The document provides a diagnosis and evaluation of shareholder reports for American Express Funds. It finds that the reports earn the DALBAR Communications Seal for displaying qualities like clear language, highlighting important performance results, and consistent presentation of data. Some areas for potential enhancement are increasing the size of disclaimers and share summaries, and providing more information on other available products and services from the company. The diagnosis evaluates numerous individual fund reports and finds that all earn the Communications Seal.

1. DIAGNOSIS
FOR THE
DALBAR COMMUNICATIONS SEAL
AMERICAN EXPRESS FUNDS
SHAREHOLDER REPORTS
MARCH 2005

2. INTRODUCTION
BACKGROUND
The DALBAR Communications Seal is the recognition awarded to financial
service communications that display excellence in meeting the needs of
customers. The DALBAR Communications Seal differentiates organizations
that recognize the importance of communicating in a manner that is
calculated to be understood by the average customer. The Seal is the third-
party endorsement of communications that establish an organization as an
industry leader in this critical area.
DIAGNOSIS FOR THE SEAL
DALBAR examines the communication to determine if the standards to earn
the Seal are met and identifies any weaknesses that may exist. The Seal
standards consist of a number of variables that satisfy:
√ Customer needs and preferences
√ Regulatory requirements
√ Aesthetic criteria
√ Industry practices
The standards for the DALBAR Communications Seal are based upon 15 years
of conducting customer surveys, collecting a vast inventory of
communications used in financial services, studying industry innovation, and
monitoring regulatory changes.
Reports are evaluated based on several rating criteria, which are organized
into five categories:
√ Calculated to Be Understood: report features that strongly impact
customers’ ability to understand important information
√ Primary Content: report content that is critically important to
customers
√ Secondary Content: report content that is important but not critical
to customers
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3. √ Desirable Design Features: design elements that positively impact
the report
√ Undesirable Design Features: design elements that negatively
impact the report
THIS REPORT
This report presents the results of the DALBAR Communications Seal
Diagnosis for American Express Funds Shareholder Reports. The report
includes:
√ Results Overview: Announcement of whether the reports earn the
Seal.
√ Strengths: Features of the reports that display industry leadership in
meeting the needs and preferences of customers.
√ Enhancements to Maintain Seal Standard in the Future:
Enhancements to respond to regulatory requirements, meet customer
needs, and meet competitive requirements.
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4. DIAGNOSIS RESULTS
RESULTS OVERVIEW
American Express Funds Shareholder Reports
Earns
The DALBAR Communications Seal
STRENGTHS
American Express Funds Shareholder Reports displays above-average
qualities in the following elements of report content and design:
Calculated to Be Understood
Employs language and explanations that are appropriate for average
investor
√ Disclosure language is clear and does not interfere with flow of
statement
√ Reports avoid common abbreviations, jargon, and unfamiliar
language
Highlights of important performance results
√ 1 year, 5 year, 10 year, and since inception
√ Compares the fund to a benchmark or index
√ Considers the effects of sale charges on the performance of the fund
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5. Primary Content
Comments on the Fund’s performance
Discussion of Past Year/Current Market Conditions
Discussed actions taken to respond to market conditions
√ General actions taken by the fund
√ Holdings that were added or dropped from the fund
Describe sources for questions and up to date information
Desirable Design Features
Highlights the most important information
Data is presented in a consistent, logical sequence
√ Data and commentary presented in logical order
√ Important information is displayed first
√ Consistent style of presentation
Use of graphics, images and color to enhance data and messages
Undesirable Design Features
Avoids excessive number of pages
√ Reports do not contain non-intentional blank pages
√ Report length is appropriate
√ Space is used adequately to inform the investor
Secondary Content
Description of company
√ Company name and logo are consistent
√ Companies description, history, affiliations, and size are stated
√ Corporate mission statement
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6. How to make additional purchases, exchanges, and open accounts
√ Provides several options for buying and selling shares
√ States the investment options associated with each class of shares
√ Provides detailed options for exchanging and selling shares
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7. RECOMMENDATIONS TO MAINTAIN THE SEAL
American Express can enhance its report to:
√ Meet current and pending legislative reform in financial
communications. Numerous Congressional bills, passed and pending,
require that financial communications be “calculated to be
understood,” including:
• Sarbanes Oxley (2002)
• Pension Security Act of 2003
• Retirement Security Advice Act of 2003
• GAO Report on Mutual Fund Fees
√ Meet competitive requirements. Leaders in the mutual fund industry
are influencing calculated to be understood standards by adopting
statement practices that impact customers’ ability to easily and fully
understand the document.
Firms that inspire calculated to be understood standards can avoid the cost
and risk associated with reacting to legislation; that is, the cost of building
new systems and processes to conform and the risk of a blow to the firm’s
image as litigators seek out non-compliant firms.
The following list identifies specific areas in which American Express trails
industry-leading practices. American Express should consider incorporating
some or all of these features in order to maintain the Seal.
Desirable Features
Appearance and presentation
√ Increase the size of the text of the disclaimers and share
summaries
√ Un-bundle the prospectus from the report
Secondary Content
Products and services available from the company
√ Increase the knowledge of other product lines available to the
investor
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8. The following reports were reviewed by DALBAR and have earned the
DALBAR Communications Seal.
Growth Funds Category
√ AXP Equity Select Fund
√ AXP Global Technology Fund
√ AXP Growth Fund
√ AXP New Dimensions Fund
√ AXP Strategy Aggressive Fund
Blend Funds Category
√ AXP Large Cap Equity Fund
√ AXP Managed Allocation Fund
√ AXP Precious Metals Fund
√ AXP Small Cap Advantage Fund
√ AXP Stock Fund
√ AXP Discovery Fund
√ AXP Quantitative Large Cap Equity
Global and International Funds Category
√ AXP Emerging Markets Fund
√ AXP European Equity Fund
√ Global Balanced Fund
√ Global Equity Fund
√ International Fund
Value Funds Category
√ AXP Diversified Equity Income Fund
√ AXP Equity Value Fund
√ AXP Large Cap Value Fund
√ AXP Mid-Cap Value Fund
√ AXP Mutual Fund
√ Dividend Opportunity
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9. √ Real Estate Fund
Income Funds Category
√ AXP Diversified Bond Fund
√ AXP Global Bond Fund
√ AXP High Yield Bond Fund
√ AXP Income Opportunities Fund
√ AXP Selective Fund
√ AXP Short Duration U.S. Government Fund
√ AXP U.S. Government Mortgage Fund
√ AXP Inflation Protected Securities Fund
√ AXP Limited Duration Bond Fund
√ AXP Core Bond Fund
Tax-Exempt Income Funds Category
√ AXP High Yield Tax-Exempt Fund
√ State Tax-Exempt Funds
√ Tax-Exempt Bond Fund
AXP Partners Funds Category
√ AXP Partners Aggressive Growth Fund
√ AXP Partners Growth Fund
√ AXP Partners International Aggressive Growth Fund
√ AXP Partners Small Cap Growth Fund
√ AXP Partners International Core Fund
√ AXP Partners International Small Cap Fund
√ AXP Partners Small Cap Core Fund
√ AXP Partners International Select Value Fund
√ AXP Partners Fundamental Value Fund
√ AXP Partners Select Value Fund
√ AXP Partners Small Cap Value Fund
√ AXP Partners Value Fund
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