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: 4/30
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AXP(R)
Emerging
Markets
Fund
Semiannual Report
for the Period Ended
April 30, 2004
AXP Emerging Markets Fund seeks to provide shareholders with long-term capital
growth.
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
Investments in Securities 10
Financial Statements (Portfolio) 13
Notes to Financial Statements (Portfolio) 16
Financial Statements (Fund) 20
Notes to Financial Statements (Fund) 23
Proxy Voting 31
(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 EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Fund Snapshot
AS OF APRIL 30, 2004
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 $279.0 million
Number of holdings 69
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 20.8%
Taiwan 13.5%
Mexico 9.6%
Brazil 7.7%
India 6.9%
Russia 6.6%
South Africa 5.8%
Israel 4.6%
Thailand 3.5%
Malaysia 3.2%
Indonesia 2.8%
Turkey 2.6%
Hong Kong 2.1%
Hungary 1.4%
United Kingdom 1.3%
Other* 7.6%
* Includes China, Estonia, Peru and Short-term securities.
TOP TEN HOLDINGS
Percentage of portfolio assets
Samsung Electronics (South Korea) 8.3%
Lukoil ADR (Russia) 4.3
America Movil ADR Series L (Mexico) 4.1
Anglo American (South Africa) 3.8
Taiwan Semiconductor Mfg (Taiwan) 3.6
Banco Itau Holding Financeira (Brazil) 2.6
Teva Pharmaceutical Inds ADR (Israel) 2.5
Chinatrust Financial Holding (Taiwan) 2.4
Kookmin Bank (South Korea) 2.3
Housing Development Finance (India) 2.2
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.
Stock prices of established companies that pay dividends may be less volatile
than the stock market as a whole. Stocks of small- and medium-sized companies
may be subject to more abrupt or erratic price movements than stocks of larger
companies. Some of these companies also may have fewer financial resources.
Fund holdings are subject to change.
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3 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Below, Portfolio Managers Julian Thompson and Jules Mort discuss AXP Emerging
Markets Fund's results and positioning for the first half of fiscal year 2004.
Q: How did AXP Emerging Markets Fund perform for the six months ended April
30, 2004?
A: AXP Emerging Markets Fund rose 9.24% (Class A shares excluding sales
charge) for the six-month period ended April 30, 2004. This was slightly
less than the Fund's benchmark, the MSCI Emerging Markets Free Index, which
rose 9.38% over the same period. The Fund's peer group, represented by the
Lipper Emerging Markets Fund Index, was up 10.47% for the same time frame.
Q: How did market conditions and country positioning affect performance during
the period?
A: Strong commodity prices, good export growth in Asia and a decline in the
value of the U.S. dollar in 2003 helped provide attractive, positive
returns for emerging market investors. However, the six months ended
April 30, 2004 was an unusual and volatile time. We positioned the Fund a
bit too conservatively last autumn, which was a period when emerging
markets fared especially well. However, this worked in our favor towards
the end of the period when the prospect of higher U.S. interest rates and
the strengthening U.S. dollar contributed to a sharp retreat in many
emerging markets.
(bar chart)
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2004
12% (bar 3)
(bar 1) (bar 2) +10.47%
9% +9.24% +9.38%
6%
3%
0%
(bar 1) AXP Emerging Markets Fund Class A (excluding sales charge)
(bar 2) MSCI Emerging Markets Free Index(1) (unmanaged)
(bar 3) Lipper Emerging Markets Funds Index(2)
(1) Morgan Stanley Capital International (MSCI) Emerging Markets Free Index, an
unmanaged market capitalization-weighted index, is compiled from a
composite of securities markets of 26 emerging market countries. The index
reflects reinvestment of all distributions and changes in market prices,
but excludes brokerage commissions or other fees.
(2) The Lipper Emerging Markets Funds Index, published by Lipper Inc., includes
the 30 largest funds that are generally similar to the Fund, although some
funds in the index may have somewhat different investment policies or
objectives.
Past performance is no guarantee of future results. The 5.75% sales charge
applicable to Class A shares of the Fund is not reflected in the bar chart; if
reflected, returns would be lower than those shown. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
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4 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
(begin callout quote)> Another source of positive returns for the Fund since
October was its higher-than-index position in Russia.(end callout quote)
The Fund's country positioning generally worked well. We maintained a
lower-than-index position in China, which was the worst performing market
in Asia for the six months ended April 30. This position helped the Fund's
performance. It appeared to us last October that stocks in China were
overvalued and that an investment "bubble" was building which would need
tighter monetary conditions. The Chinese government authorities have tried
to slow down the economy by imposing loan quotas, but there has been no
sign of a slowdown as yet. While the market has
AVERAGE ANNUAL TOTAL RETURNS
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)
as of April 30, 2004
6 months* +9.24% +2.96% +8.60% +4.60% +8.80% +7.80% +9.34% +9.34%
1 year +48.74% +40.18% +47.55% +43.55% +47.72% +47.72% +49.03% +49.03%
5 years +4.84% +3.61% +4.01% +3.84% N/A N/A +5.10% +5.10%
Since inception +2.80% +1.99% +2.00% +2.00% +0.08% +0.08% +2.99% +2.99%
as of March 31, 2004
6 months* +30.29% +22.81% +29.75% +25.75% +29.44% +28.44% +30.17% +30.17%
1 year +71.67% +61.82% +70.03% +66.03% +69.87% +69.87% +71.76% +71.76%
5 years +10.06% +8.76% +9.20% +9.06% N/A N/A +10.31% +10.31%
Since inception +4.13% +3.29% +3.32% +3.32% +2.55% +2.55% +4.31% +4.31%
The performance information shown represents the past performance and is not a
guarantee of future results. The investment return and principal value of your
investment and returns will fluctuate so that your shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower or
higher than the performance information shown. You may obtain performance
information current to the most recent month-end by calling (888) 723-8476 or
visiting www.americanexpress.com/funds. You should consider the investment
objectives, risks, and charges and expenses of the Fund carefully before
investing.
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
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5 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
corrected, more measures appear necessary to slow things down. We gradually
reduced the Fund's equity holdings in China from 6.3% at the start of the
fiscal period to just 1% of the portfolio by the end of April.
In Latin America, a higher-than-index position in Mexico was a positive
factor for the Fund while a higher-than-index position in Brazil detracted
from results. Our position in Mexico at the end of the period was large
(approximately 10% of the Fund). Mexican stocks rose by 10% for the fiscal
period, which contributed significantly to the Fund's performance. On the
other hand, Brazil languished as investors feared that Brazil's high debt
levels could be more severely affected in the coming months by rising U.S.
interest rates.
While overall economic growth in Mexico remains lackluster, the consumer
sector is growing strongly, and most of the Fund's Mexican holdings are
concentrated in that area. America Movil, a cellular telecommunications
operator based in Mexico, was one of the top contributors to Fund
performance during the fiscal period.
Since last autumn, Mexican stocks have been boosted by the growing strength
of the U.S. economy. The Mexican industrial sector is closely linked with
U.S. demand, given that 90% of Mexican exports end up in the U.S. market.
Mexico had previously suffered from competition with China but seems to have
regained some competitiveness recently. However, the Mexican equity market
is mostly linked to domestic consumption, which has been very strong on the
back of low interest rates and increased credit penetration. Above all,
Mexico offers good earnings growth which is reflected in the Mexican
companies within the Fund's portfolio.
Another source of positive returns for the Fund since October was its
higher-than-index position in Russia. The highest global oil prices in 20
years have helped the Russian economy post huge trade surpluses. While
political risks in Russia are substantial and contributed to a sharp market
sell off in April, the Fund's Russian stock holdings worked well during the
fiscal period. Our holdings in Russia include Lukoil, one of the country's
largest oil exporters, and Mobile TeleSystems, a wireless telecommunications
company.
The Fund also benefited from having a substantially lower-than-index
position in South Africa. The South African market was disappointing,
falling 6% in U.S. dollar terms over the fiscal period.
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6 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
Q: What other changes did you make to the portfolio since the end of October?
A: The Fund began the fiscal year with 57% of its assets in Asia, a
higher-than-benchmark position. We reduced this weighting to approximately
52% by the end of April. In addition to cutting the portfolio's exposure to
China because of its overheating economy, we reduced holdings in Thailand
and Taiwan. One factor affecting several Asian markets that influenced our
decision was a flood of new stock issuance that was difficult for equity
markets to absorb ($14 billion in public offerings in the first calendar
quarter of 2004).
During the period, we underestimated the impact that an overheating China
would have on the rest of Asia, particularly on Taiwan, which also faced
political concerns. We began the fiscal year with a higher-than-index
position in Taiwan, which hurt the Fund's six-month return even though we
reduced our holdings there. Elsewhere in Asia, we increased the Fund's
position in South Korea, which we felt would be less influenced by a
slowdown in China.
Within other areas of the portfolio, we reduced our positioning in Brazil
and Chile; increased the Fund's exposure to Eastern Europe and Israel and
increased the Fund's cash position. We also added to the Fund's Russian
stock holdings.
In terms of sectors, we have positioned the Fund to focus on each country's
domestic economy rather than global commodities. Therefore, we have
maintained lower-than-index positions in materials and energy, while holding
higher-than-index positions in financials, consumer staples and
telecommunications.
Q: What is the Fund's tactical view and strategy for the months ahead?
A: Our outlook has changed since our last report to you in autumn 2003. It
appears that the global economy is moving into a period of dollar
strength. Also, U.S. interest rates are likely to increase more quickly
than the market had expected. A stronger U.S. dollar and rising interest
rates change the near term outlook for emerging markets quite
significantly. We will lessen our exposure to domestic economies in
interest rate sensitive markets, such as Brazil and Turkey.
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7 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
(bar chart)
Historical Economic Growth in Emerging Markets
and Economists' Current Expectations
GDP Growth (%)
REGION
Asia Latin America Europe, Middle East and Africa
7 Year Average 2.2% 1.0% 2.0%
2001 2.6% 1.1% 1.1%
2002 4.8% -1.5% 2.8%
2003 estimate 5.1% 1.0% 3.2%
2004 estimate 5.5% 4.7% 3.7%
Source: Threadneedle Asset Management as of 4/30/04
The graph above shows the seven year average Gross Domestic Product (GDP) growth
in different regions from 2001 (actual) to 2004 (estimated). The bars depict GDP
growth in Asia, Latin America and the Europe-Middle East-Africa region,
respectively. GDP is the value of goods and services provided in each area.
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8 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
There has also been growing concern about China. To regain confidence in
this market, we need to see evidence of a soft landing. Until we see a
cooling of China's economy, we believe certain Asian equity markets may
remain under pressure. We have therefore adopted a more defensive position
within the portfolio by reducing exposure to global commodities in favor of
domestic sectors. We have also moved to a lower-than-index position in Asia
and have reduced our position in Latin America. At the same time we have
increased the Fund's holding in the Europe, Middle East and Africa region,
given that countries in this region tend to have a more defensive tilt. For
example, in emerging Europe, we purchased Gedeon Richter, a pharmaceutical
manufacturer in Hungary that produces generic drugs and is enjoying strong
growth in the U.S. market.
China apart, many emerging market economies appear fundamentally sound for
the medium term (as illustrated by the emerging market gross domestic
product (GDP) growth rate chart on page 8). While the interest rate cycle
has clearly bottomed in the United States, with higher rates expected in the
second half of the year, emerging economies are well positioned to withstand
a higher cost of capital. Leverage is much lower throughout the emerging
markets universe than it was in previous tightening cycles. We therefore
expect the asset class to remain relatively resilient in the face of rising
U.S. rates and expect current levels of growth to be sustained, with the
possible exception of China. The Fund is positioned to benefit from a pick
up in the domestic credit cycle, particularly in Asia, and is focused on
strong growth franchises supported by good cash flow and high quality
management. Stocks in this area continue to be attractively valued, in our
view.
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9 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Investments in Securities
Emerging Markets Portfolio
April 30, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (88.6%)(c)
Issuer Shares Value(a)
Brazil (5.0%)
Metals (2.0%)
Companhia Vale do Rio Doce ADR 141,917 $5,547,536
Paper & packaging (0.9%)
Aracruz Celulose ADR 82,482 2,568,489
Utilities -- telephone (2.1%)
Brasil Telecom Participacoes ADR 189,766 5,882,746
China (0.9%)
Automotive & related
Denway Motors 5,276,000 2,519,919
Estonia (0.6%)
Banks and savings & loans
Hansabank 206,664 1,582,058
Hong Kong (2.1%)
Multi-industry (1.1%)
New World Development 3,690,400 2,957,393
Real estate (1.0%)
Sun Hung Kai Properties 326,000 2,800,580
Hungary (1.3%)
Health care products
Gedeon Richter 36,892 3,758,907
India (6.7%)
Automotive & related (0.9%)
Tata Motors 231,687 2,462,667
Banks and savings & loans (3.4%)
Housing Development Finance 460,384 6,154,319
State Bank of India 90,114 3,509,940
Total 9,664,259
Beverages & tobacco (1.4%)
ITC 166,009 4,012,832
Computer software & services (1.0%)
Infosys Technologies 23,136 2,676,252
Indonesia (2.7%)
Automotive & related (0.6%)
Astra Intl 2,531,500 1,659,523
Banks and savings & loans (1.0%)
Bank Rakyat Indonesia 13,512,500(b) 2,680,743
Telecom equipment & services (1.1%)
Telekomunikasi Indonesia ADR 178,067 3,223,013
Israel (4.5%)
Computer software & services (1.2%)
Check Point Software Technologies 148,026(b) 3,468,249
Electronics (0.7%)
Orbotech 98,700(b) 2,084,544
Health care products (2.6%)
Teva Pharmaceutical Inds ADR 112,710 6,938,428
Malaysia (3.2%)
Banks and savings & loans (0.8%)
Malayan Banking 773,200 2,136,474
Cellular telecommunications (1.2%)
Maxis Communications 1,498,200 3,430,089
Leisure time & entertainment (1.2%)
Resorts World 1,228,100 3,231,842
Mexico (9.4%)
Beverages & tobacco (1.9%)
Coca-Cola Femsa ADR 120,000(b) 2,551,200
Fomento Economico Mexicano ADR 62,649 2,739,014
Total 5,290,214
See accompanying notes to investments in securities.
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10 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Mexico (cont.)
Cellular telecommunications (4.0%)
America Movil ADR Series L 333,537 $11,273,551
Media (1.4%)
Grupo Televisa ADR 91,000 3,966,690
Real estate (0.8%)
Consorcio 828,000(b) 2,259,369
Retail -- general (1.3%)
Wal-Mart de Mexico 1,217,521 3,553,770
Peru (0.7%)
Precious metals
Compania de Minas
Buenaventura ADR 90,309 1,954,287
Russia (6.5%)
Energy (4.2%)
Lukoil ADR 107,756 11,745,404
Utilities -- natural gas (0.5%)
Gazprom ADR 42,990(d) 1,328,391
Utilities -- telephone (1.8%)
Mobile Telesystems ADR 46,127 4,979,871
South Africa (5.8%)
Banks and savings & loans (2.0%)
FirstRand 2,152,700 2,960,267
Standard Bank Group 471,422 2,709,912
Total 5,670,179
Metals (3.8%)
Anglo American 521,162 10,376,805
South Korea (18.7%)
Banks and savings & loans (3.3%)
Kookmin Bank 165,720 6,188,010
Shinhan Financial Group 169,550 2,955,923
Total 9,143,933
Beverages & tobacco (2.1%)
KT&G 226,860 5,763,366
Chemicals (0.4%)
LG Chem 30,040 1,213,893
Electronics (8.9%)
Samsung Electronics 48,140 22,859,318
Samsung SDI 15,600 1,994,885
Total 24,854,203
Insurance (1.0%)
Samsung Fire & Marine 42,590 2,832,072
Retail -- general (1.1%)
Shinsegae 13,090 2,957,246
Telecom equipment & services (1.9%)
SK Telecom 18,620 3,174,765
SK Telecom ADR 106,585 2,153,017
Total 5,327,782
Taiwan (13.2%)
Banks and savings & loans (4.4%)
Chinatrust Financial Holding 6,264,840 6,703,477
Taishin Financial Holdings 6,288,000 5,484,378
Total 12,187,855
Chemicals (0.7%)
Formosa Chemicals & Fibre 1,365,335 1,964,275
Computer hardware (0.7%)
Hon Hai Precision Inds 476,600 1,871,316
Electronics (5.4%)
Acer 1,746,000 2,459,597
Taiwan Semiconductor Mfg 5,784,000 9,968,229
Yageo 5,214,000(b) 2,828,600
Total 15,256,426
Insurance (1.0%)
Cathay Financial Holding 1,623,000 2,870,069
Telecom equipment & services (1.0%)
Taiwan Cellular 3,074,000 2,810,125
Thailand (3.5%)
Banks and savings & loans (1.8%)
Kasikornbank Public 2,557,200(b) 3,099,830
Kiatnakin Finance 1,908,700 1,872,444
Total 4,972,274
See accompanying notes to investments in securities.
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11 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Thailand (cont.)
Building materials & construction (0.6%)
Siam Cement 343,700 $1,803,974
Home building (1.1%)
Land & Houses Public 11,385,000 2,930,905
Turkey (2.6%)
Banks and savings & loans (0.9%)
Akbank T.A.S. 551,591,000 2,568,254
Food (0.9%)
Migros Turk T.A.S. 479,177,580 2,400,113
Furniture & appliances (0.8%)
Arcelik 421,949,085 2,262,302
United Kingdom (1.3%)
Metals
Lonmin 203,211 3,590,607
Total common stocks
(Cost: $219,481,217) $247,266,064
Preferred stocks (4.3%)(c)
Issuer Shares Value(a)
Brazil (2.5%)
Banco Itau Holding Financeira 90,010,000 $7,177,468
South Korea (1.8%)
Samsung Electronics 17,840 4,927,673
Total preferred stocks
(Cost: $9,075,294) $12,105,141
Short-term securities (5.3%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agency (1.2%)
Federal Home Loan Mtge Corp Disc Nts
05-04-04 1.02% $1,500,000 $1,499,838
05-18-04 1.00 1,900,000 1,899,084
Total 3,398,922
Commercial paper (4.1%)
Dexia (Delaware)
05-20-04 1.03 3,500,000 3,497,997
Household Finance
05-03-04 1.03 2,900,000 2,899,751
Societe General North America
06-04-04 1.04 5,000,000 4,994,945
Total 11,392,693
Total short-term securities
(Cost: $14,791,995) $14,791,615
Total investments in securities
(Cost: $243,348,506)(e) $274,162,820
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) 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.
