UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-5696
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AXP GLOBAL SERIES, INC.
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(Exact name of registrant as specified in charter)
200 AXP Financial Center, Minneapolis, Minnesota 55474
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(Address of principal executive offices) (Zip code)
Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810, Minneapolis, MN 55402-3268
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(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 330-9283
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Date of fiscal year end: 10/31
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Date of reporting period: 4/30
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Item 1. Reports to Shareholders.
AXP(R)
Emerging
Markets
Fund
Semiannual Report
for the Period Ended April 30, 2003
AXP Emerging Markets Fund seeks to provide shareholders with long-term capital
growth.
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(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
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Table of Contents
Fund Snapshot 3
Questions & Answers with Portfolio Management 4
Investments in Securities 7
Financial Statements (Portfolio) 10
Notes to Financial Statements (Portfolio) 13
Financial Statements (Fund) 18
Notes to Financial Statements (Fund) 21
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2 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Fund Snapshot AS OF APRIL 30, 2003
PORTFOLIO MANAGER
Portfolio manager Julian Thompson
Since 1/00
Years in industry 10
FUND OBJECTIVE
For investors seeking long-term growth of capital.
Inception dates
A: 11/13/96 B: 11/13/96 C: 6/26/00 Y: 11/13/96
Ticker symbols
A: IDEAX B: IEMBX C:-- Y:--
Total net assets $182.5 million
Number of holdings approximately 70
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
STYLE
VALUE BLEND GROWTH
LARGE
X MEDIUM SIZE
SMALL
COUNTRY COMPOSITION
Percentage of portfolio assets
(pie chart)
South Africa 15.3%
South Korea 14.1%
Cash & equivalents 9.7%
Brazil 9.0%
RUssia 7.9%
Taiwan 6.9%
Mexico 6.7%
India 6.6%
China 3.8%
Chile 3.0%
Malaysia 3.0%
Israel 2.5%
Thailand 2.4%
Hong Kong 2.0%
Peru 1.7%
Hungary 1.4%
Poland 1.3%
Turkey 1.0%
Other 1.7%
TOP TEN HOLDINGS
Percentage of portfolio assets
Anglo American (South Africa) 4.5%
Yukos ADR (Russia) 3.8
Samsung Electronics (South Korea) 3.1
Lukoil Holding ADR (Russia) 3.0
Companhia Vale do Rio Doce ADR (Brazil) 2.6
CNOOC (China) 2.5
Chinatrust Financial Holding (Taiwan) 2.3
Posco (South Korea) 2.1
SK Telecom (South Korea) 2.0
Impala Platinum Holdings (South Africa) 1.9
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
There are special risk considerations associated with international investing
related to market, currency, economic, political and other factors.
Fund holdings are subject to change.
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3 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Q: How did AXP Emerging Markets Fund perform for the first half of fiscal year
2003?
A: AXP Emerging Markets Fund's Class A shares, excluding sales charge, rose
0.25% for the six-month period ended April 30, 2003. This underperformed the
Fund's benchmark, the MSCI Emerging Markets Free Index, and its peer group,
the Lipper Emerging Markets Funds Index, which climbed 5.93% and 7.21%
respectively.
Q: What factors significantly affected performance?
A: Six-month performance was weak mainly because of the Fund's lack of exposure
to lower quality stocks, which rallied dramatically during the period. The
Fund typically holds approximately 70 issues we believe are high quality,
while the Fund's benchmark includes more than 700 stocks. Differences
between the benchmark and the Fund can occasionally result in significant
divergences from the benchmark if stocks not held within the portfolio
perform unexpectedly well. This was the case in the energy sector, the
pharmaceutical sector and the utilities sector. The Fund's financial sector
holdings also detracted from performance, while overweights in the materials
and energy sectors helped performance.
(bar graph)
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2003
8%
(bar 3)
7% +7.21%
6% (bar 2)
+5.93%
5%
4%
3%
2%
1% (bar 1)
+0.25%
0%
(bar 1) AXP Emerging Markets Fund Class A (excluding sales charge)
(bar 2) MSCI Emerging Markets Free Index(1) (unmanaged)
(bar 3) Lipper Emerging Markets Funds Index(2)
(1) Morgan Stanley Capital International (MSCI) Emerging Markets Free Index, an
unmanaged market capitalization-weighted index, is compiled from a composite
of securities markets of 26 emerging market countries. The index reflects
reinvestment of all distributions and changes in market prices, but excludes
brokerage commissions or other fees.
(2) The Lipper Emerging Markets Funds Index, published by Lipper Inc., includes
the 30 largest funds that are generally similar to the Fund, although some
funds in the index may have somewhat different investment policies or
objectives.
Past performance is no guarantee of future results. The 5.75% sales charge
applicable to Class A shares of the Fund is not reflected in the bar chart; if
reflected, returns would be lower than those shown. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
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4 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
(begin callout quote) > Our outlook for emerging markets is generally positive,
as we expect interest rates in developed markets to remain low, encouraging
capital to flow to higher risk areas such as emerging markets. (end callout
quote)
While South Korea was the Fund's largest country weighting for the period,
we were underweighted compared to our benchmark index, and this helped
performance. However, the Fund was underweighted in Latin America and
Turkey, where markets rallied after fourth quarter elections brought new
leaders. This positioning detracted from the Fund's results.
South Africa's overall impact on Fund performance was neutral. South Africa
performed well over the period, but as the Fund was on average underweight
in the country, this detracted from performance. However, the Fund's good
stock selection offset any negative impact from asset allocation. Our
holdings remain concentrated in the mining sector.
AVERAGE ANNUAL TOTAL RETURNS
as of April 30, 2003
Class A Class B Class C Class Y
(Inception dates) (11/13/96) (11/13/96) (6/26/00) (11/13/96)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4) NAV(5) POP(5)
6 months* +0.25% -5.51% -0.26% -4.25% -0.26% -1.26% +0.25% +0.25%
1 year -15.04% -19.93% -15.67% -19.05% -15.64% -16.48% -14.74% -14.74%
5 years -5.77% -6.88% -6.51% -6.70% N/A N/A -5.56% -5.56%
Since inception -2.91% -3.80% -3.67% -3.67% -12.72% -12.72% -2.74% -2.74%
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be worth
more or less than the original cost. The performance shown for each class of
shares will vary due to differences in sales charges and fees. Short term
performance may be higher or lower than the figures shown. Visit
americanexpress.com for current information.
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5 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
Concerns over a new mining law in South Africa due to be released in
September have depressed prices in the sector. We believe that the mining
law, which requires redistribution of assets to community groups, will take
a balanced approach to resolving the interests of all stakeholders. We
expect asset prices to continue to recover as greater clarity regarding the
impact of the law is given.
Q: What changes did you make to the portfolio during the six-month period?
A: Reduced expectations for U.S. growth led us to trim some exposure to
neighboring Mexico, which is directly affected by U.S. performance. We
believe that Eastern Europe offers potential value for the months ahead,
while exposure to Latin America may be more beneficial than to Asia. The
Fund holds underweights in both continents. The Fund maintained a cautious
view of global growth throughout the period. We were overweight in the
materials and energy sector because we believe companies in these sectors
have good supply discipline for their products. The Fund continues its
underweight in technology and utilities.
Q: What is your outlook and Fund positioning for the coming months?
A: Our outlook for emerging markets is generally positive, as we expect
interest rates in developed markets to remain low, encouraging capital to
flow to higher risk areas such as emerging markets. A strong flow of capital
into emerging markets and a weakening dollar are two reasons for this
outlook. Previous problems in emerging economies are sorting themselves out.
In particular, oil prices have stabilized following a volatile period, and
currencies in these economies are rebounding. This combination should help
lower interest rates and boost consumption in these markets. As a result,
the Fund is moving away from the materials and energy sectors and focusing
more on domestic cyclicals and other consumer-related stocks. We anticipate
continuing a slight overweight in Eastern Europe and Africa and have begun
to cautiously add exposure in Latin America.
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6 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Investments in Securities
Emerging Markets Portfolio
April 30, 2003 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (91.7%)(c)
Issuer Shares Value(a)
Brazil (9.3%)
Banks and savings & loans (1.2%)
Unibanco - Uniao de Bancos
Brasileiros ADR 117,848 $2,138,941
Beverages & tobacco (2.0%)
Companhia de Bebidas
das Americas ADR 181,627 3,612,561
Energy (1.8%)
Petroleo Brasileiro ADR 178,907 3,220,517
Metals (2.7%)
Companhia Vale
do Rio Doce ADR 174,100 4,867,836
Paper & packaging (1.2%)
Votorantim Celulose
e Papel ADR 119,200 2,264,800
Utilities -- telephone (0.5%)
Tele Norte Leste
Partcipacoes ADR 77,379 839,562
Chile (3.1%)
Banks and savings & loans (0.7%)
Banco Santander Chile ADR 62,271 1,358,753
Metals (1.0%)
Antofagasta 185,805 1,869,382
Utilities -- telephone (1.3%)
Compania de Telecomunicaciones
de Chile ADR 204,500 2,345,615
China (4.0%)
Energy (2.6%)
CNOOC 3,550,500 4,666,289
Metals (0.9%)
Yanzhou Coal Mining Cl H 4,564,000 1,667,819
Transportation (0.5%)
Sinotrans 3,569,000(b) 883,206
Czech Republic (0.7%)
Banks and savings & loans
Komercni Banka 19,300 1,344,611
Hong Kong (2.0%)
Energy (1.1%)
China Oilfield Services 9,244,000(b) 1,955,700
Utilities -- gas (0.9%)
Hong Kong and China Gas 1,465,000 1,728,159
Hungary (1.5%)
Banks and savings & loans
OTP Bank 251,400 2,699,054
India (6.8%)
Automotive & related (0.7%)
Bajaj Auto 131,075 1,337,189
Banks and savings & loans (2.9%)
Housing Development Finance 457,516 3,296,202
State Bank of India GDR 132,697 1,963,915
Total 5,260,117
Computers & office equipment (1.6%)
Infosys Technologies 49,017 2,889,203
Health care (1.7%)
Cipla Limited 108,894 1,452,112
Ranbaxy Laboratories 109,949 1,567,548
Total 3,019,660
Indonesia (1.0%)
Beverages & tobacco
Hanjiya Mandala Sampoerna 4,301,500 1,772,971
See accompanying notes to investments in securities.
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7 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Israel (2.5%)
Computer software & services (1.0%)
Check Point Software
Technologies 118,911(b) $1,870,470
Health care (1.5%)
Teva Pharmaceutical Inds ADR 60,384 2,819,933
Malaysia (3.1%)
Banks and savings & loans (0.9%)
Malayan Banking Berhad 818,400 1,701,411
Beverages & tobacco (0.9%)
British American Tobacco
Malaysia Berhad 171,600 1,716,000
Communications equipment & services (1.2%)
Maxis Communications Berhad 1,570,000 2,169,079
Mexico (6.9%)
Beverages & tobacco (1.1%)
Grupo Modelo Series C 907,604 2,022,973
Building materials & construction (1.3%)
Cemex ADR 100,844 2,304,285
Communications equipment & services (1.5%)
America Movil ADR Cl L 166,233 2,787,727
Financial services (1.6%)
Grupo Financiero BBVA
Bancomer Cl B 3,304,924(b) 2,870,775
Utilities -- telephone (1.5%)
Telefonos de Mexico ADR Cl L 88,262 2,666,395
Peru (1.8%)
Metals
Compania de Minas
Buenaventura ADR 120,583 3,207,508
Poland (1.3%)
Banks and savings & loans
Bank Pekao 109,651 2,462,870
Russia (8.2%)
Energy (7.1%)
Lukoil Holding ADR 82,724 5,724,501
Yukos ADR 41,300 7,227,500
Total 12,952,001
Utilities -- telephone (1.1%)
Mobile Telesystems ADR 40,600 1,948,800
South Africa (15.8%)
Banks and savings & loans (2.3%)
ABSA Group 446,500 1,957,499
Standard Bank Group 551,856 2,214,614
Total 4,172,113
Energy equipment & services (1.9%)
Sasol 327,718 3,553,135
Insurance (1.3%)
Old Mutual 604,000 885,703
Sanlam 1,739,550 1,441,596
Total 2,327,299
Metals (8.9%)
Anglo American 589,688 8,444,525
AngloGold Limited 88,965 2,537,036
Gold Fields 166,000 1,685,939
Impala Platinum Holdings 73,726 3,647,645
Total 16,315,145
Multi-industry conglomerates (1.4%)
Imperial Holdings 366,500(b) 2,493,266
South Korea (13.2%)
Banks and savings & loans (1.1%)
Kookmin Bank 70,290 1,972,748
Chemicals (1.4%)
LG Chem 78,880 2,616,349
Communications equipment & services (2.1%)
SK Telecom 27,740 3,858,486
Electronics (5.3%)
LG Electronics 75,690 2,610,215
Samsung Electronics 23,180 5,818,848
Samsung SDI 20,880 1,306,074
Total 9,735,137
See accompanying notes to investments in securities.
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8 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
South Korea (cont.)
Metals (2.2%)
Posco 47,700 $4,024,074
Utilities -- telephone (1.1%)
KT ADR 98,160 1,988,722
Taiwan (7.1%)
Banks and savings & loans (3.8%)
Chinatrust Financial
Holding 5,558,000(b) 4,336,706
Taishin Financial Holdings 5,560,000(b) 2,520,023
Total 6,856,729
Chemicals (1.4%)
Formosa Chemicals & Fibre 2,684,940 2,587,894
Computers & office equipment (1.1%)
Hon Hai Precision Inds 617,000 1,929,231
Transportation (0.9%)
Wan Hai Lines 2,042,000 1,651,876
Thailand (2.4%)
Banks and savings & loans (1.1%)
Kasikornbank 2,286,700(b) 1,933,587
Building materials & construction (1.4%)
Siam Cement 886,000 2,500,724
Turkey (1.0%)
Banks and savings & loans
Akbank T.A.S. 520,846,000 1,845,910
Total common stocks
(Cost: $163,882,044) $167,604,597
Preferred stock (1.3%)(c)
Issuer Shares Value(a)
South Korea
Samsung Electronics 19,280 $2,364,379
Total preferred stock
(Cost: $2,424,105) $2,364,379
Short-term securities (10.0%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies Federal Home Loan Mtge Corp Disc Nt
06-05-03 1.21% $1,900,000 $1,897,905
Federal Natl Mtge Assn Disc Nts
05-01-03 1.23 6,100,000 6,099,792
06-02-03 1.18 1,900,000 1,897,945
07-02-03 1.18 8,400,000 8,382,989
Total short-term securities
(Cost: $18,278,723) $18,278,631
Total investments in securities
(Cost: $184,584,872)(d) $188,247,607
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.
(d) At April 30, 2003, the cost of securities for federal income tax purposes
was approximately $184,585,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $11,436,000
Unrealized depreciation (7,773,000)
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Net unrealized appreciation $ 3,663,000
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9 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
Emerging Markets Portfolio
April 30, 2003 (Unaudited)
Assets
Investments in securities, at value (Note 1)*
(identified cost $184,584,872) $188,247,607
Cash in bank on demand deposit 587,206
Foreign currency holdings (identified cost $1,652,209) (Note 1) 1,648,421
Dividends and accrued interest receivable 738,962
Receivable for investment securities sold 3,116,231
Unrealized appreciation on foreign currency contracts held, at value (Note 5) 18,132
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Total assets 194,356,559
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Liabilities
Payable for investment securities purchased 5,523,743
Unrealized depreciation on foreign currency contracts held, at value (Note 5) 2,759
Payable upon return of securities loaned (Note 4) 6,063,000
Accrued investment management services fee 5,509
Other accrued expenses 59,153
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Total liabilities 11,654,164
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Net assets $182,702,395
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* Including securities on loan, at value (Note 4) $ 5,840,000
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See accompanying notes to financial statements.
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10 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Statement of operations
Emerging Markets Portfolio
Six months ended April 30, 2003 (Unaudited)
Investment Income
Income:
Dividends $ 2,407,022
Interest 224,486
Fee income from securities lending -- net (Note 4) 5,084
Less foreign taxes withheld (199,208)
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Total income 2,437,384
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Expenses (Note 2):
Investment management services fee 1,057,546
Compensation of board members 4,867
Custodian fees 109,195
Audit fees 10,500
Other 12,189
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Total expenses 1,194,297
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Investment income (loss) -- net 1,243,087
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Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (7,580,875)
Foreign currency transactions (296,002)
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Net realized gain (loss) on investments (7,876,877)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 7,869,616
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Net gain (loss) on investments and foreign currencies (7,261)
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Net increase (decrease) in net assets resulting from operations $ 1,235,826
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See accompanying notes to financial statements.
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11 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets
Emerging Markets Portfolio
April 30, 2003 Oct. 31, 2002
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss) -- net $ 1,243,087 $ 1,481,912
Net realized gain (loss) on investments (7,876,877) 17,153,389
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies 7,869,616 4,057,136
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Net increase (decrease) in net assets
resulting from operations 1,235,826 22,692,437
--------- ----------
Proceeds from contributions 9,370,139 85,703,273
Fair value of withdrawals (26,352,325) (126,027,132)
----------- ------------
Net contributions (withdrawals) from partners (16,982,186) (40,323,859)
----------- -----------
Total increase (decrease) in net assets (15,746,360) (17,631,422)
Net assets at beginning of period 198,448,755 216,080,177
----------- -----------
Net assets at end of period $182,702,395 $ 198,448,755
============ =============
See accompanying notes to financial statements.
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12 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Notes to Financial Statements
Emerging Markets Portfolio
(Unaudited as to April 30, 2003)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Emerging Markets Portfolio (the Portfolio) is a series of World Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. The Portfolio invests
primarily in equity securities of issuers in countries with developing or
emerging markets. 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 accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted 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.
Foreign securities are valued based on quotations from the principal market in
which such securities are normally traded. If trading or events occurring in
other markets after the close of the principal market in which foreign
securities are traded, and before the close of business of the Portfolio, are
expected to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into account.
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.
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13 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
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.
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14 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
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. As of April 30, 2003, foreign currency holdings consisted of
multiple denominations.
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.
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 or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium and discount using the effective
interest method, is accrued daily.
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15 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with American Express Financial Corporation (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 1.10% to 1.00% 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 Emerging
Markets Fund to the Lipper Emerging Markets Funds Index. Prior to Dec. 1, 2002,
the maximum adjustment was 0.12% of the Portfolio's average daily net assets
after deducting 1% from the performance difference. If the performance
difference was less than 1%, the adjustment was zero. On Nov. 13, 2002,
shareholders approved modification of the performance incentive adjustment
calculation by adjusting the performance difference intervals, while retaining
the previous maximum adjustment and reducing the amount of the performance
difference for which no adjustment is made to 0.50%. The effect of the
modifications began Dec. 1, 2002. The adjustment increased the fee by $3,489 for
the six months ended April 30, 2003
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.
AEFC has a Subadvisory Agreement with American Express Asset Management
International Inc., a wholly-owned subsidiary of AEFC.
The Portfolio 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.
- --------------------------------------------------------------------------------
16 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $123,596,845 and $135,435,951, respectively, for the six
months ended April 30, 2003. For the same period, the portfolio turnover rate
was 68%. Realized gains and losses are determined on an identified cost basis.
4. LENDING OF PORTFOLIO SECURITIES
As of April 30, 2003, securities valued at $5,840,000 were on loan to brokers.
For collateral, the Portfolio received $6,063,000 in cash. Income from
securities lending amounted to $5,084 for the six months ended April 30, 2003.
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.
5. FORWARD FOREIGN CURRENCY CONTRACTS
As of April 30, 2003, the Portfolio has forward foreign currency exchange
contracts that obligate it to deliver currencies at specified future dates. The
unrealized appreciation and/or depreciation on these contracts is included in
the accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 2, 2003 2,080,544 1,304,416 $ 4,240 $ --
U.S. Dollar British Pound
May 6, 2003 488,806 305,829 -- 15
U.S. Dollar British Pound
May 7, 2003 4,332,041 608,219 13,892 --
South African Rand U.S. Dollar
May 8, 2003 5,607,371 767,891
South African Rand U.S. Dollar -- 2,744
------- ------
Total $18,132 $2,759
------- ------
- --------------------------------------------------------------------------------
17 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Emerging Markets Fund
April 30, 2003 (Unaudited)
Assets
Investment in Portfolio (Note 1) $ 182,634,159
Capital shares receivable 1,600
-----
Total assets 182,635,759
-----------
Liabilities
Capital shares payable 43,563
Accrued distribution fee 2,487
Accrued transfer agency fee 1,982
Accrued administrative services fee 500
Other accrued expenses 70,140
------
Total liabilities 118,672
-------
Net assets applicable to outstanding capital stock $ 182,517,087
=============
Represented by
Capital stock -- $.01 par value (Note 1) $ 462,746
Additional paid-in capital 324,739,569
Undistributed net investment income 180,116
Accumulated net realized gain (loss) (Note 5) (146,535,316)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 3,669,972
---------
Total -- representing net assets applicable to outstanding capital stock $ 182,517,087
=============
Net assets applicable to outstanding shares: Class A $ 122,166,938
Class B $ 59,594,843
Class C $ 661,129
Class Y $ 94,177
Net asset value per share of outstanding capital stock:
Class A shares 30,479,672 $ 4.01
Class B shares 15,599,248 $ 3.82
Class C shares 172,469 $ 3.83
Class Y shares 23,255 $ 4.05
-------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
18 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Statement of operations
AXP Emerging Markets Fund
Six months ended April 30, 2003 (Unaudited)
Investment income
Income:
Dividends $ 2,406,147
Interest 224,404
Fee income from securities lending -- net 5,082
Less foreign taxes withheld (199,136)
--------
Total income 2,436,497
---------
Expenses (Note 2):
Expenses allocated from Portfolio 1,193,870
Distribution fee
Class A 159,983
Class B 314,308
Class C 2,236
Transfer agency fee 361,904
Incremental transfer agency fee
Class A 27,576
Class B 22,248
Class C 185
Service fee -- Class Y 61
Administrative services fees and expenses 94,967
Compensation of board members 4,450
Printing and postage 50,791
Registration fees 17,129
Audit fees 3,500
Other 4,558
-----
Total expenses 2,257,766
Earnings credits on cash balances (Note 2) (1,385)
------
Total net expenses 2,256,381
Investment income (loss) -- net 180,116
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (7,578,164)
Foreign currency transactions (295,883)
--------
Net realized gain (loss) on investments (7,874,047)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 7,866,895
---------
Net gain (loss) on investments and foreign currencies (7,152)
------
Net increase (decrease) in net assets resulting from operations $ 172,964
============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
19 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets
AXP Emerging Markets Fund
April 30, 2003 Oct. 31, 2002
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss)-- net $ 180,116 $ (1,038,828)
Net realized gain (loss) on investments (7,874,047) 17,148,831
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 7,866,895 4,056,336
--------- ---------
Net increase (decrease) in net assets resulting from operations 172,964 20,166,339
------- ----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 16,809,375 92,903,611
Class B shares 2,152,089 7,961,556
Class C shares 710,991 691,958
Class Y shares 659,969 23,258,477
Payments for redemptions
Class A shares (27,164,505) (116,934,256)
Class B shares (Note 2) (7,591,075) (22,209,119)
Class C shares (Note 2) (567,502) (405,813)
Class Y shares (949,611) (23,090,767)
-------- -----------
Increase (decrease) in net assets from capital share transactions (15,940,269) (37,824,353)
----------- -----------
Total increase (decrease) in net assets (15,767,305) (17,658,014)
Net assets at beginning of period 198,284,392 215,942,406
----------- -----------
Net assets at end of period $182,517,087 $ 198,284,392
============ =============
Undistributed net investment income $ 180,116 $ --
------------ -------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
20 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Notes to Financial Statements
AXP Emerging Markets Fund
(Unaudited as to April 30, 2003)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Global Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. AXP Global 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, Class C 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 (CDSC)
and automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class C shares may be subject to CDSC.
