bond side, the  possibility of higher interest
rates probably will hang over the market for a time yet.                        

Kurt Winters                                                                    

Brad Stone                                                                      

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Fund Facts                                                                      

Class A -- 6-month performance                                                  
(All figures per share)                                                         

Net asset value (NAV)                                                           
March 31, 2000                                                      $12.62      
Sept. 30, 1999                                                      $12.94      
Decrease                                                            $ 0.32      

Distributions -- Oct. 1, 1999 - March 31, 2000                                  
From income                                                          $0.28      
From capital gains                                                   $0.80      
Total distributions                                                  $1.08      

Total return*                                                       +6.01%**    

Class B -- 6-month performance                                                  
(All figures per share)                                                         

Net asset value (NAV)                                                           
March 31, 2000                                                      $12.53      
Sept. 30, 1999                                                      $12.86      
Decrease                                                            $ 0.33      

Distributions -- Oct. 1, 1999 - March 31, 2000                                  
From income                                                          $0.22      
From capital gains                                                   $0.80      
Total distributions                                                  $1.02      

Total return*                                                       +5.50%**    

Class Y -- 6-month performance                                                  
(All figures per share)                                                         

Net asset value (NAV)                                                           
March 31, 2000                                                      $12.62      
Sept. 30, 1999                                                      $12.95      
Decrease                                                            $ 0.33      

Distributions -- Oct. 1, 1999 - March 31, 2000                                  
From income                                                          $0.29      
From capital gains                                                   $0.80      
Total distributions                                                  $1.09      

Total return*                                                       +6.01%**    

*Returns do not include sales load. The prospectus discusses the effect of sales
charges, if any, on the various classes.                                        

**The  total  return  is  a  hypothetical   investment  in  the  Fund  with  all
distributions reinvested.                                                       

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The 10 Largest Holdings                                                         

                               Percent                   Value
                                   (of net assets)      (as of March 31, 2000)
Citigroup                                3.32%              $150,357,187      
American Intl Group                      2.56                116,070,000      
Kansas City Southern Inds                2.01                 91,186,562      
Exxon Mobil                              1.96                 88,856,349      
AT&T                                     1.84                 83,531,249      
Chevron                                  1.76                 79,958,437      
Bank of America                          1.52                 68,955,312      
MCI WorldCom                             1.28                 58,113,281      
Wells Fargo                              1.18                 53,423,437      
Motorola                                 1.18                 53,390,625      

Excludes U.S. Treasury and government agency holdings.                          

For further detail about these  holdings,  please refer to the section  entitled
"Investments in Securities."                                                    

(icon of) pie chart                                                             

 The 10 holdings listed here
  make up 18.61% of net assets

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Financial Statements                                                                                 

Statement of assets and liabilities                                                                  
AXP Mutual                                                                                           

March 31, 2000 (Unaudited)                                                                           

Assets                                                                                               
                                                                                                     
Investment in Balanced Portfolio (Note 1)                                             $4,533,041,330 
                                                                                      -------------- 
Liabilities                                                                                          
Accrued distribution fee                                                                      32,912 
Accrued service fee                                                                            2,982 
Accrued transfer agency fee                                                                   15,431 
Accrued administrative services fee                                                            3,914 
Other accrued expenses                                                                       113,559 
                                                                                             ------- 
Total liabilities                                                                            168,798 
                                                                                             ------- 
Net assets applicable to outstanding capital stock                                    $4,532,872,532 
                                                                                      ============== 
Represented by                                                                                       
Capital stock-- $.01 par value (Note 1)                                               $    3,594,417 
Additional paid-in capital                                                             4,249,431,173 
Undistributed net investment income                                                        4,562,799 
Accumulated net realized gain (loss)                                                     (12,899,676)
Unrealized appreciation (depreciation) on investments and on                                         
   translation of assets and liabilities in foreign currencies                           288,183,819 
                                                                                         ----------- 
Total -- representing net assets applicable to outstanding capital stock              $4,532,872,532 
                                                                                      ============== 
Net assets applicable to outstanding shares:             Class A                      $2,983,221,920 
                                                         Class B                      $  459,998,844 
                                                         Class Y                      $1,089,651,768 
Net asset value per share of outstanding capital stock:  Class A shares  236,384,063  $        12.62 
                                                         Class B shares   36,722,360  $        12.53 
                                                         Class Y shares   86,335,290  $        12.62 
                                                                          ----------  -------------- 

See accompanying notes to financial statements.                                                      

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Statement of operations                                                             
AXP Mutual                                                                          

Six months ended March 31, 2000 (Unaudited)                                         

Investment income                                                                   
Income:                                                                             
                                                                                    
Dividends                                                              $ 24,795,595 
Interest                                                                 58,174,656 
   Less foreign taxes withheld                                              (21,450)
                                                                            ------- 
Total income                                                             82,948,801 
                                                                         ---------- 
Expenses (Note 2):                                                                  
Expenses allocated from Balanced Portfolio                               11,260,290 
Distribution fee                                                                    
   Class A                                                                3,834,829 
   Class B                                                                2,341,006 
Transfer agency fee                                                       2,751,588 
Incremental transfer agency fee                                                     
   Class A                                                                  154,213 
   Class B                                                                   59,213 
Service fee-- Class Y                                                       563,285 
Administrative services fees and expenses                                   746,039 
Compensation of board members                                                 6,292 
Printing and postage                                                         48,494 
Registration fees                                                            25,095 
Audit fees                                                                    5,125 
Other                                                                         6,676 
                                                                              ----- 
Total expenses                                                           21,802,145 
   Earnings credits on cash balances (Note 2)                              (126,804)
                                                                           -------- 
Total net expenses                                                       21,675,341 
                                                                         ---------- 
Investment income (loss) -- net                                          61,273,460 
                                                                         ---------- 
Realized and unrealized gain (loss) -- net                                          
Net realized gain (loss) on:                                                        
   Security transactions                                                 28,074,560 
   Financial futures contracts                                            8,536,820 
   Foreign currency transactions                                             58,647 
   Options contracts written                                              1,591,275 
                                                                          --------- 
Net realized gain (loss) on investments                                  38,261,302 
Net change in unrealized appreciation (depreciation) on investments                 
   and on translation of assets and liabilities in foreign currencies   165,718,529 
                                                                        ----------- 
Net gain (loss) on investments and foreign currencies                   203,979,831 
                                                                        ----------- 
Net increase (decrease) in net assets resulting from operations        $265,253,291 
                                                                       ============ 

See accompanying notes to financial statements.                                     