These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. As of April 30, 2004, the value
of these securities amounted to $1,328,391 or 0.5% of net assets.
(e) At April 30, 2004, the cost of securities for federal income tax purposes
was approximately $243,349,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 41,668,000
Unrealized depreciation (10,854,000)
-----------
Net unrealized appreciation $ 30,814,000
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12 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
Emerging Markets Portfolio
April 30, 2004 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $243,348,506) $274,162,820
Foreign currency holdings (identified cost $2,939,066) (Note 1) 2,921,173
Dividends and accrued interest receivable 481,847
Receivable for investment securities sold 2,724,768
Unrealized appreciation on foreign currency contracts held, at value (Note 4) 144
---
Total assets 280,290,752
-----------
Liabilities
Disbursements in excess of cash on demand deposit 45,202
Payable for investment securities purchased 1,089,449
Accrued investment management services fee 8,547
Other accrued expenses 76,785
------
Total liabilities 1,219,983
---------
Net assets $279,070,769
============
See accompanying notes to financial statements.
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13 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Statement of operations
Emerging Markets Portfolio
Six months ended April 30, 2004 (Unaudited)
Investment income
Income:
Dividends $ 3,315,835
Interest 47,965
Fee income from securities lending (Note 3) 256
Less foreign taxes withheld (400,047)
--------
Total income 2,964,009
---------
Expenses (Note 2):
Investment management services fee 1,370,999
Compensation of board members 5,542
Custodian fees 141,450
Audit fees 10,500
Other 3,052
-----
Total expenses 1,531,543
Earnings credits on cash balances (Note 2) (171)
----
Total net expenses 1,531,372
---------
Investment income (loss) -- net 1,432,637
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 37,082,709
Foreign currency transactions (230,607)
--------
Net realized gain (loss) on investments 36,852,102
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (15,713,215)
-----------
Net gain (loss) on investments and foreign currencies 21,138,887
----------
Net increase (decrease) in net assets resulting from operations $ 22,571,524
============
See accompanying notes to financial statements.
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14 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
Emerging Markets Portfolio
April 30, 2004 Oct. 31, 2003
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss) -- net $ 1,432,637 $ 2,490,540
Net realized gain (loss) on investments 36,852,102 17,305,707
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (15,713,215) 50,708,763
----------- ----------
Net increase (decrease) in net assets resulting from operations 22,571,524 70,505,010
---------- ----------
Proceeds from contributions 16,561,254 40,823,634
Fair value of withdrawals (5,877,601) (63,961,807)
---------- -----------
Net contributions (withdrawals) from partners 10,683,653 (23,138,173)
---------- -----------
Total increase (decrease) in net assets 33,255,177 47,366,837
Net assets at beginning of period 245,815,592 198,448,755
----------- -----------
Net assets at end of period $279,070,769 $245,815,592
============ ============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
15 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Notes to Financial Statements
Emerging Markets Portfolio
(Unaudited as to April 30, 2004)
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. Pursuant to procedures adopted by the
Board of Trustees of the portfolios, American Express Financial Corporations
(AEFC) utilizes Fair Value Pricing (FVP). FVP determinations are made in good
faith in accordance with the procedures. If a development or event is so
significant that there is a reasonably high degree of certainty that the effect
of the development or event has actually caused the closing price to no longer
reflect the actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the New York Stock Exchange.
Significant events include material movements in the U.S. securities markets
prior to the opening of foreign markets on the following trading day. FVP
results in an estimated price that reasonably reflects the current market
conditions in order to value the portfolio holdings such that shareholder
transactions receive a fair NAV. 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.
- --------------------------------------------------------------------------------
16 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
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 April 30, 2004 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.
- --------------------------------------------------------------------------------
17 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
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 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. The maximum adjustment is 0.12% per year. If the
performance difference is less than 0.50%, the adjustment will be zero. The
adjustment decreased the fee by $132,186 for the six months ended April 30,
2004.
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.
During the six months ended April 30, 2004, the Portfolio's custodian fees were
reduced by $171 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.
- --------------------------------------------------------------------------------
18 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $175,886,315 and $179,448,278, respectively, for the six
months ended April 30, 2004. Realized gains and losses are determined on an
identified cost basis.
Income from securities lending amounted to $256 for the six months ended April
30, 2004. The risks to the Portfolio of securities lending are that the borrower
may not provide additional collateral when required or return the securities
when due.
4. FORWARD FOREIGN CURRENCY CONTRACTS
As of April 30, 2004, the Portfolio has a forward foreign currency exchange
contract that obligates it to deliver currency at a specified future date. The
unrealized appreciation and/or depreciation on this contract is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contract are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 6, 2004 574,713 23,000,000 $144 $--
U.S. Dollar Thai Baht
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, 2004(e) 2003 2002 2001 2000
Ratio of expenses to average daily net assets(a) 1.12%(c) 1.20% 1.23% 1.20% 1.17%
Ratio of net investment income (loss) to average daily net assets 1.04%(c) 1.20% .63% .79% .28%
Portfolio turnover rate (excluding short-term securities) 68% 174% 226% 193% 143%
Total return(b) 9.61%(d) 37.59% 9.39% (22.59%) (2.86%)
(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.
(c) Adjusted to an annual basis.
(d) Not annualized.
(e) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
19 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Emerging Markets Fund
April 30, 2004 (Unaudited)
Assets
Investment in Portfolio (Note 1) $278,968,482
Capital shares receivable 327,305
-------
Total assets 279,295,787
-----------
Liabilities
Capital shares payable 30,843
Accrued distribution fee 3,482
Accrued service fee 49
Accrued transfer agency fee 1,976
Accrued administrative services fee 769
Other accrued expenses 233,432
-------
Total liabilities 270,551
-------
Net assets applicable to outstanding capital stock $279,025,236
============
Represented by
Capital stock -- $.01 par value (Note 1) $ 479,697
Additional paid-in capital 334,081,699
Excess of distributions over net investment income (2,403,300)
Accumulated net realized gain (loss) (Note 5) (83,918,360)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 30,785,500
----------
Total -- representing net assets applicable to outstanding capital stock $279,025,236
============
Net assets applicable to outstanding shares: Class A $178,950,037
Class B $ 78,900,001
Class C $ 1,056,158
Class I $ 2,344,153
Class Y $ 17,774,887
Net asset value per share of outstanding capital stock: Class A shares 30,345,850 $ 5.90
Class B shares 14,059,792 $ 5.61
Class C shares 187,663 $ 5.63
Class I shares 393,539 $ 5.96
Class Y shares 2,982,888 $ 5.96
--------- ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
20 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Statement of operations
AXP Emerging Markets Fund
Six months ended April 30, 2004 (Unaudited)
Investment income
Income:
Dividends $ 3,314,582
Interest 47,951
Fee income from securities lending 256
Less foreign taxes withheld (399,895)
--------
Total income 2,962,894
---------
Expenses (Note 2):
Expenses allocated from Portfolio 1,530,795
Distribution fee
Class A 219,320
Class B 396,155
Class C 3,971
Transfer agency fee 327,418
Incremental transfer agency fee
Class A 24,841
Class B 18,605
Class C 121
Service fee -- Class Y 9,344
Administrative services fees and expenses 135,096
Compensation of board members 5,217
Printing and postage 51,575
Registration fees 26,303
Audit fees 3,500
Other 8,655
-----
Total expenses 2,760,916
Earnings credits on cash balances (Note 2) (1,842)
------
Total net expenses 2,759,074
---------
Investment income (loss) -- net 203,820
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 37,068,896
Foreign currency transactions (230,503)
--------
Net realized gain (loss) on investments 36,838,393
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (15,707,926)
-----------
Net gain (loss) on investments and foreign currencies 21,130,467
----------
Net increase (decrease) in net assets resulting from operations $ 21,334,287
============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
21 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
AXP Emerging Markets Fund
April 30, 2004 Oct. 31, 2003
Six months ended Year ended
(Unaudited)
Operations and distributions
Investment income (loss) -- net $ 203,820 $ 320,873
Net realized gain (loss) on investments 36,838,393 17,299,589
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (15,707,926) 50,690,349
----------- ----------
Net increase (decrease) in net assets resulting from operations 21,334,287 68,310,811
---------- ----------
Distributions to shareholders from:
Net investment income
Class A (1,739,642) --
Class B (347,197) --
Class C (2,977) --
Class I -- --
Class Y (233,250) --
Total distributions (2,323,066) --
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 30,185,118 46,522,730
Class B shares 8,838,997 4,677,343
Class C shares 512,761 1,881,668
Class I shares 2,544,260 --
--------- ----------
Class Y shares 1,366,070 17,134,059
--------- ----------
Reinvestment of distributions at net asset value
Class A shares 1,720,981 --
Class B shares 343,336 --
Class C shares 2,764 --
Class Y shares 233,251 --
Payments for redemptions
Class A shares (20,315,476) (66,453,449)
Class B shares (Note 2) (8,126,451) (17,438,584)
Class C shares (Note 2) (92,885) (1,963,556)
Class I shares (1,782) --
Class Y shares (2,908,485) (5,243,858)
---------- ----------
Increase (decrease) in net assets from capital share transactions 14,302,459 (20,883,647)
---------- -----------
Total increase (decrease) in net assets 33,313,680 47,427,164
Net assets at beginning of period 245,711,556 198,284,392
----------- -----------
Net assets at end of period $279,025,236 $245,711,556
============ ============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
22 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Notes to Financial Statements
AXP Emerging Markets Fund
(Unaudited as to April 30, 2004)
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.
Effective March 4, 2004, the Fund offers an additional class of shares, Class I,
exclusively to certain institutional investors. Class I shares have no sales
charge and are made available through a separate prospectus supplement provided
to investors eligible to purchase the shares. As of April 30, 2004, American
Express Financial Corporation (AEFC) and the AXP Portfolio Builder Funds owned
100% of Class I shares.
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 April 30, 2004 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).
- --------------------------------------------------------------------------------
23 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
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.
- --------------------------------------------------------------------------------
24 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL 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.
Class I pays a transfer agency fee at an annual rate per shareholder account of
$1. This amount is included in the transfer agency fee on the statement of
operations.
In addition, AECSC is entitled to charge 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 currently not
effective.
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
$306,875 for Class A, $21,254 for Class B and $8 for Class C for the six months
ended April 30, 2004.
Effective Nov. 1, 2003, AEFC and its affiliates have agreed to waive certain
fees and expenses until Oct. 31, 2004. Under this agreement net expenses will
not exceed 1.99% for Class A, 2.75% for Class B, 2.75% for Class C, 1.47% for
Class I and 1.82% for Class Y.
During the six months ended April 30, 2004, the Fund's transfer agency fees were
reduced by $1,842 as a result of earnings credits from overnight cash balances.
- --------------------------------------------------------------------------------
25 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 2004
Class A Class B Class C Class I* Class Y
Sold 4,933,729 1,515,041 86,703 393,817 226,187
Issued for reinvested distributions 308,420 64,537 518 -- 41,430
Redeemed (3,356,099) (1,410,408) (17,144) (278) (477,628)
---------- ---------- ------- ---- --------
Net increase (decrease) 1,886,050 169,170 70,077 393,539 (210,011)
--------- ------- ------ ------- --------
* Inception date was March 4, 2004.
Year ended Oct. 31, 2003
Class A Class B Class C Class I Class Y
Sold 10,502,183 1,107,124 439,743 N/A 4,214,232
Issued for reinvested distributions -- -- -- N/A --
Redeemed (15,064,186) (4,225,912) (453,986) N/A (1,112,507)
----------- ---------- -------- ----- ----------
Net increase (decrease) (4,562,003) (3,118,788) (14,243) N/A 3,101,725
---------- ---------- ------- ----- ---------
4. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The Fund must
maintain asset coverage for borrowings of at least 300%. The agreement, which
enables the Fund to participate with other American Express mutual funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the
IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime
Lending Rate. Borrowings are payable within 60 days after such loan is executed.
The Fund also pays a commitment fee equal to its pro rata share of the amount of
the credit facility at a rate of 0.09% per annum. The Fund had no borrowings
outstanding during the six months ended April 30, 2004.
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.
- --------------------------------------------------------------------------------
26 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
6. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Class A
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $5.46 $4.00 $3.69 $ 4.81 $4.99
Income from investment operations:
Net investment income (loss) .01 .02 (.01) -- (.02)
Net gains (losses) (both realized and unrealized) .49 1.44 .32 (1.12) (.16)
Total from investment operations .50 1.46 .31 (1.12) (.18)
Less distributions:
Dividends from net investment income (.06) -- -- -- --
Net asset value, end of period $5.90 $5.46 $4.00 $ 3.69 $4.81
Ratios/supplemental data
Net assets, end of period (in millions) $179 $155 $132 $143 $234
Ratio of expenses to average daily net assets(b) 1.80%(c) 2.02% 2.05% 2.02% 1.83%
Ratio of net investment income (loss) to average daily net assets .36%(c) .39% (.19%) (.02%) (.38%)
Portfolio turnover rate (excluding short-term securities) 68% 174% 226% 193% 143%
Total return(d) 9.24%(e) 36.50% 8.40% (23.28%) (3.60%)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
27 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $5.19 $3.83 $3.56 $ 4.67 $4.88
Income from investment operations:
Net investment income (loss) (.01) (.02) (.04) (.04) (.07)
Net gains (losses) (both realized and unrealized) .46 1.38 .31 (1.07) (.14)
Total from investment operations .45 1.36 .27 (1.11) (.21)
Less distributions:
Dividends from net investment income (.03) -- -- -- --
Net asset value, end of period $5.61 $5.19 $3.83 $ 3.56 $4.67
Ratios/supplemental data
Net assets, end of period (in millions) $79 $72 $65 $73 $120
Ratio of expenses to average daily net assets(b) 2.56%(c) 2.80% 2.83% 2.79% 2.60%
Ratio of net investment income (loss) to average daily net assets (.40%)(c) (.39%) (.95%) (.80%) (1.14%)
Portfolio turnover rate (excluding short-term securities) 68% 174% 226% 193% 143%
Total return(d) 8.60%(e) 35.51% 7.58% (23.77%) (4.30%)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
28 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(g) 2003 2002 2001 2000(b)
Net asset value, beginning of period $5.20 $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) .46 1.38 .31 (1.08) (.95)
Total from investment operations .46 1.36 .28 (1.12) (.96)
Less distributions:
Dividends from net investment income (.03) -- -- -- --
Net asset value, end of period $5.63 $5.20 $3.84 $ 3.56 $4.68
Ratios/supplemental data
Net assets, end of period (in millions) $1 $1 $1 $-- $--
Ratio of expenses to average daily net assets(c) 2.55%(d) 2.80% 2.85% 2.79% 2.60%(d)
Ratio of net investment income (loss) to average daily net assets (.38%)(d) (.41%) (1.13%) (.63%) (2.06%)(d)
Portfolio turnover rate (excluding short-term securities) 68% 174% 226% 193% 143%
Total return(e) 8.80%(f) 35.42% 7.87% (23.93%) (17.02%)(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 2000.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
29 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Class I
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(b)
Net asset value, beginning of period $6.54
Income from investment operations:
Net investment income (loss) (.04)
Net gains (losses) (both realized and unrealized) (.54)
Total from investment operations (.58)
Net asset value, end of period $5.96
Ratios/supplemental data
Net assets, end of period (in millions) $2
Ratio of expenses to average daily net assets(c) 1.42%(d)
Ratio of net investment income (loss) to average daily net assets .66%(d)
Portfolio turnover rate (excluding short-term securities) 68%
Total return(e) (8.87%)(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was March 4, 2004 (Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
- --------------------------------------------------------------------------------
30 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $5.52 $4.04 $3.72 $ 4.83 $4.99
Income from investment operations:
Net investment income (loss) .02 .03 -- .01 (.01)
Net gains (losses) (both realized and unrealized) .49 1.45 .32 (1.12) (.15)
Total from investment operations .51 1.48 .32 (1.11) (.16)
Less distributions:
Dividends from net investment income (.07) -- -- -- --
Net asset value, end of period $5.96 $5.52 $4.04 $ 3.72 $4.83
Ratios/supplemental data
Net assets, end of period (in millions) $18 $18 $-- $-- $--
Ratio of expenses to average daily net assets(b) 1.62%(c) 1.87% 1.59% 1.84% 1.66%
Ratio of net investment income (loss) to average daily net assets .55%(c) .54% .19% .21% (.29%)
Portfolio turnover rate (excluding short-term securities) 68% 174% 226% 193% 143%
Total return(d) 9.34%(e) 36.63% 8.60% (22.98%) (3.21%)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
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. 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. In addition, after Aug.
1, 2004, information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 will be
available at http://www.sec.gov.
- --------------------------------------------------------------------------------
31 -- AXP EMERGING MARKETS FUND -- 2004 SEMIANNUAL REPORT
(logo)
AMERICAN
EXPRESS
(R)
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and
is not a broker-dealer.
AXP(R)
Global
Balanced
Fund
Semiannual Report
for the Period Ended
April 30, 2004
AXP Global Balanced Fund seeks to provide shareholders with a balance of growth
of capital and current income.
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
Investments in Securities 8
Financial Statements 14
Notes to Financial Statements 17
Proxy Voting 27
(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.
- --------------------------------------------------------------------------------
2 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Fund Snapshot
AS OF APRIL 30, 2004
PORTFOLIO MANAGERS
Portfolio manager Since Years in industry
Equity
Alex Lyle* 10/03 23
Stephen Thornber* 10/03 16
Fixed Income
Nic Pifer, CFA** 2/03 13
* The Fund is managed by a team led by Alex Lyle and Stephen Thornber in
London.
** The Fund is managed by a team led by Nic Pifer in Minneapolis.
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 $98.2 million
Number of holdings 144
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 36.2%
Germany 9.1%
United Kingdom 7.5%
Japan 7.3%
France 7.1%
Italy 6.0%
Switzerland 4.0%
Austria 3.8%
Canada 2.6%
Bermuda 2.4%
Denmark 1.9%
Brazil 1.6%
China 1.2%
Hong Kong 1.2%
Other* 6.2%
* Includes Australia, Belgium, Greece, Ireland, Israel, Mexico, Netherlands,
Norway, Singapore, 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 3.5
Govt of France (France)
5.50% 2010 2.5
Bundesrepublik Deutschland (Germany)
6.50% 2027 2.3
Govt of France (France)
4.00% 2009 1.9
Bundesrepublik Deutschland (Germany)
5.25% 2008 1.7
Federal Natl Mtge Assn (United States)
6.00% 2011 1.7
Citigroup (United States) 1.5
Samsung Electronics (South Korea) 1.4
United Kingdom Treasury (United Kingdom)
8.50% 2005 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.