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 Emerging Markets Portfolio
The Fund invests all of its assets in Emerging Markets Portfolio (the
Portfolio), a series of World Trust (the Trust), an open-end investment company
that has the same objectives as the Fund. The Portfolio invests primarily in
equity securities of issuers in countries with developing or emerging markets.
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 April 30, 2003 was 99.96%.
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).
- --------------------------------------------------------------------------------
21 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
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
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
- --------------------------------------------------------------------------------
22 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
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 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 0.10% to 0.05% 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 incremental
transfer agency fee is the amount charged to the specific classes for the
additional expense above the fee for Class Y. The Fund pays AECSC an annual fee
per shareholder account for this service as follows:
o Class A $19.00
o Class B $20.00
o Class C $19.50
o Class Y $17.00
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 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 and Class C shares.
Under a Shareholder Service Agreement, the Fund pays the Distributor 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
$92,185 for Class A, $34,220 for Class B and $94 for Class C for the six months
ended April 30, 2003.
During the six months ended April 30, 2003, the Fund's transfer agency fees were
reduced by $1,385 as a result of earnings credits from overnight cash balances.
- --------------------------------------------------------------------------------
23 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 2003
Class A Class B Class C Class Y
Sold 4,155,401 554,032 189,828 161,216
Issued for reinvested distributions -- -- -- --
Redeemed (6,697,532) (1,964,194) (149,188) (229,135)
---------- ---------- -------- --------
Net increase (decrease) (2,542,131) (1,410,162) 40,640 (67,919)
---------- ---------- ------ -------
Year ended Oct. 31, 2002
Class A Class B Class C Class Y
Sold 21,294,247 1,862,489 166,570 5,055,225
Issued for reinvested distributions -- -- -- --
Redeemed (26,885,521) (5,372,341) (97,581) (4,986,689)
----------- ---------- ------- ----------
Net increase (decrease) (5,591,274) (3,509,852) 68,989 68,536
---------- ---------- ------ ------
4. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The Fund must
maintain asset coverage for borrowings of at least 300%. The agreement, which
enables the Fund to participate with other American Express mutual funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the
IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime
Lending Rate. Borrowings are payable within 60 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 0.09% per annum. The Fund had no borrowings
outstanding during the six months ended April 30, 2003.
5. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund has a capital loss carry-over of
$136,370,605 as of Oct. 31, 2002, that will expire in 2006 through 2009 if not
offset by capital gains. It is unlikely the board will authorize a distribution
of any net realized capital gains until the available capital loss carry-over
has been offset or expires.
- --------------------------------------------------------------------------------
24 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
6. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Class A
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $4.00 $3.69 $ 4.81 $4.99 $3.44
Income from investment operations:
Net investment income (loss) .01 (.01) -- (.02) .02
Net gains (losses) (both realized and unrealized) -- .32 (1.12) (.16) 1.54
Total from investment operations .01 .31 (1.12) (.18) 1.56
Less distributions:
Dividends from net investment income -- -- -- -- (.01)
Net asset value, end of period $4.01 $4.00 $ 3.69 $4.81 $4.99
Ratios/supplemental data
Net assets, end of period (in millions) $122 $132 $143 $234 $251
Ratio of expenses to average daily net assets(c) 2.10%(d) 2.05% 2.02% 1.83% 2.03%
Ratio of net investment income (loss)
to average daily net assets .45%(d) (.19%) (.02%) (.38%) .14%
Portfolio turnover rate (excluding short-term securities) 68% 226% 193% 143% 143%
Total return(e) .25%(f) 8.40% (23.28%) (3.60%) 45.13%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
25 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $3.83 $3.56 $ 4.67 $4.88 $3.39
Income from investment operations:
Net investment income (loss) (.01) (.04) (.04) (.07) (.05)
Net gains (losses) (both realized and unrealized) -- .31 (1.07) (.14) 1.54
Total from investment operations (.01) .27 (1.11) (.21) 1.49
Net asset value, end of period $3.82 $3.83 $ 3.56 $4.67 $4.88
Ratios/supplemental data
Net assets, end of period (in millions) $60 $65 $73 $120 $130
Ratio of expenses to average daily net assets(c) 2.88%(d) 2.83% 2.79% 2.60% 2.81%
Ratio of net investment income (loss)
to average daily net assets (.33%)(d) (.95%) (.80%) (1.14%) (.63%)
Portfolio turnover rate (excluding short-term securities) 68% 226% 193% 143% 143%
Total return(e) (.26%)(f) 7.58% (23.77%) (4.30%) 43.87%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
26 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000(b)
Net asset value, beginning of period $3.84 $3.56 $ 4.68 $5.64
Income from investment operations:
Net investment income (loss) -- (.03) (.04) (.01)
Net gains (losses) (both realized and unrealized) (.01) .31 (1.08) (.95)
Total from investment operations (.01) .28 (1.12) (.96)
Net asset value, end of period $3.83 $3.84 $ 3.56 $4.68
Ratios/supplemental data
Net assets, end of period (in millions) $1 $1 $-- $--
Ratio of expenses to average daily net assets(c) 2.88%(d) 2.85% 2.79% 2.60%(d)
Ratio of net investment income (loss)
to average daily net assets (.33%)(d) (1.13%) (.63%) (2.06%)(d)
Portfolio turnover rate (excluding short-term securities) 68% 226% 193% 143%
Total return(e) (.26%)(f) 7.87% (23.93%) (17.02%)(f)
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
27 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $4.04 $3.72 $ 4.83 $4.99 $3.45
Income from investment operations:
Net investment income (loss) .01 -- .01 (.01) .02
Net gains (losses) (both realized and unrealized) -- .32 (1.12) (.15) 1.53
Total from investment operations .01 .32 (1.11) (.16) 1.55
Less distributions:
Dividends from net investment income -- -- -- -- (.01)
Net asset value, end of period $4.05 $4.04 $ 3.72 $4.83 $4.99
Ratios/supplemental data
Net assets, end of period (in millions) $-- $-- $-- $-- $--
Ratio of expenses to average daily net assets(c) 1.86%(d) 1.59% 1.84% 1.66% 1.88%
Ratio of net investment income (loss)
to average daily net assets .39%(d) .19% .21% (.29%) 1.18%
Portfolio turnover rate (excluding short-term securities) 68% 226% 193% 143% 143%
Total return(e) .25%(f) 8.60% (22.98%) (3.21%) 45.29%
Notes to financial highlights
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 2000.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2003 (Unaudited).
- --------------------------------------------------------------------------------
28 -- AXP EMERGING MARKETS FUND -- 2003 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
(logo)
AMERICAN
EXPRESS(R)
- --------------------------------------------------------------------------------
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and is
not a broker-dealer.
AXP(R)
Global
Balanced
Fund
Semiannual Report
for the Period Ended
April 30, 2003
AXP Global Balanced Fund seeks to provide shareholders with a balance of growth
of capital and current income.
- --------------------------------------------------------------------------------
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
- --------------------------------------------------------------------------------
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
Investments in Securities 9
Financial Statements 14
Notes to Financial Statements 17
- --------------------------------------------------------------------------------
2 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Fund Snapshot
AS OF APRIL 30, 2003
PORTFOLIO MANAGERS
Equity
Portfolio manager Mark Burgess
Since 9/02
Years in industry 17
Fixed Income
Portfolio manager Team led by Nic Pifer, CFA
Since 2/03
Years in industry 12
FUND OBJECTIVE
For investors seeking a balance of growth of capital and current income.
Inception dates
A: 11/13/96 B: 11/13/96 C: 6/26/00 Y: 11/13/96
Ticker symbols
A: IDGAX B: IGBBX C: -- Y: AGBYX
Total net assets $89.5 million
Number of holdings approximately 130
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
Equities
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
Bonds
DURATION
SHORT INT. LONG
X HIGH
X MEDIUM
LOW
COUNTRY COMPOSITION
Percentage of portfolio assets
United States 43.2%
United Kingdom 10.5%
Germany 7.9%
France 6.3%
Italy 5.5%
Canada 4.4%
Japan 3.9%
Austria 3.6%
Switzerland 2.5%
Norway 1.5%
Australia 1.3%
Bermuda 1.3%
Denmark 1.2%
Netherlands 1.1%
Other 5.8%
TOP TEN HOLDINGS
Percentage of portfolio assets
Buoni Poliennali Del Tes (Italy)
4.25% 2009 4.4%
Oesterreich Kontrollbank (Austria)
1.80% 2010 3.6
Govt of France (France)
5.50% 2010 2.5
Pfizer (United States) 2.5
Federal Republic of Germany (Germany)
6.50% 2027 2.3
General Electric (United States) 2.3
Federal Natl Mtge Assn (United States)
6.00% 2011 2.1
Govt of France (France)
4.00% 2009 1.9
Federal Republic of Germany (Germany)
5.25% 2008 1.8
Microsoft (United States) 1.7
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
There are special risk considerations associated with international investing
related to market, currency, economic, political and other factors.
Fund holdings are subject to change.
- --------------------------------------------------------------------------------
3 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Q: How did AXP Global Balanced Fund perform in the first half of fiscal year
2003?
A: AXP Global Balanced Fund's Class A shares, excluding sales charge, advanced
5.14% for the six-month period ended April 30, 2003. The Fund outperformed
its benchmark and its peer group. The MSCI All Country World Free Index, an
unmanaged all-equity index, rose 3.96% while the Lipper Global Flexible
Funds Index, representing the Fund's peer group, rose 4.35%.
Q: How did the balance between stocks and bonds affect the Fund's performance?
A: We entered the period modestly overweight in equities. Global bonds
generally outpaced global equities over the six months in question, so our
asset allocation between stocks and bonds actually detracted slightly from
performance. In early April, we increased equities to approximately 65%
(from 58%) of the portfolio and reduced bonds to 35%. We may remain
overweight in equities for the year, given our expectation that equities
should outperform bonds. However, we would reevaluate this position if
changes in fiscal or monetary policy reduce growth. In early April, we
increased equities to approximately 65% (from 58%) of the portfolio and
reduced bonds to 35%. The purpose of this rebalance was to restore the
overweight
(bar graph)
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2003
6%
+5.14%
5% (bar 1)
+4.35%
4% +3.96% (bar 3)
(bar 2)
3%
2%
1%
0%
(bar 1) AXP Global Balanced Fund Class A (excluding sales charge)
(bar 2) MSCI All Country World Free Index (1)
(bar 3) Lipper Global Flexible Funds Index(2)
(1) Morgan Stanley Capital International (MSCI) All Country World Free Index,
an unmanaged index, is compiled from a composite of securities markets of
47 countries, including Canada, the United States, and 26 emerging market
countries. The index reflects reinvestment of all distributions and changes
in market prices, but excludes brokerage commissions or other fees.
(2) The Lipper Global Flexible Funds Index, published by Lipper Inc., includes
the 30 largest funds that are generally similar to the Fund, although some
funds in the index may have somewhat different investment policies or
objectives.
Past performance is no guarantee of future results. The 5.75% sales charge
applicable to Class A shares of the Fund is not reflected in the bar chart; if
reflected, returns would be lower than those shown. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
- --------------------------------------------------------------------------------
4 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
(begin callout quote)> Our stock allocation had a neutral to positive effect on
overall performance as global bonds generally outpaced global equities. (end
callout quote)
equity position we had at the beginning of the period. We ended the period
a bit less overweight in equities than we started the period.
Below, Portfolio Manager Mark Burgess discusses the equity holdings of AXP
Global Balanced Fund.
Q: What factors affected the performance of the Fund's equity holdings?
A: Our substantial position in U.S. stocks was beneficial, due to both U.S.
outperformance of international markets and strong results from our
individual U.S. holdings. Stock selection in Canada was also favorable.
Stock selection in Europe was behind our benchmark.
AVERAGE ANNUAL TOTAL RETURNS
as of April 30, 2003
Class A Class B Class C Class Y
(Inception dates) (11/13/96) (11/13/96) (6/26/00) (11/13/96)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4) NAV(5) POP(5)
6 months* +5.14% -0.91% +4.74% +0.74% +5.01% +4.01% +5.48% +5.48%
1 year -4.46% -9.96% -5.19% -8.98% -5.20% -6.15% -4.32% -4.32%
5 years -2.67% -3.82% -3.41% -3.57% N/A N/A -2.44% -2.44%
Since inception +1.16% +0.24% +0.41% +0.41% -11.77% -11.77% +1.38% +1.38%
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be worth
more or less than the original cost. The performance shown for each class of
shares will vary due to differences in sales charges and fees. Short term
performance may be higher or lower than the figures shown. Visit
americanexpress.com for current information.
- --------------------------------------------------------------------------------
5 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
The Fund was underweight in Japanese stocks relative to our benchmark
during the period, which helped performance. However, the few stocks we did
hold still dragged down the Fund's overall performance. Recent legislation
requires Japanese pension managers to liquidate certain equity holdings as
part of a government-mandated restructuring and asset transfer plan. This
has put tremendous selling pressure on large-cap stocks, the focus of our
Japan allocation. Recently, we restructured our Japan equity investment
team with a view toward broadening our Japanese exposure to include more
small-cap holdings.
Q: What changes were made to equity portfolio positioning?
A: We have had a strong thematic view that the U.S. dollar would remain weak.
Consequently, we shifted some of our best sector and stock ideas toward
regions where we anticipated the most favorable currency impact and
tempered our weightings in North America.
We increased exposure to technology during the period, which worked to the
Fund's benefit. We also increased exposure to pharmaceutical companies and
telecommunication companies. The portfolio's defensive consumer staples
position was reduced because we believe much of the potential bad news for
the economy has already been priced in.
The portfolio was overweight in energy stocks prior to the start of combat
in Iraq. We subsequently began reducing the position by selling into the
energy rally as portfolio holdings reached our price targets. Similarly, we
reduced our telecommunications position in the first quarter of 2003 as
those stocks reached their price targets.
Q: What is your outlook for global equity markets?
A: Following recent price volatility, we believe U.S. and international equity
markets are now in the process of building a base for better performance.
We have seen continued cost cutting and restructuring, particularly among
European and Japanese companies. Equity valuations appear attractive to us
-- the dividend yield on U.K. equities surpassed the yield on long-term
U.K. government bonds this past spring for the first time since the 1950s.
We also think interest rates in Europe could be lowered further by
year-end. We believe all of these suggest a very favorable backdrop for
better performance in the global equity markets.
- --------------------------------------------------------------------------------
6 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
Below, Portfolio Manager Team Leader Nic Pifer discusses the fixed-income
portion of AXP Balanced Fund's portfolio.
Q: How did the portfolio's fixed income positioning affect six-month results?
A: Overall, the fixed income allocation had a positive impact, given that
global government bonds outpaced global equities by a fairly substantial
margin over the six-month period. Global bonds have benefited from the
continued depreciation of the U.S. dollar, which we think will continue.
The biggest impact on performance has been the success of our currency
positioning. We continued to overweight the currencies of commodity-driven
markets, including Canada, Australia and Norway. We were also overweight in
the Euro and underweight in the Yen. The portfolio's overweight in European
government bonds added to performance as well. Since the beginning of
calendar 2003, investors have been reallocating from U.S. government bonds
to Euro government bonds, which underperformed last year.
The portfolio's corporate position and its emerging markets holdings,
specifically in Brazil, also had a meaningful positive impact. We sold our
Brazilian bonds at the beginning of April. Given their previous
outperformance, we believed future appreciation was limited, while risk had
increased.
Q: What other changes did you make to the fixed income portion of the
portfolio?
A: During the period, we underweighted the U.S. where we kept duration in line
with our benchmark. We overweighted European government bonds, which we
think will continue to do well for three reasons. First, yields are higher
than that of U.S. government bonds. Second, there is little inflationary
pressure in Europe, so interest rates should stay relatively low and could
go lower due to widening output gap. Finally, continued weakness in the
U.S. dollar would favor Euro bonds. We preferred to buy higher yielding
government bonds, such as Greek bonds, within the Euroland sector and
intend to add a small percentage in non-Euro denominated European bonds,
such as Hungarian bonds for convergence trade. Although still overweighted
in the Euro, we have hedged our exposure somewhat to mitigate currency
risk. We have gradually reduced our U.K. allocation.
- --------------------------------------------------------------------------------
7 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
We continued to underweight Japan where government bond yields are so low
that any investment comes down to a speculation on currency. We don't think
there is much potential for the yen to appreciate because the Japanese
central bank has been checking the strength of the yen against the dollar
by intervening in the foreign exchange market.
We slightly reduced our exposure to the corporate sector, composed
primarily of U.S. corporate bonds. We have become more cautious on
corporate bonds following their recent strong performance and are unlikely
to increase our corporate position until valuations become more reasonable.
Q: Can you elaborate on the Fund's sector-based approach to bond selection?
A: Another change during the period was an increased emphasis by the Fund's
managers to use a team-based approach. If and when the Fund tilts more
toward broader bond diversification and increases its number of holdings,
sector experts will help the Fund identify opportunities as they develop.
Q: What is your outlook for the global bond market?
A: As fixed income investors have shifted their attention back to the economy,
their level of caution has remained high. Since more negative economic data
is possible and economic uncertainty is unlikely to be alleviated in the
near term, we think interest rates will probably remain range bound, with a
possibility to drift lower as concerns about deflation persist. In this
environment, our goal is to maximize this portion of the portfolio's yield
potential, while maintaining a prudent risk level.
- --------------------------------------------------------------------------------
8 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Investments in Securities
AXP Global Balanced Fund
April 30, 2003 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (62.8%)(c)
Issuer Shares Value(a)
Australia (0.7%)
Banks and savings & loans (0.4%)
Australia & New Zealand
Banking Group 30,600 $356,995
Retail (0.3%)
Woolworths 32,499 262,660
Belgium (0.2%)
Insurance
Fortis 11,400 189,818
Bermuda (1.3%)
Multi-industry conglomerates
Accenture Cl A 16,300(b) 261,126
Tyco Intl 57,165 891,774
Total 1,152,900
Canada (2.7%)
Energy (0.5%)
EnCana 15,000 491,531
Insurance (1.1%)
Sun Life Financial Services
of Canada 48,505 995,729
Media (0.4%)
Thomson 11,362 335,728
Metals (0.2%)
Alcan 5,967 174,693
Utilities -- telephone (0.4%)
BCE 19,525 385,848
Finland (0.9%)
Communications equipment & services
Nokia 47,631 805,848
France (1.8%)
Banks and savings & loans (0.8%)
BNP Paribas 14,523 681,695
Energy (1.0%)
TotalFinaElf 7,355 964,462
Germany (0.4%)
Communications equipment & services
Deutsche Telekom 24,034 321,327
Hong Kong (0.3%)
Financial services
Cheung Kong 45,000 248,684
Ireland (0.2%)
Financial services
Irish Life & Permanent 12,980 150,651
Japan (3.8%)
Automotive & related (0.4%)
Nissan Motor 44,000 337,582
Communications equipment & services (0.4%)
NTT DoCoMo 179 369,227
Computers & office equipment (0.2%)
Canon 5,000 202,079
Electronics (0.5%)
Keyence 2,090 335,949
Tokyo Electron 4,000 149,925
Total 485,874
Financial services (0.5%)
Nomura Holdings 23,000 227,763
Sumitomo Trust & Banking 65,000 184,219
Total 411,982
Furniture & appliances (0.1%)
Matsushita Electric Industrial 16,000 127,453
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
9 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Japan (cont.)
