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)
50606 AXP Financial Center, Minneapolis, Minnesota 55474
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(Address of principal executive offices) (Zip code)
Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810, Minneapolis, MN 55402-3268
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(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 330-9283
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Date of fiscal year end: 10/31
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Date of reporting period: 10/31
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AXP(R)
Emerging Markets
Fund
Annual Report
for the Period Ended
Oct. 31, 2003
AXP Emerging Markets Fund seeks to provide shareholders with long-term capital
growth.
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(logo) (logo)
American AMERICAN
Express EXPRESS
Funds (R)
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Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
The Fund's Long-term Performance 9
Investments in Securities 10
Financial Statements (Portfolio) 13
Notes to Financial Statements (Portfolio) 16
Independent Auditors' Report (Portfolio) 21
Financial Statements (Fund) 22
Notes to Financial Statements (Fund) 25
Independent Auditors' Report (Fund) 33
Board Members and Officers 34
Proxy Voting 36
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2 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Fund Snapshot AS OF OCT. 31, 2003
PORTFOLIO MANAGERS
Portfolio manager Julian Thompson*
Since 1/00
Years in industry 10
Portfolio manager Jules Mort*
Since 10/03
Years in industry 6
* The Fund is managed by a team led by Julian Thompson and Jules Mort.
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 $245.7 million
Number of holdings 71
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
COUNTRY COMPOSITION
Percentage of portfolio assets
(pie chart)
South Korea 17.1%
Taiwan 15.1%
Brazil 9.0%
Mexico 8.2%
South Africa 7.6%
India 7.1%
China 6.3%
Malaysia 4.5%
Thailand 4.0%
Turkey 3.4%
Hong Kong 3.3%
Russia 2.9%
Israel 2.3%
Chile 2.1%
Hungary 2.1%
United States 1.9%
Indonesia 1.0%
Singapore 1.0%
Other* 1.1%
* Includes Peru and United Kingdom.
TOP TEN HOLDINGS
Percentage of portfolio assets
Samsung Electronics (South Korea) 7.4%
America Movil ADR Series L (Mexico) 3.1
Banco Itau Holding Financeira (Brazil) 2.7
Chinatrust Financial Holding (Taiwan) 2.6
Taiwan Semiconductor Mfg (Taiwan) 2.6
Brasil Telecom Participacoes (Brazil) 2.6
Sappi (South Africa) 2.3
OTP Bank (Hungary) 2.1
Kookmin Bank (South Korea) 2.0
Standard Bank Group (South Africa) 2.0
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 ANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
On Oct. 20, 2003, Threadneedle investment professionals began managing American
Express Funds global and international equity funds. At that time Julian
Thompson, AXP Emerging Markets Fund's portfolio manager, joined Threadneedle. He
has managed the Fund since January 2000. On October 20, Jules Mort of
Threadneedle, a specialist in Latin American equities, joined the Fund's
management team. Below, Thompson discusses the Fund's results and positioning
for fiscal year 2003.
Q: How did AXP Emerging Markets Fund perform for the 12-month period ended
Oct. 31, 2003?
A: AXP Emerging Markets Fund rose 36.50% (Class A shares excluding sales
charge) for the 12 months ended Oct. 31, 2003. This was less than the
Fund's benchmark, the MSCI Emerging Markets Free Index, which advanced
48.74% for the period. The Fund's peer group, represented by the Lipper
Emerging Markets Fund Index, was up 48.37% for the same time frame.
Q: What factors affected performance during the period?
A: Despite strong positive returns, the Fund's results were clearly
disappointing in relative terms. The Fund was defensively positioned early
in fiscal year 2003, and this detracted from its results when emerging
markets rose sharply in April and May 2003. Our reasoning at the time was
that the global economy was suffering from chronic overcapacity, that the
liberation of Iraq would drag on, and that the SARS virus in China would
not be easy to tackle.
As it turned out, the SARS virus was dealt with rapidly. Saddam Hussein was
also toppled quickly. Meanwhile, the U.S. economy proved to be stronger
than we had anticipated as U.S. consumers took advantage of the lowest
interest rates since the 1950s. The recovery in the
(bar chart)
PERFORMANCE COMPARISON
For the year ended Oct. 31, 2003
50% (bar 2) (bar 3)
+48.74% +48.37%
40% (bar 1)
+36.50%
30%
20%
10%
0%
(bar 1) AXP Emerging Markets Fund Class A (excluding sales charge)
(bar 2) MSCI Emerging Markets Free Index(unmanaged)
(bar 3) Lipper Emerging Markets Funds Index
(see "The Fund's Long-term Performance" for Index descriptions)
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 ANNUAL REPORT
Questions & Answers
(begin callout quote)> In the coming months, we are likely to take a more
patient and longer-term approach to security selection.(end callout quote)
U.S. economy and the elimination of SARS gave Asian markets a strong boost
in April and May. Our defensive positioning at the time, with low exposure
to China and a lower-than-index positioning in the volatile technology
sector, resulted in considerable underperformance during the first half of
fiscal year 2003. We also had lower-than-index exposure to Israel and
Turkey, which performed well after American and British forces ousted the
Iraqi dictator. Stock selection also
AVERAGE ANNUAL TOTAL RETURNS
as of Oct. 31, 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)
1 year +36.50% +28.65% +35.51% +31.51% +35.42% +35.42% +36.63% +36.63%
5 years +9.70% +8.41% +8.88% +8.74% N/A N/A +9.96% +9.96%
Since inception +1.70% +0.84% +0.94% +0.94% -2.40% -2.40% +1.89% +1.89%
as of Sept. 30, 2003
1 year +31.76% +24.20% +30.69% +26.69% +30.87% +30.87% +32.29% +32.29%
5 years +9.67% +8.38% +8.82% +8.68% N/A N/A +9.94% +9.94%
Since inception +0.49% -0.37% -0.28% -0.28% -4.88% -4.88% +0.69% +0.69%
(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/funds for current information.
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5 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Questions & Answers
proved overly defensive, particularly in Latin America. While performance
has been pretty much in line with the Fund's benchmark since the end of
May, it was difficult to recover lost ground.
Q: Were there any major positive contributors to results?
A: The Fund's positioning in Russia augmented its returns in fiscal year 2003.
In early autumn, we reduced the Fund's position ahead of the deterioration
in relations between Russian President Putin and the country's so-called
business oligarchs, marked by the arrest of a leading oil executive. On
average, about 7% of the Fund was invested in the country for most of the
fiscal year. The Fund's lower-than-index exposure to Korea, which has been
suffering a credit squeeze following the puncturing of last year's bubble
in credit card spending, also helped fiscal year performance.
Q: What effect is Threadneedle's involvement having on the Fund?
A: We believe we are adding greater depth to the Fund's research resources. We
have dedicated analysts specializing in emerging market securities in Asia,
Latin America, Eastern Europe, the Middle East and Africa. Threadneedle
also has a dedicated emerging markets economist and fixed income team whose
experience in analyzing emerging economies will give greater depth to our
country allocation. Overall, though, the Fund's investment strategy and
process has not changed, although we expect to take a slightly longer-term
approach to security selection. This should, under normal market
conditions, lead to lower portfolio turnover than the 174% turnover rate we
had in fiscal year 2003. We will continue to adopt a dynamic approach in
our investment style, rather than being wedded to a strict growth or value
discipline. Our typical portfolio will also continue to contain around
50-70 stocks with a minimum market capitalization of $500 million.
Q: How is the Fund currently positioned across countries?
A: We have a larger-than-index position in Asia. We are particularly keen on
countries demonstrating a strong expansionary cycle (such as China, India
and Thailand, as well as Taiwan to a lesser extent). We are cautious on
Korea, where we have a lower-than-index position, as a credit crunch is
still ongoing. The bulk of our exposure in Korea is in exporters.
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6 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Questions & Answers
We have a slightly higher-than-index position in Latin America. However,
the Fund has no exposure to Argentina, Colombia or Venezuela. Exposure is
concentrated in Brazil, Mexico and Chile. Elsewhere, we currently have a
lower-than-index position in Russia. We have sold into recent market
strength. We also have substantially lower-than-index position in South
Africa. The reason is the strong currency, which is making life very
difficult for the country's exporters (which represent 40% of the market).
Wages are also growing far in excess of productivity in the mining sector.
Most of our South African exposure is in financial stocks, which look
exceptionally cheap at current levels.
Q: How is the Fund's overall portfolio currently allocated with respect to
economic sectors?
A: The Fund has a larger-than-index position in banks, reflecting an Asian
growth theme, as well as the prospects for credit growth in Brazil and
South Africa. The Fund is neutral with respect to the information
technology sector, and has moved to lower-than-index positions in energy
following the reduction in Russian exposure and also has a much
lower-than-index position in materials, reflecting our dislike of the South
African mining industry.
Q: What is the Fund's tactical view and strategy for the months ahead?
A: The strong performance of the emerging market universe relative to the
world index partly reflects the recovery in the U.S. economy which remains
a key export destination for the Asian region, but it also reflects the
weak dollar, which is keeping emerging market currencies strong, allowing
interest rates to fall and promoting domestic consumption.
We believe that we are in the early stages of a new investment and
consumption cycle in emerging markets, which may bring a pick-up in growth
rates from recent levels and may make emerging markets the main engine of
global growth. In fact we are already seeing this in countries such as
China, Thailand and India. It is no coincidence that these countries were
among the best performers in the third calendar quarter of 2003. Of course,
there is some concern that China may be overheating as the pace of GDP
growth in the third quarter appears to have been around 12%. However, it is
difficult to see what could really derail China at this point, particularly
as currency revaluation is really in no one's interests. We thus continue
to expect China to be a strong catalyst for regional growth, as well as for
commodity prices. While economies such as India, Thailand
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7 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Questions & Answers
and China are already booming, we expect other economies in the region such
as Taiwan, Hong Kong and Singapore to join the party. For this reason we
have more than half of the Fund's assets invested in Asia currently. We
increased this exposure in early August 2003.
We also expect a new consumption cycle in other emerging markets,
particularly Brazil. Interest rates started the year at over 26% and are
now down to 20%. We expect them to be around 16% by the end of 2003 as
inflation remains on a downward path. This should set the scene for a
strong pick-up in economic growth next year.
The Fund is positioned to benefit strongly from a resumption of consumption
in emerging markets. For the last five years, emerging economies have
struggled with high interest rates and low commodity prices. They are now
enjoying a pick-up in external demand as the U.S. economy recovers, along
with low interest rates and strong currencies. At the same time, consumers
in emerging markets are also beginning to take advantage of low interest
rates, creating a consumption boom that may bring a rebalancing of global
growth away from the U.S., towards Asia and, to a lesser extent, Latin
America.
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8 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
The Fund's Long-term Performance
This chart illustrates the total value of an assumed $10,000 investment in AXP
Emerging Markets Fund Class A shares (from 12/1/96 to 10/31/03) as compared to
the performance of two widely cited performance indices, the Morgan Stanley
Capital International (MSCI) Emerging Markets Free Index and the Lipper Emerging
Markets Funds Index. In comparing the Fund's Class A shares to these indices,
you should take into account the fact that the Fund's performance reflects the
maximum sales charge of 5.75%, while such charges are not reflected in the
performance of the indices. Returns for the Fund include the reinvestment of any
distribution paid during each period.
Past performance is no guarantee of future results. Your investment and return
values fluctuate so that your shares, when redeemed, may be worth more or less
than the original cost. Returns do not reflect taxes payable on distributions
and redemptions. Also see "Past Performance" in the Fund's current prospectus.
(line chart)
VALUE OF A HYPOTHETICAL $10,000 INVESTMENT
IN AXP EMERGING MARKETS FUND
AXP Emerging Markets Fund Class A $9,425 $10,070 $6,672 $9,687 $9,339 $7,165 $7,766 $10,601
MSCI Emerging Markets Free Index(1) $10,000 $9,001 $6,212 $8,984 $8,192 $6,270 $6,800 $9,910
Lipper Emerging Markets Funds Index(2) $10,000 $9,402 $6,283 $8,571 $8,204 $6,382 $6,837 $10,144
12/1/96 10/97 10/98 10/99 10/00 10/03 10/03 10/03
(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.
Average Annual Total Returns
Class A with Sales Charge as of Oct. 31, 2003
1 year +28.65%
5 years +8.41%
Since inception (11/13/96) +0.84%
Results for other share classes can be found on page 5.
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9 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Investments in Securities
Emerging Markets Portfolio
Oct. 31, 2003
(Percentages represent value of investments compared to net assets)
Common stocks (94.1%)(c)
Issuer Shares Value(a)
Brazil (6.4%)
Beverages & tobacco (0.6%)
Companhia de Bebidas das Americas ADR 65,829 $1,395,575
Energy (1.0%)
Petroleo Brasileiro ADR 102,335 2,404,873
Metals (0.8%)
Companhia Vale do Rio Doce ADR 44,600 2,040,450
Paper & packaging (1.4%)
Aracruz Celulose ADR 125,993 3,540,403
Utilities -- telephone (2.6%)
Brasil Telecom Participacoes 172,496 6,299,553
Chile (2.1%)
Banks and savings & loans (0.8%)
Banco Santander Chile ADR 81,759 1,942,594
Metals (1.3%)
Antofagasta 175,381 3,118,980
China (6.3%)
Automotive & related (1.9%)
Denway Motors 5,744,000 4,733,842
Computer software & services (1.1%)
Legend Group 5,802,000 2,801,744
Metals (0.9%)
Yanzhou Coal Mining Cl H 2,852,000 2,093,359
Multi-industry (0.8%)
Zhejiang Expressway 2,996,000 1,880,771
Utilities -- telephone (1.6%)
China Mobile 1,383,500 3,928,323
Hong Kong (3.3%)
Banks and savings & loans (1.3%)
BOC Hong Kong Holdings 1,840,500 3,187,700
Financial services (0.9%)
Cheung Kong Holdings 279,000 2,326,287
Real estate (1.1%)
Sun Hung Kai Properties 326,000 2,760,150
Hungary (2.1%)
Banks and savings & loans
OTP Bank 419,000(b) 5,133,152
India (7.1%)
Automotive & related (0.8%)
Tata Motors 231,687 1,914,536
Banks and savings & loans (1.9%)
Housing Development Finance 404,452(b) 4,639,775
Beverages & tobacco (1.3%)
ITC 166,009(b) 3,182,084
Computer software & services (1.9%)
Infosys Technologies 46,540 4,869,088
Health care products (1.2%)
Cipla 101,125 2,897,860
Indonesia (1.0%)
Beverages & tobacco
Hanjiya Mandala Sampoerna 4,860,500 2,488,457
Israel (2.3%)
Banks and savings & loans (0.8%)
Bank Hapoalim 924,813(b) 1,949,250
Computer software & services (0.7%)
Check Point Software Technologies 97,402(b) 1,654,860
Health care products (0.8%)
Teva Pharmaceutical Inds ADR 37,510 2,133,944
See accompanying notes to investments in securities.
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10 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Malaysia (4.5%)
Banks and savings & loans (1.8%)
Malayan Banking 1,641,900 $4,407,205
Cellular telecommunications (1.7%)
Maxis Communications 2,101,000 4,174,355
Leisure time & entertainment (1.0%)
Resorts World 884,000 2,558,947
Mexico (8.2%)
Beverages & tobacco (1.4%)
Grupo Modelo Series C 1,370,539 3,457,629
Cellular telecommunications (3.1%)
America Movil ADR Series L 319,524 7,604,671
Financial services (1.0%)
Grupo Financiero BBVA Bancomer Cl B 3,000,000(b) 2,535,479
Multi-industry (1.1%)
Grupo Aeroportuario del Sureste ADR 150,900 2,607,551
Retail -- general (0.8%)
Wal-Mart de Mexico 747,254 2,081,747
Utilities -- telephone (0.8%)
Telefonos de Mexico ADR Cl L 58,950 1,895,243
Peru (0.3%)
Precious metals
Compania de Minas Buenaventura ADR 13,600 647,632
Russia (2.9%)
Energy (1.2%)
Lukoil Holding ADR 35,656 2,898,832
Metals (1.0%)
JSC MMC Norilsk Nickel ADR 48,600 2,510,190
Utilities -- natural gas (0.7%)
Gazprom ADR 75,486 1,811,664
Singapore (1.0%)
Banks and savings & loans
United Overseas Bank 310,000 2,421,666
South Africa (7.6%)
Banks and savings & loans (3.0%)
FirstRand 2,152,700 2,544,526
Standard Bank Group 1,005,277 4,871,110
Total 7,415,636
Insurance (1.3%)
Old Mutual 1,798,000 3,119,764
Multi-industry (1.0%)
Imperial Holdings 290,500 2,548,985
Paper & packaging (2.3%)
Sappi 450,738 5,703,029
South Korea (15.7%)
Banks and savings & loans (2.0%)
Kookmin Bank 137,150 5,006,236
Beverages & tobacco (1.1%)
KT&G 139,050 2,678,783
Chemicals (1.8%)
LG Chem 110,300 4,426,912
Electronics (9.0%)
LG Electronics 71,680 3,712,703
Samsung Electronics 45,670 18,136,799
Total 21,849,502
Retail -- general (0.5%)
Shinsegae 6,310 1,266,265
Telecom equipment & services (1.3%)
SK Telecom 18,620 3,288,196
Taiwan (15.1%)
Automotive & related (0.8%)
China Motor 1,054,300 2,001,541
Banks and savings & loans (4.5%)
Chinatrust Financial Holding 6,264,840 6,509,165
Taishin Financial Holdings 6,288,000 4,460,362
Total 10,969,527
Chemicals (1.7%)
Formosa Chemicals & Fibre 2,640,335 4,196,559
Computer hardware (3.3%)
Compal Electronics 2,349,400 3,561,269
Hon Hai Precision Inds 1,044,600 4,673,412
Total 8,234,681
See accompanying notes to investments in securities.
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11 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Taiwan (cont.)
Electronics (3.7%)
Taiwan Semiconductor Mfg 3,220,000 $6,349,963
United Microelectronics 2,911,000 2,664,668
Total 9,014,631
Industrial transportation (1.1%)
Evergreen Marine 3,120,180 2,736,758
Thailand (4.0%)
Banks and savings & loans (1.8%)
Bangkok Bank 1,896,400(b) 4,444,502
Building materials & construction (1.1%)
Siam Cement 520,100 2,633,418
Home building (1.1%)
Land & Houses Public 8,865,200 2,688,781
Turkey (3.4%)
Banks and savings & loans (1.1%)
Akbank T.A.S. 551,591,000 2,585,002
Beverages & tobacco (0.2%)
Anadolu Efes Biracilik ve Malt Sanayil 38,120,780 467,834
Food (1.1%)
Migros Turk T.A.S. 191,671,032 2,636,608
Multi-industry (1.0%)
Koc Holding 187,022,000 2,572,656
United Kingdom (0.8%)
Metals
Lonmin 114,911 1,995,805
Total common stocks
(Cost: $186,815,272) $231,412,032
Preferred stocks (4.1%)(c)
Issuer Shares Value(a)
Brazil (2.7%)
Banco Itau Holding Financeira 80,550,000 $6,599,007
South Korea (1.4%)
Samsung Electronics 17,840 3,542,374
Total preferred stocks
(Cost: $8,220,420) $10,141,381
Short-term security (1.9%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
Commercial paper
General Electric Capital
11-03-03 1.04% $4,600,000 $4,599,601
Total short-term security
(Cost: $4,599,735) $4,599,601
Total investments in securities
(Cost: $199,635,427)(d) $246,153,014
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 Oct. 31, 2003, the cost of securities for federal income tax purposes
was $202,710,751 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $44,062,097
Unrealized depreciation (619,834)
--------
Net unrealized appreciation $43,442,263
-----------
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12 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
Emerging Markets Portfolio
Oct. 31, 2003
Assets
Investments in securities, at value (Note 1)
(identified cost $199,635,427) $246,153,014
Cash in bank on demand deposit 73,989
Foreign currency holdings (identified cost $590,056) (Note 1) 592,277
Dividends and accrued interest receivable 139,309
Receivable for investment securities sold 6,035,654
---------
Total assets 252,994,243
-----------
Liabilities
Payable for investment securities purchased 7,086,092
Accrued investment management services fee 7,447
Other accrued expenses 85,112
Total liabilities 7,178,651
---------
Net assets $245,815,592
============
See accompanying notes to financial statements.
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13 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Statement of operations
Emerging Markets Portfolio
Year ended Oct. 31, 2003
Investment income
Income:
Dividends $ 5,270,409
Interest 259,318
Fee income from securities lending (Note 3) 6,708
Less foreign taxes withheld (546,431)
--------
Total income 4,990,004
---------
Expenses (Note 2):
Investment management services fee 2,181,279
Compensation of board members 7,891
Custodian fees 273,054
Audit fees 21,000
Other 16,240
------
Total expenses 2,499,464
---------
Investment income (loss) -- net 2,490,540
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 18,020,396
Foreign currency transactions (714,689)
--------
Net realized gain (loss) on investments 17,305,707
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 50,708,763
----------
Net gain (loss) on investments and foreign currencies 68,014,470
----------
Net increase (decrease) in net assets resulting from operations $70,505,010
===========
See accompanying notes to financial statements.
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14 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Statements of changes in net assets
Emerging Markets Portfolio
Year ended Oct. 31, 2003 2002
Operations
Investment income (loss) -- net $ 2,490,540 $ 1,481,912
Net realized gain (loss) on investments 17,305,707 17,153,389
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 50,708,763 4,057,136
---------- ---------
Net increase (decrease) in net assets resulting from operations 70,505,010 22,692,437
---------- ----------
Proceeds from contributions 40,823,634 85,703,273
Fair value of withdrawals (63,961,807) (126,027,132)
----------- ------------
Net contributions (withdrawals) from partners (23,138,173) (40,323,859)
----------- -----------
Total increase (decrease) in net assets 47,366,837 (17,631,422)
Net assets at beginning of year 198,448,755 216,080,177
----------- -----------
Net assets at end of year $245,815,592 $ 198,448,755
============ =============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
15 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Notes to Financial Statements
Emerging Markets Portfolio
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 emerging markets companies. 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. American Express Financial
Corporation (AEFC) may use fair value if a security's value has been materially
affected by events after the close of the primary exchanges or markets on which
the security is traded and before the NAV is calculated. The fair value of a
security may be different from the quoted or published price. AEFC will price a
security at fair value in accordance with procedures adopted by the Portfolio
and board of trustees if a reliable market quotation is not readily available.
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.
- --------------------------------------------------------------------------------
16 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL 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.
- --------------------------------------------------------------------------------
17 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL 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 Oct. 31, 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, market discount and original issue
discount using the effective interest method, is accrued daily.
- --------------------------------------------------------------------------------
18 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with AEFC to manage its portfolio. Under this agreement, AEFC
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Portfolio's average daily net assets in reducing
percentages from 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 decreased the fee by $100,852 for the year ended Oct. 31, 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.
Under a Deferred Compensation Plan (the Plan), non-interested trustees may defer
receipt of their compensation. Deferred amounts are treated as though equivalent
dollar amounts had been invested in shares of the underlying Fund or other
American Express mutual funds. The Portfolio's liability for these amounts is
adjusted for market value changes and remains in the Portfolio until distributed
in accordance with the Plan.
AEFC has a Subadvisory Agreement with American Express Asset Management
International Inc. (AEAMI), a wholly-owned subsidiary of AEFC. Investment
decisions for the Portfolio are made by a team of seasoned investment
professionals at Threadneedle Asset Management Limited (Threadneedle) who are
associated with AEAMI. Threadneedle is also 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.
- --------------------------------------------------------------------------------
19 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $341,989,946 and $350,700,616, respectively, for the
year ended Oct. 31, 2003. Realized gains and losses are determined on an
identified cost basis.
Income from securities lending amounted to $6,708 for the year ended Oct. 31,
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. FINANCIAL HIGHLIGHTS
The table below shows certain important financial information for evaluating the
Portfolio's results.
Ratios/supplemental data
Fiscal period ended Oct. 31, 2003 2002 2001 2000 1999
Ratio of expenses to average daily net assets(a) 1.20% 1.23% 1.20% 1.17% 1.30%
Ratio of net investment income (loss)
to average daily net assets 1.20% .63% .79% .28% .87%
Portfolio turnover rate (excluding short-term securities) 174% 226% 193% 143% 143%
Total return(b) 37.59% 9.39% (22.59%) (2.86%) 46.00%
Notes to financial highlights
(a) Expense ratio is based on total expenses of the Portfolio before reduction
of earnings credits on cash balances. The ratio does not include feeder
fund expenses.
(b) Total return is based on a calculated Portfolio NAV and does not reflect
payment of a sales charge.
- --------------------------------------------------------------------------------
20 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Independent Auditors' Report
THE BOARD OF TRUSTEES AND UNITHOLDERS
WORLD TRUST
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of Emerging Markets Portfolio (a
series of World Trust) as of October 31, 2003, the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period ended October 31, 2003, and the
financial highlights for each of the years in the five-year period ended October
31, 2003. These financial statements and the financial highlights are the
responsibility of portfolio management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2003, by correspondence with the custodian
and brokers or by other appropriate auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Emerging Markets Portfolio as of October 31, 2003, and the results of its
operations, changes in its net assets and the financial highlights for each of
the periods stated in the first paragraph above, in conformity with accounting
principles generally accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
December 12, 2003
- --------------------------------------------------------------------------------
21 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Emerging Markets Fund
Oct. 31, 2003
Assets
Investment in Portfolio (Note 1) $ 245,722,267
Capital shares receivable 56,286
------
Total assets 245,778,553
-----------
Liabilities
Capital shares payable 1,548
Accrued distribution fee 3,057
Accrued service fee 51
Accrued transfer agency fee 1,912
Accrued administrative services fee 676
Other accrued expenses 59,753
------
Total liabilities 66,997
------
Net assets applicable to outstanding capital stock $ 245,711,556
=============
Represented by
Capital stock -- $.01 par value (Note 1) $ 456,609
Additional paid-in capital 319,802,328
Undistributed net investment income (284,054)
Accumulated net realized gain (loss) (Note 5) (120,756,753)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 46,493,426
----------
Total -- representing net assets applicable to outstanding capital stock $ 245,711,556
=============
Net assets applicable to outstanding shares: Class A $ 155,436,111
Class B $ 72,025,997
Class C $ 611,606
Class Y $ 17,637,842
Net asset value per share of outstanding capital stock: Class A shares 28,459,800 $ 5.46
Class B shares 13,890,622 $ 5.19
Class C shares 117,586 $ 5.20
Class Y shares 3,192,899 $ 5.52
--------- -------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
22 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Statement of operations
AXP Emerging Markets Fund
Year ended Oct. 31, 2003
Investment income
Income:
Dividends $ 5,268,503
Interest 259,224
Fee income from securities lending 6,705
Less foreign taxes withheld (546,234)
--------
Total income 4,988,198
---------
Expenses (Note 2):
Expenses allocated from Portfolio 2,498,565
Distribution fee
Class A 334,914
Class B 639,893
Class C 5,003
Transfer agency fee 715,361
Incremental transfer agency fee
Class A 54,133
Class B 42,717
Class C 387
Service fee -- Class Y 8,783
Administrative services fees and expenses 208,342
Compensation of board members 7,125
Printing and postage 101,788
Registration fees 40,117
Audit fees 7,000
Other 6,183
-----
Total expenses 4,670,311
Earnings credits on cash balances (Note 2) (2,986)
------
Total net expenses 4,667,325
---------
Investment income (loss) -- net 320,873
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 18,014,007
Foreign currency transactions (714,418)
--------
Net realized gain (loss) on investments 17,299,589
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 50,690,349
----------
Net gain (loss) on investments and foreign currencies 67,989,938
----------
Net increase (decrease) in net assets resulting from operations $68,310,811
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
23 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Statements of changes in net assets
AXP Emerging Markets Fund
Year ended Oct. 31, 2003 2002
Operations
Investment income (loss) -- net $ 320,873 $ (1,038,828)
Net realized gain (loss) on investments 17,299,589 17,148,831
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 50,690,349 4,056,336
---------- ---------
Net increase (decrease) in net assets resulting from operations 68,310,811 20,166,339
---------- ----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 46,522,730 92,903,611
Class B shares 4,677,343 7,961,556
Class C shares 1,881,668 691,958
Class Y shares 17,134,059 23,258,477
Payments for redemptions
Class A shares (66,453,449) (116,934,256)
Class B shares (Note 2) (17,438,584) (22,209,119)
Class C shares (Note 2) (1,963,556) (405,813)
Class Y shares (5,243,858) (23,090,767)
---------- -----------
Increase (decrease) in net assets from capital share transactions (20,883,647) (37,824,353)
----------- -----------
Total increase (decrease) in net assets 47,427,164 (17,658,014)
Net assets at beginning of year 198,284,392 215,942,406
----------- -----------
Net assets at end of year $245,711,556 $ 198,284,392
============ =============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
24 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Notes to Financial Statements
AXP Emerging Markets Fund
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 emerging markets companies.
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 Oct. 31, 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).
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.
- --------------------------------------------------------------------------------
25 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL 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.
On the statement of assets and liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by $604,927
and accumulated net realized loss has been decreased by $604,927.
The tax character of distributions paid for the years indicated is as follows:
Year ended Oct. 30, 2003 2002
Class A
Distributions paid from:
Ordinary income $-- $--
Long-term capital gain -- --
Class B
Distributions paid from:
Ordinary income -- --
Long-term capital gain -- --
Class C
Distributions paid from:
Ordinary income -- --
Long-term capital gain -- --
Class Y
Distributions paid from:
Ordinary income -- --
Long-term capital gain -- --
As of Oct. 31, 2003, the components of distributable earnings on a tax basis are
as follows:
Undistributed ordinary income $ 2,322,760
Accumulated long-term gain (loss) $(120,289,410)
Unrealized appreciation (depreciation) $ 43,419,269
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.
- --------------------------------------------------------------------------------
26 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL 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 Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
American Express mutual funds. The Fund's liability for these amounts is
adjusted for market value changes and remains in the Fund until distributed in
accordance with the Plan.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. 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 incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the fee for Class Y.
In addition, there is an annual closed-account fee of $5 per inactive account,
charged on a pro rata basis from the date the account becomes inactive until the
date the account is purged from the transfer agent system generally within one
year. However, the closed account fee is not being charged to the Fund until a
new transfer agency system is installed.
Under terms of a prior agreement that ended April 30, 2003, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $19 for Class
A, $20 for Class B, $19.50 for Class C and $17 for Class Y.
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.