Stock prices of established companies that pay dividends may be less volatile
than the stock market as a whole. Stocks of small- and medium-sized companies
may be subject to more abrupt or erratic price movements than stocks of larger
companies. Some of these companies also may have fewer financial resources.
Fund holdings are subject to change.
- --------------------------------------------------------------------------------
3 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Below, Portfolio Managers Alex Lyle and Stephen Thornber, of Threadneedle Asset
Management, and Nic Pifer discuss the Fund's positioning and results for the
semiannual period ended April 30, 2004. Threadneedle portfolio managers assumed
responsibility for the equity portion of the Fund on Oct. 20, 2003.
Q: How did AXP Global Balanced Fund perform for the six-month period ended
April 30, 2004?
A: AXP Global Balanced Fund's Class A shares gained 4.65%, excluding sales
charge, for the six months ended April 30, 2004. The Fund's benchmark, the
MSCI All Country World Free Index, rose 8.70%, and the Lipper Global
Flexible Funds Index, representing the Fund's peer group, rose 6.23% for
the period. The CitiGroup World Government Bond Index returned 3.10% for
the same period.
Q: What factors most significantly affected performance?
A: A weakening U.S. dollar versus other world currencies helped
performance during the beginning of the period for both the
equity and fixed income portions of the Fund. However, a
rebound in the U.S. dollar versus other world currencies
hurt performance later in the period. As the value of the
U.S. dollar declines, the currency value of foreign
investments typically improves and vice versa.
Within the equity portion of the Fund, we made several major changes when
we took over management in late October. We began to see the effect of
these changes throughout the semiannual period. First, a strong cyclical
focus was
(bar chart)
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2004
10%
(bar 2)
8% +8.70%
(bar 4)
6% (bar 1) +6.23%
+4.65%
4% (bar 3)
+3.10%
2%
0%
(bar 1) AXP Global Balanced Fund Class A (excluding sales charge)
(bar 2) MSCI All Country World Free Index(1) (unmanaged)
(bar 3) CitiGroup World Government Bond Index(2) (unmanaged)
(bar 4) Lipper Global Flexible Funds Index(3)
(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) 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 Flexible Funds Index, published by Lipper Inc., includes
the 30 largest funds that are generally similar to the Fund, although some
funds in the index may have somewhat different investment policies or
objectives.
Past performance is no guarantee of future results. The 5.75% sales charge
applicable to Class A shares of the Fund is not reflected in the bar chart; if
reflected, returns would be lower than those shown. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
- --------------------------------------------------------------------------------
4 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Questions & Answers
(begin callout quote)> Positives to performance during the period were asset
allocation where our greater-than-index stance in Japan and Latin America did
well for us.(end callout quote)
put in place, because we are optimistic about global growth. Historically,
stocks in these sectors benefit from a growing global economy. We have a
higher-than-index position in the industrial, financials and information
technology sectors. On the other hand, we have lower-than-index positions in
energy, consumer staples, health care, telecommunications and utilities.
These areas tend to underperform in times of global growth.
AVERAGE ANNUAL TOTAL RETURNS
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)
as of April 30, 2004
6 months* +4.65% -1.37% +4.30% +0.30% +4.31% +3.31% +4.83% +4.83%
1 year +16.37% +9.68% +15.48% +11.48% +15.51% +15.51% +16.60% +16.60%
5 years -1.54% -2.70% -2.28% -2.45% N/A N/A -1.29% -1.29%
Since inception +3.08% +2.27% +2.31% +2.31% -5.36% -5.36% +3.30% +3.30%
as of March 31, 2004
6 months* +11.30% +4.90% +10.82% +6.82% +10.86% +9.86% +11.45% +11.45%
1 year +26.58% +19.31% +25.50% +21.50% +25.63% +25.63% +26.74% +26.74%
5 years -0.38% -1.56% -1.13% -1.30% N/A N/A -0.13% -0.13%
Since inception +3.59% +2.76% +2.81% +2.81% -4.65% -4.65% +3.81% +3.81%
The performance information shown represents the past performance and is not a
guarantee of future results. The investment return and principal value of your
investment and returns will fluctuate so that your shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower or
higher than the performance information shown. You may obtain performance
information current to the most recent month-end by calling (888) 723-8476 or
visiting www.americanexpress.com/funds. You should consider the investment
objectives, risks, and charges and expenses of the Fund carefully before
investing.
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
- --------------------------------------------------------------------------------
5 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Questions & Answers
Next, we added more mid-cap stocks and reduced the number of large-cap
stocks. Unlike large company stocks, mid-cap stocks, as well as small-cap
stocks, have better growth characteristics when the economy is picking up.
We have found some very interesting opportunities in mid-sized companies.
Positives to performance during the period were asset allocation where our
greater-than-index stance in Japan and Latin America did well for us. Stock
selection, however, took a back seat to the allocation decision. In Japan,
for example, we were invested in globally oriented companies rather than
companies focused on the Japanese domestic economy. Evidence pointed out
that the economic recovery in Japan was broadening into the domestic side
and the domestic stocks performed stronger than the international names that
we owned. During the period, results were negatively affected by the Fund's
stock specific events. First, Adecco, the outsourcing and personnel group,
announced concerns over accounting irregularities of the U.S. subsidiary.
This became a significant concern for the Fund, as the stock was down 40% in
a day. Also, Swiss Life, an insurance company, announced plans to buy the
portion of an Italian bank that they did not already own. This was a drain
on the stock and, in turn, the Fund. Seiko Epson, the Japanese electronics
company, had poor results and raised concerns over its future margins.
For the fixed income portion of the Fund's portfolio, country allocation and
duration positioning contributed positively to the Fund's performance. In
particular, the Fund benefited from a higher-than-index position in European
bonds and a lower-than-index position in Japanese bonds. The portfolio's
shorter-than-benchmark duration also helped protect the Fund when global
interest rates rose sharply at the end of the period. Currency positioning
had little net effect on performance, adding value early in the period, but
hurting performance by a roughly equivalent amount later on.
Overall, it was a volatile six-month period for both the U.S. and overseas
bond markets. We started the period stuck in an interest rate trading range.
We knew the global economy was accelerating, but inflation was still
relatively low. With inflation low, major central banks appeared content to
keep short-term interest rates at highly accommodative levels. This patience
kept longer-term interest rates at relatively stable levels through
February. However, this stability gave way to significant volatility in the
last few months of the period amid shifting expectations for the U.S.
economy.
In early April we got an extremely strong payroll employment report that
prompted fears of Federal Reserve tightening. This theme continued in May,
when the bond market got a second strong payroll report that suggested the
Fed might raise rates as early as June. This shift in expectations caused
the U.S. bond market to perform poorly towards the end of the period, with
10-year Treasury yields rising 64 basis points (0.64%) in April alone. Bond
yields also rose in the major foreign markets, but to a lesser extent. This
relationship follows a pattern seen in recent years in which the U.S. bond
market has tended to
- --------------------------------------------------------------------------------
6 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Questions & Answers
outperform other major markets when yields are declining but underperform
when yields are rising.
Q: What changes did you make to the portfolio?
A: We believe the Fund is 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, is
positioned to fully participate in future rallies. We have moved from the
early cyclicals such as basic industries, chemicals, steel and the material
stocks, the mining stocks, into the later cyclicals and into particular
financial cyclicals. We have increased the Fund's weighting in the
reinsurance companies and the investment banks and market related
financials. Therefore, we still retain a cyclical focus, but we are moving
the focus within the cyclicals.
Within the Fund's equity component, we also continue to have a clear
preference for emerging markets and the material markets. We are broadly
neutral in Europe, have a lower-than-index position in the U.S., principally
because of the valuation of that market and a higher-than-index position in
Japan, Asia and Latin America. We have been changing the basis of the Fund's
Japanese holdings more into the domestic-focused firms, so we bought some
retailers and one of the local banks as well to get a more domestic focus on
the Japanese portfolio and reduce exposure to the international trading
names.
The fixed income portion of the Fund invests primarily in government bonds
and high-quality substitutes, such as agency issues and other national
issues. Given the improving outlook for global growth, we shortened the
Fund's duration by roughly half a year during the period. This change
reduced the Fund's interest rate risk from a neutral to a below-benchmark
position. We have maintained the Fund's higher-than-index position in
European government obligations this period.
Q: How do you intend to manage the Fund in the coming months?
A: In the equity portion, we are looking beyond the cyclical rally as part of
our longer-term investment strategy. Cyclical rallies tend to be fairly
short lived and we are very mindful that we want to be ahead of the game
rather than behind it. Over time, we may shift into undervalued long-term
growth stocks. We are doing a lot of work to identify what we term as growth
at a reasonable price. We will not sell all the Fund's cyclical stocks, but
what we want to do is identify the cyclical stocks that have a secondary
story as we are looking for the true restructuring or turnaround situations
rather than just capitalizing on market volatility and recovery.
Within the fixed income portion of the Fund, we will continue to run the
portfolio with a below-benchmark level of interest rate risk until global
yields rise to levels that fully account for the acceleration in global
growth and the likelihood that the Federal Reserve will soon begin raising
short-term interest rates. As always, we remain focused on careful security
selection as we seek opportunities to add attractively valued bonds.
- --------------------------------------------------------------------------------
7 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Investments in Securities
AXP Global Balanced Fund
April 30, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (61.2%)(c)
Issuer Shares Value(a)
Austria (0.3%)
Utilities -- telephone
Telekom Austria 21,500(b) $315,523
Bermuda (2.3%)
Insurance (1.5%)
PartnerRe 11,848 678,890
RenaissanceRe Holdings 16,192 853,157
Total 1,532,047
Multi-industry (0.8%)
Accenture Cl A 31,365(b) 745,546
Brazil (1.6%)
Metals (0.8%)
Companhia Vale do Rio Doce ADR 20,258 791,885
Paper & packaging (0.5%)
Aracruz Celulose ADR 16,255 506,181
Utilities -- telephone (0.3%)
Brasil Telecom Participacoes ADR 8,367 259,377
Canada (0.9%)
Banks and savings & loans (0.3%)
TSX Group 8,638 314,888
Energy (0.6%)
EnCana 13,919 545,963
China (1.2%)
Real estate investment trust (0.5%)
Henderson Land Development 112,000 502,622
Retail -- general (0.7%)
Esprit Holdings 154,500 633,919
France (2.2%)
Automotive & related (0.5%)
Renault 6,722 501,296
Energy (1.1%)
Total 5,404 998,936
Multi-industry (0.4%)
Sanofi-Synthelabo 6,686 424,521
Telecom equipment & services (0.2%)
Alcatel 16,235(b) 241,758
Germany (0.9%)
Banks and savings & loans (0.6%)
Hypo Real Estate Holding 22,367(b) 610,673
Building materials & construction (0.3%)
Hochtief 11,056 309,140
Greece (0.5%)
Utilities -- electric
Public Power 18,659 472,999
Hong Kong (1.1%)
Multi-industry (0.6%)
New World Development 759,600 608,724
Real estate (0.5%)
Sun Hung Kai Properties 58,000 498,262
Ireland (0.7%)
Banks and savings & loans
Anglo Irish Bank 39,838 651,459
Israel (0.8%)
Computer software & services
Check Point Software Technologies 35,109(b) 822,604
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
8 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Italy (0.8%)
Energy
Eni 39,594 $804,474
Japan (7.1%)
Automotive & related (1.0%)
Toyota Motor 28,200 1,018,263
Banks and savings & loans (0.8%)
Mitsubishi Tokyo Financial Group 84 746,498
Cellular telecommunications (0.4%)
NTT DoCoMo 187 370,615
Chemicals (0.5%)
Shin-Etsu Chemical 11,800 476,271
Financial services (0.4%)
Nomura Holdings 26,000 421,647
Health care products (0.5%)
Chugai Pharmaceutical 31,700 479,086
Machinery (1.1%)
Amada 81,000 455,213
Komatsu 107,000 609,077
Total 1,064,290
Media (0.5%)
Tokyo Broadcasting System 26,000 517,647
Multi-industry (1.4%)
Canon 16,000 838,370
Ricoh 27,000 537,557
Total 1,375,927
Retail -- general (0.5%)
Seven-Eleven Japan 14,000 475,113
Mexico (0.8%)
Cellular telecommunications
America Movil ADR Series L 23,190 783,822
Netherlands (0.7%)
Food
Koninklijke Numico 25,200(b) 697,379
Singapore (0.5%)
Real estate
City Developments 126,000 451,746
South Korea (1.8%)
Electronics
Samsung Electronics 2,850 1,353,324
Samsung SDI 3,540 452,685
Total 1,806,009
Switzerland (3.9%)
Banks and savings & loans (0.9%)
UBS 11,803 839,881
Health care products (2.2%)
Actelion 4,392(b) 482,442
Nobel Biocare Holding 4,615 626,321
Roche Holding 3,106 326,190
Synthes 679 738,773
Total 2,173,726
Insurance (0.8%)
Swiss Life Holding 5,724(b) 782,354
Taiwan (0.5%)
Electronics
Taiwan Semiconductor Mfg 305,440 526,400
United Kingdom (5.6%)
Aerospace & defense (0.6%)
Rolls-Royce Group 141,387 581,828
Rolls-Royce Group Cl B 7,069,350(b) 12,566
Total 594,394
Broker dealers (0.3%)
ICAP 58,315 285,585
Cellular telecommunications (1.0%)
Vodafone Group 389,680 948,993
Computer software & services (0.3%)
lastminute.com 85,723(b) 292,953
Energy (0.4%)
BP 42,199 365,688
Health care products (0.6%)
AstraZeneca 13,282 622,598
Industrial services (0.5%)
BOC Group 30,879 497,583
Industrial transportation (0.3%)
Peninsular & Oriental
Steam Navigation 75,264 289,319
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
9 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
United Kingdom (cont.)
Retail -- grocery (1.0%)
Tesco 103,030 $455,576
William Morrison Supermarkets 126,430 538,257
Total 993,833
Telecom equipment & services (0.6%)
mm02 323,704(b) 575,416
United States (26.9%)
Aerospace & defense (0.3%)
Lockheed Martin 6,798 324,265
Banks and savings & loans (0.9%)
Bank of America 5,142 413,880
Wells Fargo 8,948 505,203
Total 919,083
Beverages & tobacco (0.7%)
PepsiCo 12,851 700,251
Broker dealers (1.5%)
AmeriTrade Holding 29,600(b) 362,304
Bear Stearns Companies 6,255 501,276
Morgan Stanley 11,694 600,955
Total 1,464,535
Cellular telecommunications (0.9%)
American Tower Cl A 44,585(b) 555,083
Nextel Communications Cl A 15,800(b) 376,988
Total 932,071
Chemicals (0.3%)
Ecolab 11,397 339,631
Computer hardware (1.5%)
Cisco Systems 17,933(b) 374,262
Dell 30,364(b) 1,053,934
Total 1,428,196
Computer software & services (3.0%)
Adobe Systems 12,000 496,080
First Data 6,864 311,557
Intl Business Machines 3,171 279,587
Iron Mountain 8,500(b) 386,835
Microsoft 47,165 1,224,875
State Street 6,371 310,905
Total 3,009,839
Electronics (0.5%)
Intel 17,250 443,843
Energy (1.2%)
Exxon Mobil 7,889 335,677
Valero Energy 12,683 808,668
Total 1,144,345
Finance companies (1.5%)
Citigroup 29,899 1,437,843
Financial services (0.4%)
Moody's 6,108 394,027
Food (0.5%)
Wrigley (Wm) Jr 8,255 509,334
Furniture & appliances (0.5%)
Mohawk Inds 5,929(b) 457,363
Health care products (4.6%)
Amgen 12,669(b) 712,885
Gilead Sciences 9,736(b) 592,241
Johnson & Johnson 17,095 923,643
Laboratory Corp of
America Holdings 16,949(b) 673,553
Lilly (Eli) 4,024 297,011
Pfizer 18,382 657,340
St. Jude Medical 5,059(b) 385,799
Zimmer Holdings 4,678(b) 373,538
Total 4,616,010
Health care services (0.2%)
WellPoint Health Networks 1,632(b) 182,278
Household products (1.1%)
Procter & Gamble 10,533 1,113,865
Industrial transportation (0.3%)
Norfolk Southern 12,976 309,089
Insurance (1.1%)
American Intl Group 8,056 577,212
Prudential Financial 11,502 505,398
Total 1,082,610
Machinery (0.5%)
Deere & Co 7,401 503,564
Media (0.4%)
DIRECTV Group 21,423(b) 383,472
Multi-industry (1.1%)
General Electric 36,104 1,081,315
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
10 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
United States (cont.)