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Statements of changes in net assets                                                                  
AXP Mutual                                                                                           

                                                                      March 31, 2000   Sept. 30, 1999
                                                                     Six months ended    Year ended  
                                                                        (Unaudited)                  

Operations and distributions                                                                         
                                                                                                     
Investment income (loss)-- net                                       $   61,273,460   $  132,955,538 
Net realized gain (loss) on investments                                  38,261,302      275,155,428 
Net change in unrealized appreciation (depreciation) on investments                                  
 and on translation of assets and liabilities in foreign currencies     165,718,529      151,627,239 
                                                                        -----------      ----------- 
Net  increase  (decrease)  in net assets  resulting  from  operations   265,253,291      559,738,205 
                                                                        -----------      ----------- 
Distributions to shareholders from:                                                                  
   Net investment income                                                                             
      Class A                                                           (39,617,585)     (85,884,466)
      Class B                                                            (4,062,909)      (8,498,742)
      Class Y                                                           (15,752,250)     (36,023,973)
   Net realized gain                                                                                 
      Class A                                                          (211,728,080)    (339,669,342)
      Class B                                                           (32,551,037)     (42,241,506)
      Class Y                                                           (80,724,160)    (149,459,194)
                                                                        -----------     ------------ 
Total distributions                                                    (384,436,021)    (661,777,223)
                                                                       ------------     ------------ 
Capital share transactions (Note 3)                                                                  
Proceeds from sales                                                                                  
   Class A shares (Note 2)                                               91,943,076      232,550,724 
   Class B shares                                                        54,919,002      140,100,650 
   Class Y shares                                                       167,022,292      256,437,748 
Reinvestment of distributions at net asset value                                                     
   Class A shares                                                       224,352,785      377,479,648 
   Class B shares                                                        35,936,901       49,757,221 
   Class Y shares                                                        96,476,410      185,483,167 
Payments for redemptions                                                                             
   Class A shares                                                      (358,796,166)    (493,616,208)
   Class B shares (Note 2)                                              (77,654,708)     (78,008,197)
   Class Y shares                                                      (287,146,861)    (612,808,155)
                                                                       ------------     ------------ 
Increase (decrease) in net assets from capital share transactions       (52,947,269)      57,376,598 
                                                                        -----------       ---------- 
Total increase (decrease) in net assets                                (172,129,999)     (44,662,420)
Net assets at beginning of period                                     4,705,002,531    4,749,664,951 
                                                                      -------------    ------------- 
Net assets at end of period                                          $4,532,872,532   $4,705,002,531 
                                                                     ==============   ============== 
Undistributed net investment income                                  $    4,562,799   $    2,722,083 
                                                                     --------------   -------------- 

See accompanying notes to financial statements.                                                      

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Notes to Financial Statements                                                   

AXP Mutual                                                                      
(Unaudited as to March 31, 2000)                                                

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   
The Fund is a series of AXP Investment Series,  Inc. and is registered under the
Investment  Company  Act  of  1940  (as  amended)  as  a  diversified,  open-end
management  investment  company.  AXP  Investment  Series,  Inc.  has 10 billion
authorized  shares of capital  stock that can be  allocated  among the  separate
series as designated by the board.                                              

The Fund offers Class A, Class B and Class Y shares.                            

o Class A shares are sold with a front-end sales charge.                        
o Class B shares may be  subject  to a  contingent  deferred  sales  charge and 
 automatically  convert to Class A shares  during the ninth  calendar  year of
ownership.                                                                  
o Class Y  shares  have no  sales  charge  and are  offered  only to  qualifying
institutional investors.                                                    

All classes of shares have identical  voting,  dividend and liquidation  rights.
The  distribution  fee,  incremental  transfer agency fee and service fee (class
specific  expenses)  differ among classes.  Income,  expenses  (other than class
specific  expenses) and realized and  unrealized  gains or losses on investments
are allocated to each class of shares based upon its relative net assets.       

Investment in Balanced Portfolio                                                
The Fund  invests all of its assets in Balanced  Portfolio  (the  Portfolio),  a
series of Growth and Income Trust (the Trust),  an open-end  investment  company
that has the same objectives as the Fund. The Portfolio  invests  primarily in a
combination  of common  stocks  and  senior  securities  (debt  obligations  and
preferred stocks).                                                              

The Fund  records  daily  its  share of the  Portfolio's  income,  expenses  and
realized  and  unrealized  gains and losses.  The  financial  statements  of the
Portfolio  are  included  elsewhere  in  this  report  and  should  be  read  in
conjunction with the Fund's financial statements.                               

The Fund records its  investment  in the Portfolio at the value that is equal to
the Fund's  proportionate  ownership interest in the Portfolio's net assets. The
percentage of the  Portfolio  owned by the Fund as of March 31, 2000 was 99.97%.
Valuation  of  securities  held by the  Portfolio  is discussed in Note 1 of the
Portfolio's "Notes to financial statements" (included elsewhere in this report).

Use of estimates                                                                
Preparing  financial  statements that conform to generally  accepted  accounting
principles   requires   management  to  make  estimates  (e.g.,  on  assets  and
liabilities) that could differ from actual results.                             

Federal taxes                                                                   
The Fund's  policy is to comply with all sections of the  Internal  Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable  income to the  shareholders.  No provision  for income or excise
taxes is thus required.                                                         

Net  investment  income  (loss) and net realized  gains  (losses) may differ for
financial  statement and tax purposes  primarily  because of deferred  losses on
certain futures  contracts,  the  recognition of certain foreign  currency gains
(losses) as ordinary income (loss) for tax purposes,  and losses deferred due to
"wash sale"  transactions.  The character of distributions  made during the year
from net investment  income or net realized gains may differ from their ultimate
characterization  for federal  income tax purposes.  Also,  due to the timing of
dividend  distributions,  the fiscal year in which amounts are  distributed  may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.                                                                       

Dividends to shareholders                                                       
Dividends from net investment  income,  declared and paid each calendar quarter,
are reinvested in additional shares of the 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.                                                  

2. EXPENSES AND SALES CHARGES                                                   
In addition to the expenses  allocated from the Portfolio,  the Fund accrues its
own expenses as follows:                                                        

The Fund has an agreement with American Express Financial  Corporation (AEFC) to
provide administrative services. Under an Administrative Services Agreement, the
Fund pays AEFC a fee for administration and accounting  services at a percentage
of the Fund's  average  daily net assets in reducing  percentages  from 0.04% to
0.02% annually.  A minor portion of additional  administrative  service expenses
paid by the Fund are  consultants'  fees and fund  office  expenses.  Under this
agreement,  the Fund also pays taxes, audit and certain legal fees, registration
fees for shares,  compensation of board members,  corporate  filing fees and any
other expenses properly payable by the Fund and approved by the board.          

Under a separate  Transfer  Agency  Agreement,  American  Express Client Service
Corporation (AECSC) maintains  shareholder  accounts and records.  The Fund pays
AECSC an annual fee per shareholder account for this service as follows:        

o Class A $19                                                                   
o Class B $20                                                                   
o Class Y $17                                                                   

The Fund has  agreements  with  American  Express  Financial  Advisors Inc. (the
Distributor)  for  distribution  and  shareholder  services.  Under  a Plan  and
Agreement of Distribution, the Fund pays a distribution fee at an annual rate up
to 0.25% of the Fund's average daily net assets  attributable  to Class A shares
and up to 1.00% for Class B shares.                                             

Under a Shareholder  Service Agreement,  the Fund's Class Y shares pay a fee for
service  provided to  shareholders  by financial  advisors  and other  servicing
agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net
assets attributable to Class Y shares.                                          

Sales charges  received by the  Distributor  for  distributing  Fund shares were
$1,605,047  for Class A and  $291,033 for Class B for the six months ended March
31, 2000.                                                                       

During the six months ended March 31, 2000, the Fund's transfer agency fees were
reduced  by  $126,804  as a result  of  earnings  credits  from  overnight  cash
balances.                                                                       

3. CAPITAL SHARE TRANSACTIONS                                                   
Transactions  in  shares  of  capital  stock for the  periods  indicated  are as
follows:                                                                        