Industrial equipment & services (0.2%)
SMC 2,100 $158,125
Media (0.1%)
Sony 2,200 53,497
Multi-industry conglomerates (0.3%)
Mitsubishi 20,000 118,900
Sumitomo Chemical 50,000 135,418
Total 254,318
Retail (0.3%)
Seven-Eleven Japan 11,000 261,949
Textiles & apparel (0.2%)
Asahi Glass 42,000 223,629
Transportation (0.6%)
East Japan Railway 66 298,843
Yamato Transport 20,000 223,713
Total 522,556
Mexico (0.6%)
Financial services
Grupo Financiero BBVA
Bancomer Cl B 599,981(b) 521,165
Netherlands (1.1%)
Food
Unilever 15,069 949,320
Portugal (0.6%)
Utilities -- telephone
Portugal Telecom 80,363 574,882
Singapore (0.5%)
Banks and savings & loans
United Overseas Bank 74,000 433,431
South Korea (0.3%)
Communications equipment & services
SK Telecom 2,220 308,790
Spain (0.8%)
Beverages & tobacco
Altadis 27,300 703,783
Switzerland (2.4%)
Banks and savings & loans (1.2%)
UBS 23,276 1,104,335
Health care (1.2%)
Novartis 27,344 1,078,599
Taiwan (0.7%)
Banks and savings & loans (0.3%)
Chinatrust Financial Holding 431,000(b) 336,294
Electronics (0.4%)
Taiwan Semiconductor Mfg 243,000(b) 333,201
United Kingdom (8.8%)
Banks and savings & loans (0.6%)
Lloyds TSB Group 86,196 566,894
Computer software & services (0.5%)
Sage Group 185,546 411,462
Energy (0.9%)
BP 127,207 806,119
Financial services (0.8%)
HSBC Holdings 66,154 724,784
Food (0.4%)
Compass Group 83,018 382,129
Health care (2.3%)
GlaxoSmithKline 61,590 1,234,391
Smith & Nephew 123,778 825,439
Total 2,059,830
Insurance (0.3%)
Willis Group Holdings 7,900 246,401
Media (0.7%)
British Sky Broadcasting Group 60,366(b) 625,672
Metals (0.3%)
Rio Tinto 15,108 288,790
Retail (0.6%)
Marks & Spencer Group 114,364 532,811
Utilities -- telephone (1.4%)
Vodafone Group 613,554 1,211,057
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
10 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
United States (34.7%)
Aerospace & defense (0.5%)
Lockheed Martin 9,400 $470,470
Banks and savings & loans (1.0%)
Bank of America 12,500 925,625
Beverages & tobacco (1.1%)
Altria Group 14,700 452,172
PepsiCo 13,300 575,624
Total 1,027,796
Building materials & construction (0.7%)
Weyerhaeuser 13,500 669,465
Communications equipment & services (0.8%)
Verizon Communications 19,700 736,386
Computer software & services (1.7%)
Microsoft 57,890 1,480,247
Computers & office equipment (2.3%)
Cisco Systems 40,315(b) 606,338
Dell Computer 50,178(b) 1,450,646
Total 2,056,984
Electronics (1.2%)
Intel 38,900 715,760
Texas Instruments 18,600 343,914
Total 1,059,674
Energy (1.8%)
ConocoPhillips 10,448 525,534
Exxon Mobil 32,100 1,129,920
Total 1,655,454
Energy equipment & services (0.6%)
Baker Hughes 17,900 501,200
Financial services (2.7%)
Citigroup 36,562 1,435,059
Goldman Sachs Group 12,400 941,160
Total 2,376,219
Food (0.5%)
Sysco 15,600 448,188
Health care (4.7%)
Johnson & Johnson 18,700 1,053,932
Pfizer 71,730 2,205,697
Wyeth 22,300 970,719
Total 4,230,348
Health care services (1.0%)
McKesson 32,700 907,098
Household products (2.3%)
Estee Lauder Cl A 17,500 568,750
Kimberly-Clark 11,300 562,401
Procter & Gamble 10,200 916,470
Total 2,047,621
Industrial equipment & services (1.0%)
Illinois Tool Works 13,800 882,924
Insurance (2.6%)
American Intl Group 25,160 1,458,022
Travelers Property Casualty Cl A 51,904 842,402
Total 2,300,424
Leisure time & entertainment (1.7%)
Carnival 27,600 761,484
Mattel 34,900 758,726
Total 1,520,210
Media (0.7%)
Clear Channel Communications 14,900(b) 582,739
Multi-industry conglomerates (3.3%)
General Electric 67,510 1,988,170
S&P Depositary Receipts 10,400 956,488
Total 2,944,658
Restaurants & lodging (0.7%)
Hilton Hotels 43,900 584,748
Retail (1.9%)
Office Depot 37,200(b) 470,952
Wal-Mart Stores 21,100 1,188,352
Total 1,659,304
Total common stocks
(Cost: $58,652,205) $56,194,371
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
11 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Bonds (33.9%)(c)
Issuer Coupon Principal Value(a)
rate amount
Australia (0.6%)
New South Wales Treasury
(Australian Dollar)
04-01-04 7.00% 600,000 $383,156
03-01-08 8.00 200,000 140,585
Total 523,741
Austria (3.6%)
Oesterreich Kontrollbank
(Japanese Yen)
03-22-10 1.80 347,000,000 3,201,588
Canada (1.7%)
Govt of Canada
(Canadian Dollar)
12-01-06 7.00 720,000 550,740
06-01-08 6.00 800,000 598,701
Province of British Columbia
(Canadian Dollar)
12-01-06 5.25 500,000 360,699
Total 1,510,140
Denmark (1.2%)
Kingdom of Denmark
(Danish Krone)
05-15-03 8.00 600,000 90,369
08-15-05 5.00 6,000,000 944,378
Total 1,034,747
France (4.4%)
Govt of France
(European Monetary Unit)
10-25-09 4.00 1,500,000 1,703,791
04-25-10 5.50 1,800,000 2,221,296
Total 3,925,087
Germany (7.5%)
Allgemeine Hypo Bank
(European Monetary Unit)
09-02-09 5.00 850,000(d) 1,010,176
Federal Republic of Germany
(European Monetary Unit)
01-05-06 6.00 300,000 362,866
01-04-08 5.25 1,285,000 1,558,491
07-04-08 4.75 725,000 862,192
07-04-10 5.25 250,000 303,620
06-20-16 6.00 434,598 561,094
07-04-27 6.50 1,475,000 2,024,290
Total 6,682,729
Italy (5.4%)
Buoni Poliennali Del Tes
(European Monetary Unit)
11-01-09 4.25 3,400,000 3,915,668
11-01-29 5.25 800,000 934,084
Total 4,849,752
Norway (1.5%)
Govt of Norway
(Norwegian Krone)
11-30-04 5.75 4,350,000 630,389
05-15-09 5.50 5,000,000 730,685
Total 1,361,074
Supra National (0.6%)
Intl Bank Reconstruction & Development
(Japanese Yen)
02-18-08 2.00 55,000,000 500,698
United Kingdom (1.5%)
Greater Beijing First Expressways
(U.S. Dollar) Sr Nts
06-15-07 9.50 170,000(b) 105,400
United Kingdom Treasury
(British Pound)
12-07-05 8.50 700,000 1,253,175
Total 1,358,575
United States (6.0%)
Citicorp
(Deutsche Mark)
09-19-09 6.25 1,000,000 619,081
ConocoPhillips
(U.S. Dollar)
03-15-28 7.13 200,000 218,004
Federal Natl Mtge Assn
(U.S. Dollar)
05-15-11 6.00 1,620,000 1,844,724
07-01-13 6.00 328,743 345,413
Intl Paper
(European Monetary Unit)
08-11-06 5.38 560,000 647,696
U.S. Treasury (U.S. Dollar)
02-15-06 5.63 500,000 551,172
11-15-16 7.50 870,000 1,145,681
Total 5,371,771
Total bonds
(Cost: $26,001,410) $30,319,902
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
12 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Short-term securities (1.8%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (1.0%)
Federal Home Loan Bank Disc Nt
05-09-03 1.12% $200,000 $199,944
Federal Natl Mtge Assn Disc Nts
05-21-03 1.23 200,000 199,870
06-04-03 1.18 500,000 499,426
Total 899,240
Commercial paper (0.8%)
Danske
06-09-03 1.24 $700,000 $699,036
Total short-term securities
(Cost: $1,598,318) $1,598,276
Total investments in securities
(Cost: $86,251,933)(e) $88,112,549
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(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) At April 30, 2003, the cost of securities for federal income tax purposes
was approximately $86,252,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 6,368,000
Unrealized depreciation (4,507,000)
----------
Net unrealized appreciation $ 1,861,000
-----------
- --------------------------------------------------------------------------------
13 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Balanced Fund
April 30, 2003 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $86,251,933) $ 88,112,549
Cash in bank on demand deposit 658,141
Foreign currency holdings (identified cost $152,480) (Note 1) 151,778
Capital shares receivable 10,857
Dividends and accrued interest receivable 817,862
Receivable for investment securities sold 426,811
Unrealized appreciation on foreign currency contracts held, at value (Note 5) 1,616
-----
Total assets 90,179,614
----------
Liabilities
Capital shares payable 4,599
Payable for investment securities purchased 454,485
Unrealized depreciation on foreign currency contracts held, at value (Note 5) 105,218
Accrued investment management services fee 1,922
Accrued distribution fee 1,269
Accrued service fee 13
Accrued transfer agency fee 675
Accrued administrative services fee 146
Other accrued expenses 63,456
------
Total liabilities 631,783
-------
Net assets applicable to outstanding capital stock $ 89,547,831
============
Represented by
Capital stock -- $.01 par value (Note 1) $ 210,581
Additional paid-in capital 137,389,748
Undistributed net investment income 345,981
Accumulated net realized gain (loss) (Note 7) (50,193,361)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (Note 5) 1,794,882
---------
Total -- representing net assets applicable to outstanding capital stock $ 89,547,831
============
Net assets applicable to outstanding shares: Class A $ 50,585,051
Class B $ 33,345,650
Class C $ 693,778
Class Y $ 4,923,352
Net asset value per share of outstanding capital stock: Class A shares 11,811,750 $ 4.28
Class B shares 7,937,455 $ 4.20
Class C shares 165,714 $ 4.19
Class Y shares 1,143,195 $ 4.31
--------- ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Statement of operations
AXP Global Balanced Fund
Six months ended April 30, 2003 (Unaudited)
Investment income
Income:
Dividends $ 526,303
Interest 718,439
Fee income from securities lending -- net (Note 3) 372
Less foreign taxes withheld (52,757)
-------
Total income 1,192,357
---------
Expenses (Note 2):
Investment management services fee 346,835
Distribution fee
Class A 63,916
Class B 169,052
Class C 3,468
Transfer agency fee 129,540
Incremental transfer agency fee
Class A 7,797
Class B 8,202
Class C 145
Service fee -- Class Y 1,978
Administrative services fees and expenses 26,477
Compensation of board members 4,867
Custodian fees 16,125
Printing and postage 31,426
Registration fees 20,414
Audit fees 9,750
Other 4,875
-----
Total expenses 844,867
Earnings credits on cash balances (Note 2) (820)
----
Total net expenses 844,047
-------
Investment income (loss) -- net 348,310
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (4,490,272)
Foreign currency transactions (290,755)
--------
Net realized gain (loss) on investments (4,781,027)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 8,846,775
---------
Net gain (loss) on investments and foreign currencies 4,065,748
---------
Net increase (decrease) in net assets resulting from operations $ 4,414,058
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
15 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets
AXP Global Balanced Fund
April 30, 2003 Oct. 31, 2002
Six months ended Year ended
(Unaudited)
Operations and distributions
Investment income (loss) -- net $ 348,310 $ 1,285,246
Net realized gain (loss) on investments (4,781,027) (10,651,422)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 8,846,775 (2,044,378)
--------- ----------
Net increase (decrease) in net assets resulting from operations 4,414,058 (11,410,554)
--------- -----------
Distributions to shareholders from:
Net investment income
Class A (117,759) (398,116)
Class B -- (62,042)
Class C -- (1,400)
Class Y (12,698) (16,493)
------- -------
Total distributions (130,457) (478,051)
-------- --------
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 3,929,234 23,355,046
Class B shares 1,597,087 5,643,206
Class C shares 67,489 437,256
Class Y shares 1,683,457 3,051,849
Reinvestment of distributions at net asset value
Class A shares 112,915 380,548
Class B shares -- 60,167
Class C shares -- 1,391
Class Y shares 12,695 16,486
Payments for redemptions
Class A shares (9,775,551) (42,926,054)
Class B shares (Note 2) (5,381,578) (18,768,163)
Class C shares (Note 2) (117,385) (187,066)
Class Y shares (547,215) (1,568,467)
-------- ----------
Increase (decrease) in net assets from capital share transactions (8,418,852) (30,503,801)
---------- -----------
Total increase (decrease) in net assets (4,135,251) (42,392,406)
Net assets at beginning of period 93,683,082 136,075,488
---------- -----------
Net assets at end of period $89,547,831 $ 93,683,082
=========== ============
Undistributed net investment income $ 345,981 $ 128,128
----------- ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
16 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Notes to Financial Statements
AXP Global Balanced Fund
(Unaudited as to April 30, 2003)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Global Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified open-end management
investment company. The Fund invests primarily in equity and debt securities of
issuers throughout the world. AXP Global 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, Class C 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 (CDSC)
and automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class C shares may be subject to a CDSC.
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.
The Fund's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
- --------------------------------------------------------------------------------
17 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted 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.
Foreign securities are valued based on quotations from the principal market in
which such securities are normally traded. If trading or events occurring in
other markets after the close of the principle market in which foreign
securities are traded, and before the close of business of the Fund, are
expected to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into account.
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 Fund 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 Fund 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 Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund 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
Fund pays a premium whether or not the option is exercised. The Fund 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 Fund 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.
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18 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Futures transactions
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund 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 Fund 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 Fund 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 Fund 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. As of April 30, 2003 foreign currency consisted of multiple
denominations.
The Fund 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 Fund and the resulting unrealized appreciation and/or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete its contract obligations.
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19 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
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 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,
when available, 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.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium and discount using the effective
interest method, is accrued daily.
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20 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
2. EXPENSES AND SALES CHARGES
The Fund has agreements with American Express Financial Corporation (AEFC) to
manage its portfolio and provide administrative services. Under an Investment
Management Services Agreement, AEFC determines which securities will be
purchased, held or sold. The management fee is a percentage of the Fund's
average daily net assets in reducing percentages from 0.79% to 0.665% 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 the Fund to the
Lipper Global Flexible Funds Index. Prior to Dec. 1, 2002, the maximum
adjustment was 0.12% of the Fund's average daily net assets after deducting 1%
from the performance difference. If the performance difference was less than 1%,
the adjustment was zero. On Nov. 13, 2002, shareholders approved modification of
the performance incentive adjustment calculation by adjusting the performance
difference intervals, while retaining the previous maximum adjustment and
reducing the amount of the performance difference for which no adjustment is
made to 0.50%. The effect of the modifications began Dec. 1, 2002. The
adjustment decreased the fee by $7,059 for the six months ended April 30, 2003.
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 0.06% to 0.035% 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.
AEFC has a Subadvisory Agreement with American Express Asset Management
International Inc., a wholly owned subsidiary of AEFC.
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21 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The incremental
transfer agency fee is the amount charged to the specific classes for the
additional expense above the fee for Class Y. The Fund pays AECSC an annual fee
per shareholder account for this service as follows:
o Class A $19.00
o Class B $20.00
o Class C $19.50
o Class Y $17.00
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 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 and Class C shares.
Under a Shareholder Service Agreement, the Fund pays the Distributor 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
$50,760 for Class A, $12,753 for Class B and $26 for Class C for the six months
ended April 30, 2003.
During the six months ended April 30, 2003, the Fund's custodian and transfer
agency fees were reduced by $820 as a result of earnings credits from overnight
cash balances. The Fund also pays custodian fees to American Express Trust
Company, an affiliate of AEFC.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $16,531,853 and $24,993,546, respectively, for the six
months ended April 30, 2003. Realized gains and losses are determined on an
identified cost basis.
Income from securities lending amounted to $372 for the six months ended April
30, 2003. The risks to the Fund of securities lending are that the borrower may
not provide additional collateral when required or return the securities when
due.
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22 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 2003
Class A Class B Class C Class Y
Sold 949,234 393,505 16,628 404,646
Issued for reinvested distributions 27,340 -- -- 3,059
Redeemed (2,370,332) (1,329,901) (28,879) (131,802)
---------- ---------- ------- --------
Net increase (decrease) (1,393,758) (936,396) (12,251) 275,903
---------- -------- ------- -------
Year ended Oct. 31, 2002
Class A Class B Class C Class Y
Sold 5,328,588 1,283,731 101,110 689,459
Issued for reinvested distributions 82,548 13,194 306 3,561
Redeemed (9,813,471) (4,337,810) (45,171) (356,436)
---------- ---------- ------- --------
Net increase (decrease) (4,402,335) (3,040,885) 56,245 336,584
---------- ---------- ------ -------
5. FORWARD FOREIGN CURRENCY CONTRACTS
As of April 30, 2003, the Fund has forward foreign currency exchange contracts
that obligate it to deliver currencies at specified future dates. The unrealized
appreciation and/or depreciation on these contracts is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 1, 2003 1,485,000 12,351 $ -- $ 101
Japanese Yen U.S. Dollar
May 2, 2003 139,607 126,536 1,607 --
U.S. Dollar European Monetary Unit
May 5, 2003 158,584 99,194 -- 8
Australian Dollar U.S. Dollar
May 6, 2003 188,125 300,680 9 --
British Pound U.S. Dollar
May 6, 2003 1,727,616 14,481 -- 2
Japanese Yen U.S. Dollar
May 15, 2003 2,200,000 2,367,200 -- 86,837
European Monetary Unit U.S. Dollar
May 15, 2003 327,000,000 2,725,000 -- 18,270
Japanese Yen U.S. Dollar
------ --------
Total $1,616 $105,218
------ --------
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23 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
6. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The Fund must
maintain asset coverage for borrowings of at least 300%. The agreement, which
enables the Fund to participate with other American Express mutual funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the
IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime
Lending Rate. Borrowings are payable within 60 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 0.09% per annum. The Fund had no borrowings
outstanding during the six months ended April 30, 2003.
7. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund has a capital loss carry-over of
$44,974,747 as of Oct. 31, 2002, that will expire in 2009 and 2010 if not offset
by capital gains. It is unlikely the board will authorize a distribution of any
net realized capital gains until the available capital loss carry-over has been
offset or expires.
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24 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
8. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Class A
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $4.08 $4.53 $ 6.27 $6.61 $5.79
Income from investment operations:
Net investment income (loss) .02 .07 .07 .08 .09
Net gains (losses) (both realized and unrealized) .19 (.50) (1.27) .12 .82
Total from investment operations .21 (.43) (1.20) .20 .91
Less distributions:
Dividends from net investment income (.01) (.02) (.03) (.03) (.07)
Distributions from realized gains -- -- (.51) (.51) (.02)
Total distributions (.01) (.02) (.54) (.54) (.09)
Net asset value, end of period $4.28 $4.08 $ 4.53 $6.27 $6.61
Ratios/supplemental data
Net assets, end of period (in millions) $51 $54 $80 $110 $100
Ratio of expenses to average daily net assets(c) 1.60%(d) 1.48% 1.45% 1.31% 1.40%
Ratio of net investment income (loss) to average daily net assets 1.06%(d) 1.38% 1.18% 1.26% 1.43%
Portfolio turnover rate (excluding short-term securities) 19% 99% 173% 110% 99%
Total return(e) 5.14%(f) (9.48%) (20.63%) 2.62% 15.53%
See accompanying notes to financial highlights.
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25 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $4.01 $4.47 $ 6.21 $6.58 $5.77
Income from investment operations:
Net investment income (loss) -- .04 .01 .04 .03
Net gains (losses) (both realized and unrealized) .19 (.49) (1.24) .12 .83
Total from investment operations .19 (.45) (1.23) .16 .86
Less distributions:
Dividends from net investment income -- (.01) -- (.02) (.03)
Distributions from realized gains -- -- (.51) (.51) (.02)
Total distributions -- (.01) (.51) (.53) (.05)
Net asset value, end of period $4.20 $4.01 $ 4.47 $6.21 $6.58
Ratios/supplemental data
Net assets, end of period (in millions) $33 $36 $53 $77 $68
Ratio of expenses to average daily net assets(c) 2.37%(d) 2.25% 2.21% 2.07% 2.16%
Ratio of net investment income (loss) to average daily net assets .30%(d) .61% .42% .51% .66%
Portfolio turnover rate (excluding short-term securities) 19% 99% 173% 110% 99%
Total return(e) 4.74%(f) (10.19%) (21.21%) 1.95% 14.89%
See accompanying notes to financial highlights.
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26 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000(b)
Net asset value, beginning of period $3.99 $4.46 $ 6.21 $6.58
Income from investment operations:
Net investment income (loss) -- .03 .02 .01
Net gains (losses) (both realized and unrealized) .20 (.49) (1.24) (.38)
Total from investment operations .20 (.46) (1.22) (.37)
Less distributions:
Dividends from net investment income -- (.01) (.02) --
Distributions from realized gains -- -- (.51) --
Total distributions -- (.01) (.53) --
Net asset value, end of period $4.19 $3.99 $ 4.46 $6.21
Ratios/supplemental data
Net assets, end of period (in millions) $1 $1 $1 $--
Ratio of expenses to average daily net assets(c) 2.36%(d) 2.24% 2.21% 2.07%(d)
Ratio of net investment income (loss) to average daily net assets .30%(d) .60% .41% .47%(d)
Portfolio turnover rate (excluding short-term securities) 19% 99% 173% 110%
Total return(e) 5.01%(f) (10.34%) (21.17%) (5.62%)(f)
See accompanying notes to financial highlights.
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27 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $4.10 $4.56 $ 6.30 $6.62 $5.79
Income from investment operations:
Net investment income (loss) .03 .07 .08 .10 .09
Net gains (losses) (both realized and unrealized) .19 (.50) (1.28) .13 .84
Total from investment operations .22 (.43) (1.20) .23 .93
Less distributions:
Dividends from net investment income (.01) (.03) (.03) (.04) (.08)
Distributions from realized gains -- -- (.51) (.51) (.02)
Total distributions (.01) (.03) (.54) (.55) (.10)
Net asset value, end of period $4.31 $4.10 $ 4.56 $6.30 $6.62
Ratios/supplemental data
Net assets, end of period (in millions) $5 $4 $2 $1 $--
Ratio of expenses to average daily net assets(c) 1.42%(d) 1.30% 1.31% 1.20% 1.15%
Ratio of net investment income (loss) to average daily net assets 1.29%(d) 1.52% 1.35% 1.51% 1.65%
Portfolio turnover rate (excluding short-term securities) 19% 99% 173% 110% 99%
Total return(e) 5.48%(f) (9.55%) (20.40%) 2.99% 15.76%
Notes to financial highlights
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 2000.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2003 (Unaudited).
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28 -- AXP GLOBAL BALANCED FUND -- 2003 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
(logo)
AMERICAN
EXPRESS(R)
- --------------------------------------------------------------------------------
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and is
not a broker-dealer.
AXP(R)
Global
Bond
Fund
Semiannual Report
for the Period Ended
April 30, 2003
AXP Global Bond Fund seeks to provide shareholders with high total return
through income and growth of capital.
- --------------------------------------------------------------------------------
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
- --------------------------------------------------------------------------------
Table of Contents
Fund Snapshot 3
Questions & Answers with Portfolio Management 4
Investments in Securities 8
Financial Statements (Portfolio) 16
Notes to Financial Statements (Portfolio) 19
Financial Statements (Fund) 23
Notes to Financial Statements (Fund) 26
(Dalbar logo)
American Express(R) Funds' reports to shareholders have been awarded the
Communications Seal from Dalbar Inc., an independent financial services research
firm. The Seal recognizes communications demonstrating a level of excellence in
the industry.
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2 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Fund Snapshot
AS OF APRIL 30, 2003
PORTFOLIO MANAGER
Portfolio manager Team led by Nic Pifer, CFA
Since 5/00
Years in industry 12
FUND OBJECTIVE
For investors seeking high total return through income and growth of capital.