Retail -- drugstores (0.7%)
Walgreen 19,575 $674,946
Retail -- general (2.1%)
Circuit City Stores 30,000 350,400
Home Depot 22,539 793,148
Staples 13,647 351,547
Wal-Mart Stores 10,455 595,935
Total 2,091,030
Telecom equipment & services (0.6%)
Crown Castle Intl 39,219(b) 547,105
Utilities -- electric (0.5%)
Duke Energy 22,886 481,980
Total common stocks
(Cost: $55,758,200) $60,137,723
Preferred stock (0.9%)(c)
Issuer Shares Value(a)
Germany
Porsche 1,359 $842,565
Total preferred stock
(Cost: $654,061) $842,565
Bonds (31.3%)(c)
Issuer Coupon Principal Value(a)
rate amount
Australia (0.2%)
New South Wales Treasury
(Australian Dollar)
03-01-08 8.00% 200,000 $154,912
Austria (3.4%)
Oesterreich Kontrollbank
(Japanese Yen)
03-22-10 1.80 347,000,000 3,311,478
Belgium (0.3%)
Govt of Belgium
(European Monetary Unit)
03-28-08 5.75 225,000 294,847
Canada (1.6%)
Govt of Canada
(Canadian Dollar)
12-01-06 7.00 720,000 577,039
06-01-08 6.00 800,000 635,877
Province of British Columbia
(Canadian Dollar)
12-01-06 5.25 500,000 384,004
Total 1,596,920
Denmark (1.8%)
Kingdom of Denmark
(Danish Krone)
11-15-04 4.00 615,000 99,931
08-15-05 5.00 6,000,000 996,673
Rheinische Hypbk
(European Monetary Unit)
09-24-08 4.25 550,000 681,573
Total 1,778,177
France (4.6%)
French Treasury Note
(European Monetary Unit)
07-12-08 3.00 300,000 355,965
Govt of France
(European Monetary Unit)
10-25-09 4.00 1,500,000 1,837,430
04-25-10 5.50 1,800,000 2,368,614
Total 4,562,009
Germany (7.2%)
Allgemeine Hypo Bank
(European Monetary Unit)
09-02-09 5.00 850,000(d) 1,083,151
Bundesrepublik Deutschland
(European Monetary Unit)
01-05-06 6.00 150,000 190,084
01-04-08 5.25 1,285,000 1,652,759
07-04-08 4.75 725,000 918,694
07-04-10 5.25 250,000 325,289
06-20-16 6.00 434,598 600,834
07-04-27 6.50 1,475,000 2,169,454
Total 6,940,265
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
11 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
Greece (0.3%)
Hellenic Republic
(European Monetary Unit)
05-20-13 4.60% 200,000 $246,006
Italy (5.0%)
Buoni Poliennali Del Tes
(European Monetary Unit)
11-01-09 4.25 3,200,000 3,960,287
11-01-29 5.25 800,000 989,878
Total 4,950,165
Norway (0.3%)
Govt of Norway
(Norwegian Krone)
05-16-11 6.00 2,100,000 330,925
Supra-National (0.5%)
Intl Bank Reconstruction & Development
(Japanese Yen)
02-18-08 2.00 55,000,000 527,030
United Kingdom (1.7%)
Greater Beijing First Expressways
(U.S. Dollar) Sr Nts
06-15-07 9.50 170,000(b,e) 3,400
United Kingdom Treasury
(British Pound)
12-07-05 8.50 700,000 1,319,278
03-07-08 5.00 190,000 339,906
Total 1,662,584
United States (4.4%)
ConocoPhillips
(U.S. Dollar)
03-15-28 7.13 200,000 210,139
Federal Natl Mtge Assn
(U.S. Dollar)
05-15-11 6.00 1,520,000 1,650,619
Intl Paper
(European Monetary Unit)
08-11-06 5.38 560,000 701,839
U.S. Treasury (U.S. Dollar)
01-31-06 1.88 535,000 532,242
02-15-08 3.00 200,000 198,570
02-15-14 4.00 914,000 878,011
02-15-26 6.00 169,000 182,758
Total 4,354,178
Total bonds
(Cost: $25,564,400) $30,709,496
Short-term securities (3.7%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
Commercial paper
Dexia Delaware LLC
05-20-04 1.03% $2,000,000 $1,998,855
Old Line Funding
05-03-04 1.03 1,600,000(f) 1,599,863
Total short-term securities
(Cost: $3,598,821) $3,598,718
Total investments in securities
(Cost: $85,575,482)(g) $95,288,502
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
12 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
has been determined to be liquid under guidelines established by the board.
These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. As of April 30, 2004, the value
of these securities amounted to $1,083,151 or 1.1% of net assets.
(e) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at April 30, 2004, is as follows:
Security Acquisition Cost
date
Greater Beijing First Expressways
(U.S. Dollar) 9.50% Sr Nts 2007 06-12-97 $57,064
(f) 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. These securities may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. As of April 30, 2004, the value of these securities
amounted to $1,599,863 or 1.6% of net assets.
(g) At April 30, 2004, the cost of securities for federal income tax purposes
was approximately $85,575,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $11,132,000
Unrealized depreciation (1,418,000)
----------
Net unrealized appreciation $ 9,714,000
-----------
- --------------------------------------------------------------------------------
13 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Balanced Fund
April 30, 2004 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $85,575,482) $ 95,288,502
Cash in bank on demand deposit 514,890
Foreign currency holdings (identified cost $989,729) (Note 1) 975,908
Capital shares receivable 38,901
Dividends and accrued interest receivable 803,329
Receivable for investment securities sold 1,461,855
Unrealized appreciation on foreign currency contracts held, at value (Note 5) 29,486
------
Total assets 99,112,871
----------
Liabilities
Capital shares payable 4,970
Payable for investment securities purchased 800,890
Accrued investment management services fee 2,136
Accrued distribution fee 1,298
Accrued service fee 27
Accrued transfer agency fee 708
Accrued administrative services fee 162
Other accrued expenses 68,832
------
Total liabilities 879,023
-------
Net assets applicable to outstanding capital stock $ 98,233,848
============
Represented by
Capital stock -- $.01 par value (Note 1) $ 199,579
Additional paid-in capital 132,639,838
Undistributed net investment income 271,152
Accumulated net realized gain (loss) (Note 7) (44,602,852)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (Note 5) 9,726,131
---------
Total -- representing net assets applicable to outstanding capital stock $ 98,233,848
============
Net assets applicable to outstanding shares: Class A $ 54,786,205
Class B $ 32,745,963
Class C $ 752,077
Class Y $ 9,949,603
Net asset value per share of outstanding capital stock: Class A shares 11,058,549 $ 4.95
Class B shares 6,748,459 $ 4.85
Class C shares 155,521 $ 4.84
Class Y shares 1,995,361 $ 4.99
--------- ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Statement of operations
AXP Global Balanced Fund
Six months ended April 30, 2004 (Unaudited)
Investment income
Income:
Dividends $ 487,928
Interest 691,480
Fee income from securities lending (Note 3) 2,001
Less foreign taxes withheld (28,486)
-------
Total income 1,152,923
---------
Expenses (Note 2):
Investment management services fee 348,736
Distribution fee
Class A 68,955
Class B 167,325
Class C 3,571
Transfer agency fee 119,318
Incremental transfer agency fee
Class A 6,795
Class B 6,416
Class C 94
Service fee -- Class Y 4,142
Administrative services fees and expenses 28,186
Compensation of board members 5,542
Custodian fees 22,180
Printing and postage 24,390
Registration fees 19,925
Audit fees 9,750
Other 4,337
-----
Total expenses 839,662
Earnings credits on cash balances (Note 2) (1,136)
------
Total net expenses 838,526
-------
Investment income (loss) -- net 314,397
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 2,981,659
Foreign currency transactions (248,695)
--------
Net realized gain (loss) on investments 2,732,964
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 1,107,524
---------
Net gain (loss) on investments and foreign currencies 3,840,488
---------
Net increase (decrease) in net assets resulting from operations $4,154,885
==========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
15 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
AXP Global Balanced Fund
April 30, 2004 Oct. 31, 2003
Six months ended Year ended
(Unaudited)
Operations and distributions
Investment income (loss) -- net $ 314,397 $ 687,550
Net realized gain (loss) on investments 2,732,964 (2,312,136)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 1,107,524 15,670,500
--------- ----------
Net increase (decrease) in net assets resulting from operations 4,154,885 14,045,914
--------- ----------
Distributions to shareholders from:
Net investment income
Class A -- (444,097)
Class C -- (2)
Class Y -- (55,350)
--------- ----------
Total distributions -- (499,449)
--------- ----------
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 6,551,184 8,267,331
Class B shares 2,674,804 3,172,163
Class C shares 155,088 163,435
Class Y shares 5,694,667 3,877,067
Reinvestment of distributions at net asset value
Class A shares -- 426,497
Class C shares -- 2
Class Y shares -- 55,338
Payments for redemptions
Class A shares (7,022,330) (17,397,690)
Class B shares (Note 2) (4,119,424) (10,981,624)
Class C shares (Note 2) (73,829) (338,285)
Class Y shares (2,558,378) (1,696,600)
---------- ----------
Increase (decrease) in net assets from capital share transactions 1,301,782 (14,452,366)
--------- -----------
Total increase (decrease) in net assets 5,456,667 (905,901)
Net assets at beginning of period 92,777,181 93,683,082
---------- ----------
Net assets at end of period $98,233,848 $ 92,777,181
=========== ============
Undistributed (excess of distributions over) net investment income $ 271,152 $ (43,245)
----------- ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
16 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Notes to Financial Statements
AXP Global Balanced Fund
(Unaudited as to April 30, 2004)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Global Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified open-end management
investment company. The Fund invests primarily in equity and debt securities of
issuers throughout the world. AXP Global Series, Inc. has 10 billion authorized
shares of capital stock that can be allocated among the separate series as
designated by the board.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, incremental transfer agency fee and service fee (class
specific expenses) differ among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on investments
are allocated to each class of shares based upon its relative net assets.
The Fund's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
- --------------------------------------------------------------------------------
17 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Foreign securities are valued based on quotations from the principal market in
which such securities are normally traded. Pursuant to procedures adopted by the
Board of Directors of the funds, American Express Financial Corporation (AEFC)
utilizes Fair Value Pricing (FVP). FVP determinations are made in good faith in
accordance with the procedures. If a development or event is so significant that
there is a reasonably high degree of certainty that the effect of the
development or event has actually caused the closing price to no longer reflect
the actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the New York Stock Exchange.
Significant events include material movements in the U.S. securities markets
prior to the opening of foreign markets on the following trading day. FVP
results in an estimated price that reasonably reflects the current market
conditions in order to value the portfolio holdings such that shareholder
transactions receive a fair NAV. Short-term securities maturing in more than 60
days from the valuation date are valued at the market price or approximate
market value based on current interest rates; those maturing in 60 days or less
are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
The Fund also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
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.
- --------------------------------------------------------------------------------
18 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. As of April 30, 2004 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 April 30, 2004, 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 April 30,
2004 was $3,400 representing 0.003% of nets 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. Assets
are liquid if they can be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which the asset is valued by the
Fund.
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.
- --------------------------------------------------------------------------------
19 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
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.
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. The
maximum adjustment is 0.08% per year. If the performance difference is less than
0.50%, the adjustment will be zero. The adjustment decreased the fee by $36,889
for the six months ended April 30, 2004.
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.
- --------------------------------------------------------------------------------
20 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL 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, AECSC is entitled to charge 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 currently not
effective.
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
$85,768 for Class A, $11,914 for Class B and $82 for Class C for the six months
ended April 30, 2004.
During the six months ended April 30, 2004, the Fund's custodian and transfer
agency fees were reduced by $1,136 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 $37,044,090 and $39,053,594, respectively, for the six
months ended April 30, 2004. Realized gains and losses are determined on an
identified cost basis.
Income from securities lending amounted to $2,001 for the six months ended April
30, 2004. 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.
- --------------------------------------------------------------------------------
21 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 2004
Class A Class B Class C Class Y
Sold 1,307,517 543,176 31,369 1,123,423
Issued for reinvested distributions -- -- -- --
Redeemed (1,403,438) (836,293) (14,780) (505,839)
---------- -------- ------- --------
Net increase (decrease) (95,921) (293,117) 16,589 617,584
------- -------- ------ -------
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
---------- ---------- ------- -------
5. FORWARD FOREIGN CURRENCY CONTRACTS
As of April 30, 2004, the Fund has a forward foreign currency exchange contract
that obligates it to deliver currency at specified future date. The unrealized
appreciation and/or depreciation on this contract is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contract are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 10, 2004 3,607,000 4,350,042 $29,486 $ --
European Monetary Unit U.S. Dollar
6. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The Fund must
maintain asset coverage for borrowings of at least 300%. The agreement, which
enables the Fund to participate with other American Express mutual funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the
IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime
Lending Rate. Borrowings are payable within 60 days after such loan is executed.
The Fund also pays a commitment fee equal to its pro rata share of the amount of
the credit facility at a rate of 0.09% per annum. The Fund had no borrowings
outstanding during the six months ended April 30, 2004.
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.
- --------------------------------------------------------------------------------
22 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
8. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Class A
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $4.73 $4.08 $4.53 $ 6.27 $6.61
Income from investment operations:
Net investment income (loss) .02 .05 .07 .07 .08
Net gains (losses) (both realized and unrealized) .20 .64 (.50) (1.27) .12
Total from investment operations .22 .69 (.43) (1.20) .20
Less distributions:
Dividends from net investment income -- (.04) (.02) (.03) (.03)
Distributions from realized gains -- -- -- (.51) (.51)
Total distributions -- (.04) (.02) (.54) (.54)
Net asset value, end of period $4.95 $4.73 $4.08 $ 4.53 $6.27
Ratios/supplemental data
Net assets, end of period (in millions) $55 $53 $54 $80 $110
Ratio of expenses to average daily net assets(b) 1.46%(d) 1.60% 1.48% 1.45% 1.31%
Ratio of net investment income (loss) to average daily net assets .89%(d) 1.03% 1.38% 1.18% 1.26%
Portfolio turnover rate (excluding short-term securities) 40% 90% 99% 173% 110%
Total return(c) 4.65%(e) 16.91% (9.48%) (20.63%) 2.62%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Total return does not reflect payment of a sales charge.
(d) Adjusted to an annual basis.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
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23 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $4.65 $4.01 $4.47 $ 6.21 $6.58
Income from investment operations:
Net investment income (loss) .01 -- .04 .01 .04
Net gains (losses) (both realized and unrealized) .19 .64 (.49) (1.24) .12
Total from investment operations .20 .64 (.45) (1.23) .16
Less distributions:
Dividends from net investment income -- -- (.01) -- (.02)
Distributions from realized gains -- -- -- (.51) (.51)
Total distributions -- -- (.01) (.51) (.53)
Net asset value, end of period $4.85 $4.65 $4.01 $ 4.47 $6.21
Ratios/supplemental data
Net assets, end of period (in millions) $33 $33 $36 $53 $77
Ratio of expenses to average daily net assets(b) 2.23%(d) 2.37% 2.25% 2.21% 2.07%
Ratio of net investment income (loss) to average daily net assets .13%(d) .27% .61% .42% .51%
Portfolio turnover rate (excluding short-term securities) 40% 90% 99% 173% 110%
Total return(c) 4.30%(e) 15.96% (10.19%) (21.21%) 1.95%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Total return does not reflect payment of a sales charge.
(d) Adjusted to an annual basis.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
24 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(g) 2003 2002 2001 2000(b)
Net asset value, beginning of period $4.64 $3.99 $4.46 $ 6.21 $6.58
Income from investment operations:
Net investment income (loss) .01 -- .03 .02 .01
Net gains (losses) (both realized and unrealized) .19 .65 (.49) (1.24) (.38)
Total from investment operations .20 .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 $4.84 $4.64 $3.99 $ 4.46 $6.21
Ratios/supplemental data
Net assets, end of period (in millions) $1 $1 $1 $1 $--
Ratio of expenses to average daily net assets(c) 2.22%(e) 2.36% 2.24% 2.21% 2.07%(e)
Ratio of net investment income (loss) to average daily net assets .15%(e) .26% .60% .41% .47%(e)
Portfolio turnover rate (excluding short-term securities) 40% 90% 99% 173% 110%
Total return(d) 4.31%(f) 16.29% (10.34%) (21.17%) (5.62%)(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 2000.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Total return does not reflect payment of a sales charge.
(e) Adjusted to an annual basis.
(f) Not annualized.
(g) Six months ended April 30, 2004 (Unaudited).
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25 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $4.76 $4.10 $4.56 $ 6.30 $6.62
Income from investment operations:
Net investment income (loss) .02 .07 .07 .08 .10
Net gains (losses) (both realized and unrealized) .21 .64 (.50) (1.28) .13
Total from investment operations .23 .71 (.43) (1.20) .23
Less distributions:
Dividends from net investment income -- (.05) (.03) (.03) (.04)
Distributions from realized gains -- -- -- (.51) (.51)
Total distributions -- (.05) (.03) (.54) (.55)
Net asset value, end of period $4.99 $4.76 $4.10 $ 4.56 $6.30
Ratios/supplemental data
Net assets, end of period (in millions) $10 $7 $4 $2 $1
Ratio of expenses to average daily net assets(b) 1.29%(d) 1.43% 1.30% 1.31% 1.20%
Ratio of net investment income (loss) to average daily net assets 1.10%(d) 1.21% 1.52% 1.35% 1.51%
Portfolio turnover rate (excluding short-term securities) 40% 90% 99% 173% 110%
Total return(c) 4.83%(e) 17.32% (9.55%) (20.40%) 2.99%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Total return does not reflect payment of a sales charge.
(d) Adjusted to an annual basis.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
26 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
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. 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. In addition, after Aug.
1, 2004, information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 will be
available at http://www.sec.gov.
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27 --- AXP GLOBAL BALANCED FUND --- 2004 SEMIANNUAL REPORT
(logo)
AMERICAN
EXPRESS
(R)
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current
prospectus. Distributed by American Express Financial Advisors Inc.
Member NASD. American Express Company is separate from American
Express Financial Advisors Inc. and is not a broker-dealer.
AXP(R)
Global Bond
Fund
Semiannual Report
for the Period Ended
April 30, 2004
AXP Global Bond Fund seeks to provide shareholders with high total return
through income and growth of capital.
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
>
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
Investments in Securities 9
Financial Statements (Portfolio) 19
Notes to Financial Statements (Portfolio) 22
Financial Statements (Fund) 27
Notes to Financial Statements (Fund) 30
Proxy Voting 39
(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.
- --------------------------------------------------------------------------------
2 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Fund Snapshot
AS OF APRIL 30, 2004
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 in
Minneapolis.
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: AGBCX Y: --
Total net assets $546.4 million
Number of holdings 279
Average weighted life* 6.4 years
Effective duration** 4.6 years
* Average weighted life is the average number of years that each dollar of
unpaid principal due on a security remains outstanding.
** Effective duration measures the sensitivity of a security's price to
parallel shifts in the yield curve (the graphical depiction of the levels
of interest rates from two years out of 30 years). Positive duration means
that as rates rise, the price decreases, and negative duration means that
as rates rise, the price increases.
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 40.2%
Germany 8.1%
Spain 6.7%
Italy 5.9%
Japan 5.0%
France 4.7%
Greece 4.1%
United Kingdom 3.5%
Netherlands 3.1%
Supra-National 2.7%
Canada 2.4%
Finland 2.1%
Austria 2.0%
Australia 1.6%
Norway 1.6%
New Zealand 1.4%
Denmark 1.0%
Other* 3.9%
* Includes Brazil, Colombia, Croatia, Hungary, Ireland, Luxembourg, Malaysia,
Mexico, Poland, Romania, South Korea and Sweden.
CREDIT QUALITY SUMMARY
Percentage of portfolio assets
AAA bonds 54.6%
AA bonds 20.1
A bonds 9.8
BBB bonds 4.9
Non-investment grade bonds 3.6
Individual security ratings are based on information from Standard & Poor's
Corp. and Moody's Investors Service. If a rating is unavailable, the rating is
determined through an internal analysis, if appropriate. 0.7% of the portfolio
rating above was determined through internal analysis.
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 GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Below, Portfolio Manager Nic Pifer in Minneapolis discusses the Fund's
positioning and results for first half of fiscal year 2004.