- --------------------------------------------------------------------------------
27 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Sales charges received by the Distributor for distributing Fund shares were
$177,783 for Class A, $65,171 for Class B and $108 for Class C for the year
ended Oct. 31, 2003.
During the year ended Oct. 31, 2003, the Fund's transfer agency fees were
reduced by $2,986 as a result of earnings credits from overnight cash balances.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the years indicated are as follows:
Year ended Oct. 31, 2003
Class A Class B Class C Class Y
Sold 10,502,183 1,107,124 439,743 4,214,232
Issued for reinvested distributions -- -- -- --
Redeemed (15,064,186) (4,225,912) (453,986) (1,112,507)
----------- ---------- -------- ----------
Net increase (decrease) (4,562,003) (3,118,788) (14,243) 3,101,725
---------- ---------- ------- ---------
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 year ended Oct. 31, 2003.
5. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund has a capital loss carry-over of
$120,289,410 as of Oct. 31, 2003, 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.
- --------------------------------------------------------------------------------
28 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL 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 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) .02 (.01) -- (.02) .02
Net gains (losses) (both realized and unrealized) 1.44 .32 (1.12) (.16) 1.54
Total from investment operations 1.46 .31 (1.12) (.18) 1.56
Less distributions:
Dividends from net investment income -- -- -- -- (.01)
Net asset value, end of period $5.46 $4.00 $ 3.69 $4.81 $4.99
Ratios/supplemental data
Net assets, end of period (in millions) $155 $132 $143 $234 $251
Ratio of expenses to average daily net assets(c) 2.02% 2.05% 2.02% 1.83% 2.03%
Ratio of net investment income (loss)
to average daily net assets .39% (.19%) (.02%) (.38%) .14%
Portfolio turnover rate (excluding short-term securities) 174% 226% 193% 143% 143%
Total return(e) 36.50% 8.40% (23.28%) (3.60%) 45.13%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
29 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) (.02) (.04) (.04) (.07) (.05)
Net gains (losses) (both realized and unrealized) 1.38 .31 (1.07) (.14) 1.54
Total from investment operations 1.36 .27 (1.11) (.21) 1.49
Net asset value, end of period $5.19 $3.83 $ 3.56 $4.67 $4.88
Ratios/supplemental data
Net assets, end of period (in millions) $72 $65 $73 $120 $130
Ratio of expenses to average daily net assets(c) 2.80% 2.83% 2.79% 2.60% 2.81%
Ratio of net investment income (loss)
to average daily net assets (.39%) (.95%) (.80%) (1.14%) (.63%)
Portfolio turnover rate (excluding short-term securities) 174% 226% 193% 143% 143%
Total return(e) 35.51% 7.58% (23.77%) (4.30%) 43.87%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
30 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) (.02) (.03) (.04) (.01)
Net gains (losses) (both realized and unrealized) 1.38 .31 (1.08) (.95)
Total from investment operations 1.36 .28 (1.12) (.96)
Net asset value, end of period $5.20 $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) 2.80% 2.85% 2.79% 2.60%(d)
Ratio of net investment income (loss)
to average daily net assets (.41%) (1.13%) (.63%) (2.06%)(d)
Portfolio turnover rate (excluding short-term securities) 174% 226% 193% 143%
Total return(e) 35.42% 7.87% (23.93%) (17.02%)(f)
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
31 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) .03 -- .01 (.01) .02
Net gains (losses) (both realized and unrealized) 1.45 .32 (1.12) (.15) 1.53
Total from investment operations 1.48 .32 (1.11) (.16) 1.55
Less distributions:
Dividends from net investment income -- -- -- -- (.01)
Net asset value, end of period $5.52 $4.04 $ 3.72 $4.83 $4.99
Ratios/supplemental data
Net assets, end of period (in millions) $18 $-- $-- $-- $--
Ratio of expenses to average daily net assets(c) 1.87% 1.59% 1.84% 1.66% 1.88%
Ratio of net investment income (loss)
to average daily net assets .54% .19% .21% (.29%) 1.18%
Portfolio turnover rate (excluding short-term securities) 174% 226% 193% 143% 143%
Total return(e) 36.63% 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.
- --------------------------------------------------------------------------------
32 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Independent Auditors' Report
THE BOARD AND SHAREHOLDERS
AXP GLOBAL SERIES, INC.
We have audited the accompanying statement of assets and liabilities of AXP
Emerging Markets Fund (a series of AXP Global Series, Inc.) as of October 31,
2003, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year period
ended October 31, 2003, and the financial highlights for each of the years in
the five-year period ended October 31, 2003. These financial statements and the
financial highlights are the responsibility of fund management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AXP
Emerging Markets Fund as of October 31, 2003, and the results of its operations,
changes in its net assets and the financial highlights for each of the periods
stated in the first paragraph above, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
December 12, 2003
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33 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Board Members and Officers
Shareholders elect a board that oversees the Fund's operations. The board
appoints officers who are responsible for day-to-day business decisions based
on policies set by the board.
The following is a list of the Fund's board members. Each member oversees 15
Master Trust portfolios and 86 American Express mutual funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the board.
Independent Board Members
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Arne H. Carlson Board member since Chair, Board Services
901 S. Marquette Ave. 1999 Corporation (provides
Minneapolis, MN 55402 administrative services to
Age 69 boards). Former Governor of
Minnesota
- ------------------------------------- -------------------- -------------------------------- ------------------------
Philip J. Carroll, Jr. Board member since Retired Chairman and CEO, Scottish Power PLC,
901 S. Marquette Ave. 2002 Fluor Corporation (engineering Vulcan Materials
Minneapolis, MN 55402 and construction) since 1998 Company, Inc.
Age 65 (construction
materials/chemicals)
- ------------------------------------- -------------------- -------------------------------- ------------------------
Livio D. DeSimone Board member Retired Chair of the Board and Cargill, Incorporated
30 Seventh Street East since 2001 Chief Executive Officer, (commodity merchants
Suite 3050 Minnesota Mining and and processors),
St. Paul, MN 55101-4901 Manufacturing (3M) General Mills, Inc.
Age 69 (consumer foods),
Vulcan Materials
Company (construction
materials/ chemicals),
Milliken & Company
(textiles and
chemicals), and Nexia
Biotechnologies, Inc.
- ------------------------------------- -------------------- -------------------------------- ------------------------
Heinz F. Hutter* Board member since Retired President and Chief
901 S. Marquette Ave. 1994 Operating Officer, Cargill,
Minneapolis, MN 55402 Incorporated (commodity
Age 74 merchants and processors)
- ------------------------------------- -------------------- -------------------------------- ------------------------
Anne P. Jones Board member since Attorney and Consultant
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 68
- ------------------------------------- -------------------- -------------------------------- ------------------------
Stephen R. Lewis, Jr.** Board member since Retired President and Valmont Industries,
901 S. Marquette Ave. 2002 Professor of Economics, Inc. (manufactures
Minneapolis, MN 55402 Carleton College irrigation systems)
Age 64
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alan G. Quasha Board member since President, Quadrant Compagnie Financiere
901 S. Marquette Ave. 2002 Management, Inc. (management Richemont AG (luxury
Minneapolis, MN 55402 of private equities) goods), Harken Energy
Age 53 Corporation (oil and
gas exploration) and
SIRIT Inc. (radio
frequency
identification
technology)
- ------------------------------------- -------------------- -------------------------------- ------------------------
* Interested person of AXP Partners International Aggressive Growth Fund
and AXP Partners Aggressive Growth Fund by reason of being a security
holder of J P Morgan Chase & Co., which has a 45% interest in American
Century Companies, Inc., the parent company of the subadviser of two of
the AXP Partners Funds, American Century Investment Management, Inc.
** Interested person of AXP Partners International Aggressive Growth Fund by
reason of being a security holder of FleetBoston Financial Corporation,
parent company of Columbia Wanger Asset Management, L.P., one of the
fund's subadvisers.
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34 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
Independent Board Members (continued)
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alan K. Simpson Board member since Former three-term United Biogen, Inc.
1201 Sunshine Ave. 1997 States Senator for Wyoming (biopharmaceuticals)
Cody, WY 82414
Age 71
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alison Taunton-Rigby Board member since President, Forester Biotech
901 S. Marquette Ave. 2002 since 2000. Former President
Minneapolis, MN 55402 and CEO, Aquila
Age 59 Biopharmaceuticals, Inc.
- ------------------------------------- -------------------- -------------------------------- ------------------------
Board Members Affiliated with AEFC***
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Barbara H. Fraser Board member since Executive Vice President -
1546 AXP Financial Center 2002 AEFA Products and Corporate
Minneapolis, MN 55474 Marketing of AEFC since 2002.
Age 53 President - Travelers Check
Group, American Express
Company, 2001-2002. Management
Consultant, Reuters,
2000-2001. Managing Director -
International Investments,
Citibank Global, 1999-2000.
Chairman and CEO, Citicorp
Investment Services and
Citigroup Insurance Group,
U.S., 1998-1999
- ------------------------------------- -------------------- -------------------------------- ------------------------
Stephen W. Roszell Board membersince Senior Vice President -
50238 AXP Financial Center 2002, Institutional Group of AEFC
Minneapolis, MN 55474 Vice President
Age 54 since 2002
- ------------------------------------- -------------------- -------------------------------- ------------------------
William F. Truscott Board member since Senior Vice President - Chief
53600 AXP Financial Center 2001, Investment Officer of AEFC
Minneapolis, MN 55474 Vice President since 2001. Former Chief
Age 42 since 2002 Investment Officer and
Managing Director, Zurich
Scudder Investments
- ------------------------------------- -------------------- -------------------------------- ------------------------
*** Interested person by reason of being an officer, director and/or employee
of AEFC.
- --------------------------------------------------------------------------------
35 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL REPORT
The board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the board. In addition to Mr. Roszell, who is vice president, and
Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers
Name, address, age Position held Principal occupation during Other directorships
with Fund and past five years
length of service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Jeffrey P. Fox Treasurer since Vice President - Investment
50005 AXP Financial Center 2002 Accounting, AEFC, since 2002;
Minneapolis, MN 55474 Vice President - Finance,
Age 48 American Express Company,
2000-2002; Vice President -
Corporate Controller, AEFC,
1996-2000
- ------------------------------------- -------------------- -------------------------------- ------------------------
Paula R. Meyer President since Senior Vice President and
596 AXP Financial Center 2002 General Manager - Mutual
Minneapolis, MN 55474 Funds, AEFC, since 2002; Vice
Age 49 President and Managing
Director - American Express
Funds, AEFC, 2000-2002; Vice
President, AEFC, 1998-2000
- ------------------------------------- -------------------- -------------------------------- ------------------------
Leslie L. Ogg Vice President, President of Board Services
901 S. Marquette Ave. General Counsel, Corporation
Minneapolis, MN 55402 and Secretary
Age 65 since 1978
- ------------------------------------- -------------------- -------------------------------- ------------------------
The SAI has additional information about the Fund's directors and is available,
without charge, upon request by calling (800) 862-7919.
Proxy Voting
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
(800) 862-7919; by looking at the Web site americanexpress.com/funds; or by
searching the Web site of the Securities and Exchange Commission
http://www.sec.gov. Beginning Jan. 1, 2004, you may view the Fund's voting
record for all portfolio companies whose shareholders meetings were completed
the previous quarter on americanexpress.com/funds or obtain a copy by calling
the Fund's administrator, Board Services Corporation, collect at (612) 330-9283.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available at
http://www.sec.gov.
- --------------------------------------------------------------------------------
36 -- AXP EMERGING MARKETS FUND -- 2003 ANNUAL 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
Annual Report
for the Period Ended
Oct. 31, 2003
AXP Global Balanced Fund seeks to provide shareholders with a balance of growth
of capital and current income.
- --------------------------------------------------------------------------------
(logo) (logo)
American AMERICAN
Express EXPRESS
Funds (R)
- --------------------------------------------------------------------------------
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
The Fund's Long-term Performance 10
Investments in Securities 11
Financial Statements 16
Notes to Financial Statements 19
Independent Auditors' Report 30
Federal Income Tax Information 31
Board Members and Officers 32
Proxy Voting 34
- --------------------------------------------------------------------------------
2 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Fund Snapshot AS OF OCT. 31, 2003
PORTFOLIO MANAGERS
Portfolio manager Since Years in industry
Equity portion
Alex Lyle* 10/03 23
Stephen Thornber* 10/03 16
Portfolio manager Since Years in industry
Fixed income portion
Nic Pifer** 2/03 13
* The Fund is managed by a team led by Alex Lyle and Stephen Thornber.
** The Fund is managed by a team led by Nic Pifer.
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 $92.8 million
Number of holdings 142
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
Equities
STYLE
VALUE BLEND GROWTH
X LARGE
X MEDIUM SIZE
X SMALL
Bonds
DURATION
SHORT INT. LONG
X HIGH
X MEDIUM QUALITY
LOW
COUNTRY COMPOSITION
Percentage of portfolio assets
(pie chart)
United States 38.4%
Germany 10.0%
United Kingdom 8.3%
Italy 6.8%
France 6.2%
Japan 5.2%
Switzerland 3.9%
Austria 3.7%
Canada 2.4%
China 1.7%
South Korea 1.6%
Australia 1.3%
Denmark 1.2%
Mexico 1.2%
Norway 1.2%
Sweden 1.1%
Bermuda 1.0%
Other* 4.8%
* Includes Barbados, Brazil, Finland, Hong Kong, Ireland, Netherlands,
Supra-National and Taiwan.
TOP TEN HOLDINGS
Percentage of portfolio assets
Buoni Poliennali Del Tes (Italy)
4.25% 2009 4.2%
Oesterreich Kontrollbank (Austria)
1.80% 2010 3.7
Govt of France (France)
5.50% 2010 2.5
Bundesrepublik Deutschland (Germany)
6.50% 2027 2.3
Govt of France (France)
4.00% 2009 2.0
Federal Natl Mtge Assn (United States)
6.00% 2011 1.9
Bundesrepublik Deutschland (Germany)
5.25% 2008 1.8
Citigroup (United States) 1.4
United Kingdom Treasury (United Kingdom)
8.50% 2005 1.4
Procter & Gamble (United States) 1.4
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 ANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
On Oct. 20, 2003, Threadneedle investment professionals began managing American
Express Funds global and international equity funds. At that time responsibility
for asset allocation decisions and the equity portion of the AXP Global Balanced
Fund moved to Threadneedle. The team that manages the Fund is led by Alex Lyle,
who is responsible for asset allocation and Stephen Thornber, who is responsible
for the equity portion. Nic Pifer, located in Minneapolis, is responsible for
the Fund's fixed-income securities. Below is a discussion of the Fund's results
and changes in positioning since the start of the current fiscal year.
Q: How did AXP Global Balanced Fund perform for the fiscal year ended Oct. 31,
2003?
A: AXP Global Balanced Fund gained 16.91% (Class A, excluding sales charge)
for the 12 months ended Oct. 31, 2003. The Fund underperformed its equity
benchmark, the MSCI All Country World Free Index, which returned 25.25%
for the 12-month period. The CitiGroup World Government Bond Index, the
benchmark for the fixed income component of the Fund, increased 14.28%
for the period. The Fund underperformed the Lipper Global Flexible Funds
Index, representing the Fund's peer group, which rose 20.69% over the
same time frame.
(bar chart)
PERFORMANCE COMPARISON
For the year ended Oct. 31, 2003
30%
(bar 2)
25% +25.25%
(bar 4)
20% (bar 1) +20.69%
+16.91% (bar 3)
15% +14.28%
10%
5%
0%
(bar 1) AXP Global Balanced Fund Class A (excluding sales charge)
(bar 2) MSCI All Country World Free Index (unmanaged)
(bar 3) CitiGroup World Government Bond Index (unmanaged)
(bar 4) Lipper European Funds Index
(see "The Fund's Long-term Performance" for Index descriptions)
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 ANNUAL REPORT
Questions & Answers
(begin callout quote)> Later in the reporting period, the Fund was repositioned
to put focus on areas that could benefit from improvements in the global
economy.(end callout quote)
Q: How did your team balance asset allocation between stocks and bonds?
A: For most of the fiscal year, the Fund had a larger position in equities
than most funds in its peer group. We had an above average position in
stocks because:
o Global growth is becoming more evident. Recent economic statistics,
such as revised GDP numbers for most of the major regions, are quite
encouraging.
o Earnings numbers are also being increased, and we have had good
reporting seasons in all major markets.
AVERAGE ANNUAL TOTAL RETURNS
as of Oct. 31, 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)
1 year +16.91% +10.19% +15.96% +11.96% +16.29% +16.29% +17.32% +17.32%
5 years -0.03% -1.21% -0.79% -0.96% N/A N/A +0.20% +0.20%
Since inception +2.63% +1.76% +1.85% +1.85% -7.31% -7.31% +2.84% +2.84%
as of Sept. 30, 2003
1 year +18.34% +11.54% +17.36% +13.36% +17.45% +17.45% +18.75% +18.75%
5 years +0.44% -0.74% -0.30% -0.47% N/A N/A +0.69% +0.69%
Since inception +2.25% +1.37% +1.49% +1.49% -8.29% -8.29% +2.46% +2.46%
(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/funds for current information.
- --------------------------------------------------------------------------------
5 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Questions & Answers
Below, Portfolio Manager Alex Lyle discusses the positioning of the equity
portion of AXP Global Balanced Fund.
Q: What factors significantly affected performance during the annual period?
A: Throughout most of the 12-month period, the Fund was managed quite
defensively. At the start of the fiscal year, uncertainty associated with
the pending conflict in Iraq, led to extreme market volatility. The
Fund's risk profile was reduced in anticipation of war. In March, the
toppling of Saddam Hussein from power occurred more quickly than
anticipated, and this helped generate a dramatic market rally. However,
the Fund maintained a defensive stance based on caution that the economic
recovery -- which had been on again, off again for some time -- would not
be sustained.
The sharp rally that followed the war in Iraq favored mid- and small-cap
stocks. Many of these smaller capitalization stocks were gaining favor due
to recovery stories of their own. Because the Fund was defensively
positioned and invested in mostly large cap stocks, the portfolio did not
fully benefit from this substantial rally.
Throughout most of the fiscal year, the Fund had a lower than benchmark
position in Europe. European stocks were weak early in the fiscal year, but
bounced back sharply in March and continued to perform well through the end
of period. The Fund's low weighting in Europe hurt performance.
Moreover, early in the period in Japan, small cap stocks outperformed their
benchmark by about 25%, as pension plans sold their large-cap holdings to
raise cash to return to the Japanese government. However, the Fund's large
cap bias hindered participation in this significant Japanese market rally.
Q: What changes were made to the equity portion of the Portfolio since
Oct. 20, 2003?
A: Changes we have made to the Fund include:
o Reducing the Fund's significant position in very large cap stocks --
Reducing the overweight in large cap stocks was probably the most
significant change to the Fund. When we took over the Fund, it was
extremely overweight in large companies with market capitalizations
greater than $50 billion. We brought the market cap bias down
considerably by the end of the period.
- --------------------------------------------------------------------------------
6 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Questions & Answers
o Adding more mid-cap stocks -- Unlike large company stocks, mid cap
stocks, as well as small cap stocks, are nimble when the economy is
picking up. Mid cap stocks afford opportunities to gain exposure to
niche growth markets and valuations remain attractive even after
periods of outperformance.
o Adding more emerging markets stocks -- For some time, the
Threadneedle team has been bullish on Asia (with the exception of
Japan) and Latin America. We believe Asia has attractive growth rates
and cheap valuations. Latin America also has cheap valuations and its
growth is leveraged to the U.S. economic recovery. We wanted the Fund
to have a more active position in these areas, so we increased the
overweight in the Far East (with the exception of Japan) and Latin
American emerging markets.
o Having a strong cyclical focus -- We are optimistic about global growth
and have, for that reason, skewed the Fund toward cyclical stocks.
Historically, cyclical stocks benefit from a growing global economy. We
have a greater than index position in materials, health care and
financials sectors. On the other hand, we have lower than index
positions in energy, industrials, and telecommunications.
o Changing some allocations -- We added slightly to the Fund's position
in Europe. Europe has some attractive opportunities, although its
economic recovery has lagged the United States and Asia. We reduced our
position in the United States and Japan. Both of these nations'
economies continue to improve, but valuations were too high.
Q: How are you positioning the equity portion of the Fund for the months
ahead?
A: We significantly repositioned the Fund over the last two weeks of the
reporting period and continue to make some changes, which should be
completed by the end of November. We have a positive view regarding
global equities, and we believe that the Fund is now poised to
participate fully as the global economic recovery strengthens.
Traditionally, strong rallies occur when the economy is recovering, and
we believe the Fund, with its mid-cap bias and well-defined allocation
strategy is now positioned to fully participate in future rallies.
- --------------------------------------------------------------------------------
7 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Questions & Answers
Below, Nic Pifer, AXP Global Balanced Fund's portfolio manager in Minneapolis,
discusses the fixed income's positioning and results for the 2003 fiscal year.
Q: What factors most significantly affected fixed-income performance during
the annual period?
A: Two factors helped the Fund generate competitive results relative to its
fixed-income benchmark during the 12 months -- currency positioning and
country allocation.
Currencies: The Fund had a higher than benchmark position in the euro and
the dollar bloc currencies such as the Canadian and Australian dollars. The
Fund had a lower than benchmark position in Japanese yen, which
underperformed during the annual period. This strategy worked well for the
Fund throughout the year. On an absolute basis, the falling dollar
increased the value of many of our foreign currency denominated
investments.
Country allocation: The Fund's strong position in the core European debt
markets and modest position in the Japanese bond market helped the Fund's
performance.
Q: What changes did you make to the fixed-income portion of Fund and how is
it currently positioned?
A: We did not make any significant changes during the period in terms of
portfolio duration or country and currency weightings. However, we
constantly reassessed the issues we owned and made relative value
adjustments to the Fund.
The fixed income portion of the Fund invests primarily in government bonds
and high quality substitutes, such as agency securities or other national
issues. Keep in mind that risk requires constant monitoring. We strive to
add value for shareholders through our active management of this global
bond portfolio.
Q: How do you intend to manage the fixed-income portion of the Fund in the
coming months?
A: There are some strong cross-currents in the global market. Global
recovery, interest rates and currencies will all have some effect on the
Fund.
Global recovery: An increase in economic activity is evident in the U.S.,
Europe, Asia and even in Japan. It has been slow to blossom, but we believe
that the global economy is out of the doldrums and is selectively
accelerating.
- --------------------------------------------------------------------------------
8 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Questions & Answers
Interest rates: Current low interest rates, together with the stimulus
effects of tax cuts, point to stronger U.S. economic growth in the first
half of 2004. However, the sustainability of such economic recovery in the
U.S., as well as globally, remains uncertain. Given all of the easing that
we experienced over the past few years, short-term rates in most major
markets are at historically low levels. If the economic recovery proves
durable, short-term will need to rise. However, the U.S. Federal Open
Market Committee (FOMC) has indicated that it will keep rates at low levels
for some time -- at least through mid-2004, in our view. The European
Central Bank is expected to follow suit. Japan is expected to maintain
interest rates close to 0% for the foreseeable future. With global banks on
hold for the time being, we expect global bond yields to move broadly
sideways in the near term and we have positioned the Fund's duration close
to the index level as a result. Looking further ahead, we expect bonds to
rise as the global recovery gains traction. In anticipation of rising
yields, we will be looking for opportunities to reduce the Fund's interest
rate risk by shortening duration.
Currency. The United States now has a substantial current account deficit
of more than 5% of GDP. This creates an enormous financing need every year
for the U.S. In order to finance its current account deficit, the U.S.
needs to attract nearly $2 billion of foreign capital per day just to keep
the dollar steady. This is a very tall order, and in our view cannot be
sustained. Therefore, we expect the dollar to weaken further in the year
ahead, which would benefit the Fund by increasing the value of its foreign
bond holdings.
- --------------------------------------------------------------------------------
9 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
The Fund's Long-term Performance
This chart illustrates the total value of an assumed $10,000 investment in AXP
Global Balanced Fund Class A shares (from 12/1/96 to 10/31/03) as compared to
the performance of three widely cited performance indices, Morgan Stanley
Capital International (MSCI) All Country World Free Index, CitiGroup World
Government Bond Index and the Lipper Global Flexible Funds Index. In comparing
the Fund's Class A shares to these indices, you should take into account the
fact that the Fund's performance reflects the maximum sales charge of 5.75%,
while such charges are not reflected in the performance of the indices. Returns
for the Fund include the reinvestment of any distribution paid during each
period.
Past performance is no guarantee of future results. Your investment and return
values fluctuate so that your shares, when redeemed, may be worth more or less
than the original cost. Returns do not reflect taxes payable on distributions
and redemptions. Also see "Past Performance" in the Fund's current prospectus.
(line chart)
VALUE OF A HYPOTHETICAL $10,000 INVESTMENT
IN AXP GLOBAL BALANCED FUND
AXP Global Balanced Fund Class A $9,425 $10,188 $11,310 $13,103 $13,446 $10,672 $9,660 $11,294
MSCI All Country World Free Index(1)(unmanaged) $10,000 $11,018 $12,454 $15,694 $15,820 $11,841 $10,234 $12,818
CitiGroup World Government Bond Index(2)(unmanaged) $10,000 $10,128 $11,399 $11,119 $10,554 $11,492 $12,544 $14,335
Lipper Global Flexible Funds Index(3) $10,000 $11,100 $11,441 $13,557 $14,763 $12,758 $11,906 $14,369
12/1/96 10/03 10/98 10/99 10/00 10/03 10/03 10/03
(1) Morgan Stanley Capital International (MSCI) All Country World Free Index,
an unmanaged index of equity securities, 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) CitiGroup World Government Bond Index, an unmanaged market capitalization
weighted benchmark, tracks the performance of the 17 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) 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.
Average Annual Total Returns
Class A with Sales Charge as of Oct. 31, 2003
1 year +10.19%
5 years -1.21%
Since inception (11/13/96) +1.76%
Results for other share classes can be found on page 5.
- --------------------------------------------------------------------------------
10 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Investments in Securities
AXP Global Balanced Fund
Oct. 31, 2003
(Percentages represent value of investments compared to net assets)
Common stocks (63.7%)(c)
Issuer Shares Value(a)
Australia (0.6%)
Metals
BHP Billiton 66,120 $549,849
Barbados (0.3%)
Energy equipment & services
Nabors Inds 8,344(b) 315,403
Bermuda (0.9%)
Insurance (0.5%)
RenaissanceRe Holdings 9,900 445,302
Multi-industry conglomerates (0.4%)
Accenture Cl A 18,221(b) 426,371
Brazil (0.8%)
Metals (0.3%)
Companhia Vale do Rio Doce ADR 7,514 303,566
Paper & packaging (0.5%)
Aracruz Celulose ADR 16,255 456,766
Canada (0.5%)
Energy
EnCana 13,919 478,065
China (1.7%)
Multi-industry (0.7%)
Swire Pacific Cl A 100,000 610,376
Real estate investment trust (0.5%)
Henderson Land Development 112,000 470,170
Retail -- general (0.5%)
Esprit Holdings 154,500 485,442
Finland (0.5%)
Machinery
Kone Cl B 8,570 447,820
France (1.6%)
Computer software & services (0.3%)
Atos Origin 4,781(b) 319,024
Energy (0.8%)
Total 4,278 664,913
Telecom equipment & services (0.5%)
Alcatel 37,939 500,581
Germany (1.7%)
Automotive & related (0.8%)
Porsche 1,567 769,678
Computer software & services (0.6%)
T-Online Intl 39,579(b) 512,098
Textiles & apparel (0.3%)
Puma AG Rudolf Dassler Sport 2,026 295,534
Hong Kong (0.5%)
Real estate (0.5%)
Sun Hung Kai Properties 58,000 491,070
Ireland (0.5%)
Banks and savings & loans
Anglo Irish Bank 39,838 478,400
Italy (1.4%)
Banks and savings & loans (0.4%)
UniCredito Italiano 76,708 378,094
Energy (0.5%)
Eni 28,801 457,353
Retail -- general (0.5%)
Bulgari 53,738 486,020
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
11 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Japan (5.1%)
Automotive & related (0.5%)
Toyota Motor 15,000 $427,071
Cellular telecommunications (0.4%)
NTT DoCoMo 187 404,839
Chemicals (0.5%)
Shin-Etsu Chemical 11,800 439,005
Electronics (0.5%)
Seiko Epson 13,800 497,094
Financial services (0.5%)
Nomura Holdings 26,000 446,518
Health care products (0.4%)
Chugai Pharmaceutical 23,700 337,601
Industrial transportation (0.5%)
East Japan Railway 100 452,995
Media (0.4%)
Tokyo Broadcasting System 26,000 416,482
Multi-industry (1.4%)
Canon 16,000 774,276
Mitsubishi 47,000 487,806
Total 1,262,082
Mexico (1.1%)
Beverages & tobacco (0.3%)
Coca-Cola Femsa ADR 14,287(b) 288,597
Cellular telecommunications (0.5%)
America Movil ADR Series L 18,792 447,249
Financial services (0.3%)
Grupo Financiero BBVA Bancomer Cl B 383,632(b) 324,230
Netherlands (0.8%)
Food (0.4%)
Koninklijke Numico 15,718(b) 354,663
Utilities -- telephone (0.4%)
Koninklijke (Royal) 46,859(b) 356,257
South Korea (1.5%)
Electronics
LG Electronics 10,790 558,874
Samsung Electronics 2,190 869,708
Total 1,428,582
Sweden (1.1%)
Building materials & construction (0.5%)
SKF AB Cl B 13,585 480,648
Insurance (0.6%)
Skandia Forsakrings 136,769 501,432
Switzerland (3.8%)
Banks and savings & loans (1.4%)
Credit Suisse Group 17,853 629,036
UBS 11,803 724,788
Total 1,353,824
Health care products (1.2%)
Actelion 3,330(b) 316,703
Nobel Biocare Holding 3,247 288,141
Synthes-Stratec 508 466,401
Total 1,071,245
Insurance (0.7%)
Swiss Life Holding 4,011(b) 680,340
Multi-industry (0.5%)
Adecco 7,411 437,051
Taiwan (0.6%)
Electronics
Taiwan Semiconductor Mfg 305,440 602,339
United Kingdom (6.8%)
Banks and savings & loans (1.2%)
Barclays 35,668 300,818
Standard Chartered 47,297 756,456
Total 1,057,274
Cellular telecommunications (0.3%)
Vodafone Group 132,980 279,255
Energy (0.5%)
BP 64,735 449,295
Financial services (1.2%)
HSBC Holdings 69,458 1,043,121
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
12 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
United Kingdom (cont.)