Inception dates
A: 3/20/89 B: 3/20/95 C: 6/26/00 Y: 3/20/95
Ticker symbols
A: IGBFX B: IGLOX C: -- Y: --
Total net assets $553.2 million
Number of holdings approximately 200
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
DURATION
SHORT INT. LONG
X X HIGH
MEDIUM
LOW
COUNTRY COMPOSITION
Percentage of portfolio assets
(pie chart)
United States 38.7%
Germany 9.8%
Italy 8.5%
France 7.3%
Canada 5.4%
Spain 3.6%
Greece 3.0%
United Kingdom 2.9%
Supra National 2.6%
Finland 2.0%
Hungary 1.9%
Norway 1.9%
Belgium 1.3%
Australia 1.1%
Japan 1.1%
Denmark 1.0%
Other 7.9%
CREDIT QUALITY SUMMARY
Percentage of portfolio assets
AAA bonds 61.6%
AA bonds 14.0
A bonds 6.0
BAA bonds 2.5
Non-investment grade bonds 5.5
There are special risk considerations associated with international investing
related to market, currency, economic, political and other factors.
Fund holdings are subject to change.
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3 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers WITH PORTFOLIO MANAGEMENT
Q: How did AXP Global Bond Fund perform for the first half of fiscal year
2003?
A: AXP Global Bond Fund's Class A shares, excluding sales charge, climbed
9.76% for the six months ended April 30, 2003, outperforming both its
current benchmark, the Lehman Brothers Global Aggregate Index, and its peer
group as represented by the Lipper Global Income Funds Index, which rose
8.50% and 9.52%, respectively. The CitiGroup World Government Bond Index,
the Fund's benchmark in calendar year 2002, returned 9.73% for the same
period.
Q: What factors most affected performance during the period?
A: Three factors helped the Fund generate strong results between November
and April. First, a weakening dollar versus world currencies helped
performance dramatically. (See chart on page 5.) The dollar's decline
was most evident versus the euro, Danish krone, Swedish krona, and the
Canadian, Australian and New Zealand dollar. As the value of the U.S.
dollar declines, the currency value of foreign bonds typically improves.
Second, interest rate policy has been favorable in most major markets.
Although not in a recession, many of
(bar graph)
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2003
10% (bar 1) (bar 2) (bar 3) (bar 4)
+9.76% +8.50% +9.73% +9.52%
8%
6%
4%
2%
(bar 1) AXP Global Bond Fund Class A (excluding sales charge)
(bar 2) Lehman Brothers Global Aggregate Index (unmanaged)(1)
(bar 3) CitiGroup World Government Bond Index(unmanaged)(2)
(bar 4) Lipper Global Income Funds Index(3)
(1) Lehman Brothers Global Aggregate Index, an unmanaged market capitalization
weighted benchmark, tracks the performance of investment grade fixed income
securities denominated in 13 currencies. It is widely recognized by
investors as a measurement index for portfolios of global debt securities.
The index reflects the reinvestment of all income and changes in market
prices, but excludes brokerage commissions or other fees.
(2) CitiGroup World Government Bond Index, an unmanaged market capitalization
weighted benchmark, tracks the performance of 20 government bond markets
around the world. It is widely recognized by investors as a measurement
index for portfolios of government bond securities. The index reflects
reinvestment of all distributions and changes in market prices, but
excludes brokerage commissions or other fees.
(3) The Lipper Global Income Funds Index, published by Lipper Inc., includes
the 30 largest funds that are generally similar to the Fund, although some
funds in the index may have somewhat different investment policies or
objectives.
Past performance is no guarantee of future results. The 4.75% sales charge
applicable to Class A shares of the Fund is not reflected in the bar chart; if
reflected, returns would be lower than those shown. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
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4 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
these economies continued a sluggish recovery, and interest rates have
remained low. Uncertainty over the war in Iraq combined with a soft global
recovery contributed to this sluggishness. Finally, returns in the
corporate, high-yield and emerging market credit sectors were especially
strong during the period. The Fund participated in all sectors to varying
degrees.
Value of the U.S. Dollar Against Major Foreign Currencies
(line graph)
Trade-Weighted Dollar Index
130
125
120 X
115 X
110 X X
105 X X 105
100 X X X
95 X X X X
90 X
85 X
80
4/88 4/89 4/90 4/91 4/92 4/93 4/94 4/95 4/96 4/97 4/98 4/99 4/00 4/01 4/02
X = Index (1990 = 100)
Sources: Bank of England, Bloomberg
The chart shows that the value of the U.S. dollar has been declining since
peaking in April 2002. However, the U.S. dollar is still worth about 5% more
relative to major foreign currencies than it was in 1990. A falling currency
has the potential to help increase the return on foreign bonds for U.S.
dollar-based investors.
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5 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
(begin callout quote)> Returns in the corporate, high-yield and emerging
market credit sectors were especially strong during the period. (end callout
quote)
Q: What changes did you make to the portfolio?
A: Two major changes marked the period. The Fund has become more diversified
in different bond sectors, more than doubling the number of securities held
to approximately 200 as of April 30, 2003. We believe this approach should
make the Fund's performance more consistent over time. Also in the
beginning of 2003, the Fund's board voted to switch its benchmark to the
Lehman Brothers Global Aggregate Index to better represent the Fund's
investment approach and holdings. The previous benchmark was the
AVERAGE ANNUAL TOTAL RETURNS
as of April 30, 2003
Class A Class B Class C Class Y
(Inception dates) (3/20/89) (3/20/95) (6/26/00) (3/20/95)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4) NAV(5) POP(5)
6 months* +9.76% +4.55% +9.34% +5.34% +9.32% +8.32% +9.95% +9.95%
1 year +17.98% +12.37% +17.20% +13.20% +17.19% +16.19% +18.61% +18.61%
5 years +4.49% +3.48% +3.70% +3.52% N/A N/A +4.71% +4.71%
10 years +5.81% +5.29% N/A N/A N/A N/A N/A N/A
Since inception N/A N/A +5.55% +5.55% +7.71% +7.71% +6.32% +6.32%
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 4.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be worth
more or less than the original cost. The performance shown for each class of
shares will vary due to differences in sales charges and fees. Short term
performance may be higher or lower than the figures shown. Visit
americanexpress.com for current information.
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6 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
CitiGroup World Government Bond Index (formerly known as the Salomon Smith
Barney World Government Bond Index), which did not take into account the
Fund's non-government securities. Also, we believe that over time the
Lehman Brothers Global Aggregate Index will be a closer match with the
Fund's peer group, the Lipper Global Income Funds Index. Combined, these
changes offer a better representation of the entire global bond market and
more closely match the Fund's makeup. Technically, currency weights
remained relatively stable through the period. There was a more pronounced
shift in sector weights, especially in the securitized sector. In this
area, the Fund's percentage of assets almost doubled from 8% to 15% and
includes holdings such as U.S. mortgage-backed securities and German
Pfandbriefe. This sector has done well recently.
Another change during the period was an increased emphasis by the Fund's
managers to use a team-based approach. As the Fund tilts more toward
broader diversification and increases its number of holdings, sector teams
will help the Fund identify opportunities as they develop.
Q: What is your outlook for the coming months and how will you position the
Fund?
A: The shape and strength of a global economic recovery remains uncertain.
The Federal Reserve and European Central Bank may consider tightening
interest rates if the U.S. and European economies improve noticeably.
This would raise bond yields and make the bond environment less
favorable, and we would take a more defensive posture toward interest
rate risk. If it turns out that the war in Iraq was not the only thing
holding back the global economy and the recovery remains sluggish,
interest rates may remain stable or even fall further over the balance of
the year. This environment would be favorable for bonds. From a currency
perspective, the dollar is expected to weaken against foreign currencies
to the point that it may be undervalued. This contrasts to two years ago,
when the dollar was overvalued. If this scenario occurs, we will monitor
the situation so that the Fund may increase its dollar weighting somewhat
once it reaches its low point.
- --------------------------------------------------------------------------------
7 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Investments in Securities
World Income Portfolio
April 30, 2003 (Unaudited)
(Percentages represent value of investments compared to net assets)
Bonds (95.2%)(c)
Issuer Coupon Principal Value(a)
rate amount
Australia (1.1%)
Burns Philp Capital Property
(U.S. Dollar) Sr Sub Nts
02-15-11 10.75% $165,000(d) $177,375
New South Wales Treasury
(Australian Dollar)
03-01-08 8.00 8,000,000 5,623,395
Telstra
(U.S. Dollar)
04-01-12 6.38 500,000 556,191
Total 6,356,961
Belgium (1.3%)
Belgium Kingdom
(European Monetary Unit)
09-28-06 4.75 6,100,000 7,213,628
Bermuda (0.1%)
Imexsa Export Trust
(U.S. Dollar) Company Guaranty
05-31-05 10.63 533,510(d) 320,106
Brazil (0.6%)
Federal Republic of Brazil
(U.S. Dollar)
03-12-08 11.50 1,150,000 1,173,345
04-15-10 12.00 2,350,000 2,391,125
Total 3,564,470
Canada (5.5%)
CanWest Media
(U.S. Dollar) Sr Nts
04-15-13 7.63 250,000(d) 260,625
Cascades
(U.S. Dollar) Sr Nts
02-15-13 7.25 160,000(d) 168,800
Govt of Canada
(Canadian Dollar)
12-01-03 7.50 16,300,000 11,627,697
(Japanese Yen)
03-23-09 1.90 980,000,000 9,005,794
Province of British Columbia
(Canadian Dollar)
08-23-10 6.38 6,400,000 4,842,801
Province of Ontario
(Japanese Yen)
01-25-10 1.88 340,000,000 3,135,606
Province of Quebec
(Japanese Yen) (MBIA Insured)
05-09-13 1.60 150,000,000(f) 1,364,779
Sun Media
(U.S. Dollar) Sr Nts
02-15-13 7.63 200,000(d) 213,032
Total 30,619,134
Colombia (0.5%)
Republic of Colombia
(U.S. Dollar)
01-23-12 10.00 2,700,000 2,972,700
Croatia (0.1%)
Croatia
(European Monetary Unit)
03-14-11 6.75 660,000 824,948
Denmark (1.0%)
Kingdom of Denmark
(Danish Krone)
03-15-06 8.00 16,000,000 2,729,730
Realkredit Danmark
(Danish Krone)
01-01-05 4.00 18,000,000 2,756,285
Total 5,486,015
Dominican Republic (0.4%)
Dominican Republic
(U.S. Dollar)
01-23-13 9.04 2,400,000(d) 2,415,000
Finland (2.0%)
Republic of Finland
(European Monetary Unit)
07-04-06 2.75 10,095,000 11,246,478
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
8 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
France (7.5%)
Cie Financement Foncier
(European Monetary Unit)
06-24-05 5.00% 1,900,000 $2,223,348
Dexia Municipal Agency
(European Monetary Unit)
04-26-07 5.38 4,700,000 5,665,390
France Telecom
(U.S. Dollar)
03-01-06 8.70 700,000 794,973
Govt of France
(European Monetary Unit)
04-25-05 7.50 8,710,000 10,630,997
01-12-07 3.75 9,600,000 10,971,416
10-25-11 5.00 9,100,000 10,879,871
Vivendi Universal
(U.S. Dollar) Sr Nts
04-15-10 9.25 110,000(d) 123,396
Total 41,289,391
Germany (10.0%)
Allgemeine Hypo Bank
(European Monetary Unit)
09-02-09 5.00 10,760,000(d) 12,787,638
Bayerische Landesbank
(Japanese Yen) Sr Nts
04-22-13 1.40 150,000,000 1,343,975
Depfa Pfandbriefbank
(Japanese Yen)
07-13-05 1.25 240,000,000 2,056,637
Deutsche Bank
(European Monetary Unit)
07-28-09 4.25 500,000 569,493
Federal Republic of Germany
(European Monetary Unit)
07-04-08 4.13 2,850,000 3,294,957
07-04-09 4.50 9,200,000 10,763,110
01-04-10 5.38 4,460,000 5,451,968
07-04-27 6.50 11,770,000 16,153,140
Westfaelische Hypobank
(European Monetary Unit)
04-24-06 4.75 2,300,000 2,694,715
Total 55,115,633
Greece (3.1%)
Hellenic Republic
(European Monetary Unit)
06-21-06 2.75 7,600,000 8,452,342
05-19-10 6.00 6,900,000 8,654,344
Total 17,106,686
Hungary (1.9%)
Govt of Hungary
(Hungarian Forint)
04-12-05 7.75 1,510,000,000 7,016,665
02-12-11 7.50 700,000,000 3,441,410
Total 10,458,075
Ireland (--%)
MDP Acquisitions
(U.S. Dollar) Sr Nts
10-01-12 9.63 125,000(d) 135,625
Italy (8.6%)
Buoni Poliennali Del Tes
(European Monetary Unit)
01-01-04 8.50 27,640,000 32,070,201
11-01-26 7.25 6,686,283 9,911,396
Republic of Italy
(Japanese Yen)
03-27-08 3.80 500,000,000 4,926,589
Telecom Italia
(European Monetary Unit)
02-01-07 5.63 500,000 582,298
Total 47,490,484
Japan (1.1%)
Development Bank of Japan
(Japanese Yen)
06-20-12 1.40 700,000,000 6,282,664
Luxembourg (0.1%)
Michelin Finance Luxembourg
(European Monetary Unit) Company Guaranty
04-16-09 6.13 500,000 604,099
Malaysia (0.3%)
Petronas Capital
(U.S. Dollar) Company Guaranty
05-22-12 7.00 1,500,000(d) 1,656,380
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
9 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
Mexico (0.9%)
United Mexican States
(U.S. Dollar)
03-03-15 6.63% $4,600,000 $4,807,000
Netherlands (0.9%)
Bank of Nederlandse Gemeenten
(British Pound)
08-06-07 7.38 1,100,000 1,972,192
Deutsche Telekom Intl Finance
(European Monetary Unit) Company Guaranty
05-29-07 7.50 500,000 622,765
Intl Nederland Bank
(European Monetary Unit) Sr Nts
01-29-09 4.25 600,000 688,283
RWE Finance
(European Monetary Unit) Company Guaranty
10-26-07 5.50 500,000 597,490
Vodafone Finance
(European Monetary Unit) Company Guaranty
05-27-09 4.75 740,000 849,103
Total 4,729,833
New Zealand (1.0%)
Govt of New Zealand
(New Zealand Dollar)
02-15-05 6.50 9,200,000 5,257,216
Norway (1.9%)
A/S Eksportfinans
(Japanese Yen)
06-21-10 1.80 340,000,000 3,129,237
Govt of Norway
(Norwegian Krone)
05-16-11 6.00 49,000,000 7,343,908
Total 10,473,145
Peru (0.5%)
Republic of Peru
(U.S. Dollar)
02-21-12 9.13 2,300,000 2,524,250
Philippines (0.3%)
Republic of Philippines
(U.S. Dollar)
01-15-19 9.88 1,600,000 1,664,000
Poland (0.5%)
Republic of Poland
(Polish Zloty)
02-12-06 8.50 9,700,000 2,774,525
Russia (0.5%)
Federation of Russia
(U.S. Dollar)
06-26-07 10.00 2,100,000(d) 2,517,375
03-31-30 5.00 500,000(i) 450,000
Total 2,967,375
Singapore (0.8%)
Development Bank of Singapore
(U.S. Dollar)
05-15-11 7.13 700,000(d) 804,370
PSA
(U.S. Dollar)
08-01-05 7.13 3,500,000(d) 3,890,862
Total 4,695,232
Spain (3.7%)
Govt of Spain
(European Monetary Unit)
10-31-07 4.25 9,400,000 10,951,153
01-31-10 4.00 8,200,000 9,347,195
Total 20,298,348
Supra National (2.7%)
European Investment Bank
(British Pound)
12-07-06 7.63 2,900,000 5,181,293
Inter-American Development Bank
(Japanese Yen)
07-08-09 1.90 1,035,000,000 9,532,501
Total 14,713,794
Sweden (0.4%)
Govt of Sweden
(Swedish Krona)
04-20-06 3.50 19,000,000 2,308,422
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
10 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United Kingdom (2.9%)
British Telecom
(U.S. Dollar)
12-15-10 8.38% $700,000 $861,544
Greater Beijing First Expressways
(U.S. Dollar) Sr Nts
06-15-04 9.25 3,500,000(b) 2,205,000
06-15-07 9.50 8,750,000(b) 5,425,000
HSBS Holdings
(U.S. Dollar) Sub Nts
12-12-12 5.25 500,000 520,207
United Kingdom Treasury
(British Pound)
12-07-07 7.25 3,900,000 7,087,124
Total 16,098,875
United States (32.9%)
Airgas
(U.S. Dollar) Company Guaranty
10-01-11 9.13 195,000 217,425
Allied Waste North America
(U.S. Dollar) Company Guaranty Series B
04-01-08 8.88 700,000 756,000
AmerisourceBergen
(U.S. Dollar) Sr Nts
11-15-12 7.25 50,000(d) 53,750
ANR Pipeline
(U.S. Dollar) Sr Nts
03-15-10 8.88 60,000(d) 66,900
Associated Materials
(U.S. Dollar) Company Guaranty
04-15-12 9.75 300,000 328,500
AT&T
(U.S. Dollar)
03-15-09 6.00 10,000 10,263
(U.S. Dollar) Sr Nts
11-15-06 7.00 500,000 536,170
AT&T Broadband
(U.S. Dollar) Company Guaranty
03-15-13 8.38 106,000 129,328
Ball
(U.S. Dollar) Company Guaranty
12-15-12 6.88 335,000 351,750
Bank of America
(U.S. Dollar) Sr Nts
02-01-07 5.25 1,000,000 1,085,915
Choctaw Resort Development Enterprises
(U.S. Dollar) Sr Nts
04-01-09 9.25 85,000 90,950
Citibank Credit Card Issuance Trust
(U.S. Dollar) Series 2003-A5 Cl A5
04-07-08 2.50 500,000 502,070
Citicorp
(Deutsche Mark)
09-19-09 6.25 10,800,000 6,686,071
Cott Beverages
(U.S. Dollar) Company Guaranty
12-15-11 8.00 100,000 107,500
CSC Holdings
(U.S. Dollar) Sr Nts Series B
04-01-11 7.63 150,000 157,875
D.R. Horton
(U.S. Dollar) Sr Nts
05-01-13 6.88 150,000 153,375
DaimlerChrysler North America Holding
(European Monetary Unit) Company Guaranty
01-16-07 5.63 670,000 794,115
Del Monte
(U.S. Dollar) Company Guaranty Series B
05-15-11 9.25 235,000 254,094
DirectTV Holdings/Finance
(U.S. Dollar) Sr Nts
03-15-13 8.38 300,000(d) 333,750
EchoStar DBS
(U.S. Dollar) Sr Nts
01-15-09 9.13 85,000 95,625
Emmis Communications
(U.S. Dollar) Company Guaranty Series B
03-15-09 8.13 250,000 263,750
Federal Home Loan Mtge Corp
(European Monetary Unit)
01-15-06 5.25 1,800,000 2,131,434
(U.S. Dollar)
07-01-17 6.00 2,176,720 2,274,272
09-01-17 6.50 1,110,002 1,171,964
08-01-32 6.50 1,629,549 1,701,410
03-30-33 6.00 2,985,299 3,108,712
05-01-33 5.50 2,875,000(h) 2,953,171
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
11 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
Federal Natl Mtge Assn
(U.S. Dollar)
02-15-08 5.75% $8,500,000 $9,539,686
01-01-13 4.92 528,265 545,585
02-01-13 4.87 1,373,646 1,429,880
05-01-15 5.50 4,800,000(h) 4,992,000
04-01-17 6.50 1,967,902 2,085,049
05-01-18 4.50 1,500,000(h) 1,519,215
06-01-18 5.00 3,430,000(h) 3,522,198
07-01-30 6.00 5,000,000(h) 5,167,201
05-01-32 7.50 1,809,221 1,927,966
07-01-32 6.50 1,913,665 1,999,454
08-01-32 6.50 1,971,072 2,059,435
11-01-32 7.50 2,725,112 2,903,968
03-01-33 5.50 1,996,463(h) 2,054,235
03-01-33 6.00 4,821,482 5,024,327
06-01-33 5.50 2,200,000(h) 2,251,568
Collateralized Mtge Obligation
(U.S. Dollar)
10-25-42 7.50 987,622 1,088,237
Fisher Scientific Intl
(U.S. Dollar) Sr Sub Nts
05-01-12 8.13 100,000(d) 107,500
Ford Motor
(U.S. Dollar)
10-01-28 6.63 650,000 530,139
Forest Oil
(U.S. Dollar) Sr Nts
12-15-11 8.00 350,000 372,750
General Electric
(U.S. Dollar)
02-01-13 5.00 1,000,000 1,033,170
General Electric Capital
(European Monetary Unit)
06-20-07 5.13 500,000 592,749
Georgia-Pacific
(U.S. Dollar) Sr Nts
02-01-10 8.88 335,000(d) 360,962
GMAC
(U.S. Dollar)
09-15-06 6.13 2,500,000 2,594,720
Goldman Sachs Group
(U.S. Dollar)
05-15-09 6.65 500,000 568,232
Govt Natl Mtge Assn
Collateralized Mtge Obligation
Interest Only
(U.S. Dollar)
01-20-32 0.00 5,700,000(j) 860,482
Grant Prideco Escrow
(U.S. Dollar) Company Guaranty
12-15-09 9.00 250,000 273,750
Greenwich Capital Commercial Funding
(U.S. Dollar) Series 2002-C1 Cl A4
01-11-35 4.95 620,000 640,678
Hilton Hotels
(U.S. Dollar)
12-01-12 7.63 200,000 210,000
Household Finance
(U.S. Dollar)
10-15-11 6.38 1,500,000 1,642,875
Interpool
(U.S. Dollar)
08-01-07 7.35 140,000 133,875
Intl Paper
(European Monetary Unit)
08-11-06 5.38 700,000 809,619
J.P. Morgan Chase
(U.S. Dollar) Sub Nts
02-01-11 6.75 500,000 569,367
Joy Global
(U.S. Dollar) Company Guaranty Series B
03-15-12 8.75 60,000 64,800
Key Energy Services
(U.S. Dollar) Sr Nts
03-01-08 8.38 130,000 138,775
KFW Intl Finance
(British Pound)
12-07-05 6.38 3,000,000 5,097,349
L-3 Communications
(U.S. Dollar) Company Guaranty
06-15-12 7.63 250,000 275,625
LaBranche
(U.S. Dollar) Sr Sub Nts
03-02-07 12.00 420,000(g) 459,900
Lamar Media
(U.S. Dollar) Sr Sub Nts
01-01-13 7.25 335,000(d) 351,750
MacDermid
(U.S. Dollar)
07-15-11 9.13 35,000 38,850
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
12 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
MBNA Credit Card Master Note Trust
(U.S. Dollar) Series 2003-A1 Cl A1
07-15-10 3.30% $500,000 $501,810
Meritage
(U.S. Dollar) Sr Nts
06-01-11 9.75 145,000(d) 158,050
Metris Master Trust
(U.S. Dollar) Series 2001-1 Cl C
12-20-07 3.08 600,000(d,m) 360,000
(U.S. Dollar) Series 2001-3 Cl C
07-21-08 3.03 400,000(d,m) 200,000
Millennium America
(U.S. Dollar) Sr Nts
06-15-08 9.25 90,000(d) 98,550
Moore North America Finance
(U.S. Dollar) Sr Nts
01-15-11 7.88 85,000(d) 90,525
Morgan Stanley, Dean Witter
(European Monetary Unit)
03-16-06 5.25 2,400,000 2,812,227
Newfield Exploration
(U.S. Dollar) Sr Sub Nts
08-15-12 8.38 340,000 370,600
Nextel Communications
(U.S. Dollar) Sr Nts
11-15-09 9.38 100,000 108,000
Nissan Auto Receivables Owner Trust
(U.S. Dollar) Series 2003-A Cl A4
07-15-08 2.61 500,000 503,217
Northwest Airlines
(U.S. Dollar) Company Guaranty 1st Series 1996
01-02-15 7.67 2,024,411 1,225,072
Northwest Pipeline
(U.S. Dollar) Sr Nts
03-01-10 8.13 10,000(d) 10,900
Overseas Private Investment
(U.S. Dollar) U.S. Govt Guaranty Series 1996A
09-15-08 6.99 4,583,333 5,129,346
Owens-Brockway Glass
(U.S. Dollar)
05-15-11 7.75 115,000(d,h) 118,342
Park Place Entertainment
(U.S. Dollar) Sr Nts
04-15-13 7.00 40,000(d) 40,700
(U.S. Dollar) Sr Sub Nts
05-15-11 8.13 85,000 89,888
Peabody Energy
(U.S. Dollar) Sr Nts
03-15-13 6.88 175,000(d) 181,344
Qwest
(U.S. Dollar)
11-01-04 7.20 150,000 151,500
Remington Arms
(U.S. Dollar) Company Guaranty
02-01-11 10.50 75,000(d) 81,000
Resolution Performance
(U.S. Dollar)
04-15-10 9.50 80,000(d) 85,600
Schuler Homes
(U.S. Dollar) Company Guaranty
07-15-09 9.38 85,000 92,863
Smithfield Foods
(U.S. Dollar) Sr Sub Nts
02-15-08 7.63 125,000 122,500
Smurfit-Stone Container
(U.S. Dollar) Company Guaranty
10-01-12 8.25 85,000 92,438
Southern Natural Gas
(U.S. Dollar) Sr Nts
03-15-10 8.88 75,000(d) 84,000
SPX
(U.S. Dollar) Sr Nts
01-01-13 7.50 165,000 177,375
Stone Container
(U.S. Dollar) Sr Nts
07-01-12 8.38 210,000 226,800
Susquehanna Media
(U.S. Dollar) Sr Sub Nts
04-15-13 7.38 40,000(d) 41,700
Tenet Healthcare
(U.S. Dollar) Sr Nts
12-01-11 6.38 525,000 498,750
Toll
(U.S. Dollar) Company Guaranty
02-01-09 8.13 65,000 68,413
Toyota Motor Credit
(Japanese Yen)
06-09-08 .75 157,000,000 1,338,528
TRAINS 10-2002
(U.S. Dollar)
01-15-12 6.96 2,964,000(d,e) 3,404,333
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
13 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
Transcontinental Gas Pipeline
(U.S. Dollar) Series B
08-15-11 7.00% $75,000 $76,125
U.S. Treasury (U.S. Dollar)
01-31-04 3.00 15,000,000 15,209,759
05-31-04 3.25 180,000 184,015
11-15-05 5.75 315,000 346,192
05-15-06 4.63 155,000 166,958
02-15-13 3.88 4,880,000(g) 4,886,481
11-15-16 7.50 29,500,000 38,847,812
02-15-31 5.38 5,700,000 6,219,680
Verizon Global Funding
(U.S. Dollar)
06-15-07 6.13 1,000,000 1,110,239
Washington Mutual
(U.S. Dollar) Sr Nts
01-15-07 5.63 2,500,000 2,729,153
Wells Fargo
(U.S. Dollar) Sr Nts
02-15-07 5.13 1,000,000 1,082,904
XTO Energy
(U.S. Dollar) Sr Nts
04-15-12 7.50 260,000 286,000
04-15-13 6.25 160,000(d) 167,200
Total 181,930,949
Total bonds
(Cost: $502,264,477) $526,401,441
Other (--%)(b,c)
Issuer Shares Value(a)
Mexico
Mexico Value
Rights 1,000(k) $--
Total other
(Cost: $--) $--
Short-term securities (6.5%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (5.0%)
Federal Home Loan Mtge Corp Disc Nt
06-19-03 1.20% $10,000,000 $9,984,418
Federal Natl Mtge Assn Disc Nts
05-28-03 1.18 4,700,000 4,695,687
06-18-03 1.17 6,500,000 6,490,241
06-25-03 1.19 6,400,000 6,389,019
Total 27,559,365
Commercial paper (1.5%)
Barton Capital
05-06-03 1.26 4,200,000(l) 4,199,118
SBC Intl
05-05-03 1.23 800,000(l) 799,863
Windmill Funding
05-01-03 1.36 3,200,000(l) 3,199,879
Total 8,198,860
Total short-term securities
(Cost: $35,756,936) $35,758,225
Total investments in securities
(Cost: $538,021,413)(n) $562,159,666
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
14 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(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) Represents ownership in a cash TRAINS (Targeted Return Index Securities)
comprised of a portfolio of 23 corporate bonds selected to target a
maturity range of 7 to 15 years in the corresponding Lehman Brothers Credit
Index with a current maturity date of Jan 15, 2012.