Q: How did AXP Global Bond Fund perform for the six months ended April 30,
2003?
A: AXP Global Bond Fund's Class A shares rose 3.04%, excluding sales charge,
for the six months ended April 30, 2004. The Fund outperformed both its
current benchmark, the Lehman Brothers Global Aggregate Index, which
increased 2.81% for the period and the Fund's peer group, the Lipper Global
Income Funds Index, which returned 2.89% over the same time frame.
Q: What factors most affected Fund performance during the annual period?
A: The Fund's country selection was a positive over the semiannual period.
European government bonds outperformed U.S. and Japanese government bonds
by quite a wide margin. The Fund held a higher-than-index position in
Euro-denominated bonds and a lower-than-index position in Japan and the
U.S. bond markets, both of which were weak amid improving economic growth
prospects. The Fund's duration and yield curve positioning also were
positive contributors to total return for the six months ended April 30.
The Fund's yield curve positioning worked particularly well in the U.S.,
where investors saw a flattening of the curve, a trend that we believe may
continue.
(bar chart)
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2004
4%
(bar 1)
3% +3.04% (bar 2) (bar 3)
+2.81% +2.89%
2%
1%
0%
(bar 1) AXP Global Bond Fund Class A (excluding sales charge)
(bar 2) Lehman Brothers Global Aggregate Index(1) (unmanaged)
(bar 3) Lipper Global Income Funds Index(2)
(1) Lehman Brothers Global Aggregate Index, an unmanaged market capitalization
weighted benchmark, tracks the performance of investment grade fixed income
securities denominated in 13 currencies. It is widely recognized by
investors as a measurement index for portfolios of global debt securities.
The index reflects the reinvestment of all income and changes in market
prices, but excludes brokerage commissions or other fees.
(2) The Lipper Global Income Funds Index, published by Lipper Inc., includes
the 30 largest funds that are generally similar to the Fund, although some
funds in the index may have somewhat different investment policies or
objectives.
Past performance is no guarantee of future results. The 4.75% sales charge
applicable to Class A shares of the Fund is not reflected in the bar chart; if
reflected, returns would be lower than those shown. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
- --------------------------------------------------------------------------------
4 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
(begin callout quote)> Our conservative approach paid off as interest rates
climbed in April.(end callout quote)
Our fixed-income sector allocation also enhanced the Fund's six-month
results. We had a modest position in high yield bonds and that sector
performed well over the period. The Fund also had a lower-than-index
position in mortgage securities, and this also worked well in April as the
mortgage market suffered its biggest setback since last July.
AVERAGE ANNUAL TOTAL RETURNS
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)
as of April 30, 2004
6 months* +3.04% -1.86% +2.64% -1.36% +2.51% +1.51% +2.96% +2.96%
1 year +6.31% +1.26% +5.51% +1.51% +5.41% +5.41% +6.32% +6.32%
5 years +5.21% +4.19% +4.42% +4.25% N/A N/A +5.40% +5.40%
10 years +6.06% +5.55% N/A N/A N/A N/A N/A N/A
Since inception N/A N/A +5.55% +5.55% +7.11% +7.11% +6.32% +6.32%
as of March 31, 2004
6 months* +5.97% +0.93% +5.56% +1.56% +5.60% +4.60% +6.05% +6.05%
1 year +12.07% +6.74% +11.22% +7.22% +11.14% +11.14% +12.24% +12.24%
5 years +6.05% +5.03% +5.24% +5.08% N/A N/A +6.25% +6.25%
10 years +6.40% +5.88% N/A N/A N/A N/A N/A N/A
Since inception N/A N/A +6.03% +6.03% +8.34% +8.34% +6.82% +6.82%
The performance information shown represents the past performance and is not a
guarantee of future results. The investment return and principal value of your
investment and returns will fluctuate so that your shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower or
higher than the performance information shown. You may obtain performance
information current to the most recent month-end by calling (888) 723-8476 or
visiting www.americanexpress.com/funds. You should consider the investment
objectives, risks, and charges and expenses of the Fund carefully before
investing.
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 4.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
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5 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
During the fiscal period, currency fluctuations had a mixed effect on Fund
returns. The U.S. dollar was very weak at the beginning of the six-month
period, particularly in November and December. This augmented the Fund's
results. Since December, however, the dollar has regained quite a bit of
ground. Since the Fund typically leaves its foreign currency exposure
unhedged, returns on the Fund's non-dollar denominated bonds were
negatively affected as the U.S. dollar rebounded in value. Essentially, the
Fund gave up in the spring what it had earned from currency changes last
autumn.
Q: How have global bond market conditions changed since last autumn?
A: Overall, it was a volatile six-month period for both the U.S. and overseas
bond markets. We started the period stuck in an interest rate trading
range. We knew the global economy was accelerating, but inflation was still
relatively low. With inflation low, major central banks appeared content to
keep short-term interest rates at low levels. This patience kept
longer-term interest rates at relatively stable levels through February.
However, this stability gave way to significant volatility in the last few
months of the period amid shifting expectations for the U.S. economy.
In early April we got an extremely strong payroll employment report that
prompted fears of Federal Reserve tightening. This theme continued in May,
when the bond market got a second strong payroll report that suggested the
Fed might raise rates as early as June.
This shift in expectations caused the U.S. bond market to perform poorly
towards the end of the period, with 10-year Treasury yields rising 64 basis
points (0.64%) in April alone. Bond yields also rose in the major foreign
markets, but to a lesser extent. This relationship follows a pattern seen
in recent years in which the U.S. bond market has tended to outperform
other major markets when yields are declining but underperform when yields
are rising.
Q: What changes did you make to the Fund and how is it currently positioned?
A: We started the fiscal year fairly neutral in terms of duration relative to
the Fund's benchmark. We shortened duration modestly in January and
February, and shortened duration more aggressively in March, to the point
where we were about four-tenths of a year lower than the index going into
April, an especially difficult period for the bond market. As of April 30,
the Fund's duration was about
- --------------------------------------------------------------------------------
6 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
half a year shorter than the index. At the beginning of the six month
period the Fund's duration was approximately 4.9 years, which was pretty
much neutral to the index. At the end of the period it was 4.6 years.
Our longer-term view is that the value of the U.S. dollar will again
decline. So we used the rebound in the U.S. dollar this past winter to
increase Fund weightings in some established foreign markets such as
Europe, and decrease the Fund's weighting in the U.S. market. We also added
slightly to the Fund's holdings of investment grade corporate bonds
beginning in late January.
The Fund had a relatively low 1.6% position in emerging market debt at the
start of the period and we took that down further to 1.0% as of April 30,
the lowest weighting in many years. We remain fairly positive on the
economic fundamentals of the sector but felt that yield differences
relative to higher quality debt had simply tightened in too far following
the very strong performance seen in the sector in calendar year 2003. This
low weighting meant that the Fund was fairly well insulated from the sharp
sell-off in emerging market debt in April, when investors began to worry
about the impact of higher global interest rates on emerging market
countries.
Q: How do you intend to manage the Fund in the coming months?
A: In terms of central bank policy, which is critically important for bond
markets, it appears that the Federal Reserve may start tightening as early
as June. Growth in the U.S. has been quite strong in the last few months.
Also, inflation indicators have started moving higher, not just on the
overall level because of high energy prices, but also on several core
measures. Clearly, policy is at very expansionary levels and the Fed needs
to start normalizing short-term rates in our view. After the sharp sell-off
in April and May, the pressing question for the U.S. bond market is how
much of the impending tightening cycle is now discounted in longer-term
bond yields. In our view, fair value for 10-year U.S. Treasuries lies
closer to 5.5%, meaning that part of the adjustment has taken place but
part is yet to come. With this in mind, we will continue to run the
portfolio short duration relative to its benchmark until we see these
higher yields.
- --------------------------------------------------------------------------------
7 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
For other parts of the world, Europe is also starting to look better
economically and we do not expect the European Central Bank will ease
policy again. That said, Europe continues to lag the U.S. business cycle,
and we expect the ECB to stay on hold through the balance of the year
before starting a modest tightening cycle in early 2005. So that probably
means for the short-run European bonds have the potential to outperform
U.S. Treasuries. Japan in our view continues to look unattractive, in part
because the recovery is doing better and in part because yields remain at
such low levels.
In terms of currency markets, the key structural negatives in place for the
U.S. dollar, such as our large trade and current account imbalances, have
not gone away. In our view, these negatives will start to exert more
influence again in the months ahead now that global investors have started
adjusting to the prospect of a Fed tightening cycle beginning in the next
few months. We expect the dollar to decline over the balance of 2004,
although charting the exact course of that decline remains tricky.
Overall, we believe the economic outlook argues for being defensive on
interest rate risk and fairly cautious on sector exposures.
- --------------------------------------------------------------------------------
8 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Investments in Securities
World Income Portfolio
April 30, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Bonds (95.6%)(c)
Issuer Coupon Principal Value(a)
rate amount
Australia (1.7%)
Burns Philp Capital Property
(U.S. Dollar) Sr Sub Nts
02-15-11 10.75% $200,000 $217,000
New South Wales Treasury
(Australian Dollar)
03-01-08 8.00 8,000,000 6,196,475
Queensland Treasury
(Australian Dollar)
06-14-05 6.50 3,000,000 2,187,033
Telstra
(U.S. Dollar)
04-01-12 6.38 500,000 546,085
Total 9,146,593
Austria (2.0%)
Republic of Austria
(European Monetary Unit)
01-15-10 5.50 8,500,000 11,154,910
Brazil (0.4%)
Federal Republic of Brazil
(U.S. Dollar)
04-15-14 8.00 1,254,865 1,145,943
01-20-34 8.25 1,200,000 883,200
Total 2,029,143
Canada (2.4%)
Ainsworth Lumber
(U.S. Dollar) Sr Nts
03-15-14 6.75 40,000(d) 39,600
Canada Housing Trust
(Canadian Dollar)
06-15-06 5.53 3,220,000 2,478,456
Canadian Pacific Railway
(Canadian Dollar)
06-15-10 4.90 380,000(d) 280,307
CanWest Media
(U.S. Dollar) Series B
04-15-13 7.63 250,000 266,250
Cascades
(U.S. Dollar) Sr Nts
02-15-13 7.25 200,000 208,500
Corus Entertainment
(U.S. Dollar) Sr Sub Nts
03-01-12 8.75 200,000 220,500
Norampac
(U.S. Dollar) Sr Nts
06-01-13 6.75 260,000 270,400
Province of British Columbia
(Canadian Dollar)
08-23-10 6.38 6,400,000 5,169,834
Province of Ontario
(Canadian Dollar)
03-08-06 5.90 3,300,000 2,543,209
Province of Quebec
(Japanese Yen) (MBIA Insured)
05-09-13 1.60 150,000,000(j) 1,378,268
Sun Media
(U.S. Dollar)
02-15-13 7.63 200,000 213,000
Videotron Ltee
(U.S. Dollar)
01-15-14 6.88 125,000 126,250
Total 13,194,574
Colombia (0.1%)
Republic of Colombia
(U.S. Dollar)
01-23-12 10.00 490,000 521,850
Croatia (0.2%)
Croatia
(European Monetary Unit)
03-14-11 6.75 660,000 879,236
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
9 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
Denmark (1.1%)
Kingdom of Denmark
(Danish Krone)
03-15-06 8.00% 16,000,000 $2,824,071
Realkredit Danmark
(Danish Krone)
01-01-06 4.00 17,800,000 2,929,167
Total 5,753,238
Finland (2.2%)
Republic of Finland
(European Monetary Unit)
07-04-07 5.00 9,400,000 11,952,586
France (4.8%)
Cie Financement Foncier
(European Monetary Unit)
06-24-05 5.00 1,900,000 2,344,783
Dexia Municipal Agency
(European Monetary Unit)
04-26-07 5.38 4,700,000 6,013,185
France Telecom
(U.S. Dollar)
03-01-06 8.20 700,000(e) 761,352
Govt of France
(European Monetary Unit)
04-25-12 5.00 4,400,000 5,636,749
04-25-13 4.00 9,400,000 11,162,704
Vivendi Universal
(U.S. Dollar) Sr Nts
07-15-08 6.25 375,000 393,750
Total 26,312,523
Germany (8.4%)
Allgemeine Hypo Bank
(European Monetary Unit)
09-02-09 5.00 1,860,000(d) 2,370,189
Bayerische Landesbank
(Japanese Yen) Sr Nts
04-22-13 1.40 150,000,000 1,349,065
Bundesrepublik Deutschland
(European Monetary Unit)
07-04-13 3.75 9,600,000 11,179,105
07-04-27 6.50 7,470,000 10,986,997
Bundesschatzanweisungen
(European Monetary Unit)
12-16-05 2.75 6,300,000 7,589,880
Depfa Pfandbriefbank
(European Monetary Unit)
01-15-10 5.50 2,200,000 2,875,665
Deutsche Bank
(European Monetary Unit)
07-28-09 4.25 500,000 614,728
Eurohypo
(European Monetary Unit)
07-05-10 5.75 2,200,000 2,912,466
Hypothekenbk In Essen
(European Monetary Unit)
07-06-09 4.25 2,400,000 2,961,356
Westfaelische Hypobank
(European Monetary Unit)
04-24-06 4.75 2,300,000 2,865,890
Total 45,705,341
Greece (4.2%)
Hellenic Republic
(European Monetary Unit)
06-21-06 2.75 7,600,000 9,118,671
05-18-11 5.35 6,300,000 8,191,045
10-22-22 5.90 4,200,000 5,623,132
Total 22,932,848
Hungary (0.5%)
Govt of Hungary
(Hungarian Forint)
04-12-05 7.75 565,000,000 2,624,241
Ireland (--%)
JSG Funding
(U.S. Dollar) Sr Nts
10-01-12 9.63 125,000 140,625
Italy (6.1%)
Buoni Poliennali Del Tes
(European Monetary Unit)
03-01-07 4.50 8,800,000 11,018,931
10-15-07 5.00 8,700,000 11,073,026
11-01-26 7.25 3,486,283 5,498,280
Republic of Italy
(Japanese Yen)
03-27-08 3.80 500,000,000 5,078,643
Telecom Italia
(European Monetary Unit)
02-01-07 5.63 500,000 633,488
Total 33,302,368
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
10 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
Japan (5.1%)
Development Bank of Japan
(Japanese Yen)
06-20-12 1.40% 650,000,000 $5,907,002
Govt of Japan
(Japanese Yen)
03-20-09 0.70 390,000,000 3,533,541
12-21-09 1.70 970,000,000 9,211,094
03-22-10 1.70 320,000,000 3,036,296
06-20-12 1.40 700,000,000 6,377,386
Total 28,065,319
Luxembourg (0.2%)
Michelin Finance Luxembourg
(European Monetary Unit)
04-16-09 6.13 500,000 655,155
Telecom Italia Capital
(U.S. Dollar)
11-15-13 5.25 530,000(d) 522,541
Total 1,177,696
Malaysia (0.3%)
Petronas Capital
(U.S. Dollar)
05-22-12 7.00 1,500,000(d) 1,652,862
Mexico (0.7%)
United Mexican States
(Japanese Yen)
06-06-06 6.75 62,000,000 630,453
(U.S. Dollar)
03-03-15 6.63 3,150,000 3,173,625
Total 3,804,078
Netherlands (3.2%)
Bank of Nederlandse Gemeenten
(British Pound)
08-06-07 7.38 1,100,000 2,075,496
Deutsche Telekom Intl Finance
(European Monetary Unit)
05-29-07 7.50 500,000 668,905
(U.S. Dollar)
07-22-13 5.25 1,200,000 1,191,323
Govt of Netherlands
(European Monetary Unit)
07-15-12 5.00 8,700,000 11,103,627
Intl Nederland Bank
(European Monetary Unit) Sr Nts
01-29-09 4.25 600,000 737,296
RWE Finance
(European Monetary Unit)
10-26-07 5.50 500,000 642,268
Vodafone Finance
(European Monetary Unit)
05-27-09 4.75 740,000 918,853
Total 17,337,768
New Zealand (1.5%)
Govt of New Zealand
(New Zealand Dollar)
02-15-05 6.50 3,400,000 2,141,004
11-15-06 8.00 8,800,000 5,791,535
Total 7,932,539
Norway (1.6%)
A/S Eksportfinans
(Japanese Yen)
06-21-10 1.80 340,000,000 3,218,806
Govt of Norway
(Norwegian Krone)
05-16-11 6.00 36,800,000 5,799,069
Total 9,017,875
Poland (0.9%)
Republic of Poland
(Polish Zloty)
02-12-06 8.50 11,600,000 2,963,592
11-24-09 6.00 9,000,000 2,106,664
Total 5,070,256
Romania (0.1%)
Govt of Romania
(European Monetary Unit)
05-08-12 8.50 430,000 601,683
South Korea (0.1%)
Korea Development Bank
(Japanese Yen)
06-25-08 0.98 70,000,000 627,961
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
11 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
Spain (6.9%)
Govt of Spain
(European Monetary Unit)
10-31-07 4.25% 8,950,000 $11,156,210
07-30-09 5.15 9,500,000 12,291,780
01-31-10 4.00 9,400,000 11,477,240
La Caixa De Barcelona
(European Monetary Unit)
03-04-10 3.50 2,500,000 2,950,518
Total 37,875,748
Supra-National (2.8%)
European Investment Bank
(British Pound)
12-07-11 5.50 3,000,000 5,410,048
Inter-American Development Bank
(Japanese Yen)
07-08-09 1.90 1,035,000,000 9,934,350
Total 15,344,398
Sweden (0.5%)
Govt of Sweden
(Swedish Krona)
04-20-06 3.50 19,000,000 2,515,357
United Kingdom (3.5%)
British Telecom
(U.S. Dollar)
12-15-10 8.38 700,000 833,201
Greater Beijing First Expressways
(U.S. Dollar) Sr Nts
06-15-04 9.25 3,500,000(b,k) 70,000
06-15-07 9.50 8,750,000(b,k) 175,000
HSBC Holdings
(U.S. Dollar) Sub Nts
12-12-12 5.25 2,430,000 2,451,554
United Kingdom Treasury
(British Pound)
12-07-07 7.25 3,900,000 7,486,561
11-25-10 6.25 2,900,000 5,537,449
03-07-12 5.00 1,600,000 2,850,134
Total 19,403,899
United States (34.1%)
Aesop Funding II LLC
(U.S. Dollar) Series 2002-1A Cl A1
10-20-06 3.85 500,000(f) 510,564
Airgas
(U.S. Dollar)
10-01-11 9.13 195,000 220,350
Allied Waste North America
(U.S. Dollar) Series B
04-01-08 8.88 200,000 222,000
Apogent Technologies
(U.S. Dollar) Sr Sub Nts
05-15-13 6.50 175,000 181,563
Arvinmeritor
(U.S. Dollar)
02-15-09 6.80 75,000 76,500
ASIF Global Financing
(U.S. Dollar)
01-17-13 4.90 3,800,000(d) 3,744,444
AT&T
(U.S. Dollar)
03-15-09 6.00 10,000 10,014
(U.S. Dollar) Sr Nts
11-15-11 8.05 230,000 252,370
AT&T Wireless Services
(U.S. Dollar) Sr Nts
03-01-11 7.88 500,000 575,909
Ball
(U.S. Dollar)
12-15-12 6.88 335,000 355,100
Bank of America
(U.S. Dollar) Sr Nts
02-01-07 5.25 1,000,000 1,054,022
09-15-12 4.88 1,100,000 1,088,116
(U.S. Dollar) Sub Nts
08-15-13 4.75 800,000 772,987
Bear Stearns Commercial Mtge Securities
(U.S. Dollar) Series 2003-T10 Cl A1
03-13-40 4.00 664,690(f) 654,553
Boise Cascade
(U.S. Dollar) Sr Nts
11-01-10 6.50 90,000 94,050
Boyd Gaming
(U.S. Dollar) Sr Sub Nts
04-15-14 6.75 75,000(d) 73,875
Caesars Entertainment
(U.S. Dollar) Sr Sub Nts
05-15-11 8.13 85,000 93,925
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
12 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
CBD Media/Finance
(U.S. Dollar)
06-01-11 8.63% $60,000 $64,050
Centerpoint Energy
(U.S. Dollar)
02-15-11 7.75 130,000 145,560
Charter Communication Holdings LLC/Capital
(U.S. Dollar) Sr Nts
04-30-12 8.00 45,000(d) 44,325
04-30-14 8.38 15,000(d) 14,775
Chesapeake Energy
(U.S. Dollar) Sr Nts
01-15-16 6.88 80,000(d) 82,300
Chiquita Brands Intl
(U.S. Dollar) Sr Nts
03-15-09 10.56 225,000 246,094
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 7.25 125,000 121,250
Citigroup
(European Monetary Unit) Sr Nts
05-21-10 3.88 5,900,000 7,024,409
Comcast
(U.S. Dollar)
03-15-11 5.50 2,150,000 2,204,222
Comcast Cable Communication Holdings
(U.S. Dollar)
03-15-13 8.38 106,000 126,472
Compass Minerals Group
(U.S. Dollar)
08-15-11 10.00 200,000 228,000
Consumers Energy
(U.S. Dollar) 1st Mtge Series C
04-15-08 4.25 550,000 549,712
Cott Beverages
(U.S. Dollar)
12-15-11 8.00 500,000 545,000
CS First Boston Mtge Securities
(U.S. Dollar) Series 2004-C1 Cl A2
01-15-37 3.52 500,000(f) 489,464
CSC Holdings
(U.S. Dollar) Sr Nts
12-15-07 7.88 150,000 159,750
04-15-12 6.75 40,000(d) 39,600
CSK Auto
(U.S. Dollar)
01-15-14 7.00 60,000(d) 59,250
D.R. Horton
(U.S. Dollar) Sr Nts
05-01-13 6.88 150,000 156,750
DaimlerChrysler NA Holding
(European Monetary Unit)
01-16-07 5.63 670,000 846,421
(U.S. Dollar)
06-04-08 4.05 800,000 784,800
Del Monte
(U.S. Dollar) Series B
05-15-11 9.25 200,000 220,500
Dex Media West/Finance
(U.S. Dollar) Sr Nts
08-15-10 8.50 55,000(d) 59,400
DirecTV Holdings/Finance
(U.S. Dollar) Sr Nts
03-15-13 8.38 150,000 169,500
Dominos
(U.S. Dollar) Sr Sub Nts
07-01-11 8.25 125,000 135,000
DRS Technologies
(U.S. Dollar) Sr Sub Nts
11-01-13 6.88 80,000 80,400
EchoStar DBS
(U.S. Dollar) Sr Nts
10-01-08 5.75 125,000(d) 125,313
El Paso Natl Gas
(U.S. Dollar) Sr Nts Series A
08-01-10 7.63 160,000 164,800
Emmis Operating
(U.S. Dollar)
05-15-12 6.88 70,000(d,h) 69,650
Federal Home Loan Mtge Corp
(European Monetary Unit)
01-15-06 5.25 1,800,000 2,252,009
(U.S. Dollar)
07-01-17 6.00 739,829 772,869
09-01-17 6.50 695,001 735,706
05-01-18 5.50 1,314,560 1,349,989
10-01-18 5.00 1,041,646 1,052,803
04-01-33 6.00 2,643,113 2,720,086
08-01-33 6.50 549,025 571,806
11-01-33 5.00 1,542,537 1,498,550
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
13 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
Federal Home Loan Mtge Corp (cont.)