                                         Six months ended March 31, 2000
                                       Class A        Class B        Class Y
Sold                                    7,247,065      4,344,268     12,914,482 
Issued for reinvested distributions    18,010,569      2,908,687      7,753,173 
Redeemed                              (28,467,037)    (6,246,664)   (22,754,549)
                                     -----------     ----------    -----------
Net increase (decrease)                (3,209,403)     1,006,291     (2,086,894)

                                       Year ended Sept. 30, 1999
                                       Class A        Class B        Class Y
Sold                                   17,205,572     10,426,243     18,943,044 
Issued for reinvested distributions    29,201,918      3,876,603     14,350,544 
Redeemed                              (36,422,930)    (5,801,641)   (45,585,649)
                                     -----------     ----------    -----------
Net increase (decrease)                 9,984,560      8,501,205    (12,292,061)

4. BANK BORROWINGS                                                              
The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund
is permitted to have bank borrowings for temporary or emergency purposes to fund
shareholder redemptions. The Fund must have asset coverage for borrowings not to
exceed the  aggregate  of 333% of advances  equal to or less than five  business
days plus 367% of advances over five business days. The agreement, which enables
the Fund to  participate  with other  American  Express  mutual  funds,  permits
borrowings  up to $200 million,  collectively.  Interest is charged to each Fund
based on its  borrowings at a rate equal to the Federal Funds Rate plus 0.30% or
the Eurodollar Rate (Reserve Adjusted) plus 0.20%.  Borrowings are payable up to
90 days after such loan is executed.  The Fund also pays a commitment  fee equal
to its pro rata share of the amount of the  credit  facility  at a rate of 0.05%
per annum.  The Fund had no borrowings  outstanding  during the six months ended
March 31, 2000.                                                                 

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5. FINANCIAL HIGHLIGHTS                                                                           
The tables below show certain important financial  information for evaluting the                  
Fund's results.                                                                                   

Fiscal period ended Sept. 30,                                                                     

Per share income and capital changesa                                                             

                                                                         Class A                  

                                                       2000b     1999      1998     1997     1996 

                                                                                                  
Net asset value, beginning of period                 $12.94    $13.29    $15.32   $13.51   $12.69 

Income from investment operations:                                                                
Net investment income (loss)                            .17       .37       .48      .57      .54 

Net gains (losses) (both realized and unrealized)       .59      1.15      (.36)    2.61      .93 

Total from investment operations                        .76      1.52       .12     3.18     1.47 

Less distributions:                                                                               
Dividends from net investment income                   (.17)     (.36)     (.48)    (.53)    (.52)

Distributions from realized gains                      (.91)    (1.51)    (1.67)    (.84)    (.13)

Total distributions                                   (1.08)    (1.87)    (2.15)   (1.37)    (.65)

Net asset value, end of period                       $12.62    $12.94    $13.29   $15.32   $13.51 

Ratios/supplemental data                                                                          
Net assets, end of period (in millions)              $2,983    $3,101    $3,051   $3,251   $2,770 

Ratio of expenses to average daily net assetsc         .90%d     .83%      .80%     .83%     .87% 

Ratio of net investment income (loss)                                                             
to average daily net assets                           2.66%d    2.68%     3.35%    4.00%    4.01% 

Portfolio turnover rate                                                                           
(excluding short-term securities)                       58%      134%       98%      49%      45% 

Total returne                                         6.01%    11.72%      .70%   24.88%   11.84% 

a For a share outstanding  throughout the period. Rounded to the nearest cent.                    
b Six months ended March 31, 2000 (Unaudited).                                                    
c Expense  ratio is based on total  expenses  of the Fund  before  reduction  of                  
  earnings credits on cash balances.                                                              
d Adjusted to an annual basis.                                                                    
e Total return does not reflect payment of a sales charge.                                        

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Fiscal period ended Sept. 30,                                                                                          

Per share income and capital changesa                                                                                  

                                                     Class B                                    Class Y                

                                      2000b   1999    1998    1997    1996        2000b   1999    1998    1997    1996 

Net asset value,                                                                                                       
                                                                                                                       
beginning of period                 $12.86  $13.21  $15.25  $13.47  $12.66      $12.95  $13.29  $15.32  $13.51  $12.69 

Income from investment operations:                                                                                     
Net investment                                                                                                         
income (loss)                          .12     .27     .38     .46     .45         .19     .38     .49     .59     .56 

Net gains (losses) (both                                                                                               
realized and unrealized)               .57    1.15    (.37)   2.59     .93         .57    1.16    (.36)   2.61     .93 

Total from investment                                                                                                  
operations                             .69    1.42     .01    3.05    1.38         .76    1.54     .13    3.20    1.49 

Less distributions:                                                                                                    
Dividends from net                                                                                                     
investment income                     (.11)   (.26)   (.38)   (.43)   (.44)       (.18)   (.37)   (.49)   (.55)   (.54)

Distributions from                                                                                                     
realized gains                        (.91)  (1.51)  (1.67)   (.84)   (.13)       (.91)  (1.51)  (1.67)   (.84)   (.13)

Total distributions                  (1.02)  (1.77)  (2.05)  (1.27)   (.57)      (1.09)  (1.88)  (2.16)  (1.39)   (.67)

Net asset value,                                                                                                       
end of period                       $12.53  $12.86  $13.21  $15.25  $13.47      $12.62  $12.95  $13.29  $15.32  $13.51 

Ratios/supplemental data                                                                                               
Net assets, end of period                                                                                              
(in millions)                         $460    $459    $360    $264    $133      $1,090  $1,145  $1,339  $1,337  $1,114 

Ratio of expenses to                                                                                                   
average daily net assetsc            1.66%d  1.53%   1.56%   1.59%   1.64%        .74%d   .73%    .73%    .70%    .70% 

Ratio of net investment                                                                                                
income (loss) to average                                                                                               
daily net assets                     1.90%d  1.98%   2.58%   3.28%   3.32%       2.82%d  2.79%   3.42%   4.13%   4.18% 

Portfolio turnover rate                                                                                                
(excluding short-term                                                                                                  
securities)                            58%    134%     98%     49%     45%         58%    134%     98%     49%     45% 

Total returne                        5.50%  10.93%   (.07%) 23.93%  10.99%       6.01%  11.90%    .77%  25.04%  12.02% 

a For a share outstanding  throughout the period. Rounded to the nearest cent.                                         
b Six months ended March 31, 2000 (Unaudited).                                                                         
c Expense  ratio is based on total  expenses  of the Fund  before  reduction  of                                       
  earnings credits on cash balances.                                                                                   
d Adjusted to an annual basis.                                                                                         
e Total return does not reflect payment of a sales charge.                                                             

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Financial Statements                                                  

Statement of assets and liabilities                                   
Balanced Portfolio                                                    

March 31, 2000 (Unaudited)                                            

Assets                                                                
Investments in securities, at value (Note 1)                          
                                                                      
   (identified cost $4,752,343,833)                     $5,053,342,729
Cash in bank on demand deposit                                 818,788
Dividends and accrued interest receivable                   20,778,898
Receivable for investment securities sold                   60,588,937
U.S. government securities held as collateral (Note 6)      86,610,277
                                                            ----------
Total assets                                             5,222,139,629
                                                         -------------
Liabilities                                                           
Payable for investment securities purchased                380,010,133
Payable upon return of securities loaned (Note 6)          307,795,277
Accrued investment management services fee                      60,450
Other accrued expenses                                          40,215
                                                                ------
Total liabilities                                          687,906,075
                                                           -----------
Net assets                                              $4,534,233,554
                                                        ==============

See accompanying notes to financial statements.                       