(f) The following abbreviation is used in the portfolio security description to
identify the insurer of the issue:
MBIA -- Municipal Bond Investors Assurance
(g) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Purchase contracts
German Euro, June 2003, 10-year $10,000,000
Sale contracts
U.S. Treasury Notes, June 2003, 10-year 19,300,000
(h) At April 30, 2003, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$22,463,729.
(i) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on April 30,
2003.
(j) Interest-only represents securities that entitle holders to receive only
interest payments on the underlying mortgages. The yield to maturity of an
interest-only is extremely sensitive to the rate of principal payments on
the underlying mortgage assets. A rapid (slow) rate of principal repayments
may have an adverse (positive) effect on yield to maturity. The principal
amount shown is the notional amount of the underlying mortgages. Interest
rate disclosed represents yield based upon the estimated timing of future
cash flows as of April 30, 2003.
(k) Negligible market value.
(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) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on April 30,
2003.
(n) At April 30, 2003, the cost of securities for federal income tax purposes
was approximately $538,021,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $30,415,000
Unrealized depreciation (6,276,000)
----------
Net unrealized appreciation $24,139,000
-----------
- --------------------------------------------------------------------------------
15 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
World Income Portfolio
April 30, 2003 (Unaudited)
Assets Investments in securities, at value (Note 1)
(identified cost $538,021,413) $562,159,666
Cash in bank on demand deposit 22,438
Foreign currency holdings (identified cost $3,866,259) (Note 1) 3,894,652
Dividends and accrued interest receivable 9,282,739
Receivable for investment securities sold 12,743,219
----------
Total assets 588,102,714
-----------
Liabilities
Payable for investment securities purchased 34,551,980
Unrealized depreciation on foreign currency contracts held, at value (Note 4) 394,828
Accrued investment management services fee 11,331
Other accrued expenses 33,336
------
Total liabilities 34,991,475
----------
Net assets $553,111,239
============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
16 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Statement of operations
World Income Portfolio
Six months ended April 30, 2003 (Unaudited)
Investment income
Income:
Interest $11,807,022
Fee income from securities lending -- net (Note 3) 190
---
Total income 11,807,212
----------
Expenses (Note 2):
Investment management services fee 1,975,269
Compensation of board members 5,342
Custodian fees 71,330
Audit fees 12,750
Other 4,290
-----
Total expenses 2,068,981
Earnings credits on cash balances (Note 2) (570)
----
Total net expenses 2,068,411
---------
Investment income (loss) -- net 9,738,801
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 8,074,491
Foreign currency transactions (2,805,928)
Futures contracts (366,826)
--------
Net realized gain (loss) on investments 4,901,737
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 35,546,661
----------
Net gain (loss) on investments and foreign currencies 40,448,398
----------
Net increase (decrease) in net assets resulting from operations $50,187,199
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
17 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets
World Income Portfolio
April 30, 2003 Oct. 31, 2002
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss) -- net $ 9,738,801 $ 17,765,639
Net realized gain (loss) on investments 4,901,737 (13,975,131)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 35,546,661 28,002,434
---------- ----------
Net increase (decrease) in net assets resulting from operations 50,187,199 31,792,942
---------- ----------
Proceeds from contributions 27,080,202 27,551,027
Fair value of withdrawals (27,477,653) (58,048,238)
----------- -----------
Net contributions (withdrawals) from partners (397,451) (30,497,211)
-------- -----------
Total increase (decrease) in net assets 49,789,748 1,295,731
Net assets at beginning of period 503,321,491 502,025,760
----------- -----------
Net assets at end of period $553,111,239 $503,321,491
============ ============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
18 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Notes to Financial Statements
World Income Portfolio
(Unaudited as to April 30, 2003)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
World Income Portfolio (the Portfolio) is a series of World Trust (the Trust)
and is registered under the Investment Company Act of 1940 (as amended) as a
non-diversified, open-end management investment company. The Portfolio invests
primarily in debt obligations of U.S. and foreign issuers. 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 accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted 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.
Foreign securities are valued based on quotations from the principal market in
which such securities are normally traded. If trading or events occurring in
other markets after the close of the principal market in which foreign
securities are traded, and before the close of business of the Portfolio, are
expected to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into account.
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.
- --------------------------------------------------------------------------------
19 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
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. As of April 30, 2003, foreign currency holdings were entirely
comprised of European Monetary Units.
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.
- --------------------------------------------------------------------------------
20 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Securities purchased on a forward-commitment basis
Delivery and payment for securities that have been purchased by the Portfolio on
a forward-commitment basis, including when-issued securities and other
forward-commitments, can take place one month or more after the transaction
date. During this period, such securities are subject to market fluctuations,
and they may affect the Portfolio's net assets the same as owned securities. The
Portfolio designates cash or liquid securities at least equal to the amount of
its forward-commitments. As of April 30, 2003, the Portfolio has entered into
outstanding when-issued securities of $20,427,115 and other forward-commitments
of $2,036,614.
The Fund also enters into transactions to sell purchase commitments to third
parties at current market values and concurrently acquires other purchase
commitments for similar securities at later dates. As an inducement for the Fund
to "roll over" its purchase commitments, the Fund receives negotiated amounts in
the form of reductions of the purchase price of the commitment.
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 or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium and discount using the effective
interest method, is accrued daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with American Express Financial Corporation (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 0.77% to 0.67% annually.
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 April 30, 2003, the Portfolio's custodian fees were
reduced by $570 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.
- --------------------------------------------------------------------------------
21 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $284,781,282 and $277,007,946, respectively, for the six
months ended April 30, 2003. For the same period, the portfolio turnover rate
was 55%. Realized gains and losses are determined on an identified cost basis.
Income from securities lending amounted to $190 for the six months ended April
30, 2003. 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.
4. FORWARD FOREIGN CURRENCY CONTRACTS
As of April 30, 2003, the Portfolio has forward foreign currency exchange
contracts that obligate it to deliver currencies at specified future dates. The
unrealized appreciation and/or depreciation on these contracts is included in
the accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 7, 2003 6,227,000 3,399,444 $-- $ 81,460
New Zealand Dollar U.S. Dollar
May 27, 2003 8,100,000 5,553,232 -- 84,495
Canadian Dollar U.S. Dollar
May 29, 2003 11,500,000 12,592,500 -- 228,873
European Monetary Unit U.S. Dollar
--- --------
Total $-- $394,828
--- --------
5. INTEREST RATE FUTURES CONTRACTS
As of April 30, 2003, investments in securities included securities valued at
$454,312 that were pledged as collateral to cover initial margin deposits on 100
open purchase contracts denominated in Euros and 193 open sale contracts. The
notional market value of the open purchase contracts as of April 30, 2003 was
$12,811,685 with a net unrealized loss of $88,614. The notional market value of
the open sale contracts as of April 30, 2003 was $22,219,125 with a net
unrealized loss of $116,944. See "Summary of significant accounting policies."
- --------------------------------------------------------------------------------
22 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Bond Fund
April 30, 2003 (Unaudited)
Assets
Investment in Portfolio (Note 1) $552,983,683
Capital shares receivable 399,404
-------
Total assets 553,383,087
-----------
Liabilities
Capital shares payable 113,573
Accrued distribution fee 7,335
Accrued transfer agency fee 2,599
Accrued administrative services fee 854
Other accrued expenses 61,210
------
Total liabilities 185,571
-------
Net assets applicable to outstanding capital stock $553,197,516
============
Represented by
Capital stock -- $.01 par value (Note 1) $ 854,906
Additional paid-in capital 547,744,957
Undistributed net investment income 588,320
Accumulated net realized gain (loss) (Note 5) (19,859,237)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 23,868,570
----------
Total -- representing net assets applicable to outstanding capital stock $553,197,516
============
Net assets applicable to outstanding shares: Class A $377,358,999
Class B $171,747,980
Class C $ 4,067,962
Class Y $ 22,575
Net asset value per share of outstanding capital stock: Class A shares 58,312,357 $ 6.47
Class B shares 26,543,959 $ 6.47
Class C shares 630,797 $ 6.45
Class Y shares 3,481 $ 6.49
----- ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
23 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Statement of operations
AXP Global Bond Fund
Six months ended April 30, 2003 (Unaudited)
Investment income
Income:
Interest $11,804,204
Fee income from securities lending -- net 190
---
Total income 11,804,394
----------
Expenses (Note 2):
Expenses allocated from Portfolio 2,067,933
Distribution fee
Class A 448,561
Class B 802,235
Class C 16,562
Transfer agency fee 467,238
Incremental transfer agency fee
Class A 33,909
Class B 28,366
Class C 716
Service fee -- Class Y 12
Administrative services fees and expenses 149,564
Compensation of board members 4,867
Printing and postage 58,728
Registration fees 37,499
Audit fees 4,250
Other 7,295
-----
Total expenses 4,127,735
Earnings credits on cash balances (Note 2) (3,324)
------
Total net expenses 4,124,411
---------
Investment income (loss) -- net 7,679,983
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 8,073,127
Foreign currency transactions (2,806,585)
Futures contracts (366,826)
--------
Net realized gain (loss) on investments 4,899,716
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 35,539,251
----------
Net gain (loss) on investments and foreign currencies 40,438,967
----------
Net increase (decrease) in net assets resulting from operations $48,118,950
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
24 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets
AXP Global Bond Fund
April 30, 2003 Oct. 31, 2002
Six months ended Year ended
(Unaudited)
Operations and distributions
Investment income (loss) -- net $ 7,679,983 $ 14,015,228
Net realized gain (loss) on investments 4,899,716 (13,978,629)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 35,539,251 28,002,459
---------- ----------
Net increase (decrease) in net assets resulting from operations 48,118,950 28,039,058
---------- ----------
Distributions to shareholders from:
Net investment income
Class A (6,324,138) (9,644,735)
Class B (1,951,274) (2,850,093)
Class C (44,049) (18,570)
Class Y (408) (1,859)
---- ------
Total distributions (8,319,869) (12,515,257)
---------- -----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 56,179,318 85,865,445
Class B shares 28,248,005 39,838,214
Class C shares 1,627,888 2,477,135
Class Y shares -- 39,390
Reinvestment of distributions at net asset value
Class A shares 5,778,340 9,451,955
Class B shares 1,816,513 2,694,998
Class C shares 40,288 18,429
Class Y shares 384 2,055
Payments for redemptions
Class A shares (60,126,738) (112,854,832)
Class B shares (Note 2) (22,743,575) (40,086,791)
Class C shares (Note 2) (431,093) (813,795)
Class Y shares (55,411) (34,448)
------- -------
Increase (decrease) in net assets from capital share transactions 10,333,919 (13,402,245)
---------- -----------
Total increase (decrease) in net assets 50,133,000 2,121,556
Net assets at beginning of period 503,064,516 500,942,960
----------- -----------
Net assets at end of period $553,197,516 $ 503,064,516
============ =============
Undistributed net investment income $ 588,320 $ 1,228,206
------------ -------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
25 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Notes to Financial Statements
AXP Global Bond Fund
(Unaudited as to April 30, 2003)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Global Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a non-diversified open-end
management investment company. AXP Global 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, Class C 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 (CDSC)
and automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class C shares may be subject to a CDSC.
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 World Income Portfolio
The Fund invests all of its assets in the World Income Portfolio (the
Portfolio), a series of World Trust, an open-end investment company that has the
same objectives as the Fund. The Portfolio invests primarily in debt obligations
of U.S. and foreign issuers.
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 April 30, 2003 was 99.98%.
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 accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
- --------------------------------------------------------------------------------
26 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
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,
when available, 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 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 0.06% to 0.04% 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 incremental
transfer agency fee is the amount charged to the specific classes for the
additional expense above the fee for Class Y. The Fund pays AECSC an annual fee
per shareholder account for this service as follows:
o Class A $19.50
o Class B $20.50
o Class C $20.00
o Class Y $17.50
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 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 and Class C shares.
- --------------------------------------------------------------------------------
27 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Under a Shareholder Service Agreement, the Fund pays the Distributor a fee for
service provided 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
$412,185 for Class A, $57,959 for Class B and $1,013 for Class C for the six
months ended April 30, 2003.
During the six months ended April 30, 2003, the Fund's transfer agency fees were
reduced by $3,324 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 April 30, 2003
Class A Class B Class C Class Y
Sold 8,921,743 4,491,851 261,236 --
Issued for reinvested distributions 937,603 294,223 6,546 62
Redeemed (9,607,834) (3,633,501) (68,738) (9,192)
---------- ---------- ------- ------
Net increase (decrease) 251,512 1,152,573 199,044 (9,130)
------- --------- ------- ------
Year ended Oct. 31, 2002
Class A Class B Class C Class Y
Sold 14,885,496 6,883,558 432,176 6,938
Issued for reinvested distributions 1,684,541 480,718 3,287 366
Redeemed (19,692,200) (6,992,384) (140,508) (6,113)
----------- ---------- -------- ------
Net increase (decrease) (3,122,163) 371,892 294,955 1,191
---------- ------- ------- -----
4. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The Fund must
maintain asset coverage for borrowings of at least 300%. The agreement, which
enables the Fund to participate with other American Express mutual funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the
IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime
Lending Rate. Borrowings are payable within 60 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 0.09% per annum The Fund had no borrowings
outstanding during the six months ended April 30, 2003.
5. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund has a capital loss carry-over of
$24,197,023 as of Oct. 31, 2002, that will expire in 2006 through 2010 if not
offset by capital gains. It is unlikely the board will authorize a distribution
of any net realized capital gains until the available capital loss carry-over
has been offset or expires.
- --------------------------------------------------------------------------------
28 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
6. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Class A
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $6.00 $5.81 $5.39 $5.87 $6.17
Income from investment operations:
Net investment income (loss) .10 .19 .27 .34 .33
Net gains (losses) (both realized and unrealized) .48 .17 .30 (.63) (.36)
Total from investment operations .58 .36 .57 (.29) (.03)
Less distributions:
Dividends from net investment income (.11) (.17) (.15) (.19) (.26)
Distributions from realized gains -- -- -- -- (.01)
Total distributions (.11) (.17) (.15) (.19) (.27)
Net asset value, end of period $6.47 $6.00 $5.81 $5.39 $5.87
Ratios/supplemental data
Net assets, end of period (in millions) $377 $348 $355 $389 $598
Ratio of expenses to average daily net assets(c) 1.34%(d) 1.34% 1.32% 1.30% 1.22%
Ratio of net investment income (loss) to average daily net assets 3.18%(d) 3.12% 4.75% 5.49% 5.49%
Portfolio turnover rate (excluding short-term securities) 55% 51% 24% 48% 48%
Total return(e) 9.76%(f) 6.24% 10.83% (5.16%) (.35%)
See accompanying notes to financial highlights.
- -------------------------------------------------------------------------------
29 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $5.99 $5.79 $5.38 $5.87 $6.17
Income from investment operations:
Net investment income (loss) .07 .13 .21 .29 .28
Net gains (losses) (both realized and unrealized) .49 .19 .31 (.62) (.35)
Total from investment operations .56 .32 .52 (.33) (.07)
Less distributions:
Dividends from net investment income (.08) (.12) (.11) (.16) (.22)
Distributions from realized gains -- -- -- -- (.01)
Total distributions (.08) (.12) (.11) (.16) (.23)
Net asset value, end of period $6.47 $5.99 $5.79 $5.38 $5.87
Ratios/supplemental data
Net assets, end of period (in millions) $172 $152 $145 $155 $235
Ratio of expenses to average daily net assets(c) 2.11%(d) 2.10% 2.09% 2.07% 1.98%
Ratio of net investment income (loss) to average daily net assets 2.41%(d) 2.36% 3.99% 4.73% 4.72%
Portfolio turnover rate (excluding short-term securities) 55% 51% 24% 48% 48%
Total return(e) 9.34%(f) 5.59% 9.73% (5.77%) (1.10%)
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000(b)
Net asset value, beginning of period $5.98 $5.79 $5.38 $5.52
Income from investment operations:
Net investment income (loss) .07 .14 .21 .10
Net gains (losses) (both realized and unrealized) .48 .18 .31 (.24)
Total from investment operations .55 .32 .52 (.14)
Less distributions:
Dividends from net investment income (.08) (.13) (.11) --
Net asset value, end of period $6.45 $5.98 $5.79 $5.38
Ratios/supplemental data
Net assets, end of period (in millions) $4 $3 $1 $--
Ratio of expenses to average daily net assets(c) 2.12%(d) 2.10% 2.09% 2.07%(d)
Ratio of net investment income (loss) to average daily net assets 2.40%(d) 2.29% 3.84% 4.80%(d)
Portfolio turnover rate (excluding short-term securities) 55% 51% 24% 48%
Total return(e) 9.32%(f) 5.51% 9.84% (2.49%)(f)
See accompanying notes to financial highlights.