Health care products (1.0%)
AstraZeneca 13,282 $623,876
GlaxoSmithKline 15,118 323,759
Total 947,635
Media (0.5%)
United Business Media 53,101 418,109
Metals (0.5%)
Rio Tinto 20,273 491,608
Retail -- grocery (1.0%)
Tesco 103,030 413,052
William Morrison Supermarkets 126,430 480,581
Total 893,633
Telecom equipment & services (0.6%)
mm02 543,992(b) 590,802
United States (31.9%)
Aerospace & defense (1.9%)
Boeing 23,090 888,734
United Technologies 10,644 901,440
Total 1,790,174
Banks and savings & loans (3.2%)
Bank of America 5,584 422,876
North Fork Bancorporation 16,370 638,103
U.S. Bancorp 24,115 656,410
Wachovia 15,048 690,251
Wells Fargo 8,948 503,951
Total 2,911,591
Beverages & tobacco (0.7%)
PepsiCo 12,851 614,535
Broker dealers (0.7%)
Morgan Stanley 11,694 641,650
Cable (0.9%)
Comcast Cl A 23,848(b) 808,924
Chemicals (0.3%)
Ecolab 11,397 306,465
Computer hardware (2.4%)
Cisco Systems 26,450(b) 554,921
Dell 33,778(b) 1,220,062
EMC 32,797(b) 453,910
Total 2,228,893
Computer software & services (3.1%)
BEA Systems 29,986(b) 416,805
First Data 15,707 560,740
Intl Business Machines 3,171 283,741
Microsoft 40,396 1,056,356
Siebel Systems 38,691(b) 487,120
Total 2,804,762
Electronics (1.6%)
Intel 33,043 1,092,072
Lam Research 13,806(b) 396,784
Total 1,488,856
Energy (1.0%)
EOG Resources 7,382 311,077
Exxon Mobil 15,909 581,951
Total 893,028
Finance companies (1.4%)
Citigroup 27,375 1,297,575
Financial services (0.3%)
SLM 7,852 307,484
Food (0.5%)
Wrigley (Wm) Jr 8,255 465,582
Health care products (3.8%)
Amgen 9,757(b) 602,592
Gilead Sciences 6,965(b) 380,150
Johnson & Johnson 17,095 860,391
Lilly (Eli) 4,024 268,079
Pfizer 9,461 298,968
St. Jude Medical 8,752(b) 509,016
Zimmer Holdings 8,725(b) 556,742
Total 3,475,938
Health care services (0.5%)
WellPoint Health Networks 4,808(b) 427,431
Household products (1.9%)
Colgate-Palmolive 10,728 570,622
Procter & Gamble 12,475 1,226,168
Total 1,796,790
Insurance (0.5%)
American Intl Group 8,056 490,046
Leisure time & entertainment (0.8%)
Carnival 22,587 788,512
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
13 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
United States (cont.)
Media (0.6%)
Fox Entertainment Group Cl A 20,706(b) $573,557
Metals (0.5%)
Phelps Dodge 8,219(b) 507,441
Multi-industry (1.9%)
3M 11,047 871,277
General Electric 15,073 437,268
Weight Watchers Intl 11,361(b) 419,221
Total 1,727,766
Precious metals (0.5%)
Freeport McMoRan Cooper & Gold Cl B 12,641 489,839
Retail -- general (1.4%)
Staples 26,747(b) 717,355
Wal-Mart Stores 10,455 616,322
Total 1,333,677
Telecom equipment & services (0.6%)
Motorola 43,355 586,593
Utilities -- electric (0.4%)
Cinergy 9,221 334,815
Utilities -- telephone (0.5%)
SBC Communications 18,753 449,698
Total common stocks
(Cost: $55,403,921) $59,064,393
Preferred stock (0.7%)(c)
Issuer Shares Value(a)
Germany
ProSiebenSat.1 Media 43,809 $674,796
Total preferred stock
(Cost: $640,174) $674,796
Bonds (32.2%)(c)
Issuer Coupon Principal Value(a)
rate amount
Australia (0.6%)
New South Wales Treasury
(Australian Dollar)
04-01-04 7.00% 600,000 $428,962
03-01-08 8.00 200,000 154,273
Total 583,235
Austria (3.6%)
Oesterreich Kontrollbank
(Japanese Yen)
03-22-10 1.80 347,000,000 3,328,216
Canada (1.8%)
Govt of Canada
(Canadian Dollar)
02-01-06 7.00 720,000 600,265
06-01-08 6.00 800,000 655,951
Province of British Columbia
(Canadian Dollar)
12-01-06 5.25 500,000 396,415
Total 1,652,631
Denmark (1.2%)
Kingdom of Denmark
(Danish Krone)
11-15-04 4.00 615,000 97,669
08-15-05 5.00 6,000,000 973,576
Total 1,071,245
France (4.3%)
Govt of France
(European Monetary Unit)
10-25-09 4.00 1,500,000 1,757,747
04-25-10 5.50 1,800,000 2,276,797
Total 4,034,544
Germany (7.1%)
Allgemeine Hypo Bank
(European Monetary Unit)
09-02-09 5.00 850,000 1,039,674
Bundesrepublik Deutschland
(European Monetary Unit)
01-05-06 6.00 150,000 185,696
01-04-08 5.25 1,285,000 1,594,941
07-04-08 4.75 725,000 887,908
07-04-10 5.25 250,000 311,999
06-20-16 6.00 434,598 575,380
07-04-27 6.50 1,475,000 2,078,004
Total 6,673,602
Italy (5.1%)
Buoni Poliennali Del Tes
(European Monetary Unit)
11-01-09 4.25 3,200,000 3,792,774
11-01-29 5.25 800,000 952,655
Total 4,745,429
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
14 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
Norway (1.2%)
Govt of Norway
(Norwegian Krone)
11-30-04 5.75% 2,350,000 $341,730
05-15-09 5.50 5,000,000 740,162
Total 1,081,892
Supra-National (0.6%)
Intl Bank Reconstruction & Development
(Japanese Yen)
02-18-08 2.00 55,000,000 531,196
United Kingdom (1.4%)
Greater Beijing First Expressways
(U.S. Dollar) Sr Nts
06-15-07 9.50 170,000(b,d) 3,400
United Kingdom Treasury
(British Pound)
12-07-05 8.50 700,000 1,279,694
Total 1,283,094
United States (5.3%)
Citicorp
(Deutsche Mark)
09-19-09 6.25 1,000,000 650,900
ConocoPhillips
(U.S. Dollar)
03-15-28 7.13 200,000 209,403
Federal Natl Mtge Assn
(U.S. Dollar)
05-15-11 6.00 1,520,000 1,675,689
Intl Paper
(European Monetary Unit)
08-11-06 5.38 560,000 675,317
U.S. Treasury
(U.S. Dollar)
02-15-06 5.63 500,000 540,762
08-15-13 4.25 937,000 933,336
02-15-26 6.00 169,000 185,649
Total 4,871,056
Total bonds
(Cost: $24,963,866) $29,856,140
Total investments in securities
(Cost: $81,007,961)(e) $89,595,329
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) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at Oct. 31, 2003, is as follows:
Security Acquisition Cost
dates
Greater Beijing First Expressways
(U.S. Dollar) 9.50% Sr Nts 2007 06-12-97 $57,064
(e) At Oct. 31, 2003, the cost of securities for federal income tax purposes
was $81,141,664 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $9,193,628
Unrealized depreciation (739,963)
--------
Net unrealized appreciation $8,453,665
----------
- --------------------------------------------------------------------------------
15 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Balanced Fund
Oct. 31, 2003
Assets
Investments in securities, at value (Note 1)
(identified cost $81,007,961) $ 89,595,329
Cash in bank on demand deposit 627,987
Foreign currency holdings (identified cost $1,923,950) (Note 1) 1,921,294
Capital shares receivable 2,356
Dividends and accrued interest receivable 606,620
Receivable for investment securities sold 94,082
Unrealized appreciation on foreign currency contracts held, at value (Note 5) 18,784
------
Total assets 92,866,452
----------
Liabilities
Accrued investment management services fee 2,012
Accrued distribution fee 1,281
Accrued service fee 18
Accrued transfer agency fee 732
Accrued administrative services fee 153
Other accrued expenses 85,075
------
Total liabilities 89,271
------
Net assets applicable to outstanding capital stock $ 92,777,181
============
Represented by
Capital stock -- $.01 par value (Note 1) $ 197,128
Additional paid-in capital 131,340,507
Excess of distributions over net investment income (43,245)
Accumulated net realized gain (loss) (Note 7) (47,335,816)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (Note 5) 8,618,607
---------
Total -- representing net assets applicable to outstanding capital stock $ 92,777,181
============
Net assets applicable to outstanding shares: Class A $ 52,801,832
Class B $ 32,772,150
Class C $ 644,336
Class Y $ 6,558,863
Net asset value per share of outstanding capital stock: Class A shares 11,154,470 $ 4.73
Class B shares 7,041,576 $ 4.65
Class C shares 138,932 $ 4.64
Class Y shares 1,377,777 $ 4.76
--------- ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
16 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Statement of operations
AXP Global Balanced Fund
Year ended Oct. 31, 2003
Investment income
Income:
Dividends $ 1,098,991
Interest 1,395,698
Fee income from securities lending (Note 3) 379
Less foreign taxes withheld (86,876)
-------
Total income 2,408,192
---------
Expenses (Note 2):
Investment management services fee 702,933
Distribution fee
Class A 130,201
Class B 337,140
Class C 7,203
Transfer agency fee 260,952
Incremental transfer agency fee
Class A 15,448
Class B 15,873
Class C 300
Service fee -- Class Y 4,903
Administrative services fees and expenses 56,559
Compensation of board members 7,891
Custodian fees 40,425
Printing and postage 68,988
Registration fees 46,570
Audit fees 19,500
Other 5,854
-----
Total expenses 1,720,740
Earnings credits on cash balances (Note 2) (98)
---
Total net expenses 1,720,642
---------
Investment income (loss) -- net 687,550
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (1,825,063)
Foreign currency transactions (487,073)
--------
Net realized gain (loss) on investments (2,312,136)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 15,670,500
----------
Net gain (loss) on investments and foreign currencies 13,358,364
----------
Net increase (decrease) in net assets resulting from operations $14,045,914
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
17 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Statements of changes in net assets
AXP Global Balanced Fund
Year ended Oct. 31, 2003 2002
Operations and distributions
Investment income (loss) -- net $ 687,550 $ 1,285,246
Net realized gain (loss) on investments (2,312,136) (10,651,422)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 15,670,500 (2,044,378)
---------- ----------
Net increase (decrease) in net assets resulting from operations 14,045,914 (11,410,554)
---------- -----------
Distributions to shareholders from:
Net investment income
Class A (444,097) (398,116)
Class B -- (62,042)
Class C (2) (1,400)
Class Y (55,350) (16,493)
------- -------
Total distributions (499,449) (478,051)
-------- --------
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 8,267,331 23,355,046
Class B shares 3,172,163 5,643,206
Class C shares 163,435 437,256
Class Y shares 3,877,067 3,051,849
Reinvestment of distributions at net asset value
Class A shares 426,497 380,548
Class B shares -- 60,167
Class C shares 2 1,391
Class Y shares 55,338 16,486
Payments for redemptions
Class A shares (17,397,690) (42,926,054)
Class B shares (Note 2) (10,981,624) (18,768,163)
Class C shares (Note 2) (338,285) (187,066)
Class Y shares (1,696,600) (1,568,467)
---------- ----------
Increase (decrease) in net assets from capital share transactions (14,452,366) (30,503,801)
----------- -----------
Total increase (decrease) in net assets (905,901) (42,392,406)
Net assets at beginning of year 93,683,082 136,075,488
---------- -----------
Net assets at end of year $ 92,777,181 $ 93,683,082
============ ============
Undistributed (excess of distributions over) net investment income $ (43,245) $ 128,128
------------ ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
18 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Notes to Financial Statements
AXP Global Balanced Fund
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.
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. American Express Financial
Corporation (AEFC) may use fair value if a security's value has been materially
affected by events after the close of the primary exchanges or markets on which
the security is traded and before the NAV is calculated. The fair value of a
security may be different from the quoted or published price. AEFC will price a
security at fair value in accordance with procedures adopted by the Fund and
board if a reliable market quotation is not readily available. 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.
- --------------------------------------------------------------------------------
19 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
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.
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.
- --------------------------------------------------------------------------------
20 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL 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 Oct. 31, 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.
Illiquid Securities
As of Oct. 31, 2003, investments in securities included issues that are illiquid
which the Fund currently limits to 10% of net assets, at market value, at the
time of purchase. The aggregate value of such securities as of Oct. 31, 2003 was
$3,400 representing .004% 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.
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.
- --------------------------------------------------------------------------------
21 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
On the statement of assets and liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by $359,474
and accumulated net realized loss has been decreased by $388,654 resulting in a
net reclassification adjustment to decrease paid-in capital by $29,180.
The tax character of distributions paid for the years indicated is as follows:
Year ended Oct. 31, 2003 2002
Class A
Distributions paid from:
Ordinary income $444,097 $398,116
Long-term capital gain -- --
Class B
Distributions paid from:
Ordinary income -- 62,042
Long-term capital gain -- --
Class C
Distributions paid from:
Ordinary income 2 1,400
Long-term capital gain -- --
Class Y
Distributions paid from:
Ordinary income 55,350 16,493
Long-term capital gain -- --
As of Oct. 31, 2003, the components of distributable earnings on a tax basis are
as follows:
Undistributed ordinary income $ --
Accumulated long-term gain (loss) $(47,202,112)
Unrealized appreciation (depreciation) $ 8,441,658
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, market discount and original issue
discount using the effective interest method, is accrued daily.
- --------------------------------------------------------------------------------
22 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
2. EXPENSES AND SALES CHARGES
The Fund has agreements with 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, changing the
maximum adjustment to 0.08% 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 $19,267
for the year ended Oct. 31, 2003.
AEFC has a Subadvisory Agreement with American Express Asset Management
International Inc. (AEAMI), a wholly owned subsidiary of AEFC. Investment
decisions for the Fund are made by a team of seasoned investment professionals
at Threadneedle Asset Management Limited (Threadneedle) who are associated with
AEAMI. Threadneedle is also a wholly-owned subsidiary of AEFC.
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 deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
American Express mutual funds. The Fund's liability for these amounts is
adjusted for market value changes and remains in the Fund until distributed in
accordance with the Plan.
- --------------------------------------------------------------------------------
23 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $19.50
o Class B $20.50
o Class C $20.00
o Class Y $17.50
The incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the fee for Class Y.
In addition, there is an annual closed-account fee of $5 per inactive account,
charged on a pro rata basis from the date the account becomes inactive until the
date the account is purged from the transfer agent system generally within one
year. However, the closed account fee is not being charged to the Fund until a
new transfer agency system is installed.
Under terms of a prior agreement that ended April 30, 2003, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $19 for Class
A, $20 for Class B, $19.50 for Class C and $17 for Class Y.
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
$96,955 for Class A, $25,918 for Class B and $44 for Class C for the year ended
Oct. 31, 2003.
During the year ended Oct. 31, 2003, the Fund's custodian and transfer agency
fees were reduced by $98 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 $79,565,605 and $94,336,428, respectively, for the year
ended Oct. 31, 2003. Realized gains and losses are determined on an identified
cost basis.
Income from securities lending amounted to $379 for the year ended Oct. 31,
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.
- --------------------------------------------------------------------------------
24 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the years indicated are as follows:
Year ended Oct. 31, 2003
Class A Class B Class C Class Y
Sold 1,893,751 744,690 38,196 880,736
Issued for reinvested distributions 94,345 -- -- 12,132
Redeemed (4,039,134) (2,576,965) (77,229) (382,383)
---------- ---------- ------- --------
Net increase (decrease) (2,051,038) (1,832,275) (39,033) 510,485
---------- ---------- ------- -------
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 Oct. 31, 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
Nov. 6, 2003 2,200,000 2,574,000 $16,645 $--
European Monetary Unit U.S. Dollar
Nov. 6, 2003 1,340,000 1,559,800 2,139 --
European Monetary Unit U.S. Dollar
------- ---
Total $18,784 $--
------- ---
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 year ended Oct. 31, 2003.
- --------------------------------------------------------------------------------
25 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
7. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund has a capital loss carry-over of
$47,202,112 as of Oct. 31, 2003, that will expire in 2009 through 2011 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.
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 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) .05 .07 .07 .08 .09
Net gains (losses) (both realized and unrealized) .64 (.50) (1.27) .12 .82
Total from investment operations .69 (.43) (1.20) .20 .91
Less distributions:
Dividends from net investment income (.04) (.02) (.03) (.03) (.07)
Distributions from realized gains -- -- (.51) (.51) (.02)
Total distributions (.04) (.02) (.54) (.54) (.09)
Net asset value, end of period $4.73 $4.08 $ 4.53 $6.27 $6.61
Ratios/supplemental data
Net assets, end of period (in millions) $53 $54 $80 $110 $100
Ratio of expenses to average daily net assets(c) 1.60% 1.48% 1.45% 1.31% 1.40%
Ratio of net investment income (loss)
to average daily net assets 1.03% 1.38% 1.18% 1.26% 1.43%
Portfolio turnover rate (excluding short-term securities) 90% 99% 173% 110% 99%
Total return(e) 16.91% (9.48%) (20.63%) 2.62% 15.53%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
26 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) .64 (.49) (1.24) .12 .83
Total from investment operations .64 (.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 $4.65 $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% 2.25% 2.21% 2.07% 2.16%
Ratio of net investment income (loss)
to average daily net assets .27% .61% .42% .51% .66%
Portfolio turnover rate (excluding short-term securities) 90% 99% 173% 110% 99%
Total return(e) 15.96% (10.19%) (21.21%) 1.95% 14.89%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
27 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) .65 (.49) (1.24) (.38)
Total from investment operations .65 (.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 $4.64 $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% 2.24% 2.21% 2.07%(d)
Ratio of net investment income (loss)
to average daily net assets .26% .60% .41% .47%(d)
Portfolio turnover rate (excluding short-term securities) 90% 99% 173% 110%
Total return(e) 16.29% (10.34%) (21.17%) (5.62%)(f)
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
28 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) .07 .07 .08 .10 .09
Net gains (losses) (both realized and unrealized) .64 (.50) (1.28) .13 .84
Total from investment operations .71 (.43) (1.20) .23 .93
Less distributions:
Dividends from net investment income (.05) (.03) (.03) (.04) (.08)
Distributions from realized gains -- -- (.51) (.51) (.02)
Total distributions (.05) (.03) (.54) (.55) (.10)
Net asset value, end of period $4.76 $4.10 $ 4.56 $6.30 $6.62
Ratios/supplemental data
Net assets, end of period (in millions) $7 $4 $2 $1 $--
Ratio of expenses to average daily net assets(c) 1.43% 1.30% 1.31% 1.20% 1.15%
Ratio of net investment income (loss)
to average daily net assets 1.21% 1.52% 1.35% 1.51% 1.65%
Portfolio turnover rate (excluding short-term securities) 90% 99% 173% 110% 99%
Total return(e) 17.32% (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.
- --------------------------------------------------------------------------------
29 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Independent Auditors' Report
THE BOARD AND SHAREHOLDERS
AXP GLOBAL SERIES, INC.
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of AXP Global Balanced Fund (a series
of the AXP Global Series, Inc.) as of October 31, 2003, the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period ended October 31, 2003 and the
financial highlights for each of the years in the five-year period ended October
31, 2003. These financial statements and the financial highlights are the
responsibility of fund management. Our responsibility is to express an opinion
on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2003, by correspondence with the custodian
and brokers or by other appropriate auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AXP
Global Balanced Fund as of October 31, 2003, and the results of its operations,
changes in its net assets and the financial highlights for each of the periods
stated in the first paragraph above, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
December 12, 2003
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30 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Federal Income Tax Information
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
AXP Global Balanced Fund
Fiscal year ended Oct. 31, 2003
Class A
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals (effective for
distributions made after Jan. 1, 2003) 100%
Dividends Received Deduction for corporations 100%
Payable date Per share
Dec. 20, 2002 $0.00924
March 21, 2003 0.00000
June 20, 2003 0.00000
Sept. 19, 2003 0.02896
Total distributions $0.03820
Class C
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals (effective for
distributions made after Jan. 1, 2003) 100%
Dividends Received Deduction for corporations 100%
Payable date Per share
Dec. 20, 2002 $0.00000
March 21, 2003 0.00000
June 20, 2003 0.00000
Sept. 19, 2003 0.00001
Total distributions $0.00001
Class Y
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals (effective for
distributions made after Jan. 1, 2003) 100%
Dividends Received Deduction for corporations 100%
Payable date Per share
Dec. 20, 2002 $0.01405
March 21, 2003 0.00000
June 20, 2003 0.00000
Sept. 19, 2003 0.03328
Total distributions $0.04733
- --------------------------------------------------------------------------------
31 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Board Members and Officers
Shareholders elect a board that oversees the Fund's operations. The board
appoints officers who are responsible for day-to-day business decisions based
on policies set by the board.
The following is a list of the Fund's board members. Each member oversees 15
Master Trust portfolios and 86 American Express mutual funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the board.
Independent Board Members
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Arne H. Carlson Board member since Chair, Board Services
901 S. Marquette Ave. 1999 Corporation (provides
Minneapolis, MN 55402 administrative services to
Age 69 boards). Former Governor of
Minnesota
- ------------------------------------- -------------------- -------------------------------- ------------------------
Philip J. Carroll, Jr. Board member since Retired Chairman and CEO, Scottish Power PLC,
901 S. Marquette Ave. 2002 Fluor Corporation (engineering Vulcan Materials
Minneapolis, MN 55402 and construction) since 1998 Company, Inc.
Age 65 (construction
materials/chemicals)
- ------------------------------------- -------------------- -------------------------------- ------------------------
Livio D. DeSimone Board member Retired Chair of the Board and Cargill, Incorporated
30 Seventh Street East since 2001 Chief Executive Officer, (commodity merchants
Suite 3050 Minnesota Mining and and processors),
St. Paul, MN 55101-4901 Manufacturing (3M) General Mills, Inc.
Age 69 (consumer foods),
Vulcan Materials
Company (construction
materials/ chemicals),
Milliken & Company
(textiles and
chemicals), and Nexia
Biotechnologies, Inc.
- ------------------------------------- -------------------- -------------------------------- ------------------------
Heinz F. Hutter* Board member since Retired President and Chief
901 S. Marquette Ave. 1994 Operating Officer, Cargill,
Minneapolis, MN 55402 Incorporated (commodity
Age 74 merchants and processors)
- ------------------------------------- -------------------- -------------------------------- ------------------------
Anne P. Jones Board member since Attorney and Consultant
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 68
- ------------------------------------- -------------------- -------------------------------- ------------------------
Stephen R. Lewis, Jr.** Board member since Retired President and Valmont Industries,
901 S. Marquette Ave. 2002 Professor of Economics, Inc. (manufactures
Minneapolis, MN 55402 Carleton College irrigation systems)
Age 64
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alan G. Quasha Board member since President, Quadrant Compagnie Financiere
901 S. Marquette Ave. 2002 Management, Inc. (management Richemont AG (luxury
Minneapolis, MN 55402 of private equities) goods), Harken Energy
Age 53 Corporation (oil and
gas exploration) and
SIRIT Inc. (radio
frequency
identification
technology)
- ------------------------------------- -------------------- -------------------------------- ------------------------
* Interested person of AXP Partners International Aggressive Growth Fund
and AXP Partners Aggressive Growth Fund by reason of being a security
holder of J P Morgan Chase & Co., which has a 45% interest in American
Century Companies, Inc., the parent company of the subadviser of two of
the AXP Partners Funds, American Century Investment Management, Inc.
** Interested person of AXP Partners International Aggressive Growth Fund by
reason of being a security holder of FleetBoston Financial Corporation,
parent company of Columbia Wanger Asset Management, L.P., one of the
fund's subadvisers.
- --------------------------------------------------------------------------------
32 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
Independent Board Members (continued)
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alan K. Simpson Board member since Former three-term United Biogen, Inc.
1201 Sunshine Ave. 1997 States Senator for Wyoming (biopharmaceuticals)
Cody, WY 82414
Age 71
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alison Taunton-Rigby Board member since President, Forester Biotech
901 S. Marquette Ave. 2002 since 2000. Former President
Minneapolis, MN 55402 and CEO, Aquila
Age 59 Biopharmaceuticals, Inc.
- ------------------------------------- -------------------- -------------------------------- ------------------------
Board Members Affiliated with AEFC***
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Barbara H. Fraser Board member since Executive Vice President -
1546 AXP Financial Center 2002 AEFA Products and Corporate
Minneapolis, MN 55474 Marketing of AEFC since 2002.
Age 53 President - Travelers Check
Group, American Express
Company, 2001-2002. Management
Consultant, Reuters,
2000-2001. Managing Director -
International Investments,
Citibank Global, 1999-2000.
Chairman and CEO, Citicorp
Investment Services and
Citigroup Insurance Group,
U.S., 1998-1999
- ------------------------------------- -------------------- -------------------------------- ------------------------
Stephen W. Roszell Board membersince Senior Vice President -
50238 AXP Financial Center 2002, Institutional Group of AEFC
Minneapolis, MN 55474 Vice President
Age 54 since 2002
- ------------------------------------- -------------------- -------------------------------- ------------------------
William F. Truscott Board member since Senior Vice President - Chief
53600 AXP Financial Center 2001, Investment Officer of AEFC
Minneapolis, MN 55474 Vice President since 2001. Former Chief
Age 42 since 2002 Investment Officer and
Managing Director, Zurich
Scudder Investments
- ------------------------------------- -------------------- -------------------------------- ------------------------
*** Interested person by reason of being an officer, director and/or employee
of AEFC.
- --------------------------------------------------------------------------------
33 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL REPORT
The board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the board. In addition to Mr. Roszell, who is vice president, and
Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers
Name, address, age Position held Principal occupation during Other directorships
with Fund and past five years
length of service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Jeffrey P. Fox Treasurer since Vice President - Investment
50005 AXP Financial Center 2002 Accounting, AEFC, since 2002;
Minneapolis, MN 55474 Vice President - Finance,
Age 48 American Express Company,
2000-2002; Vice President -
Corporate Controller, AEFC,
1996-2000
- ------------------------------------- -------------------- -------------------------------- ------------------------
Paula R. Meyer President since Senior Vice President and
596 AXP Financial Center 2002 General Manager - Mutual
Minneapolis, MN 55474 Funds, AEFC, since 2002; Vice
Age 49 President and Managing
Director - American Express
Funds, AEFC, 2000-2002; Vice
President, AEFC, 1998-2000
- ------------------------------------- -------------------- -------------------------------- ------------------------
Leslie L. Ogg Vice President, President of Board Services
901 S. Marquette Ave. General Counsel, Corporation
Minneapolis, MN 55402 and Secretary
Age 65 since 1978
- ------------------------------------- -------------------- -------------------------------- ------------------------
The SAI has additional information about the Fund's directors and is available,
without charge, upon request by calling (800) 862-7919.
Proxy Voting
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
(800) 862-7919; by looking at the Web site americanexpress.com/funds; or by
searching the Web site of the Securities and Exchange Commission
http://www.sec.gov. Beginning Jan. 1, 2004, you may view the Fund's voting
record for all portfolio companies whose shareholders meetings were completed
the previous quarter on americanexpress.com/funds or obtain a copy by calling
the Fund's administrator, Board Services Corporation, collect at (612) 330-9283.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available at
http://www.sec.gov.
- --------------------------------------------------------------------------------
34 -- AXP GLOBAL BALANCED FUND -- 2003 ANNUAL 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
Annual Report
for the Period Ended
Oct. 31, 2003
AXP Global Bond Fund seeks to provide shareholders with high total return
through income and growth of capital.
- --------------------------------------------------------------------------------
(logo) (logo)
American AMERICAN
Express EXPRESS
Funds (R)
- --------------------------------------------------------------------------------
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
The Fund's Long-term Performance 8
Investments in Securities 9
Financial Statements (Portfolio) 19
Notes to Financial Statements (Portfolio) 22
Independent Auditors' Report (Portfolio) 27
Financial Statements (Fund) 28
Notes to Financial Statements (Fund) 31
Independent Auditors' Report (Fund) 38
Federal Income Tax Information 39
Board Members and Officers 41
Proxy Voting 43
[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.
- --------------------------------------------------------------------------------
2 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Fund Snapshot
AS OF OCT. 31, 2003
PORTFOLIO MANAGER
Portfolio manager Nic Pifer, CFA*
Since 5/00
Years in industry 13
* The Fund is managed by a team of portfolio managers led by Nic Pifer.
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 $543.0 million
Number of holdings 273
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
DURATION
SHORT INT. LONG
X X HIGH
MEDIUM QUALITY
LOW
COUNTRY COMPOSITION
Percentage of portfolio assets
[pie chart]
United States 44.9%
Germany 10.7%
France 6.4%
Italy 4.1%
Spain 4.0%
Japan 3.7%
Canada 3.0%
Greece 3.0%
United Kingdom 2.8%
Supra-National 2.6%
Finland 2.0%
Norway 1.8%
Hungary 1.6%
Netherlands 1.6%
Austria 1.3%
Australia 1.2%
Denmark 1.0%
New Zealand 1.0%
Other* 3.3%
* Includes Brazil, Colombia, Croatia, Dominican Republic, Ireland, Malaysia,
Mexico, Peru, Poland, Romania, Russia, South Korea, Sweden and Ukraine.
CREDIT QUALITY SUMMARY
Percentage of portfolio assets
AAA bonds 54.6%
AA bonds 14.2
A bonds 8.1
BBB bonds 4.8
Non-investment grade bonds 5.2
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 BOND FUND -- 2003 ANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Below, Nic Pifer, AXP Global Bond Fund's portfolio manager in Minneapolis,
discusses the Fund's positioning and results for the 2003 fiscal year.
Q: How did AXP Global Bond Fund perform for the fiscal year ended Oct. 31,
2003?
A: AXP Global Bond Fund gained 13.25% (Class A shares, excluding sales charge)
for the 12 months ended Oct. 31, 2003. The Fund outperformed its current
benchmark, the Lehman Brothers Global Aggregate Index, which increased
12.20% for the period. The Fund underperformed its former benchmark index,
the CitiGroup World Government Bond Index, which increased 14.28% for the
period. The Fund's peer group, the Lipper Global Income Funds Index,
returned 13.21% over the same time frame.