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Statement of operations                                                             
Balanced Portfolio                                                                  

Six months ended March 31, 2000 (Unaudited)                                         

Investment income                                                                   
Income:                                                                             
                                                                                    
Dividends                                                              $ 24,802,126 
Interest                                                                 58,214,532 
   Less foreign taxes withheld                                              (21,455)
                                                                            ------- 
Total income                                                             82,995,203 
                                                                         ---------- 
Expenses (Note 2):                                                                  
Investment management services fee                                       11,054,259 
Compensation of board members                                                 8,965 
Custodian fees                                                              153,999 
Audit fees                                                                   15,375 
Other                                                                        32,436 
                                                                             ------ 
Total expenses                                                           11,265,034 
   Earnings credits on cash balances (Note 2)                                (1,777)
                                                                             ------ 
Total net expenses                                                       11,263,257 
                                                                         ---------- 
Investment income (loss) -- net                                          71,731,946 
                                                                         ---------- 
Realized and unrealized gain (loss) -- net                                          
Net realized gain (loss) on:                                                        
   Security transactions (Note 3)                                        28,078,635 
   Financial futures contracts                                            8,539,065 
   Foreign currency transactions                                             58,659 
   Options contracts written (Note 4)                                     1,591,694 
                                                                          --------- 
Net realized gain (loss) on investments                                  38,268,053 
Net change in unrealized appreciation (depreciation) on investments                 
   and on translation of assets and liabilities in foreign currencies   165,762,466 
                                                                        ----------- 
Net gain (loss) on investments and foreign currencies                   204,030,519 
                                                                        ----------- 
Net increase (decrease) in net assets resulting from operations        $275,762,465 
                                                                       ============ 

See accompanying notes to financial statements.                                     

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Statements of changes in net assets                                                                  
Balanced Portfolio                                                                                   

                                                                      March 31, 2000   Sept. 30, 1999
                                                                     Six months ended    Year ended  
                                                                        (Unaudited)                  

Operations                                                                                           
                                                                                                     
Investment income (loss)-- net                                       $   71,731,946   $  152,546,500 
Net realized gain (loss) on investments                                  38,268,053      275,222,886 
Net change in unrealized appreciation (depreciation) on investments                                  
   and on translations of assets and liabilities in foreign currencies  165,762,466      151,665,578 
                                                                        -----------      ----------- 
Net increase (decrease) in net assets resulting from operations         275,762,465      579,434,964 
Net contributions (withdrawals) from partners                          (447,942,347)    (624,252,082)
                                                                       ------------     ------------ 
Total increase (decrease) in net assets                                (172,179,882)     (44,817,118)
Net assets at beginning of period                                     4,706,413,436    4,751,230,554 
                                                                      -------------    ------------- 
Net assets at end of period                                          $4,534,233,554   $4,706,413,436 
                                                                     ==============   ============== 

See accompanying notes to financial statements.                                                      

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Notes to Financial Statements                                                   

Balanced Portfolio                                                              
(Unaudited as to March 31, 2000)                                                

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   
Balanced  Portfolio (the  Portfolio) is a series of Growth and Income Trust (the
Trust) and is registered  under the Investment  Company Act of 1940 (as amended)
as a diversified,  open-end management  investment  company.  Balanced Portfolio
seeks to provide a balance of growth of capital and current  income by investing
primarily in a  combination  of common stocks and senior  securities  (preferred
stocks and debt  obligations).  The Declaration of Trust permits the Trustees to
issue non-transferable interests in the Portfolio.                              

The Portfolio's significant accounting policies are summarized below:           

Use of estimates                                                                
Preparing  financial  statements that conform to generally  accepted  accounting
principles   requires   management  to  make  estimates  (e.g.,  on  assets  and
liabilities) that could differ from actual results.                             

Valuation of securities                                                         
All securities are valued at the close of each business day.  Securities  traded
on national  securities  exchanges  or included in national  market  systems are
valued at the last quoted sales price.  Debt securities are generally  traded in
the  over-the-counter  market and are valued at a price that reflects fair value
as quoted by dealers in these  securities or by an independent  pricing service.
Securities for which market  quotations are not readily  available are valued at
fair value according to methods selected in good faith by the board.  Short-term
securities  maturing in more than 60 days from the valuation  date are valued at
the market price or approximate  market value based on current  interest  rates;
those maturing in 60 days or less are valued at amortized cost.                 

Option transactions                                                             
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter  market where completing
the  obligation  depends  upon the  credit  standing  of the  other  party.  The
Portfolio  also may buy and sell put and call  options  and write  covered  call
options on portfolio  securities as well as write cash-secured put options.  The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases.  The risk in writing a put
option  is that  the  Portfolio  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 Portfolio  pays a premium  whether or not the option is exercised.  The
Portfolio also has the  additional  risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.                        

Option  contracts  are  valued  daily at the  closing  prices  on their  primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction  expires or closes. When
an option is  exercised,  the proceeds on sales for a written  call option,  the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.       

Futures transactions                                                            
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio  also  may buy and  write  put  and  call  options  on  these  futures
contracts.  Risks of entering into futures contracts and related options include
the  possibility  of an  illiquid  market  and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.                                                                     

Upon  entering  into a futures  contract,  the  Portfolio is required to deposit
either  cash or  securities  in an amount  (initial  margin)  equal to a certain
percentage of the contract value.  Subsequent  payments  (variation  margin) are
made or received by the Portfolio  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  Portfolio  recognizes  a realized  gain or loss when the
contract is closed or expires.                                                  

Foreign currency translations and foreign currency contracts                    
Securities and other assets and  liabilities  denominated in foreign  currencies
are translated daily into U.S. dollars.  Foreign currency amounts related to the
purchase or sale of  securities  and income and expenses are  translated  at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized  and  unrealized  security  gains or losses is  reflected as a
component of such gains or losses. In the statement of operations,  net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation   gains  or  losses  on  dividends,   interest  income  and  foreign
withholding taxes.                                                              

The Portfolio may enter into forward  foreign  currency  exchange  contracts for
operational  purposes and to protect against adverse exchange rate  fluctuation.
The net U.S.  dollar  value  of  foreign  currency  underlying  all  contractual
commitments held by the Portfolio and the resulting  unrealized  appreciation or
depreciation  are  determined  using  foreign  currency  exchange  rates from an
independent  pricing  service.  The Portfolio is subject to the credit risk that
the other party will not complete its contract obligations.                     

Securities purchased on a when-issued basis                                     
Delivery and payment for securities that have been purchased by the Portfolio on
a forward-commitment or when-issued basis can take place one month or more after
the transaction date. During this period,  such securities are subject to market
fluctuations,  and they may affect the  Portfolio's net assets the same as owned
securities.  The Portfolio  designates cash or liquid high-grade debt securities
at least  equal to the  amount  of its  commitment.  As of March 31,  2000,  the
Portfolio had entered into  outstanding  when-issued or  forward-commitments  of
$376,972,929.                                                                   

Federal taxes                                                                   
For federal  income tax purposes the Portfolio  qualifies as a  partnership  and
each  investor  in the  Portfolio  is treated as the owner of its  proportionate
share of the net assets, income,  expenses and realized and unrealized gains and
losses of the Portfolio.  As a "pass-through"  entity,  the Portfolio  therefore
does not pay any income dividends or capital gain distributions.                