- -------------------------------------------------------------------------------
30 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $6.01 $5.80 $5.40 $5.87 $6.17
Income from investment operations:
Net investment income (loss) .10 .20 .29 .35 .34
Net gains (losses) (both realized and unrealized) .49 .19 .27 (.62) (.36)
Total from investment operations .59 .39 .56 (.27) (.02)
Less distributions:
Dividends from net investment income (.11) (.18) (.16) (.20) (.27)
Distributions from realized gains -- -- -- -- (.01)
Total distributions (.11) (.18) (.16) (.20) (.28)
Net asset value, end of period $6.49 $6.01 $5.80 $5.40 $5.87
Ratios/supplemental data
Net assets, end of period (in millions) $-- $-- $-- $-- $--
Ratio of expenses to average daily net assets(c) 1.13%(d) 1.17% 1.16% 1.14% 1.07%
Ratio of net investment income (loss) to average daily net assets 3.23%(d) 3.29% 4.90% 5.75% 5.63%
Portfolio turnover rate (excluding short-term securities) 55% 51% 24% 48% 48%
Total return(e) 9.95%(f) 6.72% 10.71% (4.88%) (.19%)
Notes to financial highlights
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 2000.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2003 (Unaudited).
- --------------------------------------------------------------------------------
31 -- AXP GLOBAL BOND FUND -- 2003 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
(logo)
AMERICAN
EXPRESS(R)
- --------------------------------------------------------------------------------
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and
is not a broker-dealer.
AXP(R)
Global
Growth
Fund
Semiannual Report
for the Period Ended April 30, 2003
AXP Global Growth Fund seeks to provide shareholders with long-term capital
growth.
- --------------------------------------------------------------------------------
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
- --------------------------------------------------------------------------------
Table of Contents
Fund Snapshot 3
Questions & Answers with Portfolio Management 4
Investments in Securities 8
Financial Statements (Portfolio) 12
Notes to Financial Statements (Portfolio) 15
Financial Statements (Fund) 20
Notes to Financial Statements (Fund) 23
- --------------------------------------------------------------------------------
2 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Fund Snapshot
AS OF APRIL 30, 2003
PORTFOLIO MANAGER
Portfolio manager Mark Burgess
Since 2/02
Years in industry 17
FUND OBJECTIVE
For investors seeking long-term capital growth.
Inception dates
A: 5/29/90 B: 3/20/95 C: 6/26/00 Y: 3/20/95
Ticker symbols
A: IGLGX B: IDGBX C:-- Y: IDGYX
Total net assets $505 million
Number of holdings approximately 90
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
COUNTRY COMPOSITION
Percentage of portfolio assets
(pie chart)
United States 54.8%
United Kingdom 14.1%
Japan 5.7%
Canada 4.5%
Switzerland 4.0%
France 3.2%
Bermuda 2.1%
Netherlands 1.7%
Spain 1.4%
Taiwan 1.3%
Australia 1.2%
Finland 1.1%
Portugal 1.0%
Other 3.9%
TOP TEN HOLDINGS
Percentage of portfolio assets
Pfizer (Health care) 3.9%
General Electric (Multi-industry conglomerates) 3.2
Mircosoft (Computer software & services) 2.7
Dell Computer (Computers & office equipment) 2.6
Citigroup (Financial services) 2.5
American Intl Group (Insurance) 2.4
GlaxoSmithKline (Health care) 2.3
Vodafone Group (Utilities - telephone) 2.1
Exxon Mobil (Energy) 2.1
Wal-Mart Stores (Retail) 2.1
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
There are special risk considerations associated with international investing
related to market, currency, economic, political and other factors.
Fund holdings are subject to change.
- --------------------------------------------------------------------------------
3 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Q: How did the AXP Global Growth Fund perform for the first half of fiscal
year 2003?
A: AXP Global Growth Fund's Class A shares advanced 1.79% (excluding sales
charge) for the six-month period ended April 30, 2003. The Fund slightly
outpaced the Lipper Global Funds Index, representing the Fund's peer group,
which rose 1.71%. However, amid continued economic uncertainty and the
conflict in Iraq, the Fund underperformed its benchmark, the MSCI All
Country World Free Index, which returned 3.96% for the period.
Q: What factors affected the Fund's performance?
A: Our substantial position in U.S. stocks was beneficial. The U.S.
outperformed established international markets for the fiscal period. We
had strong results from the Fund's U.S. holdings. However, we were
underweight in the U.S. relative to our benchmark for much of the fiscal
period. Stock selection in Canada was also favorable. Our somewhat
conservative approach to stock selection in Europe benefited the Fund
during the latter part of the calendar year.
From a sector perspective, overweights in healthcare companies such as
Johnson & Johnson, and technology companies were advantageous. We had been
cautious of this sector, which corrected sharply from highs in 2000;
however, there had been favorable changes and prices became very
attractive.
(bar graph)
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2003
4.0% (bar 2)
+3.96%
3.2%
2.4% (bar 1) (bar 3)
+1.79% +1.71%
1.6%
0.8%
0.0%
(bar 1) AXP Global Growth Fund Class A (excluding sales charge)
(bar 2) MSCI All Country World Free Index (unmanaged)(1)
(bar 3) Lipper Global Funds Index(2)
(1) Morgan Stanley Capital International (MSCI) All Country World Free Index,
an unmanaged index, is compiled from a composite of securities markets of
47 countries, including Canada, the United States and 26 emerging market
countries. The index reflects reinvestment of all distributions and changes
in market prices, but excludes brokerage commissions or other fees.
(2) The Lipper Global Funds Index, published by Lipper Inc., includes the 30
largest funds that are generally similar to the Funds, although some funds
in the index may have somewhat different investment policies or objectives.
Past performance is no guarantee of future results. The 5.75% sales charge
applicable to Class A shares of the Fund is not reflected in the bar chart; if
reflected, returns would be lower than those shown. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
- --------------------------------------------------------------------------------
4 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
(begin callout quote)> Our process is to set overall global themes, decide what
sectors look attractive to us and strive to choose promising stocks within those
sectors.(end callout quote)
Although the Fund was underweighted in Japan relative to our benchmark,
stock selection in Japan was a detractor from the portfolio's performance,
primarily due to an unusual technical situation in the Japanese market.
Recently enacted legislation requires Japanese pension managers to liquidate
their holdings as part of a government-mandated asset transfer program, and
this has put tremendous selling pressure on large-cap stocks, causing them
to underperform smaller companies. Because our strategy in Japan focused on
medium to large-cap stocks, this underperformance was detrimental to the
portfolio. Recently, we restructured our Japan investment team with a view
toward broadening our Japanese exposure to include more small-cap holdings.
AVERAGE ANNUAL TOTAL RETURNS
as of April 30, 2003
Class A Class B Class C Class Y
(Inception dates) (5/29/90) (3/20/95) (6/26/00) (3/20/95)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4) NAV(5) POP(5)
6 months* +1.79% -4.06% +1.33% -2.67% +1.33% +0.33% +1.78% +1.78%
1 year -17.05% -21.81% -17.71% -21.00% -17.75% -18.57% -16.98% -16.98%
5 years -7.80% -8.88% -8.52% -8.65% N/A N/A -7.66% -7.66%
10 years +1.83% +1.23% N/A N/A N/A N/A N/A N/A
Since inception N/A N/A +0.61% +0.61% -22.47% -22.47% +1.54% +1.54%
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be worth
more or less than the original cost. The performance shown for each class of
shares will vary due to differences in sales charges and fees. Short term
performance may be higher or lower than the figures shown. Visit
americanexpress.com for current information.
- --------------------------------------------------------------------------------
5 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
Q: What changes were made to the portfolio positioning?
A: We follow a sector and stock-focused approach in managing the Fund. Our
process is to set overall global themes, decide what sectors look attractive
to us and strive to choose promising stocks within those sectors. Once
stocks are identified, we look at the total portfolio to analyze
implications for country and currency exposure, as well as how portfolio
holdings are likely to behave as a whole.
With that process as our framework, we have had a strong thematic view about
the probable weakness of the U.S. dollar. Consequently, we shifted some of
our best sector and stock ideas toward regions where we anticipated the most
favorable currency impact and tempered our weightings in North America. As
previously mentioned, we were underweight in the U.S. during much of the
fiscal period. Recently we added to the Fund's U.S. holdings and are now
about neutral compared to our benchmark.
We have generally avoided U.S. consumer cyclicals, but have added some
specific companies within this sector that we thought could add value
through their restructuring. Mattel is one example of this. In our opinion,
the company has a strong franchise, has effectively restructured and has
been able to survive a difficult period. We have also held market share
gainers such as Wal-Mart, which are able to grow in a difficult environment.
We increased exposure to technology during the period, which worked to the
Fund's benefit. We also held pharmaceutical companies because valuations
were attractive to us and we believe the easing of recent issues, including
pricing pressures and lack of new product development, should lead to
positive earnings growth.
The portfolio was overweight in energy prior to the start of combat in Iraq.
We subsequently began gradually reducing the position by selling into the
energy rally as portfolio holdings reached our price targets. Similarly, we
reduced our telecommunications position in the first quarter of 2003 as
those stocks reached their price targets.
- --------------------------------------------------------------------------------
6 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
Q: How does the portfolio reflect your outlook on currency trends?
A: We typically hedge currency only when we anticipate significant shifts. We
may hedge back to the U.S. dollar if we think it will strengthen, but our
current expectations are for a weaker dollar. Our exposure to all other
currencies is determined by our stock positions. We are always mindful of
how currency trends may affect the competitiveness of individual companies.
For example, European companies are now facing greater competitive threat
from the U.S. given the weaker dollar, and from Asian countries whose
currencies are pegged to the dollar. We are looking to avoid companies
vulnerable to that risk.
Q: What is your outlook for global markets and the Fund?
A: We are generally optimistic about global equity performance. We continue to
anticipate moderate global economic expansion in 2003 as government and
central bank policies are generally supportive of growth. U.S. growth should
remain modestly positive, but consumer spending may soften. Japan's economy
is unlikely to gain momentum as restructuring in the corporate sector has
negatively impacted the labor markets, and budget deficits and outstanding
debt continue to limit the government's ability to stimulate economic
activity.
Following recent price volatility, we think U.S. and international equity
markets are now in the process of building a base for better performance.
Equity valuations appear attractive to us -- the dividend yield on U.K.
equities surpassed the yield on long-term U.S. government bonds this past
spring for the first time since 1959. We also believe that short-term
interest rates in Europe could be lowered further by year-end. We believe
all of these suggest a very favorable backdrop for better performance in the
global equity markets.
- --------------------------------------------------------------------------------
7 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Investments in Securities
World Growth Portfolio
April 30, 2003 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (98.0%)(c)
Issuer Shares Value(a)
Australia (1.2%)
Banks and savings & loans (0.7%)
Australia & New Zealand
Banking Group 288,600 $3,366,955
Retail (0.5%)
Woolworths 308,929 2,496,797
Belgium (0.3%)
Insurance
Fortis 99,550 1,657,580
Bermuda (2.1%)
Multi-industry conglomerates
Accenture Cl A 152,000(b) 2,435,040
Tyco Intl 525,709 8,201,060
Total 10,636,100
Canada (4.5%)
Energy (0.9%)
EnCana 142,200 4,659,711
Insurance (1.9%)
Sun Life Financial
Services of Canada 439,770 9,027,761
Media (0.7%)
Thomson 121,061 3,577,147
Metals (0.3%)
Alcan 55,448 1,623,321
Utilities -- telephone (0.7%)
BCE 188,068 3,716,535
Finland (1.1%)
Communications equipment & services
Nokia 329,207 5,569,711
France (3.1%)
Banks and savings & loans (1.5%)
BNP Paribas 159,325 7,478,553
Energy (1.6%)
TotalFinaElf 64,076 8,402,289
Germany (0.5%)
Communications equipment & services
Deutsche Telekom 196,818 2,631,395
Hong Kong (0.5%)
Financial services
Cheung Kong 415,000 2,293,420
Ireland (0.3%)
Financial services
Irish Life & Permanent 113,677 1,319,381
Japan (5.6%)
Communications equipment & services (0.7%)
NTT DoCoMo 1,622 3,345,732
Computers & office equipment (0.5%)
Canon 60,000 2,424,954
Electronics (0.8%)
Keyence 17,820 2,864,409
Tokyo Electron 36,300 1,360,565
Total 4,224,974
Financial services (0.8%)
Nomura Holdings 214,000 2,119,185
Sumitomo Trust & Banking 603,000 1,708,989
Total 3,828,174
Furniture & appliances (0.2%)
Matsushita Electric Industrial 150,000 1,194,868
Industrial equipment & services (0.3%)
SMC 20,600 1,551,132
Media (0.1%)
Sony 19,700 479,037
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
8 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Japan (cont.)
Multi-industry conglomerates (0.5%)
Mitsubishi 200,000 $1,188,999
Sumitomo Chemical 550,000 1,489,602
Total 2,678,601
Retail (0.5%)
Seven-Eleven Japan 98,000 2,333,725
Textiles & apparel (0.4%)
Asahi Glass 339,000 1,805,006
Transportation (0.8%)
East Japan Railway 525 2,377,159
Yamato Transport 194,000 2,170,015
Total 4,547,174
Mexico (1.0%)
Financial services
Grupo Financiero
BBVA Bancomer Cl B 5,649,642(b) 4,907,481
Netherlands (1.7%)
Food
Unilever 138,023 8,695,204
Portugal (1.0%)
Utilities -- telephone
Portugal Telecom 740,263 5,295,518
Singapore (0.8%)
Banks and savings & loans
United Overseas Bank 665,000 3,895,021
South Korea (0.6%)
Communications equipment & services
SK Telecom 22,020 3,062,864
Spain (1.3%)
Beverages & tobacco
Altadis 263,400 6,790,349
Switzerland (4.0%)
Banks and savings & loans (2.0%)
UBS 213,344 10,122,160
Health care (2.0%)
Novartis 250,629 9,886,199
Taiwan (1.3%)
Banks and savings & loans (0.7%)
Chinatrust Financial Holding 4,106,000(b) 3,203,764
Electronics (0.6%)
Taiwan Semiconductor Mfg 2,304,000(b) 3,159,243
United Kingdom (14.0%)
Banks and savings & loans (1.1%)
Lloyds TSB Group 857,956 5,642,607
Computer software & services (0.7%)
Sage Group 1,652,463 3,664,457
Energy (1.4%)
BP 1,103,435 6,992,539
Financial services (1.3%)
HSBC Holdings 579,506 6,349,073
Food (0.7%)
Compass Group 797,557 3,671,125
Health care (3.7%)
GlaxoSmithKline 564,143 11,306,591
Smith & Nephew 1,133,765 7,560,741
Total 18,867,332
Insurance (0.4%)
Willis Group Holdings 68,200 2,127,158
Media (1.1%)
British Sky Broadcasting Group 549,582(b) 5,696,230
Metals (0.5%)
Rio Tinto 131,683 2,517,131
Retail (1.0%)
Marks & Spencer Group 1,047,303 4,879,281
Utilities -- telephone (2.1%)
Vodafone Group 5,263,836 10,389,969
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
9 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
United States (53.1%)
Aerospace & defense (0.9%)
Lockheed Martin 86,000 $4,304,300
Banks and savings & loans (1.5%)
Bank of America 102,700 7,604,935
Beverages & tobacco (1.8%)
Altria Group 123,900 3,811,164
PepsiCo 127,000 5,496,560
Total 9,307,724
Building materials & construction (1.0%)
Weyerhaeuser 101,600 5,038,344
Communications equipment & services (1.4%)
Verizon Communications 183,500 6,859,230
Computer software & services (2.7%)
Microsoft 529,080 13,528,576
Computers & office equipment (3.7%)
Cisco Systems 368,739(b) 5,545,835
Dell Computer 450,660(b) 13,028,580
Total 18,574,415
Electronics (1.9%)
Intel 356,500 6,559,600
Texas Instruments 172,700 3,193,223
Total 9,752,823
Energy (3.0%)
ConocoPhillips 94,413 4,748,974
Exxon Mobil 293,700 10,338,240
Total 15,087,214
Energy equipment & services (0.9%)
Baker Hughes 163,900 4,589,200
Financial services (4.0%)
Citigroup 320,337 12,573,228
Goldman Sachs Group 99,200 7,529,280
Total 20,102,508
Food (0.8%)
Sysco 141,600 4,068,168
Health care (7.6%)
Johnson & Johnson 171,000 9,637,560
Pfizer 628,470 19,325,453
Wyeth 210,114 9,146,262
Total 38,109,275
Health care services (1.7%)
McKesson 311,200 8,632,688
Household products (3.7%)
Estee Lauder Cl A 158,400 5,148,000
Kimberly-Clark 101,100 5,031,747
Procter & Gamble 94,600 8,499,810
Total 18,679,557
Industrial equipment & services (1.6%)
Illinois Tool Works 128,200 8,202,236
Insurance (3.9%)
American Intl Group 206,297 11,954,911
Travelers Property Casualty Cl A 486,382 7,893,980
Total 19,848,891
Leisure time & entertainment (2.8%)
Carnival 257,900 7,115,461
Mattel 327,300 7,115,502
Total 14,230,963
Media (1.1%)
Clear Channel Communications 140,000(b) 5,475,400
Multi-industry conglomerates (3.2%)
General Electric 547,500 16,123,876
Restaurants & lodging (1.0%)
Hilton Hotels 395,200 5,264,064
Retail (2.9%)
Office Depot 348,500(b) 4,412,010
Wal-Mart Stores 182,400 10,272,768
Total 14,684,778
Total common stocks
(Cost: $520,479,880) $494,753,903
See accompanying notes to investments in securities.
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10 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Short-term securities (1.2%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (0.6%)
Federal Natl Mtge Assn Disc Nts
05-13-03 1.16% $500,000 $499,791
06-02-03 1.18 800,000 799,135
06-16-03 1.19 1,500,000 1,497,669
Total 2,796,595
Commercial paper (0.6%)
UBS Finance (Delaware)
05-01-03 1.36 3,500,000 3,499,868
Total short-term securities
(Cost: $6,296,687) $6,296,463
Total investments in securities
(Cost: $526,776,567)(d) $501,050,366
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.
(d) At April 30, 2003, the cost of securities for federal income tax purposes
was approximately $526,777,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 18,072,000
Unrealized depreciation (43,799,000)
-----------
Net unrealized depreciation $(25,727,000)
------------
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11 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
World Growth Portfolio
April 30, 2003 (Unaudited)
Assets Investments in securities, at value (Note 1)
(identified cost $526,776,567) $501,050,366
Foreign currency holdings (identified cost $1,431,155) 1,422,813
Dividends and accrued interest receivable 1,945,195
Receivable for investment securities sold 4,810,354
Unrealized appreciation on foreign currency contracts held, at value (Note 4) 14,186
------
Total assets 509,242,914
-----------
Liabilities
Disbursements in excess of cash on demand deposit 60,070
Payable for investment securities purchased 3,855,376
Unrealized depreciation on foreign currency contracts held, at value (Note 4) 1,051
Accrued investment management services fee 10,846
Other accrued expenses 50,093
------
Total liabilities 3,977,436
---------
Net assets $505,265,478
============
See accompanying notes to financial statements.
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12 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Statement of operations
World Growth Portfolio
Six months ended April 30, 2003 (Unaudited)
Investment income
Income:
Dividends $ 4,804,264
Interest 50,094
Fee income from securities lending -- net (Note 3) 29,000
Less foreign taxes withheld (507,542)
--------
Total income 4,375,816
---------
Expenses (Note 2):
Investment management services fee 1,862,294
Compensation of board members 5,700
Custodian fees 39,250
Audit fees 13,500
Other 6,015
-----
Total expenses 1,926,759
---------
Investment income (loss) -- net 2,449,057
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (46,350,184)
Foreign currency transactions (10,156)
-------
Net realized gain (loss) on investments (46,360,340)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 53,035,128
----------
Net gain (loss) on investments and foreign currencies 6,674,788
---------
Net increase (decrease) in net assets resulting from operations $ 9,123,845
============
See accompanying notes to financial statements.
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13 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets
World Growth Portfolio
April 30, 2003 Oct. 31, 2002
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss) -- net $ 2,449,057 $ 5,803,520
Net realized gain (loss) on investments (46,360,340) (131,918,088)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 53,035,128 9,918,976
---------- ---------
Net increase (decrease) in net assets resulting from operations 9,123,845 (116,195,592)
--------- ------------
Proceeds from contributions 2,097,031 44,021,250
Fair value of withdrawals (93,716,052) (375,713,758)
----------- ------------
Net contributions (withdrawals) from partners (91,619,021) (331,692,508)
----------- ------------
Total increase (decrease) in net assets (82,495,176) (447,888,100)
Net assets at beginning of period 587,760,654 1,035,648,754
----------- -------------
Net assets at end of period $505,265,478 $ 587,760,654
============ ==============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Notes to Financial Statements
World Growth Portfolio
(Unaudited as to April 30, 2003)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
World Growth Portfolio (the Portfolio) is a series of World Trust (the Trust)
and is registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. The Portfolio invests
primarily in equity securities of companies around the world that are positioned
to meet market needs in a changing world economy. 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 accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted 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.
Foreign securities are valued based on quotations from the principal market in
which such securities are normally traded. If trading or events occurring in
other markets after the close of the principal market in which foreign
securities are traded, and before the close of business of the Portfolio, are
expected to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into account.
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.
- --------------------------------------------------------------------------------
15 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
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.
- --------------------------------------------------------------------------------
16 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
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. As of April 30, 2003, foreign currency holdings consisted of
multiple denominations.
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.
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 or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium and discount using the effective
interest method, is accrued daily.
- --------------------------------------------------------------------------------
17 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with American Express Financial Corporation (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 0.8% to 0.675% 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 Global Growth
Fund to the Lipper Global Funds Index. Prior to Dec. 1, 2002, the maximum
adjustment was 0.12% of the Portfolio's average daily net assets after deducting
1% from the performance difference. If the performance difference was less than
1%, the adjustment was zero. On Nov. 13, 2002, shareholders approved
modification of the performance incentive adjustment calculation by adjusting
the performance difference intervals, while retaining the previous maximum
adjustment and reducing the amount of the performance difference for which no
adjustment is made to 0.50%. The effect of the modifications began Dec. 1, 2002.
The adjustment decreased the fee by $230,594 for the six months ended April 30,
2003.
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.
AEFC has a Subadvisory Agreement with American Express Asset Management
International Inc., a wholly-owned subsidiary of AEFC.
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.
- --------------------------------------------------------------------------------
18 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $135,700,852 and $213,235,433, respectively, for the six
months ended April 30, 2003. For the same period, the portfolio turnover rate
was 26%. Realized gains and losses are determined on an identified cost basis.