Q: What factors most significantly affected performance during the annual
period?
A: Three factors helped the Fund generate strong results relative to its
current benchmark during the 12 months -- currency positioning, sector
exposure, and country allocation.
Currencies: The Fund had a higher than new benchmark position in the euro
and dollar block bond currencies (Canada, Australia, and New Zealand). The
Fund had a lower than benchmark position in Japanese yen, which
underperformed in fiscal year 2003. This strategy worked well for the Fund
throughout the year. On an absolute basis, the falling U.S. dollar
increased the value of many of our foreign currency denominated
investments.
Sectors: The Fund's participation in the emerging market and high-yield
credit sectors also boosted performance relative to its benchmark. Early in
the period, we allocated about 8% of assets to below investment grade debt.
The Fund benefited greatly from this allocation, which we took from
government bonds, agency
(bar chart)
PERFORMANCE COMPARISON
For the year ended Oct. 31, 2003
15% (bar 1) (bar 2) (bar 3) (bar 4)
12% +13.25% +12.20% +14.28% +13.21%
9%
6%
3%
0%
(bar 1) AXP Global Bond Fund Class A (excluding sales charge)
(bar 2) Lehman Brothers Global Aggregate Index (unmanaged)
(bar 3) CitiGroup World Government Bond Index (unmanaged)
(bar 4) Lipper Global Income Funds Index
(see "The Fund's Long-term Performance" for Index descriptions)
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.
- --------------------------------------------------------------------------------
4 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Questions & Answers
(begin callout quote)> Current low interest rates, together with the stimulus
effects of tax cuts and mortgage refinancing, point to stronger U.S. economic
growth in the first half of 2004.(end callout quote)
debt and other low-yielding investments. Emerging market and high yield
debt, which are not part of the index benchmarks, produced strong returns.
By the end of the period, however, we reduced our exposure to below
investment grade debt to approximately 4%, half of the year's top
weighting.
Country allocation: The Fund's strong position in the core European debt
markets and modest position in the Japanese bond market helped the Fund's
performance. Japan was the worst performing major debt market, producing a
negative annual return.
AVERAGE ANNUAL TOTAL RETURNS
as of Oct. 31, 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)
1 year +13.25% +7.87% +12.39% +8.39% +12.41% +12.41% +13.54% +13.54%
5 years +4.73% +3.72% +3.95% +3.77% N/A N/A +4.95% +4.95%
10 years +5.43% +4.92% N/A N/A N/A N/A N/A N/A
Since inception N/A N/A +5.55% +5.55% +7.41% +7.41% +6.34% +6.34%
as of Sept. 30, 2003
1 year +13.90% +8.50% +13.04% +9.04% +12.89% +12.89% +14.21% +14.21%
5 years +4.99% +3.98% +4.19% +4.02% N/A N/A +5.18% +5.18%
10 years +5.52% +5.01% N/A N/A N/A N/A N/A N/A
Since inception N/A N/A +5.72% +5.72% +7.86% +7.86% +6.50% +6.50%
(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/funds for current information.
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5 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Questions & Answers
Q: What changes did you make to the Fund and how is it currently positioned?
A: During the first half of the fiscal year, we increased the Fund's level of
diversification. The Fund held 273 securities as of Oct. 31, 2003. This was
more than twice the number of holdings from a year ago. Besides reducing
the Fund's risk profile, we believe this change should contribute to more
consistent Fund performance over time. Second, in early 2003, the Fund's
board voted to change AXP Global Bond Fund's benchmark to the Lehman
Brothers Global Aggregate Index. We made this change because the new
benchmark better represents the Fund's investment approach and holdings,
including its non-government securities.
Third, we made shifts in the Fund's sector weightings. For example, we
reduced the Fund's position in government and agency bonds and redeployed
those assets into the securitized sector. The securitized sector includes
holdings such as U.S. mortgage-backed securities, commercial
mortgage-backed securities, and asset-backed securities as well as Danish
mortgages and German Pfandbriefe (a type of mortgage security). Currency
and country weights remained relatively stable through the period.
Finally, we shifted to a team-based approach in managing the Fund. As the
Fund further diversified across sectors, more holdings were added. We
believe sector teams have helped the Fund identify and analyze
opportunities as they developed for this global portfolio.
Q: How do you intend to manage the Fund in the coming months?
A: There are some strong cross-currents in the global market. Global recovery,
interest rates and currencies will all have some effect on the Fund.
Global Recovery: An increase in economic activity is evident in the U.S.,
Europe, Asia and even in Japan. It has been slow to blossom, but we believe
that the global economy is out of the doldrums and is selectively
accelerating. Global recovery and the current historically low level of
short term rates raise a question for the bond markets. How much recovery
can occur before central banks -- the Federal Reserve, the European Central
Bank, and even the Bank of Japan -- become less accommodative?
- --------------------------------------------------------------------------------
6 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Questions & Answers
Interest rates: Current low interest rates, together with the stimulus
effects of tax cuts and mortgage refinancing, point to stronger U.S.
economic growth in the first half of 2004. However, the sustainability of
such economic recovery in the U.S., as well as globally, remains uncertain.
Given all of the easing that we experienced over the past few years, short
rates in most major markets are at historically low levels. If the economic
recovery proves durable, short rates will need to rise. However, the U.S.
Federal Open Market Committee (FOMC) has indicated that it will keep rates
at low levels for some time -- at least through mid-2004, in our view. The
European Central Bank is expected to follow suit. Japan is expected to
maintain interest rates close to 0% for the foreseeable future. With global
central banks on hold for the time being, we expect global bond yields to
move broadly sideways in the near term and have positioned the Fund's
duration close to the index level as a result. Looking further ahead, we
expect bond yields to rise as the global recovery gains traction. In
anticipation of rising yields, we will be looking for opportunities to
reduce the Fund's interest rate risk by shortening duration.
Currency: The United States now has a substantial current account deficit
of more than 5% of GDP. This creates an enormous financing need every year
for the U.S. In order to finance its current account deficit, the U.S.
needs to attract nearly $2 billion of foreign capital per day just to keep
the dollar steady. This is a very tall order, and in our view cannot be
sustained. We therefore expect the dollar to weaken further in the year
ahead, which would benefit the Fund by increasing the value of its foreign
bond holdings. As always, we remain focused on careful security selection,
as we continue to seek opportunities to capitalize on attractively valued
bonds.
- --------------------------------------------------------------------------------
7 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
The Fund's Long-term Performance
This chart illustrates the total value of an assumed $10,000 investment in AXP
Global Bond Fund Class A shares (from 11/1/93 to 10/31/03) as compared to the
performance of three widely cited performance indices, the Lehman Brothers
Global Aggregate Index, the CitiGroup World Government Bond Index and the Lipper
Global Income Funds Index. Recently, the Fund's investment manager recommended
to the Fund that the Fund change its comparative index from the CitiGroup World
Government Bond Index to the Lehman Brothers Global Aggregate Index. The
investment manager made this recommendation because the new index more closely
represents the Fund's holdings. We will include both indexes in this transition
year. In the future, however, only the Lehman Brothers Global Aggregate Index
will be included. In comparing the Fund's Class A shares to these indices, you
should take into account the fact that the Fund's performance reflects the
maximum sales charge of 4.75%, while such charges are not reflected in the
performance of the indices. Returns for the Fund include the reinvestment of any
distribution paid during each period.
Past performance is no guarantee of future results. Your investment and return
values fluctuate so that your shares, when redeemed, may be worth more or less
than the original cost. Returns do not reflect taxes payable on distributions
and redemptions. Also see "Past Performance" in the Fund's current prospectus.
(line chart)
VALUE OF A HYPOTHETICAL $10,000 INVESTMENT
IN AXP GLOBAL TECHNOLOGY FUND
AXP Global Bond Fund Class A
$9,525 $9,386 $10,661 $11,616 $12,186 $12,827 $12,782 $12,123 $13,436 $14,274 $16,165
Lehman Brothers Global Aggregate Index(1)
$10,000 $10,081 $11,689 $12,480 $13,109 $14,718 $14,291 $13,885 $15,251 $16,485 $18,496
CitiGroup World Government Bond Index(2)
$10,000 $10,362 $11,937 $12,577 $12,905 $14,525 $14,167 $13,448 $14,643 $15,983 $18,265
Lipper Global Income Funds Index(3)
$10,000 $9,595 $10,690 $11,947 $12,606 $13,169 $13,086 $12,959 $14,268 $14,967 $16,944
`93 `94 `95 `96 `97 `98 `99 `00 `01 `02 `03
(1) The Lehman Brothers Global Aggregate Index, an unmanaged market
capitalization weighted benchmark, tracks the performance of investment
grade fixed income securities denominated in 13 currencies. 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 the 17 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.
Average Annual Total Returns
Class A with Sales Charge as of Oct. 31, 2003
1 year +7.87%
5 years +3.72%
10 years +4.92%
Results for other share classes can be found on page 5.
- --------------------------------------------------------------------------------
8 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Investments in Securities
World Income Portfolio
Oct. 31, 2003
(Percentages represent value of investments compared to net assets)
Bonds (93.9%)(c)
Issuer Coupon Principal Value(a)
rate amount
Australia (1.3%)
Burns Philp Capital Property
(U.S. Dollar) Sr Sub Nts
02-15-11 10.75% $100,000(d) $105,500
New South Wales Treasury
(Australian Dollar)
03-01-08 8.00 8,000,000 6,170,928
Telstra
(U.S. Dollar)
04-01-12 6.38 500,000 550,249
Total 6,826,677
Austria (1.4%)
Republic of Austria
(European Monetary Unit)
10-20-07 5.50 5,900,000 7,378,191
Brazil (0.6%)
Federal Republic of Brazil
(U.S. Dollar)
10-22-10 9.25 2,000,000 1,995,000
04-15-14 8.00 1,317,609 1,228,670
Total 3,223,670
Canada (3.2%)
Canadian Pacific Railway
(Canadian Dollar)
06-15-10 4.90 380,000 284,470
CanWest Media
(U.S. Dollar) Series B
04-15-13 7.63 250,000 273,125
Cascades
(U.S. Dollar) Sr Nts
02-15-13 7.25 40,000(d) 41,400
02-15-13 7.25 160,000 167,200
Conoco Funding
(U.S. Dollar)
10-15-11 6.35 600,000 668,083
Corus Entertainment
(U.S. Dollar) Sr Sub Nts
03-01-12 8.75 150,000 165,188
Norampac
(U.S. Dollar) Sr Nts
06-01-13 6.75 250,000(d) 260,000
Province of British Columbia
(Canadian Dollar)
08-23-10 6.38 6,400,000 5,307,963
Province of Ontario
(Canadian Dollar)
03-08-06 5.90 3,300,000 2,643,480
(Japanese Yen)
01-25-10 1.88 340,000,000 3,258,047
Province of Quebec
(Japanese Yen) (MBIA Insured)
05-09-13 1.60 150,000,000(m) 1,385,819
(U.S. Dollar)
12-01-05 6.50 3,200,000 2,583,501
Rogers Cable
(U.S. Dollar)
06-15-13 6.25 250,000 250,000
Sun Media
(U.S. Dollar)
02-15-13 7.63 200,000 214,000
Videotron Ltee
(U.S. Dollar) Sr Nts
01-15-14 6.88 125,000(d) 128,125
Total 17,630,401
Colombia (0.2%)
Republic of Colombia
(U.S. Dollar)
01-23-12 10.00 1,230,000 1,291,500
Croatia (0.2%)
Croatia
(European Monetary Unit)
03-14-11 6.75 660,000 842,441
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
9 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
Denmark (1.0%)
Kingdom of Denmark
(Danish Krone)
03-15-06 8.00% 16,000,000 $2,779,937
Realkredit Danmark
(Danish Krone)
01-01-05 4.00 18,000,000 2,858,528
Total 5,638,465
Dominican Republic (0.1%)
Dominican Republic
(U.S. Dollar)
01-23-13 9.04 610,000(d) 469,700
Finland (2.1%)
Republic of Finland
(European Monetary Unit)
07-04-06 2.75 10,095,000 11,671,328
France (6.9%)
Cie Financement Foncier
(European Monetary Unit)
06-24-05 5.00 1,900,000 2,289,807
Crown Euro Holdings
(U.S. Dollar)
03-01-13 10.88 40,000 45,600
Dexia Municipal Agency
(European Monetary Unit)
04-26-07 5.38 4,700,000 5,817,725
France Telecom
(U.S. Dollar)
03-01-06 8.70 700,000 783,941
Govt of France
(European Monetary Unit)
04-25-05 6.05 8,710,000 10,827,884
01-12-07 3.75 9,600,000 11,360,312
10-25-11 5.00 4,600,000 5,651,126
Michelin Finance Luxembourg
(European Monetary Unit)
04-16-09 6.13 500,000 628,283
Vivendi Universal
(U.S. Dollar) Sr Nts
07-15-08 6.25 275,000(d) 288,200
Total 37,692,878
Germany (11.5%)
Allgemeine Hypo Bank
(European Monetary Unit)
09-02-09 5.00 1,860,000 2,275,050
Bayerische Landesbank
(Japanese Yen) Sr Nts
04-22-13 1.40 150,000,000 1,359,594
Bundesrepublik Deutschland
(European Monetary Unit)
07-04-27 6.50 11,770,000 16,581,769
DaimlerChrysler North American Holding
(European Monetary Unit)
01-16-07 5.63 670,000 812,437
Depfa Pfandbriefbank
(European Monetary Unit)
01-15-10 5.50 2,200,000 2,764,261
Deutsche Bank
(European Monetary Unit)
07-28-09 4.25 500,000 586,530
Deutsche Telekom Intl Finance
(European Monetary Unit)
05-29-07 7.50 500,000 649,210
(U.S. Dollar)
07-22-13 5.25 1,200,000 1,191,024
Eurohypo
(European Monetary Unit)
07-05-10 5.75 2,200,000 2,799,872
Federal Republic of Germany
(European Monetary Unit)
07-04-08 4.13 2,850,000 3,391,375
07-04-09 4.50 9,200,000 11,078,950
01-04-10 5.38 10,760,000 13,522,802
Hypothekenbk In Essen
(European Monetary Unit)
07-06-09 4.25 2,400,000 2,832,074
Westfaelische Hypobank
(European Monetary Unit)
04-24-06 4.75 2,300,000 2,778,960
Total 62,623,908
Greece (3.3%)
Hellenic Republic
(European Monetary Unit)
06-21-06 2.75 7,600,000 8,769,948
05-18-11 5.35 7,200,000 8,983,497
Total 17,753,445
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
10 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
Hungary (1.8%)
Govt of Hungary
(Hungarian Forint)
04-12-05 7.75% 1,510,000,000 $6,563,636
02-12-11 7.50 700,000,000 3,050,188
Total 9,613,824
Ireland (--%)
JSG Funding
(U.S. Dollar) Sr Nts
10-01-12 9.63 125,000 138,750
Italy (4.4%)
Buoni Poliennali Del Tes
(European Monetary Unit)
01-01-04 .01 6,800,000 7,982,517
11-01-26 7.25 6,686,283 10,172,106
Republic of Italy
(Japanese Yen)
03-27-08 3.80 500,000,000 5,173,734
Telecom Italia
(European Monetary Unit)
02-01-07 5.63 500,000 612,561
Total 23,940,918
Japan (4.0%)
Development Bank of Japan
(Japanese Yen)
06-20-12 1.40 650,000,000 5,934,505
Govt of Japan
(Japanese Yen)
12-21-09 1.70 970,000,000 9,252,892
06-20-12 1.40 700,000,000 6,411,996
Total 21,599,393
Malaysia (0.3%)
Petronas Capital
(U.S. Dollar)
05-22-12 7.00 1,500,000(d) 1,670,130
Mexico (0.6%)
United Mexican States
(U.S. Dollar)
03-03-15 6.63 3,150,000 3,236,625
Netherlands (1.8%)
Bank of Nederlandse Gemeenten
(British Pound)
08-06-07 7.38 1,100,000 2,002,255
Govt of Netherlands
(European Monetary Unit)
07-15-12 5.00 4,400,000 5,401,185
Intl Nederland Bank
(European Monetary Unit) Sr Nts
01-29-09 4.25 600,000 706,967
RWE Finance
(European Monetary Unit)
10-26-07 5.50 500,000 616,705
Vodafone Finance
(European Monetary Unit)
05-27-09 4.75 740,000 881,365
Total 9,608,477
New Zealand (1.1%)
Govt of New Zealand
(New Zealand Dollar)
11-15-06 8.00 8,800,000 5,723,440
Norway (1.9%)
A/S Eksportfinans
(Japanese Yen)
06-21-10 1.80 340,000,000 3,227,073
Govt of Norway
(Norwegian Krone)
11-30-04 5.75 49,800,000 7,241,772
Total 10,468,845
Peru (0.3%)
Republic of Peru
(U.S. Dollar)
02-21-12 9.13 870,000 972,225
02-06-15 9.88 430,000 502,025
Total 1,474,250
Poland (0.5%)
Republic of Poland
(Polish Zloty)
02-12-06 8.50 9,700,000 2,497,808
Romania (0.1%)
Govt of Romania
(European Monetary Unit)
05-08-12 8.50 430,000 577,606
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
11 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
Russia (0.1%)
Federation of Russia
(U.S. Dollar)
03-31-30 5.00% $570,000(d,i) $531,525
South Korea (0.1%)
Korea Development Bank
(Japanese Yen)
06-25-08 .98 70,000,000 619,621
Spain (4.4%)
Govt of Spain
(European Monetary Unit)
10-31-07 4.25 9,400,000 11,264,198
01-31-10 4.00 8,200,000 9,582,794
La Caixa De Barcelona
(European Monetary Unit)
03-04-10 3.50 2,500,000 2,815,820
Total 23,662,812
Supra-National (2.8%)
European Investment Bank
(British Pound)
12-07-11 5.50 3,000,000 5,154,991
Inter-American Development Bank
(Japanese Yen)
07-08-09 1.90 1,035,000,000 10,006,168
Total 15,161,159
Sweden (0.4%)
Govt of Sweden
(Swedish Krona)
04-20-06 3.50 19,000,000 2,421,749
Ukraine (0.1%)
Govt of Ukraine
(U.S. Dollar)
06-11-13 7.65 540,000(d) 535,275
United Kingdom (3.1%)
British Telecom
(U.S. Dollar)
12-15-10 8.38 700,000 845,362
Greater Beijing First Expressways
(U.S. Dollar) Sr Nts
06-15-04 9.25 3,500,000(b,o) 70,000
06-15-07 9.50 8,750,000(b,o) 175,000
HSBC Holdings
(U.S. Dollar) Sub Nts
12-12-12 5.25 500,000 507,544
United Kingdom Treasury
(British Pound)
12-07-07 7.25 3,900,000 7,186,595
11-25-10 6.25 2,900,000 5,285,912
03-07-12 5.00 1,600,000 2,708,059
Total 16,778,472
United States (34.3%)
Airgas
(U.S. Dollar)
10-01-11 9.13 195,000 217,913
Allied Waste North America
(U.S. Dollar) Series B
04-01-08 8.88 200,000 221,000
ANR Pipeline
(U.S. Dollar) Sr Nts
03-15-10 8.88 160,000 174,400
Apogent Technologies
(U.S. Dollar) Sr Sub Nts
05-15-13 6.50 175,000(d) 181,125
ASIF Global Financing
(U.S. Dollar)
01-17-13 4.90 1,600,000(d) 1,583,712
AT&T
(U.S. Dollar)
03-15-09 6.00 10,000 10,650
(U.S. Dollar) Sr Nts
11-15-11 7.80 230,000(i) 260,653
AT&T Broadband
(U.S. Dollar)
03-15-13 8.38 106,000 128,132
AT&T Wireless Services
(U.S. Dollar) Sr Nts
03-01-11 7.88 500,000 571,341
Ball
(U.S. Dollar)
12-15-12 6.88 335,000 345,887
Bank of America
(U.S. Dollar) Sr Nts
02-01-07 5.25 1,000,000 1,068,180
(U.S. Dollar) Sub Nts
08-15-13 4.75 800,000 780,797
Bear Stearns Commercial Mtge Securities
(U.S. Dollar) Series 2003-T10 Cl A1
03-13-40 4.00 682,607 681,529
Boise Cascade
(U.S. Dollar) Sr Nts
11-01-10 6.50 30,000 30,520
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
12 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
CBD Media/Finance
(U.S. Dollar) Sr Sub Nts
06-01-11 8.63% $120,000(d) $128,699
Centerpoint Energy
(U.S. Dollar)
02-15-11 7.75 130,000 145,772
Chiquita Brands Intl
(U.S. Dollar) Sr Nts
03-15-09 10.56 225,000 245,813
Choctaw Resort Development Enterprises
(U.S. Dollar) Sr Nts
04-01-09 9.25 150,000 162,000
Cincinnati Bell
(U.S. Dollar)
07-15-13 7.25 125,000(d) 126,726
01-15-14 8.38 50,000(d,h) 51,425
Citibank Credit Card Issuance Trust
(U.S. Dollar) Series 2003-A5 Cl A5
04-07-08 2.50 500,000 499,780
(U.S. Dollar) Series 2003-A6 Cl A6
05-17-10 2.90 500,000 490,500
Citicorp
(Deutsche Mark)
09-19-09 6.25 10,800,000 7,029,712
Coast Hotels & Casino
(U.S. Dollar)
04-01-09 9.50 150,000 159,750
Comcast
(U.S. Dollar)
03-15-11 5.50 1,100,000 1,134,915
Compass Minerals Group
(U.S. Dollar)
08-15-11 10.00 200,000 223,000
Consumers Energy
(U.S. Dollar) 1st Mtge
04-15-08 4.25 550,000(d) 552,304
Cott Beverages
(U.S. Dollar)
12-15-11 8.00 150,000 162,000
CSC Holdings
(U.S. Dollar) Sr Nts
12-15-07 7.88 150,000 153,375
D.R. Horton
(U.S. Dollar) Sr Nts
05-01-13 6.88 150,000 157,875
DaimlerChrysler NA Holding
(U.S. Dollar)
06-04-08 4.05 800,000 777,320
Del Monte
(U.S. Dollar) Series B
05-15-11 9.25 200,000 221,000
Dex Media West/Finance
(U.S. Dollar) Sr Nts
08-15-10 8.50 55,000(d) 59,813
(U.S. Dollar) Sr Sub Nts
08-15-13 9.88 50,000(d) 56,875
DirectTV Holdings/Finance
(U.S. Dollar) Sr Nts
03-15-13 8.38 150,000 168,375
Domino's
(U.S. Dollar) Sr Sub Nts
07-01-11 8.25 75,000(d) 79,313
DRS Technologies
(U.S. Dollar) Sr Sub Nts
11-01-13 6.88 155,000(d) 155,775
EchoStar
(U.S. Dollar) Sr Nts
10-01-08 5.75 125,000(d) 124,531
El Paso Production Holding
(U.S. Dollar)
06-01-13 7.75 150,000(d) 144,000
Emmis Communications
(U.S. Dollar) Series B
03-15-09 8.13 250,000 261,562
Federal Home Loan Mtge Corp
(European Monetary Unit)
01-15-06 5.25 1,800,000 2,191,383
(U.S. Dollar)
07-01-17 6.00 1,053,416 1,094,894
09-01-17 6.50 834,176 875,273
05-01-18 5.50 1,485,112 1,529,970
10-01-18 5.00 1,095,941 1,113,668
04-01-33 6.00 2,834,140 2,924,257
08-01-33 6.50 664,956 691,633
11-01-33 5.00 1,350,000(h) 1,328,913
Federal Natl Mtge Assn
(U.S. Dollar)
01-01-09 5.74 1,220,225 1,305,632
01-01-13 4.92 524,967 528,953
02-01-13 4.87 1,364,719 1,382,272
03-01-17 5.50 1,563,125 1,610,036
03-01-17 6.00 554,867 577,115
04-01-17 6.50 1,505,967 1,595,832
08-01-18 4.50 2,464,694 2,464,020
11-01-18 5.00 4,900,000(h) 4,976,563
11-01-18 6.00 1,250,000(h) 1,300,000
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
13 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
Federal Natl Mtge Assn (cont.)
(U.S. Dollar) (cont.)
11-15-18 5.00% $2,500,000 $2,570,019
11-16-18 5.50 2,500,000(h) 2,573,438
07-01-23 5.00 1,427,335 1,429,235
05-01-32 7.00 1,794,692 1,889,573
05-01-32 7.50 1,264,251 1,347,155
06-01-32 7.00 1,096,052 1,162,174
07-01-32 6.50 1,037,695 1,078,074
08-01-32 6.50 1,141,454 1,185,870
11-01-32 7.50 2,184,706 2,327,968
03-01-33 5.50 2,890,078 2,919,509
03-01-33 6.00 3,882,672 3,986,898
04-01-33 6.00 3,683,239 3,791,275
05-01-33 6.00 993,723 1,022,876
06-01-33 5.50 1,969,885 1,988,904
07-01-33 5.50 871,800 881,313
07-01-33 7.00 1,941,752 2,044,301
11-01-33 5.50 5,200,000(h) 5,247,121
11-01-33 6.50 7,600,000(h) 7,894,499
Collateralized Mtge Obligation
(U.S. Dollar)
03-25-13 4.38 620,000(f) 597,218
10-25-42 7.50 870,538(f) 953,239
Fisher Scientific Intl
(U.S. Dollar) Sr Sub Nts
09-01-13 8.00 135,000(d,h) 145,125
Ford Motor
(U.S. Dollar)
10-01-28 6.63 650,000 533,158
Gap
(U.S. Dollar)
09-15-07 6.90 40,000 43,500
Gaylord Entertainment
(U.S. Dollar) Sr Nts
11-15-13 8.00 20,000(d,h) 20,500
GE Financial Assurance
(Japanese Yen)
06-20-11 1.60 130,000,000 1,140,795
General Electric
(U.S. Dollar)
02-01-13 5.00 1,000,000 1,005,910
General Electric Capital
(European Monetary Unit)
06-20-07 5.13 500,000 612,170
Georgia Pacific
(U.S. Dollar) Sr Nts
02-01-10 8.88 185,000 211,363
GMAC
(U.S. Dollar)
09-15-06 6.13 2,500,000 2,642,654
Goldman Sachs Group
(U.S. Dollar)
05-15-09 6.65 500,000 562,948
07-15-13 4.75 600,000 579,660
Govt Natl Mtge Assn
(U.S. Dollar)
03-15-33 7.00 379,649 402,426
10-15-33 5.50 2,000,000 2,027,522
Collateralized Mtge Obligation
Interest Only
(U.S. Dollar)
01-20-32 6.00 5,700,000(f,j) 659,472
Grant Prideco Escrow
(U.S. Dollar)
12-15-09 9.00 250,000 270,000
Graphic Packaging Intl
(U.S. Dollar) Sr Nts
08-15-11 8.50 45,000(d) 49,613
Gulfterra Energy Partner
(U.S. Dollar) Sr Nts
06-01-10 6.25 90,000(d) 90,675
Hilton Hotels
(U.S. Dollar)
12-01-12 7.63 200,000 221,000
Host Marriott LP
(U.S. Dollar) Sr Nts
11-01-13 7.13 75,000(d,h) 75,000
Household Finance
(U.S. Dollar)
10-15-11 6.38 1,500,000 1,639,307
Intl Paper
(European Monetary Unit)
08-11-06 5.38 700,000 844,145
IPALCO Enterprises
(U.S. Dollar)
11-14-08 8.38 250,000 272,500
J.P. Morgan Chase
(U.S. Dollar) Sub Nts
02-01-11 6.75 500,000 561,193
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
14 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
Johnsondiversey Holdings
(U.S. Dollar)
(Zero coupon through 05-15-07,
thereafter 10.67%)
05-15-13 22.08% $80,000(d,n) $59,600
Jorgensen Earle M.