Collateralized Mtge Obligation
(U.S. Dollar)
11-15-18 5.00% $2,500,000(f) $2,541,890
11-15-28 4.50 1,082,592(f) 1,086,529
Federal Natl Mtge Assn
(U.S. Dollar)
01-01-09 5.74 1,210,337 1,289,334
01-01-13 4.92 521,577 527,652
02-01-13 4.87 1,355,531 1,357,830
12-01-13 4.98 4,980,121 4,982,771
03-01-17 5.50 1,419,006 1,464,557
03-01-17 6.00 434,716 453,649
04-01-17 6.50 1,332,554 1,421,794
06-01-17 6.00 1,113,754 1,162,259
08-01-18 4.50 2,359,775 2,325,577
11-01-18 5.50 2,408,740 2,481,040
12-01-18 5.00 4,724,687 4,770,944
07-01-23 5.00 1,370,574 1,353,160
12-01-31 6.50 562,819 588,250
05-01-32 7.00 1,675,710 1,771,495
05-01-32 7.50 1,039,214 1,111,649
06-01-32 7.00 887,415 945,810
07-01-32 6.50 785,369 817,597
08-01-32 6.50 2,925,115 3,048,470
09-01-32 6.50 619,629 648,924
11-01-32 7.50 1,489,872 1,593,720
03-01-33 5.50 2,749,069 2,747,348
03-01-33 6.00 3,476,123 3,557,725
04-01-33 6.00 3,582,973 3,676,015
05-01-33 6.00 913,490 937,215
06-01-33 5.50 4,709,237 4,713,426
07-01-33 5.50 815,757 815,505
07-01-33 7.00 1,499,317 1,585,054
09-01-33 5.50 2,110,164 2,106,888
11-01-33 6.50 3,781,808 3,943,369
FirstEnergy
(U.S. Dollar) Series B
11-15-11 6.45 78,000 82,029
Fisher Scientific Intl
(U.S. Dollar) Sr Sub Nts
09-01-13 8.00 75,000 82,125
Ford Motor
(U.S. Dollar)
10-01-28 6.63 650,000 583,353
GE Financial Assurance Holdings
(Japanese Yen)
06-20-11 1.60 130,000,000 1,146,042
General Electric
(U.S. Dollar)
02-01-13 5.00 1,000,000 995,779
General Electric Capital
(European Monetary Unit)
06-20-07 5.13 500,000 634,253
Georgia Gulf
(U.S. Dollar) Sr Nts
12-15-13 7.13 55,000(d) 57,888
Georgia-Pacific
(U.S. Dollar)
02-01-10 8.88 185,000 213,675
GMAC
(U.S. Dollar)
03-02-11 7.25 3,700,000 3,949,269
Goldman Sachs Group
(U.S. Dollar)
05-15-09 6.65 500,000 553,209
07-15-13 4.75 600,000 571,596
Govt Natl Mtge Assn
(U.S. Dollar)
10-15-33 5.50 1,925,427 1,927,915
Collateralized Mtge Obligation
Interest Only
(U.S. Dollar)
01-20-32 2.83 3,820,082(f,g) 549,991
Grant Prideco Escrow
(U.S. Dollar)
12-15-09 9.00 250,000 278,125
Graphic Packaging Intl
(U.S. Dollar) Sr Nts
08-15-11 8.50 35,000 38,675
Gulfterra Energy Partner
(U.S. Dollar) Sr Nts
06-01-10 6.25 280,000 289,800
Hilton Hotels
(U.S. Dollar)
12-01-12 7.63 200,000 224,999
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
14 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
Host Marriott LP
(U.S. Dollar) Sr Nts
11-01-13 7.13% $75,000 $76,125
Intl Paper
(European Monetary Unit)
08-11-06 5.38 700,000 877,299
IPALCO Enterprises
(U.S. Dollar)
11-14-08 8.38 250,000 277,500
J.P. Morgan Chase
(U.S. Dollar) Sub Nts
02-01-11 6.75 500,000 558,557
03-15-14 4.88 410,000 392,094
Jorgensen Earle M.
(U.S. Dollar)
06-01-12 9.75 50,000 56,000
Joy Global
(U.S. Dollar) Series B
03-15-12 8.75 60,000 67,200
Key Energy Services
(U.S. Dollar) Series C
03-01-08 8.38 130,000 138,450
(U.S. Dollar) Sr Nts
05-01-13 6.38 70,000 68,950
Kraft Foods
(U.S. Dollar)
10-01-08 4.00 1,100,000 1,095,369
L-3 Communications
(U.S. Dollar)
06-15-12 7.63 250,000 267,500
Lamar Media
(U.S. Dollar)
01-01-13 7.25 75,000 80,625
Lehman Brothers Holdings
(U.S. Dollar)
08-07-08 3.50 500,000 490,575
MacDermid
(U.S. Dollar)
07-15-11 9.13 35,000 39,375
Manitowoc
(U.S. Dollar)
11-01-13 7.13 200,000 209,000
Meritage
(U.S. Dollar)
06-01-11 9.75 145,000 161,494
Metris Master Trust
(U.S. Dollar) Series 2001-3 Cl C
07-21-08 2.80 400,000(d,f) 394,832
MGM Mirage
(U.S. Dollar)
10-01-09 6.00 125,000 127,188
(U.S. Dollar) Sr Nts
02-27-14 5.88 65,000 62,563
Mohegan Tribal Gaming
(U.S. Dollar) Sr Sub Nts
04-01-12 8.00 150,000 162,750
Morgan Stanley, Dean Witter
(European Monetary Unit)
03-16-06 5.25 2,400,000 3,003,769
Morris Publishing
(U.S. Dollar) Sr Sub Nts
08-01-13 7.00 65,000(d) 65,325
NeighborCare
(U.S. Dollar) Sr Sub Nts
11-15-13 6.88 25,000(d) 25,500
Newfield Exploration
(U.S. Dollar) Sr Sub Nts
08-15-12 8.38 340,000 377,400
Nextel Communications
(U.S. Dollar) Sr Nts
10-31-13 6.88 300,000 305,250
Nissan Auto Receivables Owner Trust
(U.S. Dollar) Series 2003-A Cl A4
07-15-08 2.61 500,000(f) 498,295
Norcraft Companies LP/Finance
(U.S. Dollar) Sr Sub Nts
11-01-11 9.00 90,000(d) 95,175
Nortek Holdings
(U.S. Dollar) Sr Sub Nts Series B
06-15-11 9.88 75,000 84,188
Northwest Pipeline
(U.S. Dollar)
03-01-10 8.13 10,000 10,850
Offshore Logistics
(U.S. Dollar)
06-15-13 6.13 155,000 147,250
Omnicare
(U.S. Dollar) Sr Sub Nts
06-01-13 6.13 140,000 141,400
Overseas Private Investment
(U.S. Dollar) U.S. Govt Guaranty Series 1996A
09-15-08 6.99 3,750,000 4,086,150
Owens-Brockway Glass
(U.S. Dollar)
05-15-11 7.75 115,000 120,463
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
15 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
Peabody Energy
(U.S. Dollar) Series B
03-15-13 6.88% $395,000 $410,800
Pemex Project Funding Master Trust
(U.S. Dollar)
12-15-14 7.38 450,000 469,314
Qwest
(U.S. Dollar)
11-01-04 7.20 150,000 151,875
03-15-12 9.13 175,000(d) 189,000
Raytheon
(U.S. Dollar)
04-01-13 5.38 550,000 551,397
Ryland Group
(U.S. Dollar) Sr Nts
06-01-08 5.38 310,000 316,200
SBC Communications
(U.S. Dollar)
08-15-12 5.88 300,000 312,447
Schuler Homes
(U.S. Dollar)
07-15-09 9.38 85,000 93,925
Scotts
(U.S. Dollar) Sr Sub Nts
11-15-13 6.63 15,000(d) 15,638
Seneca Gaming
(U.S. Dollar) Sr Nts
05-01-12 7.25 10,000(d,h) 10,163
Service Corp Intl
(U.S. Dollar)
04-15-09 7.70 30,000 32,025
Silgan Holdings
(U.S. Dollar) Sr Sub Nts
11-15-13 6.75 125,000 125,625
Smurfit-Stone Container
(U.S. Dollar)
10-01-12 8.25 85,000 90,950
Southern Natural Gas
(U.S. Dollar)
03-15-10 8.88 175,000 193,375
Sprint Capital
(U.S. Dollar)
03-15-12 8.38 860,000 1,009,336
SPX
(U.S. Dollar) Sr Nts
06-15-11 6.25 275,000 274,313
Station Casinos
(U.S. Dollar) Sr Nts
04-01-12 6.00 140,000(d) 140,875
Stone Container
(U.S. Dollar) Sr Nts
07-01-12 8.38 210,000 224,700
Susquehanna Media
(U.S. Dollar) Sr Sub Nts
04-15-13 7.38 140,000 147,875
TD Funding
(U.S. Dollar)
07-15-11 8.38 135,000 142,763
Time Warner
(U.S. Dollar)
05-01-12 6.88 1,950,000 2,131,857
Toyota Motor Credit
(Japanese Yen)
06-09-08 0.75 297,000,000 2,692,590
Transcontinental Gas Pipeline
(U.S. Dollar) Series B
08-15-11 7.00 175,000 186,375
Triad Hospitals
(U.S. Dollar) Sr Nts
05-15-12 7.00 140,000(h) 136,556
TRW Automotive
(U.S. Dollar) Sr Nts
02-15-13 9.38 70,000 80,150
U.S. Treasury (U.S. Dollar)
02-15-07 2.25 992,000(l) 978,592
02-15-14 4.00 26,840,000 25,783,175
08-15-23 6.25 7,585,000(l) 8,428,240
02-15-26 6.00 5,390,000(l) 5,828,778
United Auto Group
(U.S. Dollar)
03-15-12 9.63 75,000 83,813
United States Steel
(U.S. Dollar) Sr Nts
05-15-10 9.75 50,000 57,500
Vail Resorts
(U.S. Dollar) Sr Sub Nts
02-15-14 6.75 60,000(d) 58,800
Valmont Inds
(U.S. Dollar)
05-01-14 6.88 140,000(d,h) 139,995
Verizon Pennsylvania
(U.S. Dollar) Series A
11-15-11 5.65 3,660,000(l) 3,789,271
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
16 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
Wachovia
(U.S. Dollar)
08-15-08 3.50% $400,000 $395,212
Wachovia Bank Commercial Mtge Trust
(U.S. Dollar) Series 2003-C8 Cl A2
11-15-35 3.89 1,250,000 1,238,637
Washington Mutual Bank FA
(U.S. Dollar) Sub Nts
06-15-11 6.88 2,000,000(f) 2,236,761
Wells Fargo
(U.S. Dollar) Sr Nts
02-15-07 5.13 1,000,000 1,052,635
Weyerhaeuser
(U.S. Dollar)
03-15-12 6.75 1,100,000 1,205,881
William Carter
(U.S. Dollar) Series B
08-15-11 10.88 150,000 172,500
Williams Companies
(U.S. Dollar)
03-15-12 8.13 170,000 184,875
Total 186,388,346
Total bonds
(Cost: $505,193,611) $522,465,861
Short-term securities (7.3%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agency (5.1%)
Federal Natl Mtge Assn Disc Nts
05-05-04 1.02% $7,000,000 $6,999,094
05-19-04 1.00 5,700,000 5,697,197
06-02-04 1.00 10,000,000 9,991,285
06-09-04 1.00 5,000,000 4,994,718
Total 27,682,294
Commercial paper (2.2%)
Household Finance
05-03-04 1.03 4,400,000 4,399,622
ING (US) Funding LLC
07-16-04 1.07 3,300,000 3,292,755
Receivables Capital
05-13-04 1.05 4,500,000(i) 4,498,342
Total 12,190,719
Total short-term securities
(Cost: $39,872,842) $39,873,013
Total investments in securities
(Cost: $545,066,453)(m) $562,338,874
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.
These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. As of April 30, 2004, the value
of these securities amounted to $10,371,622 or 1.9% of net assets.
(e) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on April 30,
2004.
- --------------------------------------------------------------------------------
17 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Notes to investments in securities (continued)
(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.
(g) 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 and amount
of future cash flows as of April 30, 2004.
(h) At April 30, 2004, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$360,000.
(i) 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. These securities may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. As of April 30, 2004, the value of these securities
amounted to $4,498,342 or 0.8% of net assets.