Income from securities lending amounted to $29,000 for the six months ended
April 30, 2003. 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.
4. FORWARD FOREIGN CURRENCY CONTRACTS
As of April 30, 2003, the Portfolio has forward foreign currency exchange
contracts that obligate it to deliver currencies at specified future dates. The
unrealized appreciation and/or depreciation on these contracts is included in
the accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 1, 2003 13,662,000 113,627 $ -- $ 929
Japanese Yen U.S. Dollar
May 2, 2003 1,222,636 1,108,163 14,074 --
U.S. Dollar European Monetary Unit
May 5, 2003 1,507,380 942,866 -- 76
Australian Dollar U.S. Dollar
May 6, 2003 2,271,060 3,629,835
British Pound U.S. Dollar 112 --
May 6, 2003 14,684,735 123,086 -- 46
Japanese Yen U.S. Dollar
------- ------
Total $14,186 $1,051
------- ------
- --------------------------------------------------------------------------------
19 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Growth Fund
April 30, 2003 (Unaudited)
Assets
Investment in Portfolio (Note 1) $ 505,216,133
Capital shares receivable 1,364
-----
Total assets 505,217,497
-----------
Liabilities
Capital shares payable 90,032
Accrued distribution fee 6,468
Accrued service fee 15
Accrued transfer agency fee 4,809
Accrued administrative services fee 791
Other accrued expenses 98,657
------
Total liabilities 200,772
-------
Net assets applicable to outstanding capital stock $ 505,016,725
==============
Represented by
Capital stock -- $.01 par value (Note 1) $ 1,284,020
Additional paid-in capital 1,222,335,999
Net operating loss (156,118)
Accumulated net realized gain (loss) (Note 5) (692,836,080)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (25,611,096)
-----------
Total -- representing net assets applicable to outstanding capital stock $ 505,016,725
==============
Net assets applicable to outstanding shares: Class A $ 349,397,821
Class B $ 149,167,373
Class C $ 896,902
Class Y $ 5,554,629
Net asset value per share of outstanding capital stock: Class A shares 87,631,770 $ 3.99
Class B shares 39,149,514 $ 3.81
Class C shares 236,145 $ 3.80
Class Y shares 1,384,617 $ 4.01
--------- --------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
20 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Statement of operations
AXP Global Growth Fund
Six months ended April 30, 2003 (Unaudited)
Investment income
Income:
Dividends $ 4,803,827
Interest 50,044
Fee income from securities lending -- net 28,997
Less foreign taxes withheld (507,494)
--------
Total income 4,375,374
---------
Expenses (Note 2):
Expenses allocated from Portfolio 1,926,588
Distribution fee
Class A 460,363
Class B 785,354
Class C 4,378
Transfer agency fee 944,158
Incremental transfer agency fee
Class A 72,494
Class B 54,670
Class C 382
Service fee -- Class Y 3,365
Administrative services fees and expenses 152,468
Compensation of board members 4,867
Printing and postage 88,572
Registration fees 24,994
Audit fees 4,500
Other 8,527
-----
Total expenses 4,535,680
Earnings credits on cash balances (Note 2) (4,188)
------
Total net expenses 4,531,492
---------
Investment income (loss) -- net (156,118)
--------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (46,346,905)
Foreign currency transactions (10,171)
-------
Net realized gain (loss) on investments (46,357,076)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 53,031,066
----------
Net gain (loss) on investments and foreign currencies 6,673,990
---------
Net increase (decrease) in net assets resulting from operations $ 6,517,872
============
See accompanying notes to financial statements.
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21 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets
AXP Global Growth Fund
April 30, 2003 Oct. 31, 2002
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss) -- net $ (156,118) $ (1,935,522)
Net realized gain (loss) on investments (46,357,076) (131,909,877)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 53,031,066 9,920,003
---------- ---------
Net increase (decrease) in net assets resulting from operations 6,517,872 (123,925,396)
--------- ------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 12,866,710 153,444,115
Class B shares 3,332,260 14,910,622
Class C shares 115,913 413,384
Class Y shares 813,239 2,888,855
Payments for redemptions
Class A shares (74,905,496) (377,354,000)
Class B shares (Note 2) (28,130,800) (112,290,601)
Class C shares (Note 2) (124,353) (484,202)
Class Y shares (2,994,005) (5,560,351)
---------- ----------
Increase (decrease) in net assets from capital share transactions (89,026,532) (324,032,178)
----------- ------------
Total increase (decrease) in net assets (82,508,660) (447,957,574)
Net assets at beginning of period 587,525,385 1,035,482,959
----------- -------------
Net assets at end of period $505,016,725 $ 587,525,385
============ ==============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
22 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Notes to Financial Statements
AXP Global Growth Fund
(Unaudited as to April 30, 2003)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Global Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. AXP Global 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, Class C 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 (CDSC)
and automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class C shares may be subject to a CDSC.
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 World Growth Portfolio
The Fund invests all of its assets in World Growth Portfolio (the Portfolio), a
series of World Trust (the Trust), an open-end investment company that has the
same objectives as the Fund. The Portfolio invests primarily in equity
securities of companies around the world that are positioned to meet market
needs in a changing world economy.
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 April 30, 2003 was 99.99%.
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).
- --------------------------------------------------------------------------------
23 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
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
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
- --------------------------------------------------------------------------------
24 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
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 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 0.06% to 0.035% 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 incremental
transfer agency fee is the amount charged to the specific classes for the
additional expense above the fee for Class Y. The Fund pays AECSC an annual fee
per shareholder account for this service as follows:
o Class A $19.00
o Class B $20.00
o Class C $19.50
o Class Y $17.00
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 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 and Class C shares.
Under a Shareholder Service Agreement, the Fund pays the Distributor 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
$173,033 for Class A, $64,112 for Class B and $11 for Class C for the six months
ended April 30, 2003.
During the six months ended April 30, 2003, the Fund's transfer agency fees were
reduced by $4,188 as a result of earnings credits from overnight cash balances.
- --------------------------------------------------------------------------------
25 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 2003
Class A Class B Class C Class Y
Sold 3,314,192 896,127 31,153 207,322
Issued for reinvested distributions -- -- -- --
Redeemed (19,392,490) (7,632,579) (34,041) (779,313)
----------- ---------- ------- --------
Net increase (decrease) (16,078,298) (6,736,452) (2,888) (571,991)
----------- ---------- ------ --------
Year ended Oct. 31, 2002
Class A Class B Class C Class Y
Sold 33,048,514 3,279,173 90,882 631,685
Issued for reinvested distributions -- -- -- --
Redeemed (81,570,654) (25,562,545) (113,161) (1,189,052)
----------- ----------- -------- ----------
Net increase (decrease) (48,522,140) (22,283,372) (22,279) (557,367)
----------- ----------- ------- --------
4. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The Fund must
maintain asset coverage for borrowings of at least 300%. The agreement, which
enables the Fund to participate with other American Express mutual funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the
IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime
Lending Rate. Borrowings are payable within 60 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 0.09% per annum. The Fund had no borrowings
outstanding during the six months ended April 30, 2003.
5. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund has a capital loss carry-over of
$643,043,436 as of Oct. 31, 2002, that will expire in 2009 and 2010 if not
offset by capital gains. It is unlikely the board will authorize a distribution
of any net realized capital gains until the available capital loss carry-over
has been offset or expires.
- --------------------------------------------------------------------------------
26 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
6. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Class A
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $3.92 $4.69 $ 8.74 $ 9.18 $7.80
Income from investment operations:
Net investment income (loss) -- -- .02 (.02) .02
Net gains (losses) (both realized and unrealized) .07 (.77) (2.71) .58 1.78
Total from investment operations .07 (.77) (2.69) .56 1.80
Less distributions:
Dividends from and in excess of net investment income -- -- (.02) (.04) (.05)
Distributions from realized gains -- -- (1.34) (.96) (.37)
Total distributions -- -- (1.36) (1.00) (.42)
Net asset value, end of period $3.99 $3.92 $ 4.69 $ 8.74 $9.18
Ratios/supplemental data
Net assets, end of period (in millions) $349 $406 $714 $1,356 $1,260
Ratio of expenses to average daily net assets(c) 1.47%(d) 1.39% 1.18% 1.22% 1.25%
Ratio of net investment income (loss)
to average daily net assets .17%(d) .01% .39% (.21%) .14%
Portfolio turnover rate
(excluding short-term securities) 26% 123% 218% 131% 83%
Total return(e) 1.79%(f) (16.42%) (34.83%) 4.74% 23.59%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
27 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $3.76 $4.53 $ 8.53 $9.01 $7.68
Income from investment operations:
Net investment income (loss) (.01) (.04) (.02) (.08) (.05)
Net gains (losses) (both realized and unrealized) .06 (.73) (2.64) .56 1.75
Total from investment operations .05 (.77) (2.66) .48 1.70
Less distributions:
Distributions from realized gains -- -- (1.34) (.96) (.37)
Net asset value, end of period $3.81 $3.76 $ 4.53 $8.53 $9.01
Ratios/supplemental data
Net assets, end of period (in millions) $149 $173 $309 $575 $464
Ratio of expenses to average daily net assets(c) 2.25%(d) 2.16% 1.95% 1.98% 2.02%
Ratio of net investment income (loss)
to average daily net assets (.61%)(d) (.77%) (.38%) (.95%) (.62%)
Portfolio turnover rate
(excluding short-term securities) 26% 123% 218% 131% 83%
Total return(e) 1.33%(f) (17.00%) (35.38%) 3.89% 22.66%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
28 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000(b)
Net asset value, beginning of period $3.75 $4.52 $ 8.54 $ 9.57
Income from investment operations:
Net investment income (loss) (.01) (.04) (.02) (.01)
Net gains (losses) (both realized and unrealized) .06 (.73) (2.64) (1.02)
Total from investment operations .05 (.77) (2.66) (1.03)
Less distributions:
Dividends from and in excess of net investment income -- -- (.02) --
Distributions from realized gains -- -- (1.34) --
Total distributions -- -- (1.36) --
Net asset value, end of period $3.80 $3.75 $ 4.52 $ 8.54
Ratios/supplemental data
Net assets, end of period (in millions) $1 $1 $1 $1
Ratio of expenses to average daily net assets(c) 2.27%(d) 2.19% 1.95% 1.98%(d)
Ratio of net investment income (loss)
to average daily net assets (.62%)(d) (.78%) (.42%) (1.15%)(d)
Portfolio turnover rate
(excluding short-term securities) 26% 123% 218% 131%
Total return(e) 1.33%(f) (17.04%) (35.37%) (10.76%)(f)
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
29 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(g) 2002 2001 2000 1999
Net asset value, beginning of period $3.94 $4.70 $ 8.76 $ 9.20 $7.81
Income from investment operations:
Net investment income (loss) .01 .01 .04 (.01) .03
Net gains (losses) (both realized and unrealized) .06 (.77) (2.73) .58 1.78
Total from investment operations .07 (.76) (2.69) .57 1.81
Less distributions:
Dividends from and in excess of net investment income -- -- (.03) (.05) (.05)
Distributions from realized gains -- -- (1.34) (.96) (.37)
Total distributions -- -- (1.37) (1.01) (.42)
Net asset value, end of period $4.01 $3.94 $ 4.70 $ 8.76 $9.20
Ratios/supplemental data
Net assets, end of period (in millions) $6 $8 $12 $20 $26
Ratio of expenses to average daily net assets(c) 1.28%(d) 1.21% 1.01% 1.05% 1.13%
Ratio of net investment income (loss)
to average daily net assets .33%(d) .18% .55% (.06%) .24%
Portfolio turnover rate
(excluding short-term securities) 26% 123% 218% 131% 83%
Total return(e) 1.78%(f) (16.17%) (34.78%) 4.86% 23.86%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
30 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
Notes to financial highlights
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 2000.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2003 (Unaudited).
- --------------------------------------------------------------------------------
31 -- AXP GLOBAL GROWTH FUND -- 2003 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
(logo)
AMERICAN
EXPRESS(R)
- --------------------------------------------------------------------------------
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and
is not a broker-dealer.
AXP(R)
Global
Technology
Fund
Semiannual Report
for the Period Ended
April 30, 2003
AXP Global Technology Fund seeks to provide shareholders with long-term capital
growth.
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(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
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Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
Investments in Securities 8
Financial Statements (Portfolio) 11
Notes to Financial Statements (Portfolio) 14
Financial Statements (Fund) 19
Notes to Financial Statements (Fund) 22
(Dalbar logo)
American Express(R) Funds' reports to shareholders have been awarded the
Communications Seal from Dalbar Inc., an independent financial services research
firm. The Seal recognizes communications demonstrating a level of excellence in
the industry.
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2 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Fund Snapshot AS OF APRIL 30, 2003
PORTFOLIO MANAGERS
Portfolio manager Telis Bertsekas
Since 6/02
Years in industry 6
Portfolio manager Nina Hughes
Since 6/02
Years in industry 5
FUND OBJECTIVE
For investors seeking long-term capital growth.
Inception dates
A: 11/13/96 B: 11/13/96 C: 6/26/00 Y: 11/13/96
Ticker symbols
A: AXIAX B: INVBX C: AXICX Y: --
Total net assets $140.1 million
Number of holdings approximately 80
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
STYLE
VALUE BLEND GROWTH
X LARGE
X MEDIUM SIZE
X SMALL
SECTOR COMPOSITION
Percentage of portfolio assets
(pie chart)
Computer & office equipment (hardware) 24.6%
Computer software & services 24.3%
Electronics (includes semiconductors) 24.1%
Communications equipment & services 11.5%
Communications services 6.1%
Consumer discretionary 4.4%
Cash and equivalents 4.2%
Industrials 0.5%
Financials 0.3%
TOP TEN HOLDINGS
Percentage of portfolio assets
Nokia ADR (Communications equipment & services) 6.6%
Microsoft (Computer software & services) 4.9
Taiwan Semiconductor Mfg ADR (Electronics) 3.7
First Data (Computers & office equipment) 3.7
Ariba (Computer software & services) 3.5
Cadence Design Systems
(Computer software & services) 3.0
Intel (Electronics) 2.7
Flextronics Intl
(Communications equipment & services) 2.7
Sanmina-SCI (Computers & office equipment) 2.6
Analog Devices (Electronics) 2.5
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
Funds that concentrate investments in a limited number of securities may involve
greater risks and more price volatility than more diversified funds.
There are special risk considerations associated with international investing
related to market, currency, economic, political and other factors.
Stock prices of established companies that pay dividends may be less volatile
than the stock market as a whole. Stocks of medium- and small-sized companies
may be subject to more abrupt or erratic price movements than stocks of larger
companies. Some of these companies also have fewer financial resources.
Fund holdings are subject to change.
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3 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Q: How did the AXP Global Technology Fund perform for the first half of
fiscal year 2003?
A: AXP Global Technology Fund's Class A shares advanced 19.42% (excluding
sales charge) for the six months ended April 30, 2003. This substantially
outpaced the 9.84% return for the period for the Lipper Science and
Technology Funds Index, representing the Fund's peer group. The Fund also
outperformed the Fund's benchmark, the unmanaged Pacific Stock Exchange
Technology Index, which gained 7.67% for the period.
Q: What factors affected performance during the period?
A: We attribute most of the Fund's results over the six-month period to
stock selection since about 10 stocks in particular boosted performance.
Specifically, we look for growth stocks that have reasonable valuations
using traditional fundamental analysis. Though the technology sector has
been out of favor, we were able to generate solid returns through careful
stock selection. This helped us achieve strong, positive results despite
a volatile equity market. Mid-cap and small-cap technology stocks
generally outperformed large-cap technology stocks for the period.
(bar graph)
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2003
20% (bar 1)
+19.42%
15%
10% (bar 2) (bar 3)
+7.67% +9.84%
5%
0%
(bar 1) AXP Global Technology Fund Class A (excluding sales charge)
(bar 2) PSE Technology Index (1)
(bar 3) Lipper Science and Technology Funds Index(2)
(1) Pacific Stock Exchange Technology Index (PSE Index), an unmanaged index
published by the Pacific Exchange, is comprised of 100 listed and
over-the-counter stocks from 15 different industries including computer
hardware, software, semiconductors, telecommunications, data storage and
processing, electronics and biotechnology.
(2) The Lipper Science and Technology Funds Index, published by Lipper Inc.,
includes the 30 largest funds that are generally similar to the Fund,
although some funds in the index may have somewhat different investment
policies or objectives.
Past performance is no guarantee of future results. The 5.75% sales charge
applicable to Class A shares of the Fund is not reflected in the bar chart; if
reflected, returns would be lower than those shown. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
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4 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
(begin callout quote)> The Fund's emphasis on careful stock selection helped
us achieve strong, positive results despite a volatile equity market. (end
callout quote)
AVERAGE ANNUAL TOTAL RETURNS
as of April 30, 2003
Class A Class B Class C Class Y
(Inception dates) (11/13/96) (11/13/96) (6/26/00) (11/13/96)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4) NAV(5) POP(5)
6 months* +19.42% +12.53% +18.48% +14.48% +18.48% +17.48% +19.42% +19.42%
1 year -17.45% -22.20% -18.05% -21.32% -18.05% -18.86% -16.89% -16.89%
5 years -7.77% -8.86% -8.56% -8.60% N/A N/A -7.77% -7.77%
Since inception -1.99% -2.89% -2.80% -2.80% -41.67% -41.67% -1.99% -1.99%
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
Past performance is no guarantee of future results. Prior to April 19, 2000, the
Fund had not engaged in a broad public offering of its shares, or been subject
to redemption requests. It had sold shares only to a single investor. Investment
return and principal value will fluctuate, so that your shares, when redeemed,
may be worth more or less than the original cost. The performance shown for each
class of shares will vary due to differences in sales charges and fees. Short
term performance may be higher or lower than the figures shown. Visit
americanexpress.com for current information.
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5 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
Performance was generated across the five technology sub-sectors: computer
software, computer hardware, semiconductors, networking and computer
services. The flexibility to move between these areas is a competitive
advantage over some of the more targeted peer groups.
Overall, we found success with companies that are not widely followed by
analysts, and with companies with improving revenues and profit margins.
MicroStrategy, a supplier of business intelligence software, OmniVision
Technologies, a maker of semiconductor imaging devices for digital cameras,
Western Digital, a disk drive company and Ariba, a firm whose products
include on-line corporate purchasing systems, were four of the biggest
contributors to the Fund's results. There are many stocks in the Fund's
portfolio in which many of our peers typically do not invest. An improving
fundamental backdrop also contributed to performance.
For some large well-known media services and software firms such as AOL
Time Warner and Oracle, both of which suffered from negative news, the
first quarter was a difficult period. We avoided these two stocks and this
helped contribute to the Fund's results. The implementation of a strict
sell discipline is one of our key risk management controls and we make a
conscious effort to avoid disproportionate risk in targeting potential
upside returns.
Q: What changes did you make to the portfolio since October 2002?
A: We increased the Fund's positioning in semiconductors and decreased its
weighting in software firms. During the period, we moved from an
environment where technology companies had relatively strong fourth
calendar quarter earnings to one where the earnings outlook became muddy.
By February, investors realized that it would be a challenge for
technology companies to meet analysts' earnings expectations. To help
protect capital, we further diversified the Fund during the period,
increasing the number of names in the portfolio. This resulted in a
portfolio turnover rate of 291%.
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6 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Questions & Answers
Q: What is your outlook in the coming months?
A: Global uncertainty, restrictions on business investment and constrained
capital budgets at many businesses could be tough on technology firms,
especially software companies. Still, we believe there are many
interesting investment opportunities among companies whose products and
services are leading edge. A substantial amount of excess technology
capacity has been eliminated over the past three years, and we believe
more companies are now running IT operations with stretched resources.
In our view, there is pent-up business demand for technology services and
products that may generate reasonable industry growth later this year.
Overall, technology is one of few areas of the U.S. economy where there is
a real secular growth trend. An example of a company that may work well for
the portfolio is Nokia, the cell phone maker. Nokia has some new products,
and makes over 30% of every cellular telephone handset shipped. We believe
that Nokia could have rising units volume, rising prices and rising profit
margins. This is the kind of growth for which we are looking.
When the current earnings and geopolitical fog lifts, we expect the Fund to
be well positioned for the rest of the year. We remain focused on
generating absolute returns, and achieving strong, competitive returns in
any market environment.
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7 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Investments in Securities
World Technologies Portfolio
April 30, 2003 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (88.9%)
Issuer Shares Value(a)
Communications equipment & services (10.4%)
Arris Group 125,000(b) $487,625
Flextronics Intl 420,000(b,c) 3,675,000
Nokia ADR 530,000(c) 8,782,100
UTStarcom 40,000(b) 870,840
Westell Technologies Cl A 190,000(b) 837,900
Total 14,653,465
Computer software & services (23.2%)
Ariba 1,424,600(b) 4,644,195
Ascential Software 560,000(b) 2,150,400
Automatic Data Processing 65,000 2,185,950
Business Objects ADR 135,000(b,c) 2,933,550
Cadence Design Systems 355,000(b) 4,057,650
Electronic Arts 30,000(b) 1,778,100
Intuit 60,000(b) 2,326,800
Microsoft 256,000 6,545,920
Oracle 220,000(b) 2,613,600
Take-Two Interactive Software 100,000(b) 2,250,000
Vignette 510,000(b) 1,050,600
Total 32,536,765
Computers & office equipment (22.2%)
3Com 263,000(b) 1,367,600
Ceridian 215,000(b) 2,999,250
CGI Group 130,000(b,c) 635,229
Computer Sciences 40,000(b) 1,318,000
Compuware 690,000(b) 3,029,100
E.piphany 200,000(b) 890,000
F5 Networks 60,000(b) 825,600
First Data 125,000 4,903,750
Legato Systems 245,000(b) 1,450,400
MicroStrategy Cl A 29,500(b) 812,135
NCR 130,000(b) 2,849,600
Quantum 325,000(b) 1,121,250
Retek 205,000(b) 1,281,250
Sanmina-SCI 715,000(b) 3,432,000
Solectron 325,000(b) 1,036,750
Sun Microsystems 543,000(b) 1,791,900
Western Digital 155,000(b) 1,446,150
Total 31,189,964
Electronics (23.0%)
Analog Devices 100,000(b) 3,312,000
Artisan Components 75,000(b) 1,482,750
Corning 330,000(b) 1,788,600
Intel 200,000 3,680,000
LG Electronics 28,000(c) 965,597
Linear Technology 30,000 1,034,100
LTX 210,000(b) 1,417,500
Microchip Technology 70,000 1,455,300
Micron Technology 245,000(b) 2,082,500
NetScreen Technologies 60,000(b) 1,216,800
OPNET Technologies 100,000(b) 703,000
Pemstar 280,000(b) 837,200
Samsung Electronics 5,900(c) 1,481,070
Siliconix 25,000(b) 706,250
STMicroelectronics 120,000(c) 2,470,800
Taiwan Semiconductor Mfg ADR 590,000(b,c) 4,938,300
Trimble Navigation 45,000(b) 1,136,250
United Microelectronics ADR 465,000(b,c) 1,506,600
Total 32,214,617
Leisure time & entertainment (2.1%)
Activision 80,000(b) 1,224,000
Imax 100,000(b,c) 788,000
Scientific Games Holdings 140,000(b) 912,800
Total 2,924,800
Media (4.7%)
Comcast Special Cl A 40,000(b) 1,202,400
Sony ADR 113,000(c) 2,795,620
USA Interactive 85,000(b) 2,545,750
Total 6,543,770
Retail (2.1%)
Best Buy 85,000(b) 2,939,300
Utilities -- telephone (1.1%)
Amdocs 90,000(b,c) 1,589,400
Total common stocks
(Cost: $118,702,956) $124,592,081
See accompanying notes to investments in securities.