(U.S. Dollar)
06-01-12 9.75 50,000 54,250
Joy Global
(U.S. Dollar) Series B
03-15-12 8.75 60,000 66,300
Key Energy Services
(U.S. Dollar) Series C
03-01-08 8.38 130,000 140,075
(U.S. Dollar) Sr Nts
05-01-13 6.38 70,000 70,350
Kinetic Concepts
(U.S. Dollar) Sr Sub Nts
05-15-13 7.38 100,000(d) 102,500
Kraft Foods
(U.S. Dollar)
10-01-08 4.00 1,100,000 1,098,581
L-3 Communications
(U.S. Dollar)
06-15-12 7.63 250,000 271,250
LaBranche
(U.S. Dollar) Sr Nts
08-15-04 9.50 50,000 50,688
Lamar Media
(U.S. Dollar)
01-01-13 7.25 75,000 78,938
Lehman Brothers Holdings
(U.S. Dollar)
08-07-08 3.50 500,000 493,540
MacDermid
(U.S. Dollar)
07-15-11 9.13 35,000 39,025
MBNA Credit Card Master Note Trust
(U.S. Dollar) Series 2003-A1 Cl A1
07-15-10 3.30 500,000 498,100
Merisant
(U.S. Dollar)
07-15-13 9.50 115,000(d) 124,200
Meritage
(U.S. Dollar)
06-01-11 9.75 145,000 160,950
Metris Master Trust
(U.S. Dollar) Series 2001-3 Cl C
07-21-08 2.82 400,000(d,i) 340,000
MGM Mirage
(U.S. Dollar)
10-01-09 6.00 125,000 125,625
Mohegan Tribal Gaming
(U.S. Dollar) Sr Sub Nts
07-15-09 6.38 40,000(d) 40,800
Morgan Stanley, Dean Witter
(European Monetary Unit)
03-16-06 5.25 2,400,000 2,912,576
Morris Publishing
(U.S. Dollar) Sr Sub Nts
08-01-13 7.00 65,000(d) 66,300
Nalco
(U.S. Dollar) Sr Nts
11-15-11 7.75 50,000(d,h) 52,000
NeighborCare
(U.S. Dollar) Sr Sub Nts
11-15-13 6.88 25,000(d,h) 25,330
Newfield Exploration
(U.S. Dollar) Sr Sub Nts
08-15-12 8.38 340,000 375,700
Nextel Communications
(U.S. Dollar) Sr Nts
10-31-13 6.88 300,000 303,000
Nissan Auto Receivables Owner Trust
(U.S. Dollar) Series 2003-A Cl A4
07-15-08 2.61 500,000 499,550
Norcraft Companies LP/Finance
(U.S. Dollar) Sr Sub Nts
11-01-11 9.00 90,000(d) 94,500
Nortek
(U.S. Dollar) Sr Sub Nts Series B
06-15-11 9.88 75,000 80,813
Northwest Pipeline
(U.S. Dollar)
03-01-10 8.13 10,000 11,025
NVR
(U.S. Dollar) Sr Nts
06-15-10 5.00 375,000 365,625
Offshore Logistics
(U.S. Dollar)
06-15-13 6.13 30,000 28,800
Overseas Private Investment
(U.S. Dollar) U.S. Govt Guaranty Series 1996A
01-15-09 6.99 4,166,666 4,592,540
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
15 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
Owens-Brockway Glass
(U.S. Dollar)
05-15-11 7.75% $115,000 $121,325
Park Place Entertainment
(U.S. Dollar) Sr Sub Nts
05-15-11 8.13 85,000 92,863
Peabody Energy
(U.S. Dollar) Series B
03-15-13 6.88 175,000 184,187
Qwest
(U.S. Dollar)
11-01-04 7.20 150,000 153,750
Raytheon
(U.S. Dollar)
04-01-13 5.38 550,000 544,973
Ryland Group
(U.S. Dollar) Sr Nts
06-01-08 5.38 310,000 319,300
SBC Communications
(U.S. Dollar)
08-15-12 5.88 300,000 317,379
Schuler Homes
(U.S. Dollar)
07-15-09 9.38 85,000 95,306
Scotts
(U.S. Dollar) Sr Sub Nts
11-15-13 6.63 15,000(d) 15,225
Silgan Holdings
(U.S. Dollar) Sr Sub Nts
11-15-13 6.75 125,000(d,h) 125,174
SLM
(U.S. Dollar)
03-17-08 3.63 550,000 549,731
Smurfit-Stone Container
(U.S. Dollar)
10-01-12 8.25 85,000 89,250
Southern Natural Gas
(U.S. Dollar)
03-15-10 8.88 175,000 190,750
Sprint Capital
(U.S. Dollar)
03-15-12 8.38 400,000 456,584
SPX
(U.S. Dollar) Sr Nts
06-15-11 6.25 255,000 255,638
Stone Container
(U.S. Dollar) Sr Nts
07-01-12 8.38 210,000 221,550
Susquehanna Media
(U.S. Dollar) Sr Sub Nts
04-15-13 7.38 40,000 41,300
TD Funding
(U.S. Dollar)
07-15-11 8.38 180,000(d) 192,150
Teco Energy
(U.S. Dollar) Sr Nts
06-15-10 7.50 45,000 46,238
Time Warner
(U.S. Dollar)
05-01-12 6.88 1,000,000 1,107,194
Toll
(U.S. Dollar)
02-01-09 8.13 65,000 68,250
Tom Brown
(U.S. Dollar)
09-15-13 7.25 20,000 20,900
Toyota Motor Credit
(Japanese Yen)
06-09-08 .75 197,000,000 1,786,838
TRAINS 10-2002
(U.S. Dollar)
01-15-12 6.96 2,964,000(d,e) 3,369,030
Transcontinental Gas Pipeline
(U.S. Dollar) Series B
08-15-11 7.00 175,000 186,813
U.S. Treasury (U.S. Dollar)
11-15-05 5.75 315,000(g) 339,363
08-15-07 3.25 1,175,000 1,195,242
08-15-13 4.25 33,800,000 33,667,841
02-15-26 6.00 5,390,000 5,921,001
02-15-31 5.38 5,700,000 5,890,369
United Rentals
(U.S. Dollar) Sr Sub Nts
11-15-13 7.75 30,000(d,h) 29,775
United States Steel
(U.S. Dollar) Sr Nts
05-15-10 9.75 75,000 79,313
Verizon Pennsylvania
(U.S. Dollar) Series A
11-15-11 5.65 1,060,000 1,101,626
Wachovia
(U.S. Dollar)
08-15-08 3.50 400,000 397,744
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
16 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
Washington Mutual
(U.S. Dollar) Sr Nts
01-15-07 5.63% $2,500,000(g) $2,693,107
WCI Communities
(U.S. Dollar) Sr Sub Nts
10-01-13 7.88 35,000(d) 36,225
Wells Fargo
(U.S. Dollar) Sr Nts
02-15-07 5.13 1,000,000 1,066,211
Weyerhaeuser
(U.S. Dollar)
03-15-12 6.75 1,100,000 1,190,788
William Carter
(U.S. Dollar) Series B
08-15-11 10.88 100,000 113,250
Williams Companies
(U.S. Dollar)
03-15-12 8.13 75,000 81,000
XTO Energy
(U.S. Dollar) Sr Nts
04-15-12 7.50 260,000 291,200
04-15-13 6.25 160,000 164,000
Total 186,752,042
Total bonds
(Cost: $488,546,016) $510,055,325
Short-term securities (14.2%)(l)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agency (8.3%)
Federal Natl Mtge Assn Disc Nts
12-17-03 1.08% $20,000,000 $19,974,436
01-07-04 1.06 15,000,000 14,972,100
01-14-04 1.07 10,000,000 9,979,400
Total 44,925,936
Commercial paper (5.9%)
Fleet Funding
11-14-03 1.06 5,000,000(k) 4,997,939
Greyhawk Funding LLC
01-16-04 1.10 5,000,000(k) 4,988,494
ING US Funding
12-10-03 1.06 5,000,000 4,994,055
Northern Rock
02-24-04 1.12 5,800,000(k) 5,778,878
UBS Finance (Delaware)
11-03-03 1.04 11,300,000 11,299,022
Total 32,058,388
Total short-term securities
(Cost: $76,980,246) $76,984,324
Total investments in securities
(Cost: $565,526,262)(p) $587,039,649
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) Mortgage-backed securities represent direct or indirect participations in,
or are secured by and payable from, mortgage loans secured by real
property, and include single- and multi-class pass-through securities and
Collateralized Mortgage Obligations. These securities may be issued or
guaranteed by U.S. government agencies or instrumentalities, or by private
issuers, generally originators and investors in mortgage loans, including
savings associations, mortgage bankers, commercial banks, investment
bankers and special purpose entities. The maturity dates shown represent
the original maturity of the underlying obligation. Actual maturity may
vary based upon prepayment activity on these obligations. Unless otherwise
noted, the coupon rates presented are fixed rates.
- --------------------------------------------------------------------------------
17 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Notes to investments in securities (continued)
(g) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 6 to the financial statements):
Type of security Notional amount
Purchase contracts
Eurodollar, Sept. 2007, 90-day $27,250,000
German bund, Dec. 2003, 10-year 5,812,500
(h) At Oct. 31, 2003, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$23,754,981.
(i) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Oct. 31,
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 Oct. 31, 2003.
(k) 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.
(l) At Oct. 31, 2003, cash or short-term securities were designated to cover
open call options on futures written as follows (see Note 7 to the
financial statements):
Issuer Notional Exercise Expiration Value(a)
amount price date
U.S Treasury Notes Nov. 2003, 10-year $5,900,000 $110 Nov. 2003 $151,187
At Oct. 31, 2003, cash or short-term securities were designated to cover open put options on
futures written as follows (see Note 7 to the financial statements):
Issuer Notional Exercise Expiration Value(a)
amount price date
U.S Treasury Notes Nov. 2003, 10-year $5,900,000 $110 Nov. 2003 $15,672
(m) The following abbreviation is used in the portfolio security description to
identify the insurer of the issue:
MBIA -- Municipal Bond Investors Assurance
(n) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the
date of acquisition to maturity.
(o) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at Oct. 31, 2003, is as follows:
Security Acquisition Cost
dates
Greater Beijing First Expressways
(U.S. Dollar) 9.25% Sr Nts 2004 06-12-97 $ 410,923
(U.S. Dollar) 9.50% Sr Nts 2007 06-12-97 1,192,681
(p) At Oct. 31, 2003, the cost of securities for federal income tax purposes
was $565,526,262 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $25,147,752
Unrealized depreciation (3,634,365)
----------
Net unrealized appreciation $21,513,387
-----------
- --------------------------------------------------------------------------------
18 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
World Income Portfolio
Oct. 31, 2003
Assets
Investments in securities, at value (Note 1)*
(identified cost $565,526,262) $587,039,649
Foreign currency holdings (identified cost $3,491,673) (Note 1) 3,482,206
Dividends and accrued interest receivable 8,246,975
Receivable for investment securities sold 333,767
Unrealized appreciation on foreign currency contracts held, at value (Note 5) 100,121
-------
Total assets 599,202,718
-----------
Liabilities
Disbursements in excess of cash on demand deposit 169,528
Payable for investment securities purchased 23,883,450
Unrealized depreciation on foreign currency contracts held, at value (Note 5) 124,330
Payable upon return of securities loaned (Note 4) 31,751,250
Accrued investment management services fee 11,262
Other accrued expenses 55,893
Options contracts written, at value (premiums received $167,310) (Note 7) 166,859
-------
Total liabilities 56,162,572
----------
Net assets $543,040,146
============
* Including securities on loan, at value (Note 4) $ 30,679,572
------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
19 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Statement of operations
World Income Portfolio
Year ended Oct. 31, 2003
Investment income
Income:
Interest $22,115,819
Fee income from securities lending (Note 4) 12,208
Less foreign taxes withheld (7,009)
------
Total income 22,121,018
----------
Expenses (Note 2):
Investment management services fee 4,084,088
Compensation of board members 9,066
Custodian fees 187,191
Audit fees 25,500
Other 13,295
------
Total expenses 4,319,140
---------
Investment income (loss) -- net 17,801,878
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 20,933,458
Foreign currency transactions (2,947,788)
Futures contracts (212,635)
Options contracts written (Note 7) 228,612
-------
Net realized gain (loss) on investments 18,001,647
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 33,085,822
----------
Net gain (loss) on investments and foreign currencies 51,087,469
----------
Net increase (decrease) in net assets resulting from operations $68,889,347
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
20 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Statements of changes in net assets
World Income Portfolio
Year ended Oct. 31, 2003 2002
Operations
Investment income (loss) -- net $ 17,801,878 $ 17,765,639
Net realized gain (loss) on investments 18,001,647 (13,975,131)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 33,085,822 28,002,434
---------- ----------
Net increase (decrease) in net assets resulting from operations 68,889,347 31,792,942
---------- ----------
Proceeds from contributions 39,684,999 27,551,027
Fair value of withdrawals (68,855,691) (58,048,238)
----------- -----------
Net contributions (withdrawals) from partners (29,170,692) (30,497,211)
----------- -----------
Total increase (decrease) in net assets 39,718,655 1,295,731
Net assets at beginning of year 503,321,491 502,025,760
----------- -----------
Net assets at end of year $543,040,146 $503,321,491
============ ============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
21 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Notes to Financial Statements
World Income Portfolio
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. American Express Financial
Corporation (AEFC) may use fair value if a security's value has been materially
affected by events after the close of the primary exchanges or markets on which
the security is traded and before the NAV is calculated. The fair value of a
security may be different from the quoted or published price. AEFC will price a
security at fair value in accordance with procedures adopted by the Portfolio
and board of trustees if a reliable market quotation is not readily available.
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.
- --------------------------------------------------------------------------------
22 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL 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 Oct. 31, 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.
Illiquid securities
As of Oct. 31, 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 Oct. 31, 2003
was $245,000 representing 0.05% 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.
- --------------------------------------------------------------------------------
23 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL 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 Oct. 31, 2003, the Portfolio has entered into
outstanding when-issued securities of $23,754,981.
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, market discount and original issue
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 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.
Under a Deferred Compensation Plan (the Plan), non-interested trustees may defer
receipt of their compensation. Deferred amounts are treated as though equivalent
dollar amounts had been invested in shares of the underlying Fund or other
American Express mutual funds. The Portfolio's liability for these amounts is
adjusted for market value changes and remains in the Portfolio until distributed
in accordance with the Plan.
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.
- --------------------------------------------------------------------------------
24 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $598,097,621 and $616,568,163, respectively, for the
year ended Oct. 31, 2003. Realized gains and losses are determined on an
identified cost basis.
4. LENDING OF PORTFOLIO SECURITIES
As of Oct. 31, 2003, securities valued at $30,679,572 were on loan to brokers.
For collateral, the Portfolio received $31,751,250 in cash. Income from
securities lending amounted to $12,208 for the year ended Oct. 31, 2003. The
risks to the Portolio 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 Oct. 31, 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
Nov. 7, 2003 18,900,000 21,970,778 $ 1,397 $ --
European Monetary Unit U.S. Dollar
Nov. 7, 2003 2,315,000 2,733,089 42,131 --
European Monetary Unit U.S. Dollar
Nov. 14, 2003 1,375,333 15,500,000 24,353 --
U.S. Dollar Mexican Peso
Nov. 14, 2003 1,367,446 15,500,000 32,240 --
U.S. Dollar Mexican Peso
Nov. 25, 2003 12,958,249 1,410,000,000 -- 124,330
U.S. Dollar Japanese Yen
-------- --------
Total $100,121 $124,330
-------- --------
6. INTEREST RATE FUTURES CONTRACTS
As of Oct. 31, 2003, investments in securities included securities valued at
$673,297 that were pledged as collateral to cover initial margin deposits on 50
open purchase contracts denominated in Euros and 109 open purchase contracts.
The notional market value of the open purchase contracts denominated in Euros as
of Oct. 31, 2003 was $6,553,594 with a net unrealized gain of $49,306. The
notional market value of the open purchase contracts denominated in U.S. dollars
as of Oct. 31, 2003 was $25,824,825 with a net unrealized loss of $268,848. See
"Summary of significant accounting policies" and "Notes to investments in
securities."
- --------------------------------------------------------------------------------
25 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
7. OPTIONS CONTRACTS WRITTEN
Contracts and premiums associated with options contracts written are as follows:
Year ended Oct. 31, 2003
Puts Calls
Contracts Premiums Contracts Premiums
Balance Oct. 31, 2002 -- $ -- -- $ --
Opened 466 308,107 1,103 977,809
Closed (407) (253,952) (1,044) (864,654)
---- -------- ------ --------
Balance Oct. 31, 2003 59 $ 54,155 59 $ 113,155
-- --------- -- ---------
8. FINANCIAL HIGHLIGHTS
The table below shows certain important financial information for evaluating the
Portfolio's results.
Ratios/supplemental data
Fiscal period ended Oct. 31, 2003 2002 2001 2000 1999
Ratio of expenses to average daily net assets(a) .80% .79% .78% .78% .77%
Ratio of net investment income (loss) to average daily net assets 3.29% 3.66% 5.27% 5.98% 5.90%
Portfolio turnover rate (excluding short-term securities) 117% 51% 24% 48% 48%
Total return(b) 13.99% 6.89% 11.29% (4.29%) --%
Notes to financial highlights
(a) Expense ratio is based on total expenses of the Portfolio before reduction
of earnings credits on cash balances. The ratio does not include feeder
fund expenses.
(b) Total return is based on a calculated Portfolio NAV and does not reflect
payment of a sales charge.
- --------------------------------------------------------------------------------
26 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Independent Auditors' Report
THE BOARD OF TRUSTEES AND UNITHOLDERS
WORLD TRUST
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of World Income Portfolio (a series
of World Trust) as of October 31, 2003, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period ended October 31, 2003, and the financial
highlights for each of the years in the five-year period ended October 31, 2003.
These financial statements and the financial highlights are the responsibility
of portfolio management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2003, by correspondence with the custodian
and brokers or by other appropriate auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of World
Income Portfolio as of October 31, 2003, and the results of its operations,
changes in its net assets and the financial highlights for each of the periods
stated in the first paragraph above, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
December 12, 2003
- --------------------------------------------------------------------------------
27 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Bond Fund
Oct. 31, 2003
Assets
Investment in Portfolio (Note 1) $542,908,102
Capital shares receivable 400,853
-------
Total assets 543,308,955
-----------
Liabilities
Capital shares payable 152,274
Accrued distribution fee 7,082
Accrued transfer agency fee 3,203
Accrued administrative services fee 849
Other accrued expenses 64,805
------
Total liabilities 228,213
-------
Net assets applicable to outstanding capital stock $543,080,742
============
Represented by
Capital stock -- $.01 par value (Note 1) $ 826,222
Additional paid-in capital 529,380,582
Undistributed net investment income 5,836,050
Accumulated net realized gain (loss) (Note 5) (14,370,439)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 21,408,327
----------
Total -- representing net assets applicable to outstanding capital stock $543,080,742
============
Net assets applicable to outstanding shares: Class A $380,369,260
Class B $157,749,689
Class C $ 4,896,742
Class Y $ 65,051
Net asset value per share of outstanding capital stock: Class A shares 57,861,587 $ 6.57
Class B shares 24,002,923 $ 6.57
Class C shares 747,827 $ 6.55
Class Y shares 9,872 $ 6.59
----- ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
28 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Statement of operations
AXP Global Bond Fund
Year ended Oct. 31, 2003
Investment income
Income:
Interest $22,112,403
Fee income from securities lending 12,205
Less foreign taxes withheld (7,007)
------
Total income 22,117,601
----------
Expenses (Note 2):
Expenses allocated from Portfolio 4,318,134
Distribution fee
Class A 934,595
Class B 1,630,210
Class C 40,221
Transfer agency fee 1,032,815
Incremental transfer agency fee
Class A 72,987
Class B 60,182
Class C 1,799
Service fee -- Class Y 31
Administrative services fees and expenses 311,211
Compensation of board members 7,891
Printing and postage 139,749
Registration fees 54,408
Audit fees 8,500
Other 10,470
------
Total expenses 8,623,203
Earnings credits on cash balances (Note 2) (5,862)
------
Total net expenses 8,617,341
---------
Investment income (loss) -- net 13,500,260
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 20,927,943
Foreign currency transactions (2,947,445)
Futures contracts (212,623)
Options contracts written 228,557
-------
Net realized gain (loss) on investments 17,996,432
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 33,079,008
----------
Net gain (loss) on investments and foreign currencies 51,075,440
----------
Net increase (decrease) in net assets resulting from operations $64,575,700
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
29 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Statements of changes in net assets
AXP Global Bond Fund
Year ended Oct. 31, 2003 2002
Operations and distributions
Investment income (loss) -- net $ 13,500,260 $ 14,015,228
Net realized gain (loss) on investments 17,996,432 (13,978,629)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 33,079,008 28,002,459
---------- ----------
Net increase (decrease) in net assets resulting from operations 64,575,700 28,039,058
---------- ----------
Distributions to shareholders from:
Net investment income
Class A (12,438,109) (9,644,735)
Class B (3,958,002) (2,850,093)
Class C (103,214) (18,570)
Class Y (1,009) (1,859)
------ ------
Total distributions (16,500,334) (12,515,257)
----------- -----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 118,383,281 85,865,445
Class B shares 50,004,285 39,838,214
Class C shares 3,603,615 2,477,135
Class Y shares 41,942 39,390
Reinvestment of distributions at net asset value
Class A shares 11,408,319 9,451,955
Class B shares 3,683,453 2,694,998
Class C shares 93,681 18,429
Class Y shares 985 2,055
Payments for redemptions
Class A shares (130,390,225) (112,854,832)
Class B shares (Note 2) (63,154,212) (40,086,791)
Class C shares (Note 2) (1,678,853) (813,795)
Class Y shares (55,411) (34,448)
------- -------
Increase (decrease) in net assets from capital share transactions (8,059,140) (13,402,245)
---------- -----------
Total increase (decrease) in net assets 40,016,226 2,121,556
Net assets at beginning of year 503,064,516 500,942,960
----------- -----------
Net assets at end of year $ 543,080,742 $ 503,064,516
============= =============
Undistributed net investment income $ 5,836,050 $ 1,228,206
------------- -------------
See accompanying notes to financial statements.
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30 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Notes to Financial Statements
AXP Global Bond Fund
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 Oct. 31, 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.
- --------------------------------------------------------------------------------
31 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL 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.
On the statement of assets and liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by
$7,607,918 and accumulated net realized loss has been increased by $7,607,918.
The tax character of distributions paid for the years indicated is as follows:
Year ended Oct. 31, 2003 2002
Class A
Distributions paid from:
Ordinary income $12,438,109 $9,644,735
Long-term capital gain -- --
Class B
Distributions paid from:
Ordinary income 3,958,002 2,850,093
Long-term capital gain -- --
Class C
Distributions paid from:
Ordinary income 103,214 18,570
Long-term capital gain -- --
Class Y
Distributions paid from:
Ordinary income 1,009 1,859
Long-term capital gain -- --
As of Oct. 31, 2003, the components of distributable earnings on a tax basis are
as follows:
Undistributed ordinary income $ 7,210,151
Accumulated long-term gain (loss) $(14,577,099)
Unrealized appreciation (depreciation) $ 20,240,886
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.
- --------------------------------------------------------------------------------
32 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL 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 0.04% 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 Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
American Express mutual funds. The Fund's liability for these amounts is
adjusted for market value changes and remains in the Fund until distributed in
accordance with the Plan.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $20.50
o Class B $21.50
o Class C $21.00
o Class Y $18.50
The incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the fee for Class Y.
In addition, there is an annual closed-account fee of $5 per inactive account,
charged on a pro rata basis from the date the account becomes inactive until the
date the account is purged from the transfer agent system generally within one
year. However, the closed account fee is not being charged to the Fund until a
new transfer agency system is installed.
Under terms of a prior agreement that ended April 30, 2003, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $19.50 for
Class A, $20.50 for Class B, $20 for Class C and $17.50 for Class Y.
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 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.
- --------------------------------------------------------------------------------
33 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Sales charges received by the Distributor for distributing Fund shares were
$867,579 for Class A, $140,300 for Class B and $2,038 for Class C for the year
ended Oct. 31, 2003.
During the year ended Oct. 31, 2003, the Fund's transfer agency fees were
reduced by $5,862 as a result of earnings credits from overnight cash balances.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the years indicated are as follows:
Year ended Oct. 31, 2003
Class A Class B Class C Class Y
Sold 18,346,322 7,797,131 562,338 6,300
Issued for reinvested distributions 1,795,377 578,536 14,712 154
Redeemed (20,340,957) (9,764,130) (260,976) (9,193)
----------- ---------- -------- ------
Net increase (decrease) (199,258) (1,388,463) 316,074 (2,739)
-------- ---------- ------- ------
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 year ended Oct. 31, 2003.
5. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund has a capital loss carry-over of
$14,577,099 as of Oct. 31, 2003, 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.
- --------------------------------------------------------------------------------
34 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL 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 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) .18 .19 .27 .34 .33
Net gains (losses) (both realized and unrealized) .60 .17 .30 (.63) (.36)
Total from investment operations .78 .36 .57 (.29) (.03)
Less distributions:
Dividends from net investment income (.21) (.17) (.15) (.19) (.26)
Distributions from realized gains -- -- -- -- (.01)
Total distributions (.21) (.17) (.15) (.19) (.27)
Net asset value, end of period $6.57 $6.00 $5.81 $5.39 $5.87
Ratios/supplemental data
Net assets, end of period (in millions) $380 $348 $355 $389 $598
Ratio of expenses to average daily net assets(c) 1.36% 1.34% 1.32% 1.30% 1.22%
Ratio of net investment income (loss) to average daily net assets 2.73% 3.12% 4.75% 5.49% 5.49%
Portfolio turnover rate (excluding short-term securities) 117% 51% 24% 48% 48%
Total return(e) 13.25% 6.24% 10.83% (5.16%) (.35%)
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
35 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) .12 .13 .21 .29 .28
Net gains (losses) (both realized and unrealized) .62 .19 .31 (.62) (.35)
Total from investment operations .74 .32 .52 (.33) (.07)
Less distributions:
Dividends from net investment income (.16) (.12) (.11) (.16) (.22)
Distributions from realized gains -- -- -- -- (.01)
Total distributions (.16) (.12) (.11) (.16) (.23)
Net asset value, end of period $6.57 $5.99 $5.79 $5.38 $5.87
Ratios/supplemental data
Net assets, end of period (in millions) $158 $152 $145 $155 $235
Ratio of expenses to average daily net assets(c) 2.12% 2.10% 2.09% 2.07% 1.98%
Ratio of net investment income (loss) to average daily net assets 1.97% 2.36% 3.99% 4.73% 4.72%
Portfolio turnover rate (excluding short-term securities) 117% 51% 24% 48% 48%
Total return(e) 12.39% 5.59% 9.73% (5.77%) (1.10%)
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) .13 .14 .21 .10
Net gains (losses) (both realized and unrealized) .60 .18 .31 (.24)
Total from investment operations .73 .32 .52 (.14)
Less distributions:
Dividends from net investment income (.16) (.13) (.11) --
Net asset value, end of period $6.55 $5.98 $5.79 $5.38
Ratios/supplemental data
Net assets, end of period (in millions) $5 $3 $1 $--
Ratio of expenses to average daily net assets(c) 2.14% 2.10% 2.09% 2.07%(d)
Ratio of net investment income (loss) to average daily net assets 1.89% 2.29% 3.84% 4.80%(d)
Portfolio turnover rate (excluding short-term securities) 117% 51% 24% 48%
Total return(e) 12.41% 5.51% 9.84% (2.49%)(f)
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
36 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) .19 .20 .29 .35 .34
Net gains (losses) (both realized and unrealized) .61 .19 .27 (.62) (.36)
Total from investment operations .80 .39 .56 (.27) (.02)
Less distributions:
Dividends from net investment income (.22) (.18) (.16) (.20) (.27)
Distributions from realized gains -- -- -- -- (.01)
Total distributions (.22) (.18) (.16) (.20) (.28)
Net asset value, end of period $6.59 $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) 1.18% 1.17% 1.16% 1.14% 1.07%
Ratio of net investment income (loss) to average daily net assets 2.69% 3.29% 4.90% 5.75% 5.63%
Portfolio turnover rate (excluding short-term securities) 117% 51% 24% 48% 48%
Total return(e) 13.54% 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.
- --------------------------------------------------------------------------------
37 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Independent Auditors' Report
THE BOARD AND SHAREHOLDERS
AXP GLOBAL SERIES, INC.
We have audited the accompanying statement of assets and liabilities of AXP
Global Bond Fund (a series of AXP Global Series, Inc.) as of October 31, 2003,
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period ended October
31, 2003, and the financial highlights for each of the years in the five-year
period ended October 31, 2003. These financial statements and the financial
highlights are the responsibility of fund management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AXP
Global Bond Fund as of October 31, 2003, and the results of its operations,
changes in its net assets and the financial highlights for each of the periods
stated in the first paragraph above, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
December 12, 2003
- --------------------------------------------------------------------------------
38 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Federal Income Tax Information
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
AXP Global Bond Fund
Fiscal year ended Oct. 31, 2003
Class A
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals
(effective for distributions made after Jan. 1, 2003) 0.00%
Dividends Received Deduction for corporations 0.00%
Payable date Per share
Dec. 20, 2002 $0.06846
March 21, 2003 0.04120
June 20, 2003 0.04145
Sept. 19, 2003 0.06379
Total distributions $0.21490
Class B
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals (effective for
distributions made after Jan. 1, 2003) 0.00%
Dividends Received Deduction for corporations 0.00%
Payable date Per share
Dec. 20, 2002 $0.04615
March 21, 2003 0.02948
June 20, 2003 0.02912
Sept. 19, 2003 0.05109
Total distributions $0.15584
- --------------------------------------------------------------------------------
39 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Class C
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals (effective for
distributions made after Jan. 1, 2003) 0.00%
Dividends Received Deduction for corporations 0.00%
Payable date Per share
Dec. 20, 2002 $0.05241
March 21, 2003 0.03054
June 20, 2003 0.03057
Sept. 19, 2003 0.05136
Total distributions $0.16488
Class Y
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals (effective for
distributions made after Jan. 1, 2003) 0.00%
Dividends Received Deduction for corporations 0.00%
Payable date Per share
Dec. 20, 2002 $0.06800
March 21, 2003 0.04382
June 20, 2003 0.04440
Sept. 19, 2003 0.06671
Total distributions $0.22293
- --------------------------------------------------------------------------------
40 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Board Members and Officers
Shareholders elect a board that oversees the Fund's operations. The board
appoints officers who are responsible for day-to-day business decisions based
on policies set by the board.
The following is a list of the Fund's board members. Each member oversees 15
Master Trust portfolios and 86 American Express mutual funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the board.
Independent Board Members
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Arne H. Carlson Board member since Chair, Board Services
901 S. Marquette Ave. 1999 Corporation (provides
Minneapolis, MN 55402 administrative services to
Age 69 boards). Former Governor of
Minnesota
- ------------------------------------- -------------------- -------------------------------- ------------------------
Philip J. Carroll, Jr. Board member since Retired Chairman and CEO, Scottish Power PLC,
901 S. Marquette Ave. 2002 Fluor Corporation (engineering Vulcan Materials
Minneapolis, MN 55402 and construction) since 1998 Company, Inc.
Age 65 (construction
materials/chemicals)
- ------------------------------------- -------------------- -------------------------------- ------------------------
Livio D. DeSimone Board member Retired Chair of the Board and Cargill, Incorporated
30 Seventh Street East since 2001 Chief Executive Officer, (commodity merchants
Suite 3050 Minnesota Mining and and processors),
St. Paul, MN 55101-4901 Manufacturing (3M) General Mills, Inc.
Age 69 (consumer foods),
Vulcan Materials
Company (construction
materials/ chemicals),
Milliken & Company
(textiles and
chemicals), and Nexia
Biotechnologies, Inc.
- ------------------------------------- -------------------- -------------------------------- ------------------------
Heinz F. Hutter* Board member since Retired President and Chief
901 S. Marquette Ave. 1994 Operating Officer, Cargill,
Minneapolis, MN 55402 Incorporated (commodity
Age 74 merchants and processors)
- ------------------------------------- -------------------- -------------------------------- ------------------------
Anne P. Jones Board member since Attorney and Consultant
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 68
- ------------------------------------- -------------------- -------------------------------- ------------------------
Stephen R. Lewis, Jr.** Board member since Retired President and Valmont Industries,
901 S. Marquette Ave. 2002 Professor of Economics, Inc. (manufactures
Minneapolis, MN 55402 Carleton College irrigation systems)
Age 64
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alan G. Quasha Board member since President, Quadrant Compagnie Financiere
901 S. Marquette Ave. 2002 Management, Inc. (management Richemont AG (luxury
Minneapolis, MN 55402 of private equities) goods), Harken Energy
Age 53 Corporation (oil and
gas exploration) and
SIRIT Inc. (radio
frequency
identification
technology)
- ------------------------------------- -------------------- -------------------------------- ------------------------
* Interested person of AXP Partners International Aggressive Growth Fund
and AXP Partners Aggressive Growth Fund by reason of being a security
holder of J P Morgan Chase & Co., which has a 45% interest in American
Century Companies, Inc., the parent company of the subadviser of two of
the AXP Partners Funds, American Century Investment Management, Inc.