(j) The following abbreviation is used in the portfolio security description to
identify the insurer of the issue:
MBIA -- MBIA Insurance Corporation
(k) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at April 30, 2004, is as follows:
Security Acquisition Cost
dates
Greater Beijing First Expressways
(U.S. Dollar) 9.25% Sr Nts 2004 6-12-97 $ 410,923
(U.S. Dollar) 9.50% Sr Nts 2007 6-12-97 1,192,681
(l) 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
Sale contracts
U.S. Treasury Notes, June 2004, 10-year $24,500,000
(m) At April 30, 2004, the cost of securities for federal income tax purposes
was approximately $545,066,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $22,563,000
Unrealized depreciation (5,290,000)
----------
Net unrealized appreciation $17,273,000
-----------
- --------------------------------------------------------------------------------
18 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
World Income Portfolio
April 30, 2004 (Unaudited)
Assets
Investments in securities, at value (Note 1)*
(identified cost $545,066,453) $562,338,874
Foreign currency holdings (identified cost $30) (Note 1) 29
Dividends and accrued interest receivable 8,521,346
Receivable for investment securities sold 5,795,561
---------
Total assets 576,655,810
-----------
Liabilities
Disbursements in excess of cash on demand deposit 108,672
Payable for investment securities purchased 5,852,049
Unrealized depreciation on foreign currency contracts held, at value (Note 5) 82,041
Payable upon return of securities loaned (Note 4) 23,950,000
Accrued investment management services fee 11,278
Other accrued expenses 51,089
------
Total liabilities 30,055,129
----------
Net assets $546,600,681
============
* Including securities on loan, at value (Note 4) $ 23,054,880
------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
19 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Statement of operations
World Income Portfolio
Six months ended April 30, 2004 (Unaudited)
Investment income
Income:
Dividends $ 721
Interest 11,270,182
Fee income from securities lending (Note 4) 33,397
------
Total income 11,304,300
----------
Expenses (Note 2):
Investment management services fee 2,105,193
Compensation of board members 6,058
Custodian fees 95,650
Audit fees 12,750
Other 8,015
-----
Total expenses 2,227,666
Earnings credits on cash balances (Note 2) (403)
----
Total net expenses 2,227,263
---------
Investment income (loss) -- net 9,077,037
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 13,339,307
Foreign currency transactions (1,012,263)
Futures contracts (598,836)
Options contracts written (Note 7) 167,310
-------
Net realized gain (loss) on investments 11,895,518
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (3,121,373)
----------
Net gain (loss) on investments and foreign currencies 8,774,145
---------
Net increase (decrease) in net assets resulting from operations $17,851,182
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
20 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
World Income Portfolio
April 30, 2004 Oct. 31, 2003
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss) -- net $ 9,077,037 $ 17,801,878
Net realized gain (loss) on investments 11,895,518 18,001,647
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (3,121,373) 33,085,822
---------- ----------
Net increase (decrease) in net assets resulting from operations 17,851,182 68,889,347
---------- ----------
Proceeds from contributions 18,244,464 39,684,999
Fair value of withdrawals (32,535,111) (68,855,691)
----------- -----------
Net contributions (withdrawals) from partners (14,290,647) (29,170,692)
----------- -----------
Total increase (decrease) in net assets 3,560,535 39,718,655
Net assets at beginning of period 543,040,146 503,321,491
----------- -----------
Net assets at end of period $546,600,681 $543,040,146
============ ============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
21 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Notes to Financial Statements
World Income Portfolio
(Unaudited as to April 30, 2004)
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. Pursuant to procedures adopted by the
Board of Trustees of the portfolios, American Express Financial Corporations
(AEFC) utilizes Fair Value Pricing (FVP). FVP determinations are made in good
faith in accordance with the procedures. If a development or event is so
significant that there is a reasonably high degree of certainty that the effect
of the development or event has actually caused the closing price to no longer
reflect the actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the New York Stock Exchange.
Significant events include material movements in the U.S. securities markets
prior to the opening of foreign markets on the following trading day. FVP
results in an estimated price that reasonably reflects the current market
conditions in order to value the portfolio holdings such that shareholder
transactions receive a fair NAV. 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.
- --------------------------------------------------------------------------------
22 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. As of April 30, 2004, foreign currency holdings were
comprised of Australian dollars.
- --------------------------------------------------------------------------------
23 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL 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.
Illiquid securities
As of April 30, 2004, investments in securities included issues that are
illiquid which the Portfolio currently limits to 10% of net assets, at market
value, at the time of purchase. The aggregate value of such securities as of
April 30, 2004 was $245,000 representing 0.04% 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. Assets are liquid if they can be sold or disposed of in the ordinary
course of business within seven days at approximately the value at which the
asset is valued by the Portfolio.
Securities purchased on a forward-commitment basis
Delivery and payment for securities that have been purchased by the Portfolio on
a forward-commitment basis, including when-issued securities and other
forward-commitments, can take place one month or more after the transaction
date. During this period, such securities are subject to market fluctuations,
and they may affect the Portfolio's net assets the same as owned securities. The
Portfolio designates cash or liquid securities at least equal to the amount of
its forward-commitments. As of April 30, 2004, the Portfolio has entered into
outstanding when-issued securities of $360,000.
The Portfolio 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
Portfolio to "roll over" its purchase commitments, the Portfolio 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.
- --------------------------------------------------------------------------------
24 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL 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 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.
During the six months ended April 30, 2004, the Portfolio's custodian fees were
reduced by $403 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 $312,865,844 and $309,350,398, respectively, for the six
months ended April 30, 2004. Realized gains and losses are determined on an
identified cost basis.
4. LENDING OF PORTFOLIO SECURITIES
As of April 30, 2004, securities valued at $23,054,880 were on loan to brokers.
For collateral, the Portfolio received $23,950,000 in cash. Cash collateral
received is invested in short-term securities, which are included in the
short-term section of the "Investments in securities." Income from securities
lending amounted to $33,397 for the six months ended April 30, 2004. The risks
to the Portfolio of securities lending are that the borrower may not provide
additional collateral when required or return the securities when due.
5. FORWARD FOREIGN CURRENCY CONTRACTS
As of April 30, 2004, the Portfolio has a forward foreign currency exchange
contract that obligates it to deliver currency at a specified future date. The
unrealized appreciation and/or depreciation on this contract is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contract are as follows:
Currency to Currency to Unrealized Unrealized
Exchange date be delivered be received appreciation depreciation
June 6, 2004 12,853,236 1,410,000,000 $-- $82,041
U.S. Dollar Japanese Yen
- --------------------------------------------------------------------------------
25 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
6. INTEREST RATE FUTURES CONTRACTS
As of April 30, 2004, investments in securities included securities valued at
$648,220 that were pledged as collateral to cover initial margin deposits on 245
open sale contracts. The notional market value of the open sale contracts as of
April 30, 2004 was $27,072,500 with a net unrealized gain of $1,129,942. See
"Summary of significant accounting policies" and "Notes to investments in
securities."
7. OPTIONS CONTRACTS WRITTEN
Contracts and premiums associated with options contracts written are as follows:
Six months ended April 30, 2004
Puts Calls
Contracts Premiums Contracts Premiums
Balance Oct. 31, 2003 59 $ 54,155 59 $ 113,155
Exercised -- -- (59) (113,155)
Expired (59) (54,155) -- --
Balance April 30, 2004 -- $ -- -- $ --
---- -------- ---- ---------
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, 2004(e) 2003 2002 2001 2000
Ratio of expenses to average daily net assets(a) .80%(c) .80% .79% .78% .78%
Ratio of net investment income (loss) to average daily net assets 3.24%(c) 3.29% 3.66% 5.27% 5.98%
Portfolio turnover rate (excluding short-term securities) 58% 117% 51% 24% 48%
Total return(b) 3.20%(d) 13.99% 6.89% 11.29% (4.29%)
(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.
(c) Adjusted to an annual basis.
(d) Not annualized.
(e) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
26 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Bond Fund
April 30, 2004 (Unaudited)
Assets
Investment in Portfolio (Note 1) $546,464,373
Capital shares receivable 241,990
-------
Total assets 546,706,363
-----------
Liabilities
Capital shares payable 249,746
Accrued distribution fee 7,133
Accrued transfer agency fee 3,061
Accrued administrative services fee 849
Other accrued expenses 69,130
------
Total liabilities 329,919
-------
Net assets applicable to outstanding capital stock $546,376,444
============
Represented by
Capital stock -- $.01 par value (Note 1) $ 826,738
Additional paid-in capital 529,650,729
Undistributed net investment income 88,993
Accumulated net realized gain (loss) (Note 5) (2,477,623)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 18,287,607
----------
Total -- representing net assets applicable to outstanding capital stock $546,376,444
============
Net assets applicable to outstanding shares: Class A $374,838,999
Class B $161,928,491
Class C $ 5,237,060
Class I $ 4,298,940
Class Y $ 72,954
Net asset value per share of outstanding capital stock: Class A shares 56,713,413 $ 6.61
Class B shares 24,504,889 $ 6.61
Class C shares 795,525 $ 6.58
Class I shares 648,951 $ 6.62
Class Y shares 11,012 $ 6.62
------ ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
27 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Statement of operations
AXP Global Bond Fund
Six months ended April 30, 2004 (Unaudited)
Investment income
Income:
Dividends $ 721
Interest 11,268,200
Fee income from securities lending 33,389
------
Total income 11,302,310
----------
Expenses (Note 2):
Expenses allocated from Portfolio 2,226,716
Distribution fee
Class A 485,829
Class B 820,481
Class C 25,932
Transfer agency fee 461,495
Incremental transfer agency fee
Class A 34,374
Class B 22,555
Class C 333
Service fee -- Class Y 38
Administrative services fees and expenses 158,879
Compensation of board members 5,542
Printing and postage 59,500
Registration fees 35,800
Audit fees 4,250
Other 10,926
------
Total expenses 4,352,650
Earnings credits on cash balances (Note 2) (2,419)
------
Total net expenses 4,350,231
---------
Investment income (loss) -- net 6,952,079
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 13,338,550
Foreign currency transactions (1,014,208)
Futures contracts (598,836)
Options contracts written 167,310
-------
Net realized gain (loss) on investments 11,892,816
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (3,120,720)
----------
Net gain (loss) on investments and foreign currencies 8,772,096
---------
Net increase (decrease) in net assets resulting from operations $15,724,175
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
28 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
AXP Global Bond Fund
April 30, 2004 Oct. 31, 2003
Six months ended Year ended
(Unaudited)
Operations and distributions
Investment income (loss) -- net $ 6,952,079 $ 13,500,260
Net realized gain (loss) on investments 11,892,816 17,996,432
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (3,120,720) 33,079,008
---------- ----------
Net increase (decrease) in net assets resulting from operations 15,724,175 64,575,700
---------- ----------
Distributions to shareholders from:
Net investment income
Class A (9,297,975) (12,438,109)
Class B (3,287,569) (3,958,002)
Class C (104,663) (103,214)
Class I (6,977) --
Class Y (1,952) (1,009)
------ ------
Total distributions (12,699,136) (16,500,334)
----------- -----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 47,598,982 118,383,281
Class B shares 24,159,495 50,004,285
Class C shares 1,210,585 3,603,615
Class I shares 4,392,529 --
Class Y shares 13,381 41,942
Reinvestment of distributions at net asset value
Class A shares 8,593,979 11,408,319
Class B shares 3,059,909 3,683,453
Class C shares 91,695 93,681
Class I shares 6,904 --
Class Y shares 1,952 985
Payments for redemptions
Class A shares (64,049,300) (130,390,225)
Class B shares (Note 2) (23,799,855) (63,154,212)
Class C shares (Note 2) (979,926) (1,678,853)
Class I shares (21,727) --
Class Y shares (7,940) (55,411)
------ -------
Increase (decrease) in net assets from capital share transactions 270,663 (8,059,140)
------- ----------
Total increase (decrease) in net assets 3,295,702 40,016,226
Net assets at beginning of period 543,080,742 503,064,516
----------- -----------
Net assets at end of period $546,376,444 $ 543,080,742
============ =============
Undistributed net investment income $ 88,993 $ 5,836,050
------------ -------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
29 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Notes to Financial Statements
AXP Global Bond Fund
(Unaudited as to April 30, 2004)
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.
Effective March 4, 2004, the Fund offers an additional class of shares, Class I,
exclusively to certain institutional investors. Class I shares have no sales
charges and are made available through a separate prospectus supplement provided
to investors eligible to purchase the shares. As of April 30, 2004, American
Express Financial Corporation (AEFC) and the AXP Portfolio Builder Funds owned
100% of Class I shares.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, incremental transfer agency fee and service fee (class
specific expenses) differ among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on investments
are allocated to each class of shares based upon its relative net assets.
Investment in World Income Portfolio
The Fund invests all of its assets in the World Income Portfolio (the
Portfolio), a series of World Trust, an open-end investment company that has the
same objectives as the Fund. The Portfolio invests primarily in debt obligations
of U.S. and foreign issuers.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at the value that is equal to
the Fund's proportionate ownership interest in the Portfolio's net assets. The
percentage of the Portfolio owned by the Fund as of April 30, 2004 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).
- --------------------------------------------------------------------------------
30 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
Dividends from net investment income, declared and paid each calendar quarter,
when available, are reinvested in additional shares of the Fund at net asset
value or payable in cash. Capital gains, when available, are distributed along
with the last income dividend of the calendar year.
2. EXPENSES AND SALES CHARGES
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
The Fund has an agreement with AEFC to provide administrative services. Under an
Administrative Services Agreement, the Fund pays AEFC a fee for administration
and accounting services at a percentage of the Fund's average daily net assets
in reducing percentages from 0.06% to 0.04% annually. A minor portion of
additional administrative service expenses paid by the Fund are consultants'
fees and fund office expenses. Under this agreement, the Fund also pays taxes,
audit and certain legal fees, registration fees for shares, compensation of
board members, corporate filing fees and any other expenses properly payable by
the Fund and approved by the board.
Under a 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.
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31 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL 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 $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.
Class I pays a transfer agency fee at an annual rate per shareholder account of
$1. This amount is included in the transfer agency fee on the statement of
operations.
In addition, AECSC is entitled to charge 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 currently not
effective.
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
$521,767 for Class A, $54,164 for Class B and $1,185 for Class C for the six
months ended April 30, 2004.
During the six months ended April 30, 2004, the Fund's transfer agency fees were
reduced by $2,419 as a result of earnings credits from overnight cash balances.
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32 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 2004
Class A Class B Class C Class I* Class Y
Sold 7,023,881 3,565,252 179,492 651,094 2,007
Issued for reinvested distributions 1,273,699 453,211 13,641 1,005 289
Redeemed (9,445,754) (3,516,497) (145,435) (3,148) (1,156)
---------- ---------- -------- ------ ------
Net increase (decrease) (1,148,174) 501,966 47,698 648,951 1,140
---------- ------- ------ ------- -----
* Inception date was March 4, 2004.
Year ended Oct. 31, 2003
Class A Class B Class C Class I Class Y
Sold 18,346,322 7,797,131 562,338 N/A 6,300
Issued for reinvested distributions 1,795,377 578,536 14,712 N/A 154
Redeemed (20,340,957) (9,764,130) (260,976) N/A (9,193)
----------- ---------- -------- ----- ------
Net increase (decrease) (199,258) (1,388,463) 316,074 N/A (2,739)
-------- ---------- ------- ----- ------
4. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The Fund must
maintain asset coverage for borrowings of at least 300%. The agreement, which
enables the Fund to participate with other American Express mutual funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the
IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime
Lending Rate. Borrowings are payable within 60 days after such loan is executed.
The Fund also pays a commitment fee equal to its pro rata share of the amount of
the credit facility at a rate of 0.09% per annum. The Fund had no borrowings
outstanding during the six months ended April 30, 2004.
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.
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33 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
6. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Class A
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $6.57 $6.00 $5.81 $5.39 $5.87
Income from investment operations:
Net investment income (loss) .09 .18 .19 .27 .34
Net gains (losses) (both realized and unrealized) .11 .60 .17 .30 (.63)
Total from investment operations .20 .78 .36 .57 (.29)
Less distributions:
Dividends from net investment income (.16) (.21) (.17) (.15) (.19)
Net asset value, end of period $6.61 $6.57 $6.00 $5.81 $5.39
Ratios/supplemental data
Net assets, end of period (in millions) $375 $380 $348 $355 $389
Ratio of expenses to average daily net assets(b) 1.33%(c) 1.36% 1.34% 1.32% 1.30%
Ratio of net investment income (loss) to average daily net assets 2.71%(c) 2.73% 3.12% 4.75% 5.49%
Portfolio turnover rate (excluding short-term securities) 58% 117% 51% 24% 48%
Total return(d) 3.04%(e) 13.25% 6.24% 10.83% (5.16%)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
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34 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $6.57 $5.99 $5.79 $5.38 $5.87
Income from investment operations:
Net investment income (loss) .08 .12 .13 .21 .29
Net gains (losses) (both realized and unrealized) .10 .62 .19 .31 (.62)
Total from investment operations .18 .74 .32 .52 (.33)
Less distributions:
Dividends from net investment income (.14) (.16) (.12) (.11) (.16)
Net asset value, end of period $6.61 $6.57 $5.99 $5.79 $5.38
Ratios/supplemental data
Net assets, end of period (in millions) $162 $158 $152 $145 $155
Ratio of expenses to average daily net assets(b) 2.08%(c) 2.12% 2.10% 2.09% 2.07%
Ratio of net investment income (loss) to average daily net assets 1.96%(c) 1.97% 2.36% 3.99% 4.73%
Portfolio turnover rate (excluding short-term securities) 58% 117% 51% 24% 48%
Total return(d) 2.64%(e) 12.39% 5.59% 9.73% (5.77%)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
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35 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(g) 2003 2002 2001 2000(b)
Net asset value, beginning of period $6.55 $5.98 $5.79 $5.38 $5.52
Income from investment operations:
Net investment income (loss) .08 .13 .14 .21 .10
Net gains (losses) (both realized and unrealized) .09 .60 .18 .31 (.24)
Total from investment operations .17 .73 .32 .52 (.14)
Less distributions:
Dividends from net investment income (.14) (.16) (.13) (.11) --
Net asset value, end of period $6.58 $6.55 $5.98 $5.79 $5.38
Ratios/supplemental data
Net assets, end of period (in millions) $5 $5 $3 $1 $--
Ratio of expenses to average daily net assets(c) 2.07%(d) 2.14% 2.10% 2.09% 2.07%(d)
Ratio of net investment income (loss) to average daily net assets 1.98%(d) 1.89% 2.29% 3.84% 4.80%(d)
Portfolio turnover rate (excluding short-term securities) 58% 117% 51% 24% 48%
Total return(e) 2.51%(f) 12.41% 5.51% 9.84% (2.49%)(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 2000.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2004 (Unaudited).
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36 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Class I
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(b)
Net asset value, beginning of period $6.77
Income from investment operations:
Net investment income (loss) .05
Net gains (losses) (both realized and unrealized) (.15)
Total from investment operations (.10)
Less distributions:
Dividends from net investment income (.05)
Net asset value, end of period $6.62
Ratios/supplemental data
Net assets, end of period (in millions) $4
Ratio of expenses to average daily net assets(c) .95%(d)
Ratio of net investment income (loss) to average daily net assets 3.45%(d)
Portfolio turnover rate (excluding short-term securities) 58%
Total return(e) (1.50%)(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was March 4, 2004 (Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
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37 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $6.59 $6.01 $5.80 $5.40 $5.87
Income from investment operations:
Net investment income (loss) .09 .19 .20 .29 .35
Net gains (losses) (both realized and unrealized) .11 .61 .19 .27 (.62)
Total from investment operations .20 .80 .39 .56 (.27)
Less distributions:
Dividends from net investment income (.17) (.22) (.18) (.16) (.20)
Net asset value, end of period $6.62 $6.59 $6.01 $5.80 $5.40
Ratios/supplemental data
Net assets, end of period (in millions) $-- $-- $-- $-- $--
Ratio of expenses to average daily net assets(b) 1.16%(c) 1.18% 1.17% 1.16% 1.14%
Ratio of net investment income (loss) to average daily net assets 2.90%(c) 2.69% 3.29% 4.90% 5.75%
Portfolio turnover rate (excluding short-term securities) 58% 117% 51% 24% 48%
Total return(d) 2.96%(e) 13.54% 6.72% 10.71% (4.88%)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
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38 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
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. 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. In addition, after Aug.