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8 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Preferred stocks & other (0.4%)(b,f)
Issuer Shares Value(a)
Bluestream Ventures LP 1,375,000(e) $465,059
Marketsoft
Cv 225,410 112,706
Paxonet Communications 106,383(d) --
Portera
Series G 425,374(d) --
Retail Exchange.com 314,286(d) --
Warrants 111,789(d) --
Vcommerce
Cv Series C 64,378
1,288
Total preferred stocks & other
(Cost: $5,036,582) $579,053
Bonds (2.2%)
Issuer Coupon Principal Value(a)
rate amount
BEA Systems
Cv
12-15-06 4.00% $900,000 $852,750
Ciena
Cv
02-01-08 3.75 1,000,000 793,750
Kulicke & Soffa Inds
Cv
12-15-06 4.75 1,000,000 672,500
Manugistics Group
Cv
11-01-07 5.00 1,300,000 734,500
Total bonds
(Cost: $2,867,070) $3,053,500
Short-term securities (4.0%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (2.2%)
Federal Natl Mtge Assn Disc Nts
05-09-03 1.18% $400,000 $399,882
05-19-03 1.17 1,400,000 1,399,136
05-21-03 1.23 1,300,000 1,299,156
Total 3,098,174
Commercial paper (1.8%)
SBC Intl
05-15-03 1.23 2,500,000(g) 2,498,719
Total short-term securities
(Cost: $5,596,996) $5,596,893
Total investments in securities
(Cost: $132,203,604)(h) $133,821,527
See accompanying notes to investments in securities.
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9 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
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. As of April 30, 2003,
the value of foreign securities represented 23.2% of net assets.
(d) Negligible market value.
(e) The share amount for Limited Liability Companies (LLC) or Limited
Partnerships (LP) represents capital contributions.
(f) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at April 30, 2003, is as follows:
Security Acquisition Cost
dates
Bluestream Ventures LP 06-28-00 thru 02-18-03 $1,305,113
Marketsoft
Cv 12-11-00 1,100,001
Paxonet Communications 04-04-01 thru 04-23-01 300,000
Portera
Series G 11-10-00 1,425,003
Retail Exchange.com 11-29-00 thru 10-21-02 606,463
Warrants 11-29-00 1
Vcommerce
Cv Series C 07-21-00 300,001
(g) 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.
(h) At April 30, 2003, the cost of securities for federal income tax purposes
was approximately $132,204,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 8,747,000
Unrealized depreciation (7,129,000)
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Net unrealized appreciation $ 1,618,000
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10 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
World Technologies Portfolio
April 30, 2003 (Unaudited)
Assets
Investments in securities, at value
(Note 1)*
(identified cost $132,203,604) $133,821,527
Cash in bank on demand deposit 2,124,600
Dividends and accrued interest receivable 83,357
Receivable for investment securities sold 13,004,369
U.S. government securities held as collateral (Note 4) 872,821
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Total assets 149,906,674
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Liabilities
Payable for investment securities purchased 7,636,889
Payable upon return of securities loaned (Note 4) 1,997,821
Accrued investment management services fee 2,775
Other accrued expenses 27,882
------
Total liabilities 9,665,367
---------
Net assets $140,241,307
============
* Including securities on loan, at value (Note 4) $ 1,830,850
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See accompanying notes to financial statements.
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11 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Statement of operations
World Technologies Portfolio
Six months ended April 30, 2003 (Unaudited)
Investment income
Income:
Dividends $ 240,496
Interest 177,626
Fee income from securities lending -- net (Note 3) 39,475
Less foreign taxes withheld (20,803)
-------
Total income 436,794
-------
Expenses (Note 2):
Investment management services fee 465,279
Compensation of board members 4,867
Custodian fees 30,018
Audit fees 10,500
Other 9,235
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Total expenses 519,899
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Investment income (loss) -- net (83,105)
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 17,249,894
Foreign currency transactions (6,778)
------
Net realized gain (loss) on investments 17,243,116
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 6,011,389
---------
Net gain (loss) on investments and foreign currencies 23,254,505
----------
Net increase (decrease) in net assets resulting from operations $23,171,400
===========
See accompanying notes to financial statements.
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12 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets
World Technologies Portfolio
April 30, 2003 Oct. 31, 2002
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss) -- net $ (83,105) $ (960,315)
Net realized gain (loss) on investments 17,243,116 (86,891,957)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 6,011,389 15,298,490
--------- ----------
Net increase (decrease) in net assets resulting from operations 23,171,400 (72,553,782)
---------- -----------
Proceeds from contributions 5,547,316 12,839,018
Fair value of withdrawals (9,387,667) (37,231,532)
---------- -----------
Net contributions (withdrawals) from partners (3,840,351) (24,392,514)
---------- -----------
Total increase (decrease) in net assets 19,331,049 (96,946,296)
Net assets at beginning of period 120,910,258 217,856,554
----------- -----------
Net assets at end of period $140,241,307 $120,910,258
============ ============
See accompanying notes to financial statements.
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13 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Notes to Financial Statements
World Technologies Portfolio
(Unaudited as to April 30, 2003)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
World Technologies Portfolio (the Portfolio) is a series of World Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a non-diversified, open-end management investment company. The Portfolio
invests in equity securities of companies in the information technology industry
throughout the world. 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 accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted 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.
Foreign securities are valued based on quotations from the principal market in
which securities are normally traded. If trading or events occurring in other
markets after the close of the principal market in which foreign securities are
traded, and before the close of business of the Portfolio, are expected to
materially affect the value of those securities, then they are valued at their
fair value taking this trading or these events into account. 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.
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14 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
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.
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15 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
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.
Illiquid securities
As of April 30, 2003, investments in securities included issues that are
illiquid which the Portfolio currently limits to 10% of net assets, at market
value, at the time of purchase. The aggregate value of such securities as of
April 30, 2003 was $579,053 representing 0.41% of net assets. These securities
are valued at fair value according to methods selected in good faith by the
board. According to board guidelines, certain unregistered securities are
determined to be liquid and are not included within the 10% limitation specified
above.
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16 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Securities purchased on a forward-commitment basis
Delivery and payment for securities that have been purchased by the Portfolio on
a forward-commitment basis, including when-issued securities and future capital
commitments for limited partnership interests, can take place one month or more
after the transaction date. During this period, when-issued 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 securities
at least equal to the amount of its forward-commitments. As of April 30, 2003,
the Portfolio has entered into outstanding future capital commitments for
limited partnership interests of $1,125,000.
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 or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium and discount using the effective
interest method, is accrued daily.
- --------------------------------------------------------------------------------
17 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with American Express Financial Corporation (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 0.72% to 0.595% annually.
On Nov. 13, 2002, shareholders approved the addition of the performance
incentive adjustment that may adjust the management fee upward or downward based
upon a comparison of the performance of Class A shares of AXP Global Technology
Fund to the Lipper Science and Technology Funds Index. The maximum adjustment is
0.12% of the Fund's average daily net assets. If the performance difference is
less than 0.50%, the adjustment will be zero. The first adjustment will be made
on June 1, 2003 and will cover the six-month period beginning Dec. 1, 2002.
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.
The Portfolio 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 $352,355,812 and $361,460,787, respectively, for the six
months ended April 30, 2003. For the same period, the portfolio turnover rate
was 291%. Realized gains and losses are determined on an identified cost basis.
Brokerage clearing fees paid to brokers affiliated with AEFC were $320,769 for
the six months ended April 30, 2003.
4. LENDING OF PORTFOLIO SECURITIES
As of April 30, 2003, securities valued at $1,830,850 were on loan to brokers.
For collateral, the Portfolio received $1,125,000 in cash and U.S. government
securities valued at $872,821. Income from securities lending amounted to
$39,475 for the six months ended April 30, 2003. 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.
- --------------------------------------------------------------------------------
18 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Technology Fund
April 30, 2003 (Unaudited)
Assets
Investment in Portfolio (Note 1) $ 140,220,839
Capital shares receivable 93,570
------
Total assets 140,314,409
-----------
Liabilities
Capital shares payable 22,979
Accrued distribution fee 1,917
Accrued transfer agency fee 2,888
Accrued administrative services fee 231
Other accrued expenses 143,335
-------
Total liabilities 171,350
-------
Net assets applicable to outstanding capital stock $ 140,143,059
=============
Represented by
Capital stock -- $.01 par value (Note 1) $ 1,191,127
Additional paid-in capital 612,481,063
Net operating loss (1,028,923)
Accumulated net realized gain (loss) (Note 5) (474,117,848)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 1,617,640
---------
Total -- representing net assets applicable to outstanding capital stock $ 140,143,059
=============
Net assets applicable to outstanding shares: Class A $ 93,626,968
Class B $ 44,036,112
Class C $ 2,389,954
Class Y $ 90,025
Net asset value per share of outstanding capital stock: Class A shares 76,417,059 $ 1.23
Class B shares 40,430,942 $ 1.09
Class C shares 2,191,241 $ 1.09
Class Y shares 73,489 $ 1.23
------ -------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
19 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Statement of operations
AXP Global Technology Fund
Six months ended April 30, 2003 (Unaudited)
Investment income
Income:
Dividends $ 240,461
Interest 177,601
Fee income from securities lending -- net 39,469
Less foreign taxes withheld (20,800)
-------
Total income 436,731
-------
Expenses (Note 2):
Expenses allocated from Portfolio 519,824
Distribution fee
Class A 108,049
Class B 201,974
Class C 10,541
Transfer agency fee 496,405
Incremental transfer agency fee
Class A 37,264
Class B 29,969
Class C 1,394
Service fee -- Class Y 35
Administrative services fees and expenses 37,706
Compensation of board members 4,450
Printing and postage 56,576
Registration fees 35,793
Audit fees 3,500
Other 9,605
-----
Total expenses 1,553,085
Earnings credits on cash balances (Note 2) (725)
----
Total net expenses 1,552,360
---------
Investment income (loss) -- net (1,115,629)
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 17,247,400
Foreign currency transactions (6,777)
------
Net realized gain (loss) on investments 17,240,623
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 6,010,516
---------
Net gain (loss) on investments and foreign currencies 23,251,139
----------
Net increase (decrease) in net assets resulting from operations $22,135,510
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
20 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Statements of changes in net assets
AXP Global Technology Fund
April 30, 2003 Oct. 31, 2002
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss) -- net $ (1,115,629) $ (3,613,346)
Net realized gain (loss) on investments 17,240,623 (86,881,115)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 6,010,516 15,296,644
--------- ----------
Net increase (decrease) in net assets resulting from operations 22,135,510 (75,197,817)
---------- -----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 13,042,007 37,783,172
Class B shares 4,289,203 14,424,364
Class C shares 408,096 1,493,914
Class Y shares 31,976 76,038
Payments for redemptions
Class A shares (15,185,655) (54,052,105)
Class B shares (Note 2) (4,946,738) (19,608,355)
Class C shares (Note 2) (348,222) (1,832,580)
Class Y shares (12,849) (46,571)
------- -------
Increase (decrease) in net assets from capital share transactions (2,722,182) (21,762,123)
---------- -----------
Total increase (decrease) in net assets 19,413,328 (96,959,940)
Net assets at beginning of period 120,729,731 217,689,671
----------- -----------
Net assets at end of period $140,143,059 $120,729,731
============ ============
Undistributed net investment income (loss) $ (1,028,923) $ 86,706
------------ ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
21 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Notes to Financial Statements
AXP Global Technology Fund
(Unaudited as to April 30, 2003)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AXP Global Technology Fund (a series of AXP Global Series, Inc.) is registered
under the Investment Company Act of 1940 (as amended) as a non-diversified,
open-end management investment company. AXP Global 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, Class C 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 (CDSC)
and automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class C shares may be subject to a CDSC.
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 World Technologies Portfolio
The Fund invests all of its assets in World Technologies Portfolio (the
Portfolio), a series of World Trust (the Trust), an open-end investment company
that has the same objectives as the Fund. The Portfolio invests in equity
securities of companies in the information technology industry throughout the
world.
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 April 30, 2003 was 99.99%.
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).
- --------------------------------------------------------------------------------
22 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
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
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
- --------------------------------------------------------------------------------
23 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
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 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 0.06% to 0.035% 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 incremental
transfer agency fee is the amount charged to the specific classes for the
additional expense above the fee for Class Y. The Fund pays AECSC an annual fee
per shareholder account for this service as follows:
o Class A $19.00
o Class B $20.00
o Class C $19.50
o Class Y $17.00
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 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 and Class C shares.
Under a Shareholder Service Agreement, the Fund pays the Distributor 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
$196,878 for Class A, $40,489 for Class B and $399 for Class C for the six
months ended April 30, 2003.
During the six months ended April 30, 2003, the Fund's transfer agency fees were
reduced by $725 as a result of earnings credits from overnight cash balances.
- --------------------------------------------------------------------------------
24 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 2003
Class A Class B Class C Class Y
Sold 11,515,170 4,222,048 400,904 28,306
Issued for reinvested distributions -- -- -- --
Redeemed (13,508,084) (4,956,509) (340,649) (11,319)
----------- ---------- -------- -------
Net increase (decrease) (1,992,914) (734,461) 60,255 16,987
---------- -------- ------ ------
Year ended Oct. 31, 2002
Class A Class B Class C Class Y
Sold 24,601,849 10,522,166 1,103,099 50,002
Issued for reinvested distributions -- -- -- --
Redeemed (37,466,707) (16,160,687) (1,796,278) (29,205)
----------- ----------- ---------- -------
Net increase (decrease) (12,864,858) (5,638,521) (693,179) 20,797
----------- ---------- -------- ------
4. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The Fund must
maintain asset coverage for borrowings of at least 300%. The agreement, which
enables the Fund to participate with other American Express mutual funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the
IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime
Lending Rate. Borrowings are payable within 60 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 0.09% per annum. The Fund had no borrowings
outstanding during the six months ended April 30, 2003.
5. CAPITAL LOSS CARRY-OVER
For federal income tax purposes the Fund has a capital loss carry-over of
$484,898,024 as of Oct. 31, 2002, that will expire in 2008 through 2010, if not
offset by capital gains. It is unlikely the board will authorize a distribution
of any net realized capital gains until the available capital loss carry-over
has been offset or expires.
- --------------------------------------------------------------------------------
25 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
6. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Class A
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(l) 2002 2001 2000 1999
Net asset value, beginning of period $1.03 $1.60 $ 5.26 $ 11.27 $ 5.41
Income from investment operations:
Net investment income (loss) (.01) (.03) (.02) (.01) (.08)
Net gains (losses) (both realized and unrealized) .21 (.54) (3.64) 7.05 5.94
Total from investment operations .20 (.57) (3.66) 7.04 5.86
Less distributions:
Distributions from realized gains -- -- -- (1.29) --
Tax return of capital -- -- -- (11.76)(i) --
Total distributions -- -- -- (13.05) --
Net asset value, end of period $1.23 $1.03 $ 1.60 $ 5.26 $11.27
Ratios/supplemental data:
Net assets, end of period (in thousands) $93,627 $80,831 $146,139 $319,164 $7,435
Ratio of expenses to average daily net assets(c) 2.14%(d) 1.91% 1.63% 1.24%(e) 1.11%(e)
Ratio of net investment income (loss)
to average daily net assets (1.46%)(d) (1.65%) (.99%) (.38%) (1.01%)
Portfolio turnover rate (excluding short-term securities) 291% 391% 233% 116% 113%
Total return(j) 19.42%(k) (35.62%) (69.58%) 66.58% 108.32%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
26 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(l) 2002 2001 2000 1999
Net asset value, beginning of period $ .92 $1.44 $ 4.77 $ 11.02 $ 5.33
Income from investment operations:
Net investment income (loss) (.01) (.04) (.04) (.04) (.14)
Net gains (losses) (both realized and unrealized) .18 (.48) (3.29) 6.84 5.83
Total from investment operations .17 (.52) (3.33) 6.80 5.69
Less distributions:
Distributions from realized gains -- -- -- (1.29) --
Tax return of capital -- -- -- (11.76)(i) --
Total distributions -- -- -- (13.05) --
Net asset value, end of period $1.09 $ .92 $ 1.44 $ 4.77 $11.02
Ratios/supplemental data:
Net assets, end of period (in thousands) $44,036 $37,877 $67,425 $138,545 $220
Ratio of expenses to average daily net assets(c) 2.95%(d) 2.71% 2.42% 2.01%(f) 1.86%(f)
Ratio of net investment income (loss)
to average daily net assets (2.28%)(d) (2.45%) (1.78%) (1.16%) (1.76%)
Portfolio turnover rate (excluding short-term securities) 291% 391% 233% 116% 113%
Total return(j) 18.48%(k) (36.11%) (69.81%) 65.25% 106.72%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
27 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(l) 2002 2001 2000(b)
Net asset value, beginning of period $ .92 $1.44 $ 4.77 $5.05
Income from investment operations:
Net investment income (loss) (.01) (.04) (.04) (.01)
Net gains (losses) (both realized and unrealized) .18 (.48) (3.29) (.27)
Total from investment operations .17 (.52) (3.33) (.28)
Net asset value, end of period $1.09 $ .92 $ 1.44 $4.77
Ratios/supplemental data:
Net assets, end of period (in thousands) $2,390 $1,964 $4,069 $3,298
Ratio of expenses to average daily net assets(c) 2.94%(d) 2.69% 2.42% 2.01%(d),(g)
Ratio of net investment income (loss)
to average daily net assets (2.25%)(d) (2.39%) (1.84%) (1.17%)(d)
Portfolio turnover rate (excluding short-term securities) 291% 391% 233% 116%
Total return(j) 18.48%(k) (36.11%) (69.81%) (5.54%)(k)
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
28 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003(l) 2002 2001 2000 1999
Net asset value, beginning of period $1.03 $1.60 $ 5.25 $ 11.27 $ 5.41
Income from investment operations:
Net investment income (loss) (.01) (.03) (.02) -- (.08)
Net gains (losses) (both realized and unrealized) .21 (.54) (3.63) 7.03 5.94
Total from investment operations .20 (.57) (3.65) 7.03 5.86
Less distributions:
Distributions from realized gains -- -- -- (1.29) --
Tax return of capital -- -- -- (11.76)(i) --
Total distributions -- -- -- (13.05) --
Net asset value, end of period $1.23 $1.03 $ 1.60 $ 5.25 $11.27
Ratios/supplemental data:
Net assets, end of period (in thousands) $90 $58 $57 $88 $225
Ratio of expenses to average daily net assets(c) 1.91%(d) 1.72% 1.49% .94%(h) 1.11%(h)
Ratio of net investment income (loss)
to average daily net assets (1.19%)(d) (1.61%) (.89%) (.80%) (1.01%)
Portfolio turnover rate (excluding short-term securities) 291% 391% 233% 116% 113%
Total return(j) 19.42%(k) (35.63%) (69.52%) 66.27% 108.32%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
29 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
Notes to financial highlights
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 2000.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class A would have been 1.45% and 1.22%
for the periods ended 2000 and 1999, respectively.
(f) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class B would have been 2.26% and 1.97%
for the periods ended 2000 and 1999, respectively.
(g) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratio of expenses for Class C would have been 2.26% for the
period ended 2000.
(h) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class Y would have been 1.19% and 1.12%
for the periods ended 2000 and 1999, respectively.
(i) A distribution payable to a single corporate shareholder.
(j) Total return does not reflect payment of a sales charge.
(k) Not annualized.
(l) Six months ended April 30, 2003 (Unaudited).
Prior to April 19, 2000, the Fund had not engaged in a broad public offering of
its shares, or been subject to redemption requests. It had sold shares only to a
single investor. One factor impacting the Fund's 2000 and 1999 performance was
the high concentration in technology investments, particularly in securities of
Internet and communication companies. These investments performed well and had a
greater effect on the Fund's performance than similar investments made by other
funds because of high concentration, the lack of cash flows and the smaller size
of the Fund. There is no assurance that the Fund's future investments will
result in the same level of performance.
- --------------------------------------------------------------------------------
30 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
(logo)
AMERICAN
EXPRESS(R)
- --------------------------------------------------------------------------------
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and
is not a broker-dealer.
Item 2. Code of Ethics. Not applicable pursuant to SEC Release No. IC-25914
(January 27, 2003).
Item 3. Audit Committee Financial Expert. Not applicable pursuant to SEC
Release No. IC-25914 (January 27, 2003).
Item 4. Principal Accountant Fees and Services. Not applicable pursuant to
SEC Release No. IC-25915 (January 28, 2003).
Items 5-6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. [Reserved]
Item 9. Controls and Procedures.
(a) The registrant's Principal Executive Officer and Principal
Financial Officer have evaluated the registrant's disclosure
controls and procedures within 90 days of this filing and have
concluded that the registrant's disclosure controls and
procedures by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) At the date of filing this Form N-CSR, the registrant's Principal
Executive Officer and Principal Financial Officer are aware of no
significant changes in the registrant's internal controls or in
other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Item 10. Exhibits.
(a) Not applicable pursuant to SEC Release No. IC-25914 (January 27,
2003).
(b) Separate certification for the Registrant's principal executive
officer and principal financial officer, as required by Section 302 of
the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
Company Act of 1940, are attached as EX.99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) AXP Global Series, Inc.
By /s/ Paula R. Meyer
------------------
Paula R. Meyer
President and Principal Executive Officer
Date June __, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Paula R. Meyer
------------------
Paula R. Meyer
President and Principal Executive Officer
Date July 1, 2003
By /s/ Jeffrey P. Fox
------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date July 1, 2003