** Interested person of AXP Partners International Aggressive Growth Fund by
reason of being a security holder of FleetBoston Financial Corporation,
parent company of Columbia Wanger Asset Management, L.P., one of the
fund's subadvisers.
- --------------------------------------------------------------------------------
41 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
Independent Board Members (continued)
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alan K. Simpson Board member since Former three-term United Biogen, Inc.
1201 Sunshine Ave. 1997 States Senator for Wyoming (biopharmaceuticals)
Cody, WY 82414
Age 71
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alison Taunton-Rigby Board member since President, Forester Biotech
901 S. Marquette Ave. 2002 since 2000. Former President
Minneapolis, MN 55402 and CEO, Aquila
Age 59 Biopharmaceuticals, Inc.
- ------------------------------------- -------------------- -------------------------------- ------------------------
Board Members Affiliated with AEFC***
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Barbara H. Fraser Board member since Executive Vice President -
1546 AXP Financial Center 2002 AEFA Products and Corporate
Minneapolis, MN 55474 Marketing of AEFC since 2002.
Age 53 President - Travelers Check
Group, American Express
Company, 2001-2002. Management
Consultant, Reuters,
2000-2001. Managing Director -
International Investments,
Citibank Global, 1999-2000.
Chairman and CEO, Citicorp
Investment Services and
Citigroup Insurance Group,
U.S., 1998-1999
- ------------------------------------- -------------------- -------------------------------- ------------------------
Stephen W. Roszell Board membersince Senior Vice President -
50238 AXP Financial Center 2002, Institutional Group of AEFC
Minneapolis, MN 55474 Vice President
Age 54 since 2002
- ------------------------------------- -------------------- -------------------------------- ------------------------
William F. Truscott Board member since Senior Vice President - Chief
53600 AXP Financial Center 2001, Investment Officer of AEFC
Minneapolis, MN 55474 Vice President since 2001. Former Chief
Age 42 since 2002 Investment Officer and
Managing Director, Zurich
Scudder Investments
- ------------------------------------- -------------------- -------------------------------- ------------------------
*** Interested person by reason of being an officer, director and/or employee
of AEFC.
- --------------------------------------------------------------------------------
42 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL REPORT
The board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the board. In addition to Mr. Roszell, who is vice president, and
Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers
Name, address, age Position held Principal occupation during Other directorships
with Fund and past five years
length of service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Jeffrey P. Fox Treasurer since Vice President - Investment
50005 AXP Financial Center 2002 Accounting, AEFC, since 2002;
Minneapolis, MN 55474 Vice President - Finance,
Age 48 American Express Company,
2000-2002; Vice President -
Corporate Controller, AEFC,
1996-2000
- ------------------------------------- -------------------- -------------------------------- ------------------------
Paula R. Meyer President since Senior Vice President and
596 AXP Financial Center 2002 General Manager - Mutual
Minneapolis, MN 55474 Funds, AEFC, since 2002; Vice
Age 49 President and Managing
Director - American Express
Funds, AEFC, 2000-2002; Vice
President, AEFC, 1998-2000
- ------------------------------------- -------------------- -------------------------------- ------------------------
Leslie L. Ogg Vice President, President of Board Services
901 S. Marquette Ave. General Counsel, Corporation
Minneapolis, MN 55402 and Secretary
Age 65 since 1978
- ------------------------------------- -------------------- -------------------------------- ------------------------
The SAI has additional information about the Fund's directors and is available,
without charge, upon request by calling (800) 862-7919.
Proxy Voting
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
(800) 862-7919; by looking at the Web site americanexpress.com/funds; or by
searching the Web site of the Securities and Exchange Commission
http://www.sec.gov. Beginning Jan. 1, 2004, you may view the Fund's voting
record for all portfolio companies whose shareholders meetings were completed
the previous quarter on americanexpress.com/funds or obtain a copy by calling
the Fund's administrator, Board Services Corporation, collect at (612) 330-9283.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available at
http://www.sec.gov.
- --------------------------------------------------------------------------------
43 -- AXP GLOBAL BOND FUND -- 2003 ANNUAL 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 Equity
Fund
Annual Report
for the Period Ended
Oct. 31, 2003
AXP Global Equity Fund seeks to provide shareholders with long-term capital
growth.
- --------------------------------------------------------------------------------
(logo) (logo)
American AMERICAN
Express EXPRESS
Funds (R)
- --------------------------------------------------------------------------------
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
The Fund's Long-term Performance 9
Investments in Securities 10
Financial Statements (Portfolio) 14
Notes to Financial Statements (Portfolio) 17
Independent Auditors' Report (Portfolio) 21
Financial Statements (Fund) 22
Notes to Financial Statements (Fund) 25
Independent Auditors' Report (Fund) 32
Board Members and Officers 33
Proxy Voting 35
- --------------------------------------------------------------------------------
2 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Fund Snapshot AS OF OCT. 31, 2003
PORTFOLIO MANAGERS
Portfolio manager Dominic Rossi*
Since 10/03
Years in industry 17
Portfolio manager Stephen Thornber*
Since 10/03
Years in industry 16
* The Fund is managed by a team led by Dominic Rossi and Stephen Thornber.
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 $513.8 million
Number of holdings 107
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
COUNTRY COMPOSITION
Percentage of portfolio assets
(pie chart)
United States 49.4%
Japan 7.6%
United Kingdom 7.5%
Switzerland 5.8%
Germany 5.5%
Italy 2.9%
China 2.5%
France 2.3%
Mexico 2.3%
Australia 2.1%
Bermuda 2.1%
South Korea 1.7%
Brazil 1.2%
Hong Kong 1.0%
Malaysia 1.0%
Netherlands 1.0%
Taiwan 1.0%
Other* 3.1%
* Includes Barbados, Canada, Finland, Ireland and Sweden.
TOP TEN HOLDINGS
Percentage of portfolio assets
Citigroup (United States) 1.7%
Samsung Electronics (South Korea) 1.7
Swiss Life Holding (Switzerland) 1.7
HSBC Holdings (United Kingdom) 1.6
Microsoft (United States) 1.6
Intel (United States) 1.6
North Fork Bancorporation (United States) 1.6
Procter & Gamble (United States) 1.6
Johnson & Johnson (United States) 1.5
Dell (United States) 1.5
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 EQUITY FUND -- 2003 ANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
On Oct. 20, 2003, Threadneedle investment professionals began managing American
Express Funds global and international equity mutual funds. At that time
responsibility for the management of the AXP Global Equity Fund moved to a
Threadneedle team led by Dominic Rossi and Stephen Thornber. Below is a
discussion of the Fund's results and changes in positioning since the start of
the fiscal year. The Fund's name was changed from AXP Global Growth Fund to AXP
Global Equity Fund on Oct. 20, 2003.
Q: How did AXP Global Equity Fund perform for the fiscal year period ended
Oct. 31, 2003?
A: AXP Global Equity Fund's Class A shares rose 17.86%, excluding sales
charge, for the 12-month period ended Oct. 31, 2003. This was less than the
Fund's benchmark, the MSCI All Country World Free Index, which advanced
25.25% for the period. The Lipper Global Funds Index, representing the
Fund's peer group, rose 22.65% for the same time frame.
Q: What factors most significantly affected performance?
A: Throughout the 12-month period, the Fund was managed defensively. At the
start of the fiscal year, uncertainty associated with the pending
conflict in Iraq led to high market volatility. The Fund's risk profile
was reduced in anticipation of war. In March, the toppling of Saddam
Hussein from power occurred more quickly than could have been reasonably
anticipated, and this helped generate a dramatic market rally. However,
the Fund maintained a defensive stance based on caution that the economic
recovery -- which had been on again, off again for some time -- would not
be sustained.
(bar chart)
PERFORMANCE COMPARISON
For the year ended Oct. 31, 2003
30%
(bar 2)
25% +25.25% (bar 3)
+22.65%
20% (bar 1)
+17.86%
15%
10%
5%
0%
(bar 1) AXP Global Equity Fund Class A (excluding sales charge)
(bar 2) MSCI All Country World-Free Index (unmanaged)
(bar 3) Lipper Global Funds Index
(see "The Fund's Long-term Performance" for Index descriptions)
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 EQUITY FUND -- 2003 ANNUAL REPORT
Questions & Answers
(begin callout quote)> Our day-to-day portfolio management decisions are all
based on the thorough research and involvement of our investment team. (end
callout quote)
The sharp rally that followed the war in Iraq favored mid- and small-cap
stocks. Many of these smaller capitalization stocks were gaining favor due
to recovery stories of their own. Because the Fund was defensively
positioned and invested in mostly large cap stocks, the Fund did not fully
benefit from this substantial rally.
During the fiscal year, the Fund held a lower than benchmark position in
European stocks and this hurt its results. Stocks in Europe were weak in
the autumn and winter of 2002, but bounced back sharply in March and
continued to perform well
AVERAGE ANNUAL TOTAL RETURNS
as of Oct. 31, 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)
1 year +17.86% +11.08% +17.02% +13.02% +16.80% +16.80% +18.02% +18.02%
5 years -3.64% -4.77% -4.37% -4.50% N/A N/A -3.47% -3.47%
10 years +2.12% +1.51% N/A N/A N/A N/A N/A N/A
Since inception N/A N/A +2.27% +2.27% -15.95% -15.95% +3.21% +3.21%
as of Sept. 30, 2003
1 year +18.33% +11.53% +17.42% +13.42% +17.46% +17.46% +18.82% +18.82%
5 years -3.13% -4.27% -3.88% -4.02% N/A N/A -2.96% -2.96%
10 years +1.97% +1.36% N/A N/A N/A N/A N/A N/A
Since inception N/A N/A +1.68% +1.68% -17.58% -17.58% +2.63% +2.63%
(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/funds for current information.
- --------------------------------------------------------------------------------
5 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Questions & Answers
through the end of period. The Fund did not increase its positioning in
Europe to fully capitalize on the market turnaround.
In Japan, early in the fiscal period, small cap stocks outperformed
substantially as Japanese pension plans sold large-cap holdings to raise
cash to return to the Japanese government. The Fund's large cap focus in
Japan became another source of underpeformance in fiscal year 2003.
Later in the reporting period, the Fund was repositioned to focus on areas
that could benefit from improvements in the global economy. The Fund
reduced holdings in defensive stocks and broadened out its market cap to
more mid-cap stocks. The Fund also added emerging markets exposure because
emerging markets were more competitive against high cost production areas
in Europe, the U.S. and other mature markets. The Pacific regional
weighting in Singapore, Australia, and Hong Kong was also reduced. Those
assets were then used to reinvest in emerging markets and Japan.
Q: What changes were made to the Portfolio since Oct. 20, 2003?
A: Changes we have made to the Fund include:
o Eliminating the Fund's substantial large-cap stock focus -- When we
took over the Fund, companies with market capitalizations greater
than $50 billion made up nearly half of the Fund's portfolio. We
felt the Fund had taken on too much risk by focusing on this segment
of the market, and we have since cut the $50 billion plus portion of
the portfolio to less than a third of the portfolio, a percentage
that is more in line with the Fund's peer group and Threadneedle's
investment discipline.
o Adding more mid-cap stocks -- Unlike large company stocks, mid cap
stocks, as well as small cap stocks, tend to benefit more as the
economy accelerates. Mid cap stocks afford opportunities to gain
exposure to niche growth markets and valuations remain attractive.
- --------------------------------------------------------------------------------
6 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Questions & Answers
o Adding more emerging markets stocks -- For some time, the
Threadneedle team has been bullish on Asia (with the exception of
Japan) and Latin America. We believe Asia has attractive growth rates
and cheap valuations. Latin America also has attractive valuations
and its growth is leveraged to the U.S. economic recovery. We wanted
the Fund to have a more active position in these areas, so we
increased our positioning in the Far East (with the exception of
Japan) and Latin American emerging markets.
o Having a strong cyclical focus -- We are optimistic about global growth
and have, for that reason, skewed the Fund toward cyclical stocks.
Historically, cyclical stocks benefit from a growing global economy. We
have a greater than index position in materials, health care and
financials sectors.
o Changed some country and regional allocations -- We added slightly to
the Fund's position in Europe. Europe has some attractive
opportunities, although its economic recovery has lagged the United
States and Asia. We reduced our position in the United States and
Japan. Both of these nations' economies continue to improve, but
valuations are high, in our view.
Q: Can you share some specific examples of these changes?
A: Among the very large capitalization stocks we sold was General Electric. We
eliminated it from the Fund because we saw its stock as overvalued. Pfizer,
the pharmaceutical giant, was another holding that we greatly reduced. We
believe that the market has been underestimating the risk to Pfizer's
earnings potential over the next few years.
We have seen some positive trends in Asia. We are especially confident in
Hong Kong. Property markets there are booming, and we have added several
property companies to the Fund. The financial sector in Hong Kong is also
doing extremely well.
We are always watching for medium sized biotechnology and other promising
medical companies. We added Actellion, a European company, which has a new
cardiovascular drug that we are excited about.
Our day-to-day portfolio management decisions are all based on the thorough
research and involvement of our investment team.
- --------------------------------------------------------------------------------
7 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Questions & Answers
Q: How does Threadneedle manage stock selection?
A: In Threadneedle's global portfolios, including this Fund, we select
securities based on our proprietary research efforts and on-going
discussions. We feel that this process helps ensure consistency across
all global portfolios, and consistency is key to our overall investment
process. At Threadneedle we rely on our colleagues' research to
construct global portfolios. We have a Largest Companies list and a
Preferred List that help guide stock selection. There is also a
discretionary stock selection element, based on a portfolio manager's own
opinion. Here is how the process works:
Largest Companies List: We construct our global portfolios using a Largest
Companies List, which gives specific recommended weights for the largest 60
stocks in the index. A member of the Threadneedle team is responsible for
following an assigned stock and making a recommendation to the rest of the
team as to what our position should be. Then the team makes the decision,
based on the research and other information available.
Preferred List: Our Preferred List is a list of stocks that represents the
best ideas uncovered by Threadneedle's research efforts. These are stocks
that our firm's research team believes should have a larger-than-index
position in a diversified portfolio.
Q: What is the goal of Threadneedle's overall investment process?
A: Our investment process strives for both consistent performance --
irrespective of market conditions -- and effective risk management. The
dynamic strategy employed by Threadneedle capitalizes on all opportunities
across all sectors. We also actively manage sector weightings to reflect
the environment, assess the economic environment and ensure that we are
taking an appropriate level of risk.
Q: How are you positioning the Fund for the months ahead?
A: We significantly repositioned the Fund over the last two weeks of the
reporting period, and we completed this process at the end of November
2003. We believe that the Fund is now poised to participate fully as the
global economic recovery strengthens. Traditionally, strong rallies occur
when the economy is recovering, and we believe the Fund, with its mid-cap
focus and well-defined allocation strategy, is now positioned to more fully
participate in future rallies.
- --------------------------------------------------------------------------------
8 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
The Fund's Long-term Performance
This chart illustrates the total value of an assumed $10,000 investment in AXP
Global Equity Fund Class A shares (from 11/1/93 to 10/31/03) as compared to the
performance of two widely cited performance indices, the Morgan Stanley Capital
International All Country World Free Index and the Lipper Global Funds Index. In
comparing the Fund's Class A shares to these indices, you should take into
account the fact that the Fund's performance reflects the maximum sales charge
of 5.75%, while such charges are not reflected in the performance of the
indices. Returns for the Fund include the reinvestment of any distribution paid
during each period.
Past performance is no guarantee of future results. Your investment and return
values fluctuate so that your shares, when redeemed, may be worth more or less
than the original cost. Returns do not reflect taxes payable on distributions
and redemptions. Also see "Past Performance" in the Fund's current prospectus.
(line chart)
VALUE OF A HYPOTHETICAL $10,000 INVESTMENT
IN AXP GLOBAL EQUITY FUND
AXP Global Equity Fund
Class A $9,425 $10,566 $9,828 $11,254 $11,954 $13,986 $17,285 $18,105 $11,799 $9,861 $11,623
MSCI All Country
World Free Index(1) $10,000 $10,934 $11,800 $13,670 $15,867 $17,935 $22,601 $22,782 $17,052 $14,738 $18,460
Lipper Global Funds Index(2) $10,000 $10,944 $11,397 $13,090 $15,437 $16,326 $20,227 $22,639 $17,278 $14,988 $18,383
'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03
(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 Fund, although some funds
in the index may have somewhat different investment policies or objectives.
Average Annual Total Returns
Class A with Sales Charge as of Oct. 31, 2003
1 year +11.08%
5 years -4.77%
10 years +1.51%
Results for other share classes can be found on page 5.
- --------------------------------------------------------------------------------
9 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Investments in Securities
World Growth Portfolio
Oct. 31, 2003
(Percentages represent value of investments compared to net assets)
Common stocks (98.2%)(c)
Issuer Shares Value(a)
Australia (2.1%)
Media (1.1%)
News ADR 151,800 $5,411,670
Metals (1.0%)
BHP Billiton 621,035 5,164,481
Barbados (0.8%)
Energy equipment & services
Nabors Inds 105,799(b) 3,999,202
Bermuda (2.1%)
Insurance (1.0%)
RenaissanceRe Holdings 112,100 5,042,258
Multi-industry conglomerates (1.1%)
Accenture Cl A 236,972(b) 5,545,145
Brazil (1.3%)
Metals (0.5%)
Companhia Vale do Rio Doce ADR 63,520 2,566,208
Paper & packaging (0.8%)
Aracruz Celulose ADR 137,406 3,861,109
Canada (0.5%)
Chemicals
Potash 32,310 2,543,766
China (2.6%)
Financial services (0.7%)
Hong Kong Exchanges & Clearing 1,822,000 3,965,103
Multi-industry (0.8%)
Swire Pacific Cl A 634,500 3,872,838
Real estate investment trust (1.0%)
Henderson Land Development 1,261,000 5,293,612
Finland (0.5%)
Machinery
Kone Cl B 48,298 2,523,782
France (2.3%)
Computer software & services (0.8%)
Atos Origin 60,623(b) 4,045,221
Energy (1.0%)
Total 32,879 5,110,260
Telecom equipment & services (0.5%)
Alcatel 200,447 2,644,773
Germany (4.8%)
Automotive & related (1.1%)
Porsche 11,037 5,421,149
Computer software & services (1.3%)
SAP 18,088 2,631,567
T-Online Intl 335,000(b) 4,334,439
Total 6,966,006
Health care products (0.5%)
Altana 43,280 2,727,468
Insurance (1.1%)
Muenchener Rueckversicherungs-Gesellschaft 46,082 5,495,780
Textiles & apparel (0.8%)
Puma Rudolf Dassler Sport 28,529 4,161,540
Hong Kong (1.0%)
Real estate (1.0%)
Sun Hung Kai Properties 602,000 5,096,965
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
10 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Ireland (0.5%)
Banks and savings & loans
Anglo Irish Bank 224,508 $2,696,033
Italy (2.9%)
Banks and savings & loans (1.1%)
Banco Popolare di Verona e Novara 349,352 5,401,419
Energy (0.8%)
Eni 243,462 3,866,116
Retail -- general (1.0%)
Bulgari 605,686 5,477,976
Japan (7.4%)
Automotive & related (0.7%)
Toyota Motor 126,600 3,604,475
Cellular telecommunications (0.9%)
NTT DoCoMo 2,113 4,574,467
Chemicals (0.9%)
Shin-Etsu Chemical 124,900 4,646,755
Electronics (1.0%)
Seiko Epson 155,100 5,586,901
Financial services (1.0%)
Nomura Holdings 291,000 4,997,571
Industrial transportation (1.0%)
East Japan Railway 1,122 5,082,603
Multi-industry (1.9%)
Canon 133,000 6,436,167
Mitsubishi 369,000 3,829,799
Total 10,265,966
Malaysia (1.1%)
Leisure time & entertainment
Resorts World Berhad 1,873,000 5,421,842
Mexico (2.3%)
Beverages & tobacco (0.5%)
Coca-Cola Femsa ADR 120,770(b) 2,439,554
Cellular telecommunications (1.0%)
America Movil ADR Series L 226,941 5,401,196
Financial services (0.8%)
Grupo Financiero BBVA Bancomer Cl B 4,864,460(b) 4,111,245
Netherlands (1.0%)
Food (0.5%)
Koninklijke Numico 110,725(b) 2,498,413
Utilities -- telephone (0.5%)
Koninklijke (Royal) 341,479(b) 2,596,180
South Korea (1.7%)
Electronics
Samsung Electronics 22,360 8,879,763
Sweden (0.8%)
Machinery
Atlas Copco Cl A 117,852 4,139,478
Switzerland (4.0%)
Banks and savings & loans (1.8%)
Credit Suisse Group 113,188 3,988,090
UBS 86,758 5,327,559
Total 9,315,649
Health care products (2.3%)
Actelion 70,369(b) 6,692,524
Nobel Biocare Holding 27,452 2,436,112
Synthes-Stratec 2,790 2,561,531
Total 11,690,167
Insurance (1.7%)
Swiss Life Holding 50,862(b) 8,627,133
Taiwan (1.0%)
Electronics
Taiwan Semiconductor Mfg 2,583,320 5,094,406
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
11 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
United Kingdom (7.5%)
Banks and savings & loans (0.8%)
Standard Chartered 245,791 $3,931,118
Cellular telecommunications (0.8%)
Vodafone Group 1,873,539 3,934,383
Computer software & services (0.5%)
lastminute.com 545,627(b) 2,745,296
Energy (0.7%)
BP 547,227 3,798,040
Financial services (1.7%)
HSBC Holdings 550,456 8,266,746
Health care products (1.0%)
AstraZeneca 112,277 5,273,824
Metals (1.0%)
Rio Tinto 214,488 5,201,205
Retail -- grocery (1.0%)
Tesco 650,000 2,605,877
William Morrison Supermarkets 712,503 2,708,341
Total 5,314,218
United States (48.2%)
Aerospace & defense (2.4%)
Boeing 174,275 6,707,845
United Technologies 65,000(b) 5,504,850
Total 12,212,695
Banks and savings & loans (5.0%)
Bank of America 47,783 3,618,607
North Fork Bancorporation 207,571 8,091,117
U.S. Bancorp 203,856 5,548,960
Wachovia 125,000 5,733,750
Wells Fargo 47,276 2,662,584
Total 25,655,018
Beverages & tobacco (1.0%)
PepsiCo 108,635 5,194,926
Broker dealers (1.1%)
Morgan Stanley 100,000 5,487,000
Cable (1.1%)
Comcast Special Cl A 167,483(b) 5,463,295
Computer hardware (4.4%)
Apple Computer 228,637(b) 5,233,501
Cisco Systems 188,419(b) 3,953,031
Dell 214,153(b) 7,735,206
EMC 396,067(b) 5,481,567
Total 22,403,305
Computer software & services (2.9%)
Adobe Systems 61,253 2,685,332
BEA Systems 292,483(b) 4,065,514
Microsoft 314,519 8,224,672
Total 14,975,518
Electronics (3.2%)
Amphenol Cl A 66,597(b) 3,912,574
Intel 248,800 8,222,840
Lam Research 150,000(b) 4,311,000
Total 16,446,414
Energy (1.7%)
EOG Resources 93,599 3,944,262
Exxon Mobil 134,480 4,919,278
Total 8,863,540
Finance companies (1.7%)
Citigroup 188,360 8,928,264
Financial services (0.5%)
SLM 66,373 2,599,167
Food (1.1%)
Wrigley (Wm) Jr 100,000 5,640,000
Health care products (7.3%)
Amgen 123,720(b) 7,640,947
Gilead Sciences 90,575(b) 4,943,584
Johnson & Johnson 154,834 7,792,794
Myogen 300,000(b) 4,800,000
St. Jude Medical 114,173(b) 6,640,302
Zimmer Holdings 90,000(b) 5,742,900
Total 37,560,527
Health care services (1.3%)
WellPoint Health Networks 75,000(b) 6,667,500
Household products (2.5%)
Colgate-Palmolive 90,685 4,823,535
Procter & Gamble 81,120 7,973,285
Total 12,796,820
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
12 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
United States (cont.)
Insurance (1.0%)
American Intl Group 85,126 $5,178,215
Leisure time & entertainment (1.0%)
Carnival 152,749 5,332,468
Machinery (1.3%)
Deere & Co 114,294 6,928,502
Media (0.9%)
Fox Entertainment Group Cl A 175,037(b) 4,848,525
Multi-industry (2.2%)
3M 70,213 5,537,699
ITT Inds 61,523 4,182,949
Weight Watchers Intl 37,194(b) 1,372,459
Total 11,093,107
Precious metals (1.3%)
Freeport McMoRan Cooper & Gold Cl B 178,094 6,901,143
Retail -- general (1.8%)
Staples 154,161(b) 4,134,598
Wal-Mart Stores 88,381 5,210,060
Total 9,344,658
Utilities -- electric (0.8%)
Cinergy 108,266 3,931,138
Utilities -- natural gas (0.7%)
Kinder Morgan 70,599 3,780,576
Total common stocks
(Cost: $474,348,660) $504,570,795
Preferred stock & other (0.6%)(c)
Issuer Shares Value(a)
Germany
Muenchener Rueckversicherung-
Gesellschaft Rights 46,082(b) $380,885
ProSiebenSat.1 Media 185,168 2,852,166
Total preferred stock & other
(Cost: $2,705,832) $3,233,051
Short-term security (1.0%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
Commercial paper
General Electric Capital
11-03-03 1.04% $5,200,000 $5,199,549
Total short-term security
(Cost: $5,199,700) $5,199,549
Total investments in securities
(Cost: $482,254,192)(d) $513,003,395
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 Oct. 31, 2003, the cost of securities for federal income tax purposes
was $482,660,547 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $36,200,032
Unrealized depreciation (5,857,184)
----------
Net unrealized appreciation $30,342,848
-----------
- --------------------------------------------------------------------------------
13 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
World Growth Portfolio
Oct. 31, 2003
Assets
Investments in securities, at value (Note 1)
(identified cost $482,254,192) $513,003,395
Foreign currency holdings (identified cost $8,535,824) (Note 1) 8,530,527
Dividends and accrued interest receivable 1,349,436
Receivable for investment securities sold 1,326,813
---------
Total assets 524,210,171
-----------
Liabilities
Disbursements in excess of cash on demand deposit 5,807,277
Payable for investment securities purchased 4,333,688
Accrued investment management services fee 11,103
Other accrued expenses 49,799
------
Total liabilities 10,201,867
----------
Net assets $514,008,304
============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Statement of operations
World Growth Portfolio
Year ended Oct. 31, 2003
Investment income
Income:
Dividends $ 9,869,928
Interest 95,374
Fee income from securities lending (Note 3) 29,000
Less foreign taxes withheld (752,577)
--------
Total income 9,241,725
---------
Expenses (Note 2):
Investment management services fee 3,763,415
Compensation of board members 9,191
Custodian fees 101,239
Audit fees 27,000
Other 16,238
------
Total expenses 3,917,083
---------
Investment income (loss) -- net 5,324,642
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (27,481,179)
Foreign currency transactions (86,386)
-------
Net realized gain (loss) on investments (27,567,565)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 109,515,236
-----------
Net gain (loss) on investments and foreign currencies 81,947,671
----------
Net increase (decrease) in net assets resulting from operations $ 87,272,313
============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
15 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Statements of changes in net assets
World Growth Portfolio
Year ended Oct. 31, 2003 2002
Operations
Investment income (loss) -- net $ 5,324,642 $ 5,803,520
Net realized gain (loss) on investments (27,567,565) (131,918,088)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 109,515,236 9,918,976
----------- ---------
Net increase (decrease) in net assets resulting from operations 87,272,313 (116,195,592)
---------- ------------
Proceeds from contributions 2,304,809 44,021,250
Fair value of withdrawals (163,329,472) (375,713,758)
------------ ------------
Net contributions (withdrawals) from partners (161,024,663) (331,692,508)
------------ ------------
Total increase (decrease) in net assets (73,752,350) (447,888,100)
Net assets at beginning of year 587,760,654 1,035,648,754
----------- -------------
Net assets at end of year $ 514,008,304 $ 587,760,654
============= ==============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
16 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Notes to Financial Statements
World Growth Portfolio
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, including
companies located in developed and emerging countries. 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. American Express Financial
Corporation (AEFC) may use fair value if a security's value has been materially
affected by events after the close of the primary exchanges or markets on which
the security is traded and before the NAV is calculated. The fair value of a
security may be different from the quoted or published price. AEFC will price a
security at fair value in accordance with procedures adopted by the Portfolio
and board of trustees if a reliable market quotation is not readily available.
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.
- --------------------------------------------------------------------------------
17 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL 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.
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 Oct 31, 2003, foreign currency holdings consisted of
multiple denominations.
- --------------------------------------------------------------------------------
18 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
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, market discount and original issue
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 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 Equity Fund (formerly 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 $382,729 for the year ended Oct. 31, 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.
- --------------------------------------------------------------------------------
19 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Under a Deferred Compensation Plan (the Plan), non-interested trustees may defer
receipt of their annual compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the underlying Fund or
other American Express mutual funds. The Portfolio's liability for these amounts
is adjusted for market value changes and remains in the Portfolio until
distributed in accordance with the Plan.
AEFC has a Subadvisory Agreement with American Express Asset Management
International Inc. (AEAMI), a wholly-owned subsidiary of AEFC. Investment
decisions for the Portfolio are made by a team of seasoned investment
professionals at Threadneedle Asset Management Limited (Threadneedle) who are
associated with AEAMI. Threadneedle is also 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.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $678,292,195 and $818,119,889, respectively, for the
year ended Oct. 31, 2003. Realized gains and losses are determined on an
identified cost basis.
Income from securities lending amounted to $29,000 for the year ended Oct. 31,
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. FINANCIAL HIGHLIGHTS
The table below shows certain important financial information for evaluating the
Portfolio's results.
Ratios/supplemental data
Fiscal period ended Oct. 31, 2003 2002 2001 2000 1999
Ratio of expenses to average daily net assets(a) .74% .72% .62% .73% .78%
Ratio of net investment income (loss)
to average daily net assets 1.01% .67% .95% .27% .61%
Portfolio turnover rate (excluding short-term securities) 132% 123% 218% 131% 83%
Total return(b) 18.91% (15.58%) (34.42%) 4.95% 24.16%
Notes to financial highlights
(a) Expense ratio is based on total expenses of the Portfolio before reduction
of earnings credits on cash balances. The ratio does not include feeder
fund expenses.