Other                                                                           
Security  transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including level-yield amortization of premium and discount, is accrued daily.   

2. FEES AND EXPENSES                                                            
The Trust,  on behalf of the Portfolio,  has an Investment  Management  Services
Agreement  with  AEFC to  manage  its  portfolio.  Under  this  agreement,  AEFC
determines which securities will be purchased,  held or sold. The management fee
is a  percentage  of the  Portfolio's  average  daily  net  assets  in  reducing
percentages  from 0.53% to 0.43%  annually.  The fee may be  adjusted  upward or
downward by a  performance  incentive  adjustment  based on a comparison  of the
performance  of Class A shares of AXP Mutual to the Lipper  Balanced Fund Index.
The maximum  adjustment  is 0.08% of the  Portfolio's  average  daily net assets
after  deducting  1%  from  the  performance  difference.   If  the  performance
difference  is less  than  1%,  the  adjustment  will be  zero.  The  adjustment
decreased the fee by $328,786 for the six months ended March 31, 2000.          

Under the  agreement,  the Trust  also pays  taxes,  brokerage  commissions  and
nonadvisory  expenses,  which include  custodian  fees,  audit and certain legal
fees,  fidelity bond premiums,  registration  fees for units,  office  expenses,
consultants'  fees,  compensation of trustees,  corporate filing fees,  expenses
incurred in connection with lending  securities of the Portfolio,  and any other
expenses properly payable by the Trust or Portfolio and approved by the board.  

During the six months ended March 31, 2000, the Portfolio's  custodian fees were
reduced by $1,777 as a result of earnings  credits from overnight cash balances.
The Portfolio  also pays custodian  fees to American  Express Trust Company,  an
affiliate of AEFC.                                                              

According to a Placement Agency Agreement,  American Express Financial  Advisors
Inc. acts as placement agent of the Trust's units.                              

3. SECURITIES TRANSACTIONS                                                      
Cost of purchases and proceeds from sales of securities  (other than  short-term
obligations) aggregated $2,734,044,986 and $3,115,145,573, respectively, for the
six months ended March 31, 2000.  For the same period,  the  portfolio  turnover
rate was 58%.  Realized  gains and losses are  determined on an identified  cost
basis.                                                                          

Brokerage  commissions paid to brokers affiliated with AEFC were $35,141 for the
six months ended March 31, 2000.                                                

4. OPTIONS CONTRACTS WRITTEN                                                    
Contracts and premium amounts  associated with options  contracts written are as
follows:                                                                        

                                 Six months ended March 31, 2000

                                Puts                       Calls
                              Contracts   Premium        Contracts   Premium
Balance Sept. 30, 1999              --          $--         12,500   $1,822,960 
Opened                             260      161,460            260      206,149 
Closed                              --           --        (12,500)  (1,822,960)
Exercised                         (260)    (161,460)            --           -- 
Expired                             --           --           (260)    (206,149)
                                  ---         ----           ----     --------
Balance March 31, 2000              --          $--             --          $-- 

See "Summary of significant accounting policies."                               

5. INTEREST RATE FUTURES CONTRACTS                                              
As of March 31, 2000,  investments in securities  included  securities valued at
$31,531,839  that were pledged as collateral to cover initial margin deposits on
700 open purchase  contracts and 8,467 open sale contracts.  The market value of
the open  purchase  contracts  as of March 31, 2000 was  $64,356,250  with a net
unrealized  gain of $423,762.  The market value of the open sale contracts as of
March 31, 2000 was $830,693,920  with a net unrealized loss of $14,416,808.  See
"Summary of significant accounting policies".                                   

6. LENDING OF PORTFOLIO SECURITIES                                              
As of March 31, 2000, securities valued at $299,071,581 were on loan to brokers.
For collateral,  the Portfolio received $221,185,000 in cash and U.S. government
securities  valued at $86,610,277.  Income from securities  lending  amounted to
$739,905 for the six months ended March 31, 2000.  The risks to the Portfolio of
securities lending are that the borrower may not provide  additional  collateral
when required or return the securities when due.                                

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Investments in Securities                                                              

Balanced Portfolio                                                                     
March 31, 2000 (Unaudited)                                                             

(Percentages represent value of investments compared to net assets)                    

Common stocks (64.8%)                                                                  
Issuer                                                       Shares           Value(a) 

Aerospace & defense (1.6%)                                                             
                                                                                       
Honeywell Intl                                               800,000        $42,150,000
Rockwell Intl                                                675,000         28,223,438
Total                                                                        70,373,438

Airlines (0.4%)                                                                        
AMR                                                          625,000(b)      19,921,875

Automotive & related (2.3%)                                                            
Delphi Automotive Systems                                  1,508,916         24,142,656
Ford Motor                                                   515,000         23,657,813
General Motors                                               275,000         22,773,438
TRW                                                          577,000         33,754,499
Total                                                                       104,328,406

Banks and savings & loans (6.5%)                                                       
Bank of America                                            1,315,000         68,955,312
Bank of New York                                           1,105,000         45,926,563
Chase Manhattan                                              480,000         41,850,000
FleetBoston Financial                                      1,035,000         37,777,500
Mellon Financial                                           1,110,000         32,745,000
SLM Holding                                                  400,000         13,325,000
Wells Fargo                                                1,305,000         53,423,437
Total                                                                       294,002,812

Building materials & construction (1.3%)                                               
Fluor                                                        770,000         23,870,000
Martin Marietta Materials                                    710,450         33,746,375
Total                                                                        57,616,375

Chemicals (1.4%)                                                                       
Air Products & Chemicals                                     815,000         23,176,563
Dow Chemical                                                 120,000         13,680,000
Du Pont (EI) de Nemours                                      535,000         28,288,125
Total                                                                        65,144,688

Communications equipment & services (1.2%)                                             
Motorola                                                     375,000         53,390,625

Computers & office equipment (3.7%)                                                    
BMC Software                                                 310,000(b)      15,306,250
Compaq Computer                                              635,000         16,906,875
Electronic Data Systems                                      243,000         15,597,563
EQUANT                                                       216,800(b,c)    18,441,550
First Data                                                   330,000         14,602,500
Hewlett-Packard                                              115,000         15,244,688
NOVA                                                         565,000(b)      16,455,625
SABRE Holdings Cl A                                          246,158(b)       9,092,443
Solectron                                                    720,000(b)      28,844,999
Unisys                                                       630,000(b)      16,065,000
Total                                                                       166,557,493

Electronics (1.0%)                                                                     
Natl Semiconductor                                           254,300(b)      15,416,938
Texas Instruments                                            175,000         28,000,000
Total                                                                        43,416,938

Energy (7.1%)                                                                          
Chevron                                                      865,000         79,958,437
Conoco Cl B                                                1,500,000         38,437,500
ENI                                                        5,520,000(b,c,f)  27,631,092
Exxon Mobil                                                1,141,929         88,856,349
Texaco                                                       910,000         48,798,750
Tosco                                                      1,185,000         36,068,438
Total                                                                       319,750,566