(b) Total return is based on a calculated Portfolio NAV and does not reflect
payment of a sales charge.
- --------------------------------------------------------------------------------
20 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Independent Auditors' Report
THE BOARD OF TRUSTEES AND UNITHOLDERS
WORLD TRUST
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of World Growth Portfolio (a series
of World Trust) as of October 31, 2003, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period ended October 31, 2003, and the financial
highlights for each of the years in the five-year period ended Oct. 31, 2003.
These financial statements and the financial highlights are the responsibility
of portfolio management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2003, by correspondence with the custodian
and brokers or by other appropriate auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of World
Growth Portfolio as of October 31, 2003, and the results of its operations,
changes in its net assets and the financial highlights for each of the periods
stated in the first paragraph above, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
December 12, 2003
- --------------------------------------------------------------------------------
21 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Equity Fund
Oct. 31, 2003
Assets
Investment in Portfolio (Note 1) $ 513,950,900
Capital shares receivable 13,744
------
Total assets 513,964,644
-----------
Liabilities
Capital shares payable 25,573
Accrued distribution fee 6,424
Accrued service fee 15
Accrued transfer agency fee 4,714
Accrued administrative services fee 808
Other accrued expenses 99,045
------
Total liabilities 136,579
-------
Net assets applicable to outstanding capital stock $ 513,828,065
==============
Represented by
Capital stock -- $.01 par value (Note 1) $ 1,127,493
Additional paid-in capital 1,155,698,652
Undistributed net investment income 97,478
Accumulated net realized gain (loss) (Note 5) (673,959,704)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 30,864,146
----------
Total -- representing net assets applicable to outstanding capital stock $ 513,828,065
==============
Net assets applicable to outstanding shares: Class A $ 365,819,585
Class B $ 141,588,339
Class C $ 976,538
Class Y $ 5,443,603
Net asset value per share of outstanding capital stock: Class A shares 79,168,197 $ 4.62
Class B shares 32,188,495 $ 4.40
Class C shares 222,859 $ 4.38
Class Y shares 1,169,771 $ 4.65
--------- --------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
22 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Statement of operations
AXP Global Equity Fund
Year ended Oct. 31, 2003
Investment income
Income:
Dividends $ 9,868,970
Interest 95,840
Fee income from securities lending 28,996
Less foreign taxes withheld (752,504)
--------
Total income 9,241,302
---------
Expenses (Note 2):
Expenses allocated from Portfolio 3,916,705
Distribution fee
Class A 921,298
Class B 1,518,123
Class C 9,258
Transfer agency fee 1,816,134
Incremental transfer agency fee
Class A 139,134
Class B 101,824
Class C 740
Service fee -- Class Y 6,215
Administrative services fees and expenses 304,662
Compensation of board members 7,891
Printing and postage 255,275
Registration fees 47,225
Audit fees 9,000
Other 10,793
------
Total expenses 9,064,277
Earnings credits on cash balances (Note 2) (6,954)
------
Total net expenses 9,057,323
---------
Investment income (loss) -- net 183,979
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (27,480,700)
Foreign currency transactions (86,501)
-------
Net realized gain (loss) on investments (27,567,201)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 109,506,308
-----------
Net gain (loss) on investments and foreign currencies 81,939,107
----------
Net increase (decrease) in net assets resulting from operations $ 82,123,086
============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
23 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Statements of changes in net assets
AXP Global Equity Fund
Year ended Oct. 31, 2003 2002
Operations
Investment income (loss) -- net $ 183,979 $ (1,935,522)
Net realized gain (loss) on investments (27,567,201) (131,909,877)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 109,506,308 9,920,003
----------- ---------
Net increase (decrease) in net assets resulting from operations 82,123,086 (123,925,396)
---------- ------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 35,389,682 153,444,115
Class B shares 6,481,182 14,910,622
Class C shares 483,450 413,384
Class Y shares 1,478,386 2,888,855
Payments for redemptions
Class A shares (134,289,060) (377,354,000)
Class B shares (Note 2) (60,198,322) (112,290,601)
Class C shares (Note 2) (553,226) (484,202)
Class Y shares (4,612,498) (5,560,351)
---------- ----------
Increase (decrease) in net assets from capital share transactions (155,820,406) (324,032,178)
------------ ------------
Total increase (decrease) in net assets (73,697,320) (447,957,574)
Net assets at beginning of year 587,525,385 1,035,482,959
----------- -------------
Net assets at end of year $ 513,828,065 $ 587,525,385
============= ==============
Undistributed net investment income $ 97,478 $ --
------------- --------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
24 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Notes to Financial Statements
AXP Global Equity Fund (formerly AXP Global Growth Fund)
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 Oct. 31, 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).
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.
- --------------------------------------------------------------------------------
25 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL 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.
On the statement of assets and liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by $86,501
and accumulated net realized loss has been decreased by $86,501.
The tax character of distributions paid for the years indicated is as follows:
Year ended Oct. 31, 2003 2002
Class A
Distributions paid from:
Ordinary income $-- $--
Long-term capital gain -- --
Class B
Distributions paid from:
Ordinary income -- --
Long-term capital gain -- --
Class C
Distributions paid from:
Ordinary income -- --
Long-term capital gain -- --
Class Y
Distributions paid from:
Ordinary income -- --
Long-term capital gain -- --
As of Oct. 31, 2003, the components of distributable earnings on a tax basis are
as follows:
Undistributed ordinary income $ 97,478
Accumulated long-term gain (loss) $(673,553,387)
Unrealized appreciation (depreciation) $ 30,457,829
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.
- --------------------------------------------------------------------------------
26 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL 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 Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their annual compensation. Deferred amounts are treated as
though equivalent dollar amounts had been invested in shares of the Fund or
other American Express mutual funds. The Fund's liability for these amounts is
adjusted for market value changes and remains in the Fund until distributed in
accordance with the Plan.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. 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 incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the fee for Class Y.
In addition, there is an annual closed-account fee of $5 per inactive account,
charged on a pro rata basis from the date the account becomes inactive until the
date the account is purged from the transfer agent system generally within one
year. However, the closed account fee is not being charged to the Fund until a
new transfer agency system is installed.
Under terms of a prior agreement that ended April 30, 2003, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $19 for Class
A, $20 for Class B, $19.50 for Class C and $17 for Class Y.
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 EQUITY FUND -- 2003 ANNUAL REPORT
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
$315,749 for Class A, $121,320 for Class B and $85 for Class C for the year
ended Oct. 31, 2003.
During the year ended Oct. 31, 2003, the Fund's transfer agency fees were
reduced by $6,954 as a result of earnings credits from overnight cash balances.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the years indicated are as follows:
Year ended Oct. 31, 2003
Class A Class B Class C Class Y
Sold 8,499,668 1,658,622 121,148 359,435
Issued for reinvested distributions -- -- -- --
Redeemed (33,041,539) (15,356,093) (137,322) (1,146,272)
----------- ----------- -------- ----------
Net increase (decrease) (24,541,871) (13,697,471) (16,174) (786,837)
----------- ----------- ------- --------
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 year ended Oct. 31, 2003.
5. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund has a capital loss carry-over of
$673,553,387 as of Oct. 31, 2003, that will expire in 2009 through 2011 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 EQUITY FUND -- 2003 ANNUAL 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 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) .01 -- .02 (.02) .02
Net gains (losses) (both realized and unrealized) .69 (.77) (2.71) .58 1.78
Total from investment operations .70 (.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 $4.62 $3.92 $ 4.69 $ 8.74 $9.18
Ratios/supplemental data
Net assets, end of period (in millions) $366 $406 $714 $1,356 $1,260
Ratio of expenses to average daily net assets(c) 1.50% 1.39% 1.18% 1.22% 1.25%
Ratio of net investment income (loss)
to average daily net assets .26% .01% .39% (.21%) .14%
Portfolio turnover rate (excluding short-term securities) 132% 123% 218% 131% 83%
Total return(e) 17.86% (16.42%) (34.83%) 4.74% 23.59%
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) (.03) (.04) (.02) (.08) (.05)
Net gains (losses) (both realized and unrealized) .67 (.73) (2.64) .56 1.75
Total from investment operations .64 (.77) (2.66) .48 1.70
Less distributions:
Distributions from realized gains -- -- (1.34) (.96) (.37)
Net asset value, end of period $4.40 $3.76 $ 4.53 $8.53 $9.01
Ratios/supplemental data
Net assets, end of period (in millions) $142 $173 $309 $575 $464
Ratio of expenses to average daily net assets(c) 2.27% 2.16% 1.95% 1.98% 2.02%
Ratio of net investment income (loss)
to average daily net assets (.52%) (.77%) (.38%) (.95%) (.62%)
Portfolio turnover rate (excluding short-term securities) 132% 123% 218% 131% 83%
Total return(e) 17.02% (17.00%) (35.38%) 3.89% 22.66%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
29 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) (.03) (.04) (.02) (.01)
Net gains (losses) (both realized and unrealized) .66 (.73) (2.64) (1.02)
Total from investment operations .63 (.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 $4.38 $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) 2.29% 2.19% 1.95% 1.98%(d)
Ratio of net investment income (loss)
to average daily net assets (.52%) (.78%) (.42%) (1.15%)(d)
Portfolio turnover rate (excluding short-term securities) 132% 123% 218% 131%
Total return(e) 16.80% (17.04%) (35.37%) (10.76%)(f)
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) .02 .01 .04 (.01) .03
Net gains (losses) (both realized and unrealized) .69 (.77) (2.73) .58 1.78
Total from investment operations .71 (.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 $4.65 $3.94 $ 4.70 $ 8.76 $9.20
Ratios/supplemental data
Net assets, end of period (in millions) $5 $8 $12 $20 $26
Ratio of expenses to average daily net assets(c) 1.30% 1.21% 1.01% 1.05% 1.13%
Ratio of net investment income (loss)
to average daily net assets .43% .18% .55% (.06%) .24%
Portfolio turnover rate (excluding short-term securities) 132% 123% 218% 131% 83%
Total return(e) 18.02% (16.17%) (34.78%) 4.86% 23.86%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
30 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL 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.
- --------------------------------------------------------------------------------
31 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Independent Auditors' Report
THE BOARD AND SHAREHOLDERS
AXP GLOBAL SERIES, INC.
We have audited the accompanying statement of assets and liabilities of AXP
Global Equity Fund (formerly AXP Global Growth Fund) (a series of AXP Global
Series, Inc.) as of October 31, 2003, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period ended October 31, 2003, and the financial
highlights for each of the years in the five-year period ended October 31, 2003.
These financial statements and the financial highlights are the responsibility
of fund management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AXP
Global Equity Fund as of October 31, 2003, and the results of its operations,
changes in its net assets and the financial highlights for each of the periods
stated in the first paragraph above, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
December 12, 2003
- --------------------------------------------------------------------------------
32 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Board Members and Officers
Shareholders elect a board that oversees the Fund's operations. The board
appoints officers who are responsible for day-to-day business decisions based
on policies set by the board.
The following is a list of the Fund's board members. Each member oversees 15
Master Trust portfolios and 86 American Express mutual funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the board.
Independent Board Members
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Arne H. Carlson Board member since Chair, Board Services
901 S. Marquette Ave. 1999 Corporation (provides
Minneapolis, MN 55402 administrative services to
Age 69 boards). Former Governor of
Minnesota
- ------------------------------------- -------------------- -------------------------------- ------------------------
Philip J. Carroll, Jr. Board member since Retired Chairman and CEO, Scottish Power PLC,
901 S. Marquette Ave. 2002 Fluor Corporation (engineering Vulcan Materials
Minneapolis, MN 55402 and construction) since 1998 Company, Inc.
Age 65 (construction
materials/chemicals)
- ------------------------------------- -------------------- -------------------------------- ------------------------
Livio D. DeSimone Board member Retired Chair of the Board and Cargill, Incorporated
30 Seventh Street East since 2001 Chief Executive Officer, (commodity merchants
Suite 3050 Minnesota Mining and and processors),
St. Paul, MN 55101-4901 Manufacturing (3M) General Mills, Inc.
Age 69 (consumer foods),
Vulcan Materials
Company (construction
materials/ chemicals),
Milliken & Company
(textiles and
chemicals), and Nexia
Biotechnologies, Inc.
- ------------------------------------- -------------------- -------------------------------- ------------------------
Heinz F. Hutter* Board member since Retired President and Chief
901 S. Marquette Ave. 1994 Operating Officer, Cargill,
Minneapolis, MN 55402 Incorporated (commodity
Age 74 merchants and processors)
- ------------------------------------- -------------------- -------------------------------- ------------------------
Anne P. Jones Board member since Attorney and Consultant
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 68
- ------------------------------------- -------------------- -------------------------------- ------------------------
Stephen R. Lewis, Jr.** Board member since Retired President and Valmont Industries,
901 S. Marquette Ave. 2002 Professor of Economics, Inc. (manufactures
Minneapolis, MN 55402 Carleton College irrigation systems)
Age 64
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alan G. Quasha Board member since President, Quadrant Compagnie Financiere
901 S. Marquette Ave. 2002 Management, Inc. (management Richemont AG (luxury
Minneapolis, MN 55402 of private equities) goods), Harken Energy
Age 53 Corporation (oil and
gas exploration) and
SIRIT Inc. (radio
frequency
identification
technology)
- ------------------------------------- -------------------- -------------------------------- ------------------------
* Interested person of AXP Partners International Aggressive Growth Fund
and AXP Partners Aggressive Growth Fund by reason of being a security
holder of J P Morgan Chase & Co., which has a 45% interest in American
Century Companies, Inc., the parent company of the subadviser of two of
the AXP Partners Funds, American Century Investment Management, Inc.
** Interested person of AXP Partners International Aggressive Growth Fund by
reason of being a security holder of FleetBoston Financial Corporation,
parent company of Columbia Wanger Asset Management, L.P., one of the
fund's subadvisers.
- --------------------------------------------------------------------------------
33 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
Independent Board Members (continued)
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alan K. Simpson Board member since Former three-term United Biogen, Inc.
1201 Sunshine Ave. 1997 States Senator for Wyoming (biopharmaceuticals)
Cody, WY 82414
Age 71
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alison Taunton-Rigby Board member since President, Forester Biotech
901 S. Marquette Ave. 2002 since 2000. Former President
Minneapolis, MN 55402 and CEO, Aquila
Age 59 Biopharmaceuticals, Inc.
- ------------------------------------- -------------------- -------------------------------- ------------------------
Board Members Affiliated with AEFC***
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Barbara H. Fraser Board member since Executive Vice President -
1546 AXP Financial Center 2002 AEFA Products and Corporate
Minneapolis, MN 55474 Marketing of AEFC since 2002.
Age 53 President - Travelers Check
Group, American Express
Company, 2001-2002. Management
Consultant, Reuters,
2000-2001. Managing Director -
International Investments,
Citibank Global, 1999-2000.
Chairman and CEO, Citicorp
Investment Services and
Citigroup Insurance Group,
U.S., 1998-1999
- ------------------------------------- -------------------- -------------------------------- ------------------------
Stephen W. Roszell Board membersince Senior Vice President -
50238 AXP Financial Center 2002, Institutional Group of AEFC
Minneapolis, MN 55474 Vice President
Age 54 since 2002
- ------------------------------------- -------------------- -------------------------------- ------------------------
William F. Truscott Board member since Senior Vice President - Chief
53600 AXP Financial Center 2001, Investment Officer of AEFC
Minneapolis, MN 55474 Vice President since 2001. Former Chief
Age 42 since 2002 Investment Officer and
Managing Director, Zurich
Scudder Investments
- ------------------------------------- -------------------- -------------------------------- ------------------------
*** Interested person by reason of being an officer, director and/or employee
of AEFC.
- --------------------------------------------------------------------------------
34 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL REPORT
The board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the board. In addition to Mr. Roszell, who is vice president, and
Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers
Name, address, age Position held Principal occupation during Other directorships
with Fund and past five years
length of service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Jeffrey P. Fox Treasurer since Vice President - Investment
50005 AXP Financial Center 2002 Accounting, AEFC, since 2002;
Minneapolis, MN 55474 Vice President - Finance,
Age 48 American Express Company,
2000-2002; Vice President -
Corporate Controller, AEFC,
1996-2000
- ------------------------------------- -------------------- -------------------------------- ------------------------
Paula R. Meyer President since Senior Vice President and
596 AXP Financial Center 2002 General Manager - Mutual
Minneapolis, MN 55474 Funds, AEFC, since 2002; Vice
Age 49 President and Managing
Director - American Express
Funds, AEFC, 2000-2002; Vice
President, AEFC, 1998-2000
- ------------------------------------- -------------------- -------------------------------- ------------------------
Leslie L. Ogg Vice President, President of Board Services
901 S. Marquette Ave. General Counsel, Corporation
Minneapolis, MN 55402 and Secretary
Age 65 since 1978
- ------------------------------------- -------------------- -------------------------------- ------------------------
The SAI has additional information about the Fund's directors and is available,
without charge, upon request by calling (800) 862-7919.
Proxy Voting
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
(800) 862-7919; by looking at the Web site americanexpress.com/funds; or by
searching the Web site of the Securities and Exchange Commission
http://www.sec.gov. Beginning Jan. 1, 2004, you may view the Fund's voting
record for all portfolio companies whose shareholders meetings were completed
the previous quarter on americanexpress.com/funds or obtain a copy by calling
the Fund's administrator, Board Services Corporation, collect at (612) 330-9283.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available at
http://www.sec.gov.
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35 -- AXP GLOBAL EQUITY FUND -- 2003 ANNUAL 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
Annual Report
for the Period Ended
Oct. 31, 2003
AXP Global Technology Fund seeks to provide shareholders with long-term capital
growth.
- --------------------------------------------------------------------------------
(logo) (logo)
American AMERICAN
Express EXPRESS
Funds (R)
- --------------------------------------------------------------------------------
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
The Fund's Long-term Performance 8
Investments in Securities 9
Financial Statements (Portfolio) 12
Notes to Financial Statements (Portfolio) 15
Independent Auditors' Report (Portfolio) 19
Financial Statements (Fund) 20
Notes to Financial Statements (Fund) 23
Independent Auditors' Report (Fund) 30
Board Members and Officers 31
Proxy Voting 33
(logo) DALBAR
American Express(R) Funds' reports to shareholders have been awarded the
Communications Seal from Dalbar Inc., an independent financial services research
firm. The Seal recognizes communications demonstrating a level of excellence in
the industry.
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2 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Fund Snapshot
AS OF OCT. 31, 2003
PORTFOLIO MANAGERS
Portfolio manager Telis Bertsekas
Since 6/02
Years in industry 7
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 $214.0 million
Number of holdings 68
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)
Electronics 29.1%
Computer software & services 27.3%
Computer hardware 17.1%
Telecom equipment & services 8.6%
Cable 4.6%
Short-term securities 4.2%
Multi-industry 2.8%
Leisure time & entertainment 2.5%
Cellular telecommunications 1.3%
Engineering & construction 1.3%
Other* 1.2%
* Includes Financial services, Lodging & gaming and Media.
TOP TEN HOLDINGS
Percentage of portfolio assets
Hewlett-Packard (Computer hardware) 6.6%
Microsoft (Computer software & services) 4.7
Nokia ADR (Telecom equipment & services) 4.7
Cisco Systems (Computer hardware) 3.7
Trimble Navigation (Electronics) 3.6
Oracle (Computer software & services) 3.3
NTL (Cable) 3.2
Intel (Electronics) 3.0
Dell (Computer hardware) 2.9
Ascential Software (Computer software & services) 2.7
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. This Fund is
subject to greater volatility than a more broadly invested fund because it is
invested in a specific sector. Stock prices of established companies that pay
dividends may be less volatile than the stock market as a whole. Stocks of
medium-sized companies may be subject to more abrupt or erratic priced movements
than stocks of larger companies.
Fund holdings are subject to change.
- --------------------------------------------------------------------------------
3 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Below, Telis Bertsekas and Nina Hughes, portfolio managers of AXP Global
Technology Fund, discuss the Fund's results and positioning for fiscal year
2003.
Q: How did AXP Global Technology Fund perform for the 12-month period
ended Oct. 31, 2003?
A: AXP Global Technology Fund's Class A shares gained 66.99% (excluding
sales charge) for the 12 months ended Oct. 31, 2003. This
substantially outpaced the Fund's benchmarks, the unmanaged Pacific
Stock Exchange Technology Index (PSE/PCX Technology Index), which
increased 47.81%, and the Goldman Sachs Technology Index Composite
Index (GSTI Composite Index), which rose 49.54%. The Fund also
outperformed the Lipper Science and Technology Funds Index,
representing the Fund's peer group, which rose 49.41% over the same
period.
Q: What factors most significantly affected performance during the fiscal
year?
A: The technology sector produced strong absolute performance during the
past 12 months due, we believe, to several factors. These include a
stabilizing economy, historically low interest rates, a quick
toppling of Saddam Hussein in Iraq, a long-awaited re-activation in
business investment, and recovering revenue and earnings momentum for
many companies in the sector. The declining U.S. dollar was
particularly beneficial to U.S. companies with overseas sales in
Europe and, to a lesser degree, in Japan, thanks to the translation
effects of the respective currencies.
We attribute the Fund's strong relative results to a combination of
effective stock selection and industry allocation. The Fund also benefited
from its multi-cap approach during a period when mid-cap and small-cap
stocks generally outperformed large-cap stocks within the technology
sector. In fact, the Fund had strong performers among stocks of all sizes.
One of the Fund's best performers for the fiscal year was MicroStrategy, a
small-cap stock whose share price rose most
(bar chart)
PERFORMANCE COMPARISON
For the year ended Oct. 31, 2003
75% (bar 1)
+66.99%
60% (bar 2) (bar 3) (bar 4)
+47.81% +49.41% +49.54%
45%
30%
15%
0%
(bar 1) AXP Global Technology Fund Class A (excluding sales charge)
(bar 2) PSE/PCX Technology Index (unmanaged)
(bar 3) Lipper Science and Technology Funds Index
(bar 4) GSTI Composite Index (unmanaged)
(see "The Fund's Long-term Performance" for Index descriptions)
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 TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Questions & Answers
(begin callout quote)> We attribute the Fund's strong relative results to a
combination of effective stock selection and industry allocation.(end callout
quote)
dramatically in the first six months of the period. MicroStrategy provides
business intelligence software and related services. Another small-cap stock
that performed similarly well was Ariba, which provides intranet- and
Internet-based business to business electronic commerce solutions. LTX is a
small-cap stock that benefited during the fiscal period in general and during
the third calendar quarter in particular from the rally in the semiconductor and
semiconductor capital equipment industry. LTX manufactures semiconductor testing
AVERAGE ANNUAL TOTAL RETURNS
as of Oct. 31, 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)
1 year +66.99% +57.37% +66.30% +62.30% +66.30% +66.30% +66.99% +66.99%
5 years +2.56% +1.35% +1.84% +1.79% N/A N/A +2.56% +2.56%
Since inception +2.99% +2.12% +2.26% +2.26% -30.00% -30.00% +2.99% +2.99%
as of Sept. 30, 2003
1 year +86.75% +75.94% +86.49% +82.49% +86.49% +86.49% +86.75% +86.75%
5 years +1.70% +0.50% +0.99% +0.94% N/A N/A +1.70% +1.70%
Since inception +1.48% +0.61% +0.76% +0.76% -32.81% -32.81% +1.48% +1.48%
(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/funds for current information.
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 to a
single investor. One factor impacting the Fund's 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 the 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.
- --------------------------------------------------------------------------------
5 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Questions & Answers
equipment. In the mid-cap arena, Omnivision Technologies and Maxtor were
strong performers for the Fund during the annual period. Omnivision
provides integrated single chip semiconductor imaging devices. Maxtor makes
hard drives for personal computers as well as for other devices such as
iPod and TIVO.
Holdings in several large-cap stocks boosted the Fund's performance during
the fiscal year as well. These included Finnish-based phone handset
manufacturer Nokia, personal computer giant Dell, and semiconductor
companies Intel, Taiwan Semiconductor and Analog Devices.
Of course, not all of the Fund's holdings performed well. Detracting from
the Fund's performance during the fiscal year were computer services
company Automatic Data Processing, consumer electronics chain Circuit City,
software behemoth Microsoft and computer hardware leader Hewlett-Packard.
We maintained the Fund's positions in the latter two companies, as the
prospects for these industry leaders remain positive.
Q: What changes did you make to the portfolio and how is it currently
positioned?
A: From September to mid-October 2002, we had positioned the portfolio
more heavily toward higher growth stocks that had been knocked to
fairly low valuations relative to their earnings potential. This
strategy proved prudent, as these stocks rallied most dramatically in
the last months of 2002. An emphasis on the software industry also
boosted Fund returns at that time. As the new year began, 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 moved to a somewhat more
conservative posture and further diversified the Fund, increasing the
number of stocks in the portfolio.
During the second calendar quarter, the Fund moved back to a more
aggressive stance, successfully taking advantage of an environment in which
investors embraced what are considered the more high risk sectors of the
equity market, including technology. Then, early in the third quarter, we
returned to a somewhat more moderate approach, especially in July. We
emphasized companies whose growth was not dependent on a cyclical boost in
the U.S. economy. We also realized gains on stocks that either appeared to
go too far too fast or that had already advanced significantly, and, in our
view, would likely not maintain their attractive risk/reward profile after
such a rise. However, the technology sector continued to advance rapidly,
as the ripple effects of the SARS disease in Asia being brought under
control continued to be seen in the form of better than usual seasonal
demand for and shipment of
- --------------------------------------------------------------------------------
6 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Questions & Answers
technology products. By the end of the quarter, we had shifted back to a
somewhat more aggressive stance and maintained this approach through the
end of the fiscal year. This posture enabled the Fund to take advantage of
the positive outlook for the technology sector. Throughout the second half
of the fiscal year, we also increased the Fund's allocation to the wireless
telecommunications and personal computer industries. While this
repositioning contributed to a high portfolio turnover rate (more than 500%
for the fiscal year), it also helped Fund performance relative to its peer
group.
At the end of the fiscal year, the Fund held greater than benchmark
positions in computer hardware and computer software, less than benchmark
positions in networking and semiconductors, and held only a few computer
services companies. Given the latter sub-sector's unattractive relative
growth rates, lack of compelling valuations, and, ultimately, its poor
performance, this proved a prudent strategy. We continue to believe that
the flexibility to move between the technology sub-sectors and avoid others
completely if conditions warrant is a competitive advantage over some of
our more targeted peers.
Q: How do you intend to manage the Fund in the coming months?
A: We are optimistic for the technology sector looking ahead. We think
the worst of the dramatic volatility that we have seen over the past
several years is over. Also, the fourth calendar quarter is
historically a good one for technology stocks, as pressure to meet
sales quotas tends to rise at year-end as does information technology
demand toward the close of many businesses' fiscal years. Corporate
and individual demand is anticipated to increase for notebook
computers, as pricing on these products comes down and the trend for
work-at-home employees grows. There are also several new exciting
products on the horizon in the areas of wireless communications,
semiconductor chips and flat panel computer monitors and television
screens. Corporate earnings estimates are generally positive.
Improved information technology spending is anticipated, as the
economic recovery stabilizes.
We temper this bullish view with the realization that technology sector
share prices have already moved sharply higher during the last 12 months.
Thus, we intend to gradually shift away from the portfolio's aggressive
stance. We expect to pare back on select names that have experienced
significant gains over the past several months and to expand our focus on
well-established large-cap industry leaders over small-cap and mid-cap
companies. We remain focused on seeking those individual technology
companies with the best fundamental prospects at the most reasonable
prices, as we continue to find select opportunities to add value to the
portfolio.
- --------------------------------------------------------------------------------
7 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
The Fund's Long-term Performance
This chart illustrates the total value of an assumed $10,000 investment in AXP
Global Technology Fund Class A shares (from 12/1/96 to 10/31/03) as compared to
the performance of three widely cited performance indices, the Goldman Sachs
Techology Index Composite Index (GSTI Composite Index), The Lipper Science and
Technology Funds Index and Pacific Stock Exchange Technology Index (PSE/PCX
Technology Index). Recently, the Fund's investment manager recommended to the
Fund that the Fund change its comparative index from PSE/PCX Technology Index to
the GSTI Composite Index. The investment manager made this recommendation
because the new index more closely represents the Fund's holdings. We will
include both indexes in this transition year. In the future, however, only the
GSTI Composite Index will be included. In comparing the Fund's Class A shares to
these indices, you should take into account the fact that the Fund's performance
reflects the maximum sales charge of 5.75%, while such charges are not reflected
in the performance of the indices. Returns for the Fund include the reinvestment
of any distribution paid during each period.
Past performance is no guarantee of future results. Your investment and return
values fluctuate so that your shares, when redeemed, may be worth more or less
than the original cost. Returns do not reflect taxes payable on distributions
and redemptions. Also see "Past Performance" in the Fund's current prospectus.
(line chart)
VALUE OF A HYPOTHETICAL $10,000 INVESTMENT
IN AXP GLOBAL TECHNOLOGY FUND
AXP Global Technology Fund Class A $9,425 $9,932 $10,198 $21,245 $35,390 $10,766 $6,931 $11,574
GSTI Composite Index(1) (unmanaged) $10,000 $12,358 $15,565 $27,861 $33,687 $14,752 $10,092 $15,091
Lipper Science and Technology Funds Index(2) $10,000 $11,218 $12,057 $23,440 $31,637 $13,177 $8,829 $13,191
PSE/PCX Technology Index(3) $10,000 $12,155 $14,348 $26,782 $39,152 $24,133 $18,134 $26,803
12/1/96 10/97 10/98 10/99 10/00 10/01 10/02 10/03
(1) GSTI Composite Index, an unmanaged index published by Goldman Sachs, is a
market capitalization-weighted index of over 200 stocks designed to measure
the performance of companies in the technology sector.
(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.
(3) PSE/PCX Technology 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.
Average Annual Total Returns
Class A with Sales Charge as of Oct. 31, 2003
1 year +57.37%
5 years +1.35%
Since inception (11/13/96) +2.12%
Results for other share classes can be found on page 5.