Energy equipment & services (0.4%)                                                     
Halliburton                                                  470,000         19,270,000

Financial services (8.3%)                                                              
Capital One Financial                                        865,000         41,465,938
Citigroup                                                  2,535,000        150,357,187
Kansas City Southern Inds                                  1,061,080(b)      91,186,562
Morgan Stanley, Dean Witter, Discover & Co                   625,000         50,976,562
Providian Financial                                          535,000         46,344,375
Total                                                                       380,330,624

Food (0.9%)                                                                            
Bestfoods                                                    325,000         15,214,063
General Mills                                                380,000         13,751,250
Sara Lee                                                     655,000         11,790,000
Total                                                                        40,755,313

Health care (2.4%)                                                                     
American Home Products                                       455,000         24,399,375
Baxter Intl                                                  269,000         16,039,125
Guidant                                                      260,000(b)      15,291,250
Mylan Laboratories                                           510,000         14,025,000
Pharmacia & Upjohn                                           320,000         18,960,000
Warner-Lambert                                               205,000         19,987,500
Total                                                                       108,702,250

Industrial equipment & services (1.7%)                                                 
Illinois Tool Works                                          655,000         36,188,750
Parker-Hannifin                                            1,005,000         41,519,063
Total                                                                        77,707,813

Insurance (3.7%)                                                                       
American Intl Group                                        1,060,000        116,070,000
Aon                                                          171,800          5,540,550
Marsh & McLennan                                             410,000         45,228,125
Total                                                                       166,838,675

Leisure time & entertainment (1.5%)                                                    
Disney (Walt)                                                985,000         40,754,375
Viacom Cl B                                                  511,700(b)      26,992,175
Total                                                                        67,746,550

Media (0.8%)                                                                           
Adelphia Communications Cl A                                 127,000(b)       6,223,000
MediaOne Group                                               375,000(b)      30,375,000
Total                                                                        36,598,000

Multi-industry conglomerates (0.8%)                                                    
Minnesota Mining & Mfg                                       210,000         18,598,125
Tyco Intl                                                    340,000(c)      16,957,500
Total                                                                        35,555,625

Paper & packaging (0.7%)                                                               
Intl Paper                                                   770,000         32,917,500

Real estate investment trust (0.5%)                                                    
Pinnacle Holdings                                            400,000(b)      22,100,000

Retail (4.6%)                                                                          
Costco Wholesale                                             732,100(b)      38,481,006
Gap                                                          925,000         46,076,562
Safeway                                                      850,000(b)      38,462,500
Target                                                       610,250         45,616,188
TJX Companies                                              1,900,000         42,156,250
Total                                                                       210,792,506

Transportation (0.5%)                                                                  
Burlington Northern Santa Fe                               1,110,000         24,558,750

Utilities -- electric (2.4%)                                                           
Carolina Power & Light                                            23                746
CMS Energy                                                    85,000          1,540,625
Consolidated Edison                                          500,000         14,500,000
Dominion Resources                                           375,000         14,414,063
Duke Energy                                                  556,800         29,231,999
Edison Intl                                                  335,000          5,548,438
FPL Group                                                    170,000          7,830,625
New Century Energies                                         255,000          7,665,938
Pinnacle West Capital                                        250,000          7,046,875
Reliant Energy                                               675,000         15,820,312
Texas Utilities                                              225,000          6,679,688
Total                                                                       110,279,309

Utilities -- gas (0.6%)                                                                
Coastal                                                      595,000         27,370,000

Utilities -- telephone (8.4%)                                                          
ALLTEL                                                       132,000          8,324,250
AT&T                                                       1,485,000         83,531,249
AT&T - Liberty Media Group Cl A                              560,000(b)      33,180,000
Bell Atlantic                                                679,800         41,552,775
BellSouth                                                    825,000         38,775,000
Cable & Wireless                                             335,000(c)       6,282,907
Deutsche Telekom                                             100,000(c)       8,058,781
GTE                                                          442,000         31,382,000
Intermedia Communications                                      6,866(b)         331,714
MCI WorldCom                                               1,282,500(b)      58,113,281
SBC Communications                                           917,360         38,529,120
Telefonica de Espana ADR                                      96,000(b,c,f)   7,164,000
U S WEST Communications Group                                345,000         25,055,625
Total                                                                       380,280,702

Total common stocks                                                                    
(Cost: $2,611,311,609)                                                   $2,936,306,833

Preferred stocks (0.7%)                                                                
Issuer                                                        Shares          Value(a) 

Cox Communications                                                                     
   7.00% Cm Cv PRIDES                                        225,500(k)     $14,319,250
Global Crossing                                                                        
   6.38% Cv                                                   25,100(c,d)     2,704,525
Global TeleSystems Group                                                               
   7.25% Cm Cv                                               170,500          6,905,250
Intermedia Communications                                                              
   7.00% Cm Cv Series F                                      203,000          6,724,375

Total preferred stocks                                                                 
(Cost: $30,661,176)                                                         $30,653,400

See accompanying notes to investments in securities.                                   

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Bonds (39.8%)                                                                         
Issuer                                        Coupon      Principal          Value(a) 
                                               rate        amount                     

Mortgage-backed securities (20.9%)                                                    
Collateralized Mtge Obligation Trust                                                  
                                                                                      
      12-20-14                                 9.95%     $1,664,842         $1,722,095
Federal Home Loan Mtge Corp                                                           
      10-01-03                                 7.00       2,104,667          2,078,359
      07-01-07                                 6.50         149,943            148,521
      07-01-08                                 6.75         900,782            890,505
      06-01-09                                 5.50       2,881,588          2,707,763
      01-01-11                                 6.50      10,540,273         10,213,200
      03-01-13                                 5.50      12,243,435         11,303,566
      11-15-13                                 5.50      10,500,000          9,174,060
      11-01-14                                 7.50      50,004,985         49,997,722
      04-01-15                                 7.50      30,000,000(g)      29,962,500
      08-01-24                                 8.00       2,838,732          2,851,166
      09-01-28                                 6.00      26,377,768         24,061,536
      04-01-30                                 7.00      30,000,000(g)      28,846,875
   Trust Series Z                                                                     
      10-15-23                                 6.50          30,745(j)          27,544
Federal Natl Mtge Assn                                                                
      10-01-02                                 7.50         240,379            240,208
      08-15-04                                 6.50      20,000,000         19,554,520
      02-15-05                                 7.13      80,000,000(f)      80,092,560
      01-01-09                                 5.50       4,684,267          4,363,084
      09-15-09                                 6.63     110,000,000        105,785,350
      08-01-13                                 6.00      25,528,630         24,018,469
      12-01-13                                 5.50         873,221            805,159
      01-01-14                                 5.50       6,362,363          5,866,458
      02-01-14                                 5.50       1,743,767          1,607,852
      02-01-14                                 7.50         875,662            870,461
      04-01-14                                 5.50       1,048,917            967,161
      06-01-14                                 5.50      33,382,520         30,774,680
      07-01-14                                 5.50       8,542,274          7,866,341
      09-01-14                                 5.50         950,096            874,917
      04-01-15                                 7.50      80,000,000(g)      78,600,000
      05-01-23                                 6.50       3,911,333          3,702,311
      09-01-23                                 6.50       6,115,409          5,788,601
      01-01-24                                 6.50      11,224,179         10,615,820
      06-01-24                                 9.00       2,881,200          2,979,924
      08-01-25                                 7.50       9,076,910          8,929,411
      04-01-28                                 6.00      11,573,348         10,549,801
      06-01-28                                 6.00       8,928,784(e)       8,139,122
      06-01-28                                 6.00      11,274,146         10,277,061
      06-01-28                                 7.00          21,557             20,742
      07-01-28                                 6.00      12,953,049         11,807,481
      12-01-28                                 6.50      11,055,240         10,374,679
      09-01-29                                 6.50      88,139,296         82,713,441
      04-01-30                                 7.00      30,000,000(g)      28,828,125
      04-01-30                                 8.00     210,000,000(g)     210,393,750
      04-01-30                                 8.50          30,000(g)          30,581
Total                                                                      941,423,482

U.S. government obligations (9.7%)                                                    
Resolution Funding Corp                                                               
      10-15-19                                 8.13      15,000,000         17,154,060
U.S. Treasury                                                                         
      08-15-04                                 6.00      74,600,000(f)      73,634,676
      11-15-05                                 5.88       1,800,000          1,761,650
      05-15-06                                 6.88      25,000,000(f)      25,679,713
      05-15-09                                 5.50      30,000,000(f)      28,528,140
      11-15-15                                 9.88      24,000,000(f)      32,592,331
      05-15-17                                 8.75       6,400,000          8,085,440
      08-15-19                                 8.13      28,500,000(e)      34,633,345
      11-15-21                                 8.00      15,600,000         18,981,160
      02-15-23                                 7.13      12,700,000         14,205,204
      08-15-29                                 6.13      20,000,000         20,410,000
      05-15-30                                 6.25      85,000,000(f)      89,913,849
   Zero Coupon                                                                        
      05-15-13                                 6.14      74,000,000(i)      32,761,946
      11-15-13                                 6.16      90,000,000(i)      38,678,310
Total                                                                      437,019,824

Automotive & related (0.7%)                                                           
Ford Motor Credit                                                                     
      02-15-07                                 7.75      20,000,000         20,134,340
Lear                                                                                  
   Company Guaranty Series B                                                          
      05-15-09                                 8.11      15,000,000         13,697,250
Total                                                                       33,831,590

Banks and savings & loans (0.9%)                                                      
CIT Holdings LLC                                                                      
   (U.S. Dollar) Company Guaranty Series B                                            
      02-16-05                                 6.88      10,000,000(c)       9,717,030
Mellon Financial                                                                      
   Sub Nts                                                                            
      02-15-10                                 6.38      16,000,000         15,034,598
NationsBank                                                                           
   Sub Nts                                                                            
      05-15-10                                 6.60      11,825,000         11,078,766
Union Planters Capital                                                                
   Company Guaranty                                                                   
      12-15-26                                 8.20       4,000,000          3,715,323
Total                                                                       39,545,717

Building materials & construction (0.2%)                                              
Owens Corning                                                                         
      08-01-18                                 7.50      12,500,000         10,764,375

Commercial finance (0.1%)                                                             
Yale University                                                                       
      04-15-96                                 7.38       4,000,000          3,828,440

Communications equipment & services (0.4%)                                            
KPNQwest                                                                              
   (U.S. Dollar) Sr Nts                                                               
      06-01-09                                 8.13      15,000,000(c)      14,381,250
NTL                                                                                   
   Cv Sub Nts                                                                         
      12-15-09                                 5.75       2,800,000(d)       2,866,500
Total                                                                       17,247,750

Electronics (0.2%)                                                                    
Hyundai Semiconductor                                                                 
   (U.S. Dollar) Sr Nts                                                               
      05-15-04                                 8.25      10,000,000(c,d)     9,228,320

Energy (0.4%)                                                                         
Occidental Petroleum                                                                  
   Medium-term Nts Series B                                                           
      04-10-00                                 6.25       6,500,000          6,499,072
USX                                                                                   
      03-01-08                                 6.85      10,000,000          9,542,302
Total                                                                       16,041,374

Financial services (0.7%)                                                             
AT&T Capital                                                                          
   Company Guaranty Medium-term Nts Series F                                          
      05-15-05                                 6.60       9,000,000          8,624,214
Bat-CRAVE-800                                                                         
      08-12-00                                 6.68       7,000,000(d)       6,992,692
Golden State Holdings                                                                 
   Sr Nts                                                                             
      08-01-03                                 7.00      10,000,000          9,369,705
Standard Credit Card Trust                                                            
   Series A                                                                           
      10-07-04                                 5.95       8,550,000          8,219,457
Total                                                                       33,206,068

Health care services (0.1%)                                                           
Kaiser Permanente                                                                     
      07-15-05                                 9.55       6,000,000          6,457,200

Insurance (0.9%)                                                                      
Nationwide CSN Trust                                                                  
      02-15-25                                 9.88      15,500,000(d)      16,706,102
New York Life Insurance                                                               
      12-15-23                                 7.50      11,500,000(d)      10,319,157
Principal Mutual                                                                      
      03-01-44                                 8.00       7,150,000(d)       6,794,895
SAFECO Capital                                                                        
   Company Guaranty                                                                   
      07-15-37                                 8.07      10,000,000          8,695,330
Total                                                                       42,515,484

Media (0.5%)                                                                          
Cox Communications                                                                    
      08-15-06                                 7.75       8,200,000          8,163,182
Time Warner Entertainment                                                             
   Sr Nts                                                                             
      07-15-33                                 8.38      13,522,000         14,188,156
Total                                                                       22,351,338

Miscellaneous (0.1%)                                                                  
DTE Burns Harbor LLC                                                                  
   Sr Nts                                                                             
      01-30-03                                 6.57       5,361,730(d)       5,185,115

Paper & packaging (0.2%)                                                              
Intl Paper                                                                            
      11-15-12                                 5.13      13,400,000         10,288,654

Restaurants & lodging (0.2%)                                                          
MGM Grand                                                                             
      02-01-05                                 6.95      10,000,000          9,298,622

Retail (0.2%)                                                                         
Wal-Mart CRAVE Trust                                                                  
      07-17-06                                 7.00      10,946,773(d)      10,600,855

Utilities -- electric (1.5%)                                                          
Arizona Public Service                                                                
   1st Mtge Sale Lease-backed Obligation                                              
      12-30-15                                 8.00       5,400,000          5,352,325
Cleveland Electric Illuminating                                                       
      07-01-00                                 7.19       5,000,000          4,998,236
      07-01-04                                 7.67      10,000,000          9,851,960
CMS Energy                                                                            
   Sr Nts                                                                             
      07-01-03                                 8.38      20,000,000         19,336,279
Pacific Gas & Electric                                                                
   1st Mtge Series 1992D                                                              
      11-01-22                                 8.25       4,600,000          4,523,010
PSI Energy                                                                            
   1st Mtge Series BBB                                                                
      07-15-09                                 8.00       8,085,000          8,172,926
Public Service Electric & Gas                                                         
   1st & Ref Mtge (AMBAC Insured)                                                     
      01-01-16                                 6.75      13,000,000(h)      12,174,214
   1st Mtge                                                                           
      05-01-23                                 6.38       5,000,000          4,822,450
Total                                                                       69,231,400