- --------------------------------------------------------------------------------
8 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Investments in Securities
World Technologies Portfolio
Oct. 31, 2003
(Percentages represent value of investments compared to net assets)
Common stocks (94.7%)
Issuer Shares Value(a)
Cable (4.5%)
Comcast Special Cl A 90,000(b) $2,935,800
NTL 110,000(b) 6,790,300
Total 9,726,100
Cellular telecommunications (1.3%)
NII Holdings Cl B 35,000(b) 2,698,150
Computer hardware (17.0%)
Cisco Systems 372,600(b) 7,817,148
Dell 172,000(b) 6,212,640
EMC 164,000(b) 2,269,760
Hewlett-Packard 630,000 14,055,300
NVIDIA 210,000(b) 3,712,800
SimpleTech 285,000(b) 2,237,250
Total 36,304,898
Computer software & services (26.9%)
Affiliated Computer Services Cl A 53,000(b) 2,593,290
Art Technology Group 1,050,000(b) 2,005,500
Ascential Software 258,000(b) 5,725,020
Aspen Technology 258,750(b) 2,070,000
Dot Hill Systems 202,000(b) 2,708,820
Fiserv 64,000(b) 2,260,480
Internap Network Services 1,329,975(b) 1,476,272
Interwoven 983,000(b) 3,725,570
M-Systems Flash Disk Pioneers 100,000(b,c) 1,980,000
MAXIMUS 120,000(b) 4,189,200
Microsoft 384,000 10,041,600
MRO Software 113,200(b) 1,431,980
OPNET Technologies 100,000(b) 1,404,000
Oracle 585,000(b) 6,996,600
PeopleSoft 100,000(b) 2,076,000
Synopsys 40,000(b) 1,268,800
TALX 31,100 673,626
UBI Soft Entertainment 70,000(b,c) 2,263,039
Vignette 1,140,000(b) 2,861,400
Total 57,751,197
Electronics (28.8%)
Analog Devices 125,000(b) 5,541,250
ASML Holding 180,000(b,c) 3,159,000
Atmel 213,000(b) 1,201,320
DSP Group 50,000(b) 1,194,000
FormFactor 51,500(b) 1,283,895
Intel 195,000 6,444,750
Jabil Circuit 75,000(b) 2,088,750
KLA-Tencor 78,000(b) 4,471,740
LG Electronics 38,000(c) 1,968,230
MEMC Electronic Materials 368,000(b) 4,121,600
Photon Dynamics 60,000(b) 2,269,200
Samsung Electronics 7,400(c) 2,938,741
Silicon Laboratories 49,000(b) 2,645,020
Solectron 745,000(b) 4,127,300
STMicroelectronics 120,000(c) 3,196,800
Trimble Navigation 278,000(b) 7,686,700
United Microelectronics ADR 700,000(c) 3,675,000
Vishay Intertechnology 205,000(b) 3,843,750
Total 61,857,046
Engineering & construction (1.3%)
Quanta Services 345,000(b) 2,822,100
Leisure time & entertainment (2.5%)
Imax 580,000(b,c) 5,248,420
Lodging & gaming (0.5%)
Scientific Games Cl A 80,000(b) 1,064,000
Media (0.5%)
iVillage 350,000(b) 1,025,500
Multi-industry (2.8%)
Accenture Cl A 96,250(b,c) 2,252,250
Sony ADR 43,000(c) 1,513,600
Zebra Technologies Cl A 37,500(b) 2,135,625
Total 5,901,475
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
9 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Telecom equipment & services (8.5%)
Corning 253,000(b) $2,777,940
Nokia ADR 587,000(c) 9,973,130
Westell Technologies Cl A 663,000(b) 5,522,790
Total 18,273,860
Total common stocks
(Cost: $184,347,250) $202,672,746
Preferred stocks & other (0.3%)(b,f)
Issuer Shares Value(a)
Bluestream Ventures LP 1,500,000(e) $553,938
Marketsoft
Cv 225,410 112,705
Paxonet Communications
Series C 106,383(d) --
Portera
Series G 425,374(d) --
Sun Hill Software 25,751 1,288
Total preferred stocks & other
(Cost: $4,555,118) $667,931
Short-term securities (4.2%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (3.3%)
Federal Home Loan Mtge Corp Disc Nt
12-04-03 1.06% $600,000 $599,435
Federal Natl Mtge Assn Disc Nts
12-17-03 1.05 300,000 299,617
01-07-04 1.05 900,000 898,326
01-28-04 1.07 2,400,000 2,394,094
01-28-04 1.08 2,700,000 2,692,790
Total 6,884,262
Commercial paper (0.9%)
BASF
11-24-03 1.06 1,300,000(g) 1,299,073
Fairway Finance
11-10-03 1.07 700,000(g) 699,790
Total 1,998,863
Total short-term securities
(Cost: $8,882,783) $8,883,125
Total investments in securities
(Cost: $197,785,151)(h) $212,223,802
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
10 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL 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 Oct. 31, 2003,
the value of foreign securities represented 17.8% of net assets.
(d) Negligible market value.
(e) The share amount for Limited Liability Companies (LLC) or Limited
Partnerships (LP) represents capital contributions. At Oct. 31, 2003, the
amount of capital committed to the LLC or LP for future investment was
$1,000,000.
(f) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at Oct. 31, 2003, is as follows:
Security Acquisition Cost
dates
Bluestream Ventures LP 06-28-00 thru 09-23-03 $1,430,113
Marketsoft
Cv 12-11-00 1,100,001
Paxonet Communications
Series C 04-04-01 thru 04-23-01 300,000
Portera
Series G 11-10-00 1,425,003
Sun Hill Software (formerly Vcommerce) 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 Oct. 31, 2003, the cost of securities for federal income tax purposes
was $198,140,516 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $19,186,194
Unrealized depreciation (5,102,908)
----------
Net unrealized appreciation $14,083,286
-----------
- --------------------------------------------------------------------------------
11 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
World Technologies Portfolio
Oct. 31, 2003
Assets
Investments in securities, at value (Note 1)*
(identified cost $197,785,151) $212,223,802
Cash in bank on demand deposit 9,313
Dividends and accrued interest receivable 55,466
Receivable for investment securities sold 14,593,881
----------
Total assets 226,882,462
-----------
Liabilities
Payable for investment securities purchased 8,120,109
Payable upon return of securities loaned (Note 4) 4,750,000
Accrued investment management services fee 4,236
Other accrued expenses 35,915
------
Total liabilities 12,910,260
----------
Net assets $213,972,202
============
* Including securities on loan, at value (Note 4) $ 4,714,700
------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
12 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Statement of operations
World Technologies Portfolio
Year ended Oct. 31, 2003
Investment income
Income:
Dividends $ 391,982
Interest 323,082
Fee income from securities lending (Note 4) 42,823
Less foreign taxes withheld (27,516)
-------
Total income 730,371
-------
Expenses (Note 2):
Investment management services fee 1,185,180
Compensation of board members 7,891
Custodian fees 72,143
Audit fees 21,000
Other 15,425
------
Total expenses 1,301,639
Earnings credits on cash balances (Note 2) (250)
----
Total net expenses 1,301,389
---------
Investment income (loss) -- net (571,018)
--------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 64,902,476
Foreign currency transactions (8,704)
------
Net realized gain (loss) on investments 64,893,772
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 18,832,116
----------
Net gain (loss) on investments and foreign currencies 83,725,888
----------
Net increase (decrease) in net assets resulting from operations $83,154,870
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
13 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Statements of changes in net assets
World Technologies Portfolio
Year ended Oct. 31, 2003 2002
Operations
Investment income (loss) -- net $ (571,018) $ (960,315)
Net realized gain (loss) on investments 64,893,772 (86,891,957)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 18,832,116 15,298,490
---------- ----------
Net increase (decrease) in net assets resulting from operations 83,154,870 (72,553,782)
---------- -----------
Proceeds from contributions 22,782,493 12,839,018
Fair value of withdrawals (12,875,419) (37,231,532)
----------- -----------
Net contributions (withdrawals) from partners 9,907,074 (24,392,514)
--------- -----------
Total increase (decrease) in net assets 93,061,944 (96,946,296)
Net assets at beginning of year 120,910,258 217,856,554
----------- -----------
Net assets at end of year $213,972,202 $120,910,258
============ ============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Notes to Financial Statements
World Technologies Portfolio
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. American Express Financial Corporation
(AEFC) may use fair value if a security's value has been materially affected by
events after the close of the primary exchanges or markets on which the security
is traded and before the NAV is calculated. The fair value of a security may be
different from the quoted or published price. AEFC will price a security at fair
value in accordance with procedures adopted by the Portfolio and board of
trustees if a reliable market quotation is not readily available. 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.
- --------------------------------------------------------------------------------
15 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL 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.
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 Oct. 31, 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 Oct. 31, 2003
was $667,931 representing 0.31% 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.
- --------------------------------------------------------------------------------
16 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL 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 Oct. 31, 2003,
the Portfolio has entered into outstanding future capital commitments for
limited partnership interests of $1,000,000.
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, market discount and original issue
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 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 the AXP Global Technology Fund to the Lipper Science and
Technology Funds Index. The maximum adjustment is 0.12% per year. If the
performance difference is less than 0.50%, the adjustment will be zero. The
first adjustment was made on June 1, 2003 and covered the six-month period
beginning Dec. 1, 2002. The adjustment increased the fee by $67,468 for the year
ended Oct. 31, 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.
Under a Deferred Compensation Plan (the Plan), non-interested trustees may defer
receipt of their compensation. Deferred amounts are treated as though equivalent
dollar amounts had been invested in shares of the underlying Fund or other
American Express mutual funds. The Portfolio's liability for these amounts is
adjusted for market value changes and remains in the Portfolio until distributed
in accordance with the Plan.
- --------------------------------------------------------------------------------
17 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
During the year ended Oct. 31, 2003, the Portfolio's custodian fees were reduced
by $250 as a result of earnings credits from overnight cash balances. The
Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
According to a Placement Agency Agreement, American Express
Financial Advisors Inc. acts as placement agent of the Trust's
units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $800,351,844 and $794,939,151, respectively, for the
year ended Oct. 31, 2003. Realized gains and losses are determined on an
identified cost basis.
Brokerage clearing fees paid to brokers affiliated with AEFC were $495,249 for
the year ended Oct. 31, 2003.
4. LENDING OF PORTFOLIO SECURITIES
As of Oct. 31, 2003, securities valued at $4,714,700 were on loan to brokers.
For collateral, the Portfolio received $4,750,000 in cash. Income from
securities lending amounted to $42,823 for the year ended Oct. 31, 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. FINANCIAL HIGHLIGHTS
The table below shows certain important financial information for evaluating the
Portfolio's results.
Ratios/supplemental data
Fiscal period ended Oct. 31, 2003 2002 2001 2000 1999
Ratio of expenses to average daily net assets(a) .84% .77% .75% .74% 1.14%
Ratio of net investment income (loss) to average daily net assets (.37%) (.51%) (.11%) .10% (.98%)
Portfolio turnover rate (excluding short-term securities) 546% 391% 233% 116% 113%
Total return(b) 68.97% (34.78%) (69.21%) 66.70% 109.53%
Notes to financial highlights
(a) Expense ratio is based on total expenses of the Portfolio before reduction
of earnings credits on cash balances. The ratio does not include feeder
fund expenses.
(b) Total return is based on a calculated Portfolio NAV and does not reflect
payment of a sales charge.
- --------------------------------------------------------------------------------
18 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Independent Auditors' Report
THE BOARD OF TRUSTEES AND UNITHOLDERS
WORLD TRUST
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of World Technologies Portfolio (a
series of World Trust) as of October 31, 2003, the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period ended October 31, 2003, and the
financial highlights for each of the years in the five-year period ended October
31, 2003. These financial statements and the financial highlights are the
responsibility of portfolio management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2003, by correspondence with the custodian
and brokers or by other appropriate auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
World Technologies Portfolio as of October 31, 2003, and the results of its
operations, changes in its net assets and the financial highlights for each of
the periods stated in the first paragraph above, in conformity with accounting
principles generally accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
December 12, 2003
- --------------------------------------------------------------------------------
19 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Technology Fund
Oct. 31, 2003
Assets
Investment in Portfolio (Note 1) $ 213,943,279
Capital shares receivable 123,191
-------
Total assets 214,066,470
-----------
Liabilities
Capital shares payable 21,930
Accrued distribution fee 2,876
Accrued service fee 1
Accrued transfer agency fee 3,107
Accrued administrative services fee 353
Other accrued expenses 41,062
------
Total liabilities 69,329
------
Net assets applicable to outstanding capital stock $ 213,997,141
=============
Represented by
Capital stock -- $.01 par value (Note 1) $ 1,292,669
Additional paid-in capital 624,584,419
Undistributed net investment income 148,698
Accumulated net realized gain (loss) (Note 5) (426,465,386)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 14,436,741
----------
Total -- representing net assets applicable to outstanding capital stock $ 213,997,141
=============
Net assets applicable to outstanding shares: Class A $ 145,381,527
Class B $ 64,386,508
Class C $ 3,999,864
Class Y $ 229,242
Net asset value per share of outstanding capital stock: Class A shares 84,335,891 $ 1.72
Class B shares 42,182,314 $ 1.53
Class C shares 2,615,766 $ 1.53
Class Y shares 132,926 $ 1.72
------- -------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
20 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Statement of operations
AXP Global Technology Fund
Year ended Oct. 31, 2003
Investment income
Income:
Dividends $ 391,927
Interest 323,035
Fee income from securities lending 42,817
Less foreign taxes withheld (27,512)
-------
Total income 730,267
-------
Expenses (Note 2):
Expenses allocated from Portfolio 1,301,206
Distribution fee
Class A 261,243
Class B 477,623
Class C 26,874
Transfer agency fee 999,213
Incremental transfer agency fee
Class A 74,212
Class B 58,920
Class C 2,856
Service fee -- Class Y 114
Administrative services fees and expenses 93,713
Compensation of board members 7,125
Printing and postage 42,448
Registration fees 55,623
Audit fees 7,000
Other 8,673
-----
Total expenses 3,416,843
Earnings credits on cash balances (Note 2) (1,281)
------
Total net expenses 3,415,562
---------
Investment income (loss) -- net (2,685,295)
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 64,893,085
Foreign currency transactions (8,703)
------
Net realized gain (loss) on investments 64,884,382
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 18,829,617
----------
Net gain (loss) on investments and foreign currencies 83,713,999
----------
Net increase (decrease) in net assets resulting from operations $81,028,704
===========
See accompanying notes to financial statements.
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21 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Statements of changes in net assets
AXP Global Technology Fund
Year ended Oct. 31, 2003 2002
Operations
Investment income (loss) -- net $ (2,685,295) $ (3,613,346)
Net realized gain (loss) on investments 64,884,382 (86,881,115)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 18,829,617 15,296,644
---------- ----------
Net increase (decrease) in net assets resulting from operations 81,028,704 (75,197,817)
---------- -----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 40,338,279 37,783,172
Class B shares 11,875,873 14,424,364
Class C shares 1,324,959 1,493,914
Class Y shares 138,070 76,038
Payments for redemptions
Class A shares (30,612,393) (54,052,105)
Class B shares (Note 2) (10,091,766) (19,608,355)
Class C shares (Note 2) (704,810) (1,832,580)
Class Y shares (29,506) (46,571)
------- -------
Increase (decrease) in net assets from capital share transactions 12,238,706 (21,762,123)
---------- -----------
Total increase (decrease) in net assets 93,267,410 (96,959,940)
Net assets at beginning of year 120,729,731 217,689,671
----------- -----------
Net assets at end of year $213,997,141 $120,729,731
============ ============
Undistributed net investment income $ 148,698 $ 86,706
------------ ------------
See accompanying notes to financial statements.
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22 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Notes to Financial Statements
AXP Global Technology Fund
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 Oct. 31, 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).
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.
- --------------------------------------------------------------------------------
23 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL 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.
On the statement of assets and liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by
$2,747,287 and accumulated net realized loss has been decreased by $8,703
resulting in a net reclassification adjustment to decrease paid-in capital by
$2,755,990.
The tax character of distributions paid for the years indicated is as follows:
Year ended Oct. 31, 2003 2002
Class A
Distributions paid from:
Ordinary income $-- $--
Long-term capital gain -- --
Class B
Distributions paid from:
Ordinary income -- --
Long-term capital gain -- --
Class C
Distributions paid from:
Ordinary income -- --
Long-term capital gain -- --
Class Y
Distributions paid from:
Ordinary income -- --
Long-term capital gain -- --
As of Oct. 31, 2003, the components of distributable earnings on a
tax basis are as follows:
Undistributed ordinary income $ --
Accumulated long-term gain (loss) $(425,961,372)
Unrealized appreciation (depreciation) $ 14,081,425
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 TECHNOLOGY FUND -- 2003 ANNUAL 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 Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
American Express mutual funds. The Fund's liability for these amounts is
adjusted for market value changes and remains in the Fund until distributed in
accordance with the Plan.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. 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 incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the fee for Class Y.
In addition, there is an annual closed-account fee of $5 per inactive account,
charged on a pro rata basis from the date the account becomes inactive until the
date the account is purged from the transfer agent system generally within one
year. However, the closed account fee is not being charged to the Fund until a
new transfer agency system is installed.
Under terms of a prior agreement that ended April 30, 2003, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $19 for Class
A, $20 for Class B, $19.50 for Class C and $17 for Class Y.
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.
- --------------------------------------------------------------------------------
25 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
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
$470,632 for Class A, $72,179 for Class B and $549 for Class C for the year
ended Oct. 31, 2003.
During the year ended Oct. 31, 2003, the Fund's transfer agency fees were
reduced by $1,281 as a result of earnings credits from overnight cash balances.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the years indicated are as follows:
Year ended Oct. 31, 2003
Class A Class B Class C Class Y
Sold 29,664,616 9,892,297 1,093,757 97,979
Issued for reinvested distributions -- -- -- --
Redeemed (23,738,698) (8,875,386) (608,977) (21,555)
----------- ---------- -------- -------
Net increase (decrease) 5,925,918 1,016,911 484,780 76,424
--------- --------- ------- ------
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 year ended Oct. 31, 2003.
- --------------------------------------------------------------------------------
26 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
5. CAPITAL LOSS CARRY-OVER
For federal income tax purposes the Fund has a capital loss carry-over of
$425,961,372 as of Oct. 31, 2003, that will expire in 2009 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.
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 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) (.02) (.03) (.02) (.01) (.08)
Net gains (losses) (both realized and unrealized) .71 (.54) (3.64) 7.05 5.94
Total from investment operations .69 (.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 $1.72 $1.03 $ 1.60 $ 5.26 $11.27
Ratios/supplemental data
Net assets, end of period (in thousands) $145,382 $80,831 $146,139 $319,164 $7,435
Ratio of expenses to average daily net assets(c) 1.94% 1.91% 1.63% 1.24%(e) 1.11%(e)
Ratio of net investment income (loss) to average daily net assets (1.47%) (1.65%) (.99%) (.38%) (1.01%)
Portfolio turnover rate (excluding short-term securities) 546% 391% 233% 116% 113%
Total return(j) 66.99% (35.62%) (69.58%) 66.58% 108.32%
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
27 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) (.03) (.04) (.04) (.04) (.14)
Net gains (losses) (both realized and unrealized) .64 (.48) (3.29) 6.84 5.83
Total from investment operations .61 (.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 $1.53 $ .92 $ 1.44 $ 4.77 $11.02
Ratios/supplemental data
Net assets, end of period (in thousands) $64,387 $37,877 $67,425 $138,545 $220
Ratio of expenses to average daily net assets(c) 2.75% 2.71% 2.42% 2.01%(f) 1.86%(f)
Ratio of net investment income (loss) to average daily net assets (2.27%) (2.45%) (1.78%) (1.16%) (1.76%)
Portfolio turnover rate (excluding short-term securities) 546% 391% 233% 116% 113%
Total return(j) 66.30% (36.11%) (69.81%) 65.25% 106.72%
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) (.03) (.04) (.04) (.01)
Net gains (losses) (both realized and unrealized) .64 (.48) (3.29) (.27)
Total from investment operations .61 (.52) (3.33) (.28)
Net asset value, end of period $1.53 $ .92 $ 1.44 $4.77
Ratios/supplemental data
Net assets, end of period (in thousands) $4,000 $1,964 $4,069 $3,298
Ratio of expenses to average daily net assets(c) 2.72% 2.69% 2.42% 2.01%(d),(g)
Ratio of net investment income (loss) to average daily net assets (2.26%) (2.39%) (1.84%) (1.17%)(d)
Portfolio turnover rate (excluding short-term securities) 546% 391% 233% 116%
Total return(j) 66.30% (36.11%) (69.81%) (5.54%)(k)
See accompanying notes to financial highlights.
- --------------------------------------------------------------------------------
28 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2003 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) (.02) (.03) (.02) -- (.08)
Net gains (losses) (both realized and unrealized) .71 (.54) (3.63) 7.03 5.94
Total from investment operations .69 (.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 $1.72 $1.03 $ 1.60 $ 5.25 $11.27
Ratios/supplemental data
Net assets, end of period (in thousands) $229 $58 $57 $88 $225
Ratio of expenses to average daily net assets(c) 1.69% 1.72% 1.49% .94%(h) 1.11%(h)
Ratio of net investment income (loss) to average daily net assets (1.25%) (1.61%) (.89%) (.80%) (1.01%)
Portfolio turnover rate (excluding short-term securities) 546% 391% 233% 116% 113%
Total return(j) 66.99% (35.63%) (69.52%) 66.27% 108.32%
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 Oct. 31, 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 Oct. 31, 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 Oct. 31, 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 Oct. 31, 2000 and 1999, respectively.
(i) A distibution payable to a single corporate shareholder.
(j) Total return does not reflect payment of a sales charge.
(k) Not annualized.
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.
- --------------------------------------------------------------------------------
29 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Independent Auditors' Report
THE BOARD AND SHAREHOLDERS
AXP GLOBAL SERIES, INC.
We have audited the accompanying statement of assets and liabilities of AXP
Global Technology Fund (a series of AXP Global Series, Inc.) as of October 31,
2003, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year period
ended October 31, 2003, and the financial highlights for each of the years in
the five-year period ended October 31, 2003. These financial statements and the
financial highlights are the responsibility of fund management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AXP
Global Technology Fund as of October 31, 2003, and the results of its
operations, changes in its net assets and the financial highlights for each of
the periods stated in the first paragraph above, in conformity with accounting
principles generally accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
December 12, 2003
- --------------------------------------------------------------------------------
30 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Board Members and Officers
Shareholders elect a board that oversees the Fund's operations. The board
appoints officers who are responsible for day-to-day business decisions based
on policies set by the board.
The following is a list of the Fund's board members. Each member oversees 15
Master Trust portfolios and 86 American Express mutual funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the board.
Independent Board Members
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Arne H. Carlson Board member since Chair, Board Services
901 S. Marquette Ave. 1999 Corporation (provides
Minneapolis, MN 55402 administrative services to
Age 69 boards). Former Governor of
Minnesota
- ------------------------------------- -------------------- -------------------------------- ------------------------
Philip J. Carroll, Jr. Board member since Retired Chairman and CEO, Scottish Power PLC,
901 S. Marquette Ave. 2002 Fluor Corporation (engineering Vulcan Materials
Minneapolis, MN 55402 and construction) since 1998 Company, Inc.
Age 65 (construction
materials/chemicals)
- ------------------------------------- -------------------- -------------------------------- ------------------------
Livio D. DeSimone Board member Retired Chair of the Board and Cargill, Incorporated
30 Seventh Street East since 2001 Chief Executive Officer, (commodity merchants
Suite 3050 Minnesota Mining and and processors),
St. Paul, MN 55101-4901 Manufacturing (3M) General Mills, Inc.
Age 69 (consumer foods),
Vulcan Materials
Company (construction
materials/ chemicals),
Milliken & Company
(textiles and
chemicals), and Nexia
Biotechnologies, Inc.
- ------------------------------------- -------------------- -------------------------------- ------------------------
Heinz F. Hutter* Board member since Retired President and Chief
901 S. Marquette Ave. 1994 Operating Officer, Cargill,
Minneapolis, MN 55402 Incorporated (commodity
Age 74 merchants and processors)
- ------------------------------------- -------------------- -------------------------------- ------------------------
Anne P. Jones Board member since Attorney and Consultant
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 68
- ------------------------------------- -------------------- -------------------------------- ------------------------
Stephen R. Lewis, Jr.** Board member since Retired President and Valmont Industries,
901 S. Marquette Ave. 2002 Professor of Economics, Inc. (manufactures
Minneapolis, MN 55402 Carleton College irrigation systems)
Age 64
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alan G. Quasha Board member since President, Quadrant Compagnie Financiere
901 S. Marquette Ave. 2002 Management, Inc. (management Richemont AG (luxury
Minneapolis, MN 55402 of private equities) goods), Harken Energy
Age 53 Corporation (oil and
gas exploration) and
SIRIT Inc. (radio
frequency
identification
technology)
- ------------------------------------- -------------------- -------------------------------- ------------------------
* Interested person of AXP Partners International Aggressive Growth Fund
and AXP Partners Aggressive Growth Fund by reason of being a security
holder of J P Morgan Chase & Co., which has a 45% interest in American
Century Companies, Inc., the parent company of the subadviser of two of
the AXP Partners Funds, American Century Investment Management, Inc.
** Interested person of AXP Partners International Aggressive Growth Fund by
reason of being a security holder of FleetBoston Financial Corporation,
parent company of Columbia Wanger Asset Management, L.P., one of the
fund's subadvisers.
- --------------------------------------------------------------------------------
31 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
Independent Board Members (continued)
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alan K. Simpson Board member since Former three-term United Biogen, Inc.
1201 Sunshine Ave. 1997 States Senator for Wyoming (biopharmaceuticals)
Cody, WY 82414
Age 71
- ------------------------------------- -------------------- -------------------------------- ------------------------
Alison Taunton-Rigby Board member since President, Forester Biotech
901 S. Marquette Ave. 2002 since 2000. Former President
Minneapolis, MN 55402 and CEO, Aquila
Age 59 Biopharmaceuticals, Inc.
- ------------------------------------- -------------------- -------------------------------- ------------------------
Board Members Affiliated with AEFC***
Name, address, age Position held with Principal occupation during Other directorships
Fund and length of past five years
service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Barbara H. Fraser Board member since Executive Vice President -
1546 AXP Financial Center 2002 AEFA Products and Corporate
Minneapolis, MN 55474 Marketing of AEFC since 2002.
Age 53 President - Travelers Check
Group, American Express
Company, 2001-2002. Management
Consultant, Reuters,
2000-2001. Managing Director -
International Investments,
Citibank Global, 1999-2000.
Chairman and CEO, Citicorp
Investment Services and
Citigroup Insurance Group,
U.S., 1998-1999
- ------------------------------------- -------------------- -------------------------------- ------------------------
Stephen W. Roszell Board membersince Senior Vice President -
50238 AXP Financial Center 2002, Institutional Group of AEFC
Minneapolis, MN 55474 Vice President
Age 54 since 2002
- ------------------------------------- -------------------- -------------------------------- ------------------------
William F. Truscott Board member since Senior Vice President - Chief
53600 AXP Financial Center 2001, Investment Officer of AEFC
Minneapolis, MN 55474 Vice President since 2001. Former Chief
Age 42 since 2002 Investment Officer and
Managing Director, Zurich
Scudder Investments
- ------------------------------------- -------------------- -------------------------------- ------------------------
*** Interested person by reason of being an officer, director and/or employee
of AEFC.
- -------------------------------------------------------------------------------
32 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL REPORT
The board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the board. In addition to Mr. Roszell, who is vice president, and
Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers
Name, address, age Position held Principal occupation during Other directorships
with Fund and past five years
length of service
- ------------------------------------- -------------------- -------------------------------- ------------------------
Jeffrey P. Fox Treasurer since Vice President - Investment
50005 AXP Financial Center 2002 Accounting, AEFC, since 2002;
Minneapolis, MN 55474 Vice President - Finance,
Age 48 American Express Company,
2000-2002; Vice President -
Corporate Controller, AEFC,
1996-2000
- ------------------------------------- -------------------- -------------------------------- ------------------------
Paula R. Meyer President since Senior Vice President and
596 AXP Financial Center 2002 General Manager - Mutual
Minneapolis, MN 55474 Funds, AEFC, since 2002; Vice
Age 49 President and Managing
Director - American Express
Funds, AEFC, 2000-2002; Vice
President, AEFC, 1998-2000
- ------------------------------------- -------------------- -------------------------------- ------------------------
Leslie L. Ogg Vice President, President of Board Services
901 S. Marquette Ave. General Counsel, Corporation
Minneapolis, MN 55402 and Secretary
Age 65 since 1978
- ------------------------------------- -------------------- -------------------------------- ------------------------
The SAI has additional information about the Fund's directors and is available,
without charge, upon request by calling (800) 862-7919.
Proxy Voting
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
(800) 862-7919; by looking at the Web site americanexpress.com/funds; or by
searching the Web site of the Securities and Exchange Commission
http://www.sec.gov. Beginning Jan. 1, 2004, you may view the Fund's voting
record for all portfolio companies whose shareholders meetings were completed
the previous quarter on americanexpress.com/funds or obtain a copy by calling
the Fund's administrator, Board Services Corporation, collect at (612) 330-9283.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available at
http://www.sec.gov.
- --------------------------------------------------------------------------------
33 -- AXP GLOBAL TECHNOLOGY FUND -- 2003 ANNUAL 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. (a) The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer and principal financial
officer. A copy of the code of ethics is filed as an exhibit to this
form N-CSR.
(b) During the period covered by this report, there were not any
amendments to the provisions of the code of ethics adopted in 2(a)
above.
(c) During the period covered by this report, there were not any
implicit or explicit waivers to the provisions of the code of ethics
adopted in 2(a).
Item 3. The Registrant's board of directors has determined that independent
directors Livio D. DeSimone, Anne P. Jones, and Alan G. Quasha, each
qualify as audit committee financial experts.
Item 4. Principal Accountant Fees and Services. Not applicable.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 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)(1) Code of ethics as applies to the Registrant's principal
executive officer and principal financial officer, as required to be
disclosed under Item 2 of Form N-CSR, is attached as Ex. 99.CODE ETH.
(a)(2) Separate certification for the Registrant's principal
executive officer and principal financial officer, as required by
Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a)
under the Investment Company Act of 1940, are attached as
EX.99.CERT.
(b) A certification by the Registrant's principal executive officer
and principal financial officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment
Company Act of 1940, is attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) AXP GLOBAL SERIES, INC.
By /s/ Paula R. Meyer
------------------
Paula R. Meyer
President and Principal Executive Officer
Date January 5, 2004
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 January 5, 2004
By /s/ Jeffrey P. Fox
------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date January 5, 2004