Utilities -- gas (0.2%)                                                               
Ras Laffan                                                                            
   (U.S. Dollar)                                                                      
      03-15-14                                 8.29      10,000,000(c,d)     9,690,420

Utilities -- telephone (1.7%)                                                         
Bell Telephone of Pennsylvania                                                        
      03-15-33                                 7.38       5,000,000          4,671,216
BellSouth Capital Funding                                                             
      02-15-10                                 7.75      11,500,000         11,677,099
GTE                                                                                   
      11-01-21                                 8.75       5,000,000          5,553,362
Qwest Communications Intl                                                             
   Sr Nts Series B                                                                    
      11-01-08                                 7.25      21,000,000         20,121,464
SBC Communications                                                                    
      10-15-34                                 6.63       6,100,000          5,252,725
      07-15-43                                 7.38       7,500,000          6,983,339
U S WEST Capital Funding                                                              
   Company Guaranty                                                                   
      07-15-28                                 6.88       9,000,000          7,924,849
U S WEST Communications                                                               
      09-15-05                                 6.63       7,000,000          6,732,880
Vodafone Airtouch                                                                     
   Company Guaranty                                                                   
      05-01-08                                 6.65       6,950,000          6,548,512
Total                                                                       75,465,446

Total bonds                                                                           
(Cost: $1,827,130,167)                                                  $1,803,221,474

Short-term securities (6.2%)                                                          
Issuer                                     Annualized       Amount           Value(a) 
                                         yield on date    payable at                  
                                          of purchase      maturity                   

U.S. government agencies (3.4%)                                                       
Federal Home Loan Bank Disc Nts                                                       
      04-07-00                                 5.67%    $26,800,000        $26,768,030
      04-12-00                                 5.71       2,400,000          2,395,264
      04-14-00                                 5.70      24,400,000         24,343,252
      05-24-00                                 5.87       5,600,000          5,548,508
      05-26-00                                 5.88       5,900,000          5,841,896
Federal Home Loan Mtge Corp Disc Nts                                                  
      04-04-00                                 5.70       6,500,000          6,495,703
      04-20-00                                 5.71      12,000,000         11,959,682
      04-25-00                                 5.83       5,500,000          5,477,809
      05-25-00                                 5.89         600,000            594,289
      06-01-00                                 5.98       1,700,000          1,681,789
Federal Natl Mtge Assn Disc Nts                                                       
      04-05-00                                 5.72       4,000,000          3,996,822
      04-06-00                                 5.71      17,800,000         17,782,088
      04-11-00                                 5.69       6,900,000          6,888,024
      04-13-00                                 5.72      10,100,000         10,078,054
      04-20-00                                 5.76      15,900,000         15,846,579
      04-27-00                                 5.78       4,400,000          4,380,076
      05-25-00                                 5.90       4,100,000          4,060,973
Total                                                                      154,138,838

Commercial paper (2.8%)                                                               
Alcoa                                                                                 
      04-17-00                                 5.85      10,700,000         10,670,541
BBV Finance (Delaware)                                                                
      04-28-00                                 5.89      11,600,000         11,544,651
Bell Atlantic Finance Services                                                        
      04-26-00                                 5.89      20,400,000         20,313,513
Cargill Global Funding                                                                
      04-27-00                                 5.89      15,700,000(l)      15,629,866
Clorox                                                                                
      04-10-00                                 5.83       1,700,000          1,697,252
      04-25-00                                 5.89      15,500,000         15,436,814
Ford Motor Credit                                                                     
      04-13-00                                 5.83       4,700,000          4,689,787
Northern States Power                                                                 
      04-24-00                                 5.88      10,300,000         10,259,761
Paccar Financial                                                                      
      05-24-00                                 5.95       8,400,000          8,322,762
Preferred Receivables                                                                 
      04-13-00                                 5.87      16,800,000(l)      16,764,448
Toyota Motor Credit                                                                   
      05-16-00                                 5.98      13,800,000(l)      13,692,789
Total                                                                      129,022,184

Total short-term securities                                                           
(Cost: $283,240,881)                                                      $283,161,022

Total investments in securities                                                       
(Cost: $4,752,343,833)(m)                                               $5,053,342,729

See accompanying notes to investment in securities.                                   

N-30D
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Notes to investments in securities                                              

(a)  Securities  are valued by  procedures  described in Note 1 to the financial
statements.                                                                     

(b) Non-income producing.                                                       

(c) Foreign  security values are stated in U.S.  dollars.  For debt  securities,
principal  amounts are  denominated in the currency  indicated.  As of March 31,
2000, the value of foreign securities represented 2.87% of net assets.          

(d)  Represents  a  security  sold  under  Rule  144A,   which  is  exempt  from
registration  under the  Securities  Act of 1933, as amended.  This security has
been determined to be liquid under guidelines established by the board.         

(e) Partially  pledged as initial  deposit on the  following  open interest rate
futures contracts (see Note 5 to the financial statements):                     

Type of security                                          Notional amount       

Purchase contracts                                                              
U.S. Treasury Note, June 2000, 10-year notes                $70,000,000         

Sale contracts                                                                  
U.S. Treasury Bonds, June 2000                              104,600,000         
U.S. Treasury Note, June 2000, 5-year notes                 160,000,000         
U.S. Treasury Note, June 2000, 10-year notes                582,100,000         

(f)  Security  is  partially  or  fully on  loan.  See  Note 6 to the  financial
statements.                                                                     

(g) At March 31, 2000,  the cost of  securities  purchased,  including  interest
purchased, on a when-issued basis was $376,972,929.                             

(h) The following abbreviation is used in portfolio descriptions to identify the
insurer of the issue:                                                           

AMBAC    --   American Municipal Bond Association Corporation                   

(i) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.                                     

(j) This security is a collateralized  mortgage obligation that pays no interest
or principal  during its initial accrual period until previous series within the
trust have been paid off. Interest is accrued at an effective yield;  similar to
a zero coupon bond.                                                             

(k) PRIDES  (Preferred  Redeemable  Increased  Dividend  Equity  Securities) are
structured as convertible  preferred  securities.  Investors receive an enhanced
yield but based upon a specific  formula,  potential  appreciation  is  limited.
PRIDES pay dividends,  have voting rights,  are  noncallable for three years and
upon maturity, convert into shares of common stock.                             

(l) Commercial paper sold within terms of a private placement memorandum, exempt
from registration  under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under  guidelines  established by
the board.                                                                      

(m) At March 31, 2000,  the cost of securities  for federal  income tax purposes
was approximately  $4,789,059,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:                           

Unrealized appreciation                                     $485,849,000        
Unrealized depreciation                                     (221,565,000)       
                                                    ------------
Net unrealized appreciation                                 $264,284,000        

N-30D
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                                                        PRSRT STD AUTO
                                                        U.S. POSTAGE
                                                        PAID
                                                        AMERICAN
                                                       EXPRESS

                                                         S-6335 P (5/00)

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.                                                            

AXP Mutual                                                                      
200 AXP Financial Center                                                        
Minneapolis, MN 55474                                                           

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘N-30D’ Filing		Date		First		Last			Other Filings
Filed on:		5/17/00
For Period End:		3/31/00		4		18			N-30D,  NSAR-A
		10/1/99		4
		9/30/99		4		15			24F-2NT,  N-30D,  NSAR-B
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