1, 2004, information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 will be
available at http://www.sec.gov.
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39 -- AXP GLOBAL BOND FUND -- 2004 SEMIANNUAL REPORT
(logo)
AMERICAN
EXPRESS
(R)
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and is
not a broker-dealer.
AXP(R)
Global Equity
Fund
Semiannual Report
for the Period Ended
April 30, 2004
AXP Global Equity Fund seeks to provide shareholders with long-term capital
growth.
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
Investments in Securities 9
Financial Statements (Portfolio) 13
Notes to Financial Statements (Portfolio) 16
Financial Statements (Fund) 20
Notes to Financial Statements (Fund) 23
Proxy Voting 31
(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.
- --------------------------------------------------------------------------------
2 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Fund Snapshot
AS OF APRIL 30, 2004
PORTFOLIO MANAGERS
Portfolio manager Since Years in industry
Dominic Rossi* 10/03 17
Stephen Thornber* 10/03 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 $490.0 million
Number of holdings 99
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 37.6%
Japan 12.9%
United Kingdom 7.9%
Switzerland 5.4%
Germany 4.4%
France 4.2%
South Korea 3.6%
Bermuda 3.5%
Hong Kong 3.1%
Brazil 2.8%
Italy 2.6%
China 2.0%
Israel 1.5%
Mexico 1.2
Canada 1.1%
Other* 6.2%
* Includes Austria, Barbados, Finland, Greece, Ireland, Malaysia,
Netherlands, Singapore and Spain.
CREDIT QUALITY SUMMARY
Percentage of portfolio assets
Vodafone Group (United Kingdom) 3.0%
Samsung Electronics (South Korea) 2.9
Citigroup (United States) 2.7
Total (France) 2.5
Johnson & Johnson (United States) 2.4
Microsoft (United States) 2.0
Dell (United States) 2.0
Canon (Japan) 1.8
Procter & Gamble (United States) 1.8
Toyota Motor (Japan) 1.7
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
There are special risk considerations associated with international investing
related to market, currency, economic, political and other factors.
Stock prices of established companies that pay dividends may be less volatile
than the stock market as a whole. Stocks of small- and medium-sized companies
may be subject to more abrupt or erratic price movements than stocks of larger
companies. Some of these companies also may have fewer financial resources.
Fund holdings are subject to change.
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3 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Dominic Rossi and Stephen Thornber of Threadneedle Asset Management in London
describe the Fund's positioning and results for the six months ended April 30,
2004. Threadneedle portfolio managers assumed responsibility for the Fund on
Oct. 20, 2003.
Q: How did AXP Global Equity Fund perform for the six months ended April 30,
2004?
A: AXP Global Equity Fund's Class A shares, excluding sales charge, rose 5.22%
over the six-month period. The Fund underperformed its benchmark, the MSCI
All Country World Free Index, which advanced 8.70% for the reporting
period. The Fund also underperformed the Lipper Global Funds Index,
representing the Fund's peer group, which rose 9.24% during the same
timeframe.
Q: What factors most significantly affected performance?
A: When we assumed responsibility for the Fund in late October, we made
substantial changes to give the Fund a stronger cyclical focus. After
these changes were made, cyclical stocks became the mainstay of the Fund.
The rationale for the change was to catch the strong cyclical rally that
the equity market had been enjoying for much of calendar year 2003.
Unfortunately, cyclical stocks offered mediocre performance in the last
months of 2003. Although cyclicals had a strong start in 2004, performing
very well in January, they subsequently dropped
(bar chart)
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2004
10%
(bar 2) (bar 3)
8% +8.70% +9.24%
6% (bar 1)
+5.22%
4%
2%
0%
(bar 1) AXP Global Equity Fund Class A (excluding sales charge)
(bar 2) MSCI All Country World Free Index(1) (unmanaged)
(bar 3) Lipper Global Funds Index(2)
(1) Morgan Stanley Capital International (MSCI) All Country World Free Index,
an unmanaged index, is compiled from a composite of securities markets of
47 countries, including Canada, the United States and 26 emerging market
countries. The index reflects reinvestment of all distributions and changes
in market prices, but excludes brokerage commissions or other fees.
(2) The Lipper Global Funds Index, published by Lipper Inc., includes the 30
largest funds that are generally similar to the Fund, although some funds
in the index may have somewhat different investment policies or objectives.
Past performance is no guarantee of future results. The 5.75% sales charge
applicable to Class A shares of the Fund is not reflected in the bar chart; if
reflected, returns would be lower than those shown. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
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4 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
(begin callout quote)> Our asset allocation strategy related to the geographic
balance of the Fund has been beneficial and contributed positively to
performance over the six months.(end callout quote)
again when the market chose to favor defensive stocks. This on-again,
off-again market behavior dragged down the performance of cyclical stocks,
and negatively impacted the Fund since it so heavily favored cyclical
stocks during this six-month period.
AVERAGE ANNUAL TOTAL RETURNS
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)
as of April 30, 2004
6 months* +5.22% -0.83% +4.77% +0.77% +5.02% +4.02% +5.42% +5.42%
1 year +21.84% +14.84% +21.00% +17.00% +21.05% +21.05% +22.25% +22.25%
5 years -6.13% -7.24% -6.85% -6.99% N/A N/A -5.94% -5.94%
10 years +2.00% +1.39% N/A N/A N/A N/A N/A N/A
Since inception N/A N/A +2.67% +2.67% -12.94% -12.94% +3.63% +3.63%
as of March 31, 2004
6 months* +14.38% +7.80% +14.11% +10.11% +13.91% +12.91% +14.53% +14.53%
1 year +34.98% +27.22% +34.37% +30.37% +34.18% +34.18% +35.35% +35.35%
5 years -4.92% -6.04% -5.62% -5.77% N/A N/A -4.73% -4.73%
10 years +2.42% +1.82% N/A N/A N/A N/A N/A N/A
Since inception N/A N/A +3.08% +3.08% -12.46% -12.46% +4.03% +4.03%
The performance information shown represents the past performance and is not a
guarantee of future results. The investment return and principal value of your
investment and returns will fluctuate so that your shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower or
higher than the performance information shown. You may obtain performance
information current to the most recent month-end by calling (888) 723-8476 or
visiting www.americanexpress.com/funds. You should consider the investment
objectives, risks, and charges and expenses of the Fund carefully before
investing.
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
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5 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
The sector allocation of the Fund has also hurt performance during this
reporting period. The Fund had a greater-than-index position in materials
and information technology. These sectors had very strong earnings in the
first few months of 2004. The Fund maintained a less-than-index position in
consumer staples and utilities. As mentioned above, these defensive areas
returned to favor in the marketplace in the last few months of the
reporting period. We maintained a lower-than-index position in
pharmaceuticals for most of the reporting period.
Our asset allocation strategy related to the geographic balance of the Fund
has been beneficial and contributed positively to performance over the six
months. For example, we maintained a greater-than-index position in
emerging markets and Latin America, where we believe there is still much
value to be had. Late in the period (late February-early March), we
increased our allocation to Japan and now have a greater-than-index
position there. We believe deflation in Japan is nearing an end, and that
recent indications, such as strong GDP results are promising. The Fund
maintained its less-than-index position in the U.S., largely due to high
valuations there. Although the Fund's position is substantially lower than
the index, the Fund has 37.6% of its assets allocated to U.S. investments
versus nearly half of the index on April 30, 2004.
Stock selection was another key contributor to performance. Nobel Biocare,
a small-cap stock, is a Swiss manufacturer of dental implants that was a
strong contributor to performance. Esprit, a Hong Kong retailer, helped the
Fund's performance, as did Samsung, the electronics company in South Korea,
which is one of our largest holdings. All three companies have been strong
performers and we continue to hold these stocks. We are always watching for
medium sized biotechnology and other promising medical companies. We also
added Actelion, a Swiss company that has a new cardiovascular drug that we
are excited about.
During the period we had disappointing results from some companies. One
example was Swiss Life, an insurance company that has been a turnaround
situation and had performed extremely well in the Fund for a time. Swiss
Life announced a rights issue in order to fund the acquisition of an
Italian bank that they already partially owned. This acquisition was a
drain on the stock and, in turn, the Fund. We have significantly reduced
our holding in Swiss Life. Another stock that had some problematic
performance during the period was Myogen, a biotechnology company in the
U.S. We bought the company based on its success. At any given time, the
company has a number of its new drugs in test mode.
- --------------------------------------------------------------------------------
6 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
In early 2004, the company had a very promising drug in the late stages of
clinical trials. Unfortunately, this drug failed some of its clinical
trials and it had to be dropped. The stock reacted poorly to that episode
and this, in turn, impacted the Fund. We think the company -- not just one
product -- holds promise. We believe that the stock is now even more
undervalued than when we first bought it. So we have retained Myogen and
continue to have faith in it.
Q: What changes did you make to the Fund?
A: Beginning in October 2003 and continuing into the current fiscal year we
made the following changes to the Fund:
o We reduced the Fund's substantial large-cap stock focus -- When we took
over the Fund, we felt the Fund had taken on too much risk by focusing
on the large-cap segment of the market. We substantially reduced the
large-cap holdings to better align the Fund with its peer group and
Threadneedle's investment strategy.
o We added a strong cyclical focus -- We have been optimistic about
global growth, and for that reason, skewed the Fund toward cyclical
stocks. Historically, cyclical stocks benefit from a growing global
economy.
o We added 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.
o We added more emerging markets stocks -- For some time, the
Threadneedle team has been bullish on Asia and Latin America. Asia
demonstrated attractive growth rates and cheap valuations. Latin
America also showed attractive valuations and its growth has been
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 and Latin American emerging markets.
o We changed some country and regional allocations -- We added slightly
to the Fund's position in Europe. Europe provided 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 continued to improve, but
valuations were high, in our view. Later in the period, we added to the
Japanese position.
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7 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
Several broad themes continue to play out in our sector strategy over the
period. Although we have reduced our overall technology position, we favor
software over hardware and see good value in proven software companies such
as Microsoft, Adobe Systems (U.S.) and Check Point Software Technologies
(Israel). In the hardware subsector, we see the migration of hardware
technology from some highly capitalized companies in the U.S. to Asia.
We have also increased our positions in wireless communications companies
and certain health care companies, such as medical and biotechnology
companies.
Q: How is the Fund currently positioned and how do you intend to manage the
Fund in the months ahead?
A: We no longer have a cyclical slant to the portfolio. We have moved toward
more strong cash flow and growth-oriented stocks. Threadneedle's dynamic
style espouses selection of what we believe are the best stocks regardless
of growth or value slant and regardless of market capitalization. With this
said, we believe that large-cap growth stocks are now coming back into
favor.
On a broader level, with the stabilization of the U.S. dollar, we have seen
a flight of capital moving from Japan and emerging markets to the U.S. The
U.S. economy looks so good that it is likely that the Federal Reserve will
soon raise interest rates there. This likelihood was expected and we
believe it was priced into the market for much of this six-month period.
What was not expected was the incredible increase in the price of oil.
Equity markets are historically tolerant of increases in oil prices, but
the latest increases were quite high and will impact all countries, but
especially those significant importers, such as Japan, Korea and Brazil.
Currently equity markets are reacting to oil prices, not interest rates, in
our view. However, markets have the potential to be incredibly resilient,
and we maintain a positive outlook for equities given all of the economic
drivers that we are seeing.
- --------------------------------------------------------------------------------
8 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Investments in Securities
World Growth Portfolio
April 30, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (98.4%)(c)
Issuer Shares Value(a)
Austria (0.5%)
Utilities -- telephone
Telekom Austria 172,791(b) $2,535,793
Barbados (0.8%)
Insurance
Everest Re Group 43,931 3,742,043
Bermuda (3.5%)
Insurance (2.1%)
PartnerRe 88,560 5,074,488
RenaissanceRe Holdings 95,564 5,035,267
Total 10,109,755
Multi-industry (1.4%)
Accenture Cl A 292,801(b) 6,959,880
Brazil (2.8%)
Metals (1.4%)
Companhia Vale do Rio Doce ADR 180,542 7,057,387
Paper & packaging (0.7%)
Aracruz Celulose ADR 105,000 3,269,700
Utilities -- telephone (0.7%)
Brasil Telecom Participacoes ADR 110,106 3,413,286
Canada (1.1%)
Energy
EnCana 132,921 5,213,728
China (2.0%)
Real estate investment trust (1.1%)
Henderson Land Development 1,187,000 5,326,897
Retail -- general (0.9%)
Esprit Holdings 1,055,000 4,328,705
Finland (0.5%)
Energy equipment & services
Fortum 217,422 2,435,408
France (4.2%)
Automotive & related (0.6%)
Renault 38,436 2,866,382
Energy (2.5%)
Total 66,955 12,376,718
Multi-industry (1.1%)
Sanofi-Synthelabo 81,263 5,159,710
Germany (3.2%)
Automotive & related (0.5%)
Continental 57,244 2,483,219
Banks and savings & loans (1.3%)
Hypo Real Estate Holding 242,695(b) 6,626,157
Computer software & services (0.9%)
SAP 28,088 4,256,650
Utilities -- electric (0.5%)
RWE 58,431 2,534,711
Greece (0.8%)
Utilities -- electric
Public Power 158,070 4,007,022
Hong Kong (3.1%)
Financial services (0.7%)
Hong Kong Exchanges
& Clearing 1,822,000 3,644,421
Multi-industry (1.3%)
New World Development 7,671,600 6,147,825
Real estate (1.1%)
Sun Hung Kai Properties 602,000 5,171,622
Ireland (0.9%)
Banks and savings & loans
Anglo Irish Bank 277,495 4,537,790
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
9 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Israel (1.5%)
Computer software & services
Check Point Software
Technologies 316,105(b) $7,406,340
Italy (2.6%)
Banks and savings & loans (1.0%)
Banco Popolare di
Verona e Novara 303,036 5,038,953
Energy (1.6%)
Eni 383,344 7,788,810
Japan (12.9%)
Automotive & related (1.7%)
Toyota Motor 232,200 8,384,417
Banks and savings & loans (1.5%)
Mitsubishi Tokyo Financial Group 806 7,162,823
Cellular telecommunications (0.5%)
NTT DoCoMo 1,270 2,517,014
Chemicals (1.0%)
Shin-Etsu Chemical 124,900 5,041,213
Financial services (1.1%)
Nomura Holdings 346,000 5,611,148
Machinery (1.8%)
Amada 654,000 3,675,421
Komatsu 876,000 4,986,461
Total 8,661,882
Multi-industry (3.0%)
Canon 172,000 9,012,489
Ricoh 251,000 4,997,285
Total 14,009,774
Real estate (1.2%)
Daito Trust Construction 101,800 3,445,538
Mitsui Fudosan 215,000 2,364,027
Total 5,809,565
Retail -- general (0.5%)
Seven-Eleven Japan 71,000 2,409,502
Retail -- grocery (0.7%)
Aeon 79,000 3,460,271
Malaysia (0.5%)
Leisure time & entertainment
Resorts World 878,900 2,312,895
Mexico (1.2%)
Cellular telecommunications
America Movil ADR Series L 176,185 5,955,053
Netherlands (0.9%)
Food
Koninklijke Numico 152,662(b) 4,224,735
Singapore (0.8%)
Real estate
City Developments 1,155,000 4,141,002
South Korea (3.6%)
Automotive & related (0.7%)
Hyundai Motor 93,400 3,563,214
Electronics (2.9%)
Samsung Electronics 29,340 13,932,123
Spain (0.5%)
Media
Antena 3 Television 50,927(b) 2,586,846
Switzerland (5.4%)
Banks and savings & loans (1.3%)
UBS 86,758 6,173,552
Health care products (2.5%)
Actelion 47,704(b) 5,240,073
Nobel Biocare Holding 31,738 4,307,300
Synthes 2,790 3,035,606
Total 12,582,979
Insurance (1.6%)
Swiss Life Holding 55,778(b) 7,623,711
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
10 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
United Kingdom (7.8%)
Aerospace & defense (0.3%)
Rolls-Royce Group 383,568 $1,578,438
Rolls-Royce Group Cl B 19,178,400(b) 34,092
Total 1,612,530
Cellular telecommunications (3.1%)
Vodafone Group 6,075,020 14,794,575
Computer software & services (0.7%)
lastminute.com 1,035,260(b) 3,537,936
Health care products (1.3%)
AstraZeneca 136,677 6,406,780
Media (0.5%)
EMAP 170,266 2,616,539
Retail -- grocery (1.4%)
Tesco 650,000 2,874,158
William Morrison Supermarkets 979,907 4,171,812
Total 7,045,970
Telecom equipment & services (0.5%)
mm02 1,284,961(b) 2,284,148
United States (37.3%)
Banks and savings & loans (0.9%)
Wachovia 33,317 1,524,253
Wells Fargo 47,276 2,669,203
Total 4,193,456
Beverages & tobacco (0.6%)
PepsiCo 58,306 3,177,094
Broker dealers (2.1%)
AmeriTrade Holding 196,250(b) 2,402,100
Bear Stearns Companies 58,232 4,666,712
Morgan Stanley 63,982 3,288,035
Total 10,356,847
Cable (0.4%)
Cox Communications Cl A 67,081(b) 2,192,878
Cellular telecommunications (1.5%)
American Tower Cl A 399,529(b) 4,974,136
Nextel Communications Cl A 100,500(b) 2,397,930
Total 7,372,066
Computer hardware (2.5%)
Apple Computer 104,094(b) 2,678,339
Dell 274,153(b) 9,515,850
Total 12,194,189
Computer software & services (3.3%)
Adobe Systems 60,300 2,492,802
Microsoft 376,183 9,769,473
State Street 76,031 3,710,313
Total 15,972,588
Energy (1.5%)
Valero Energy 112,731 7,187,729
Finance companies (2.6%)
Citigroup 269,678 12,968,815
Financial services (0.8%)
Goldman Sachs Group 41,999 4,052,904
Food (0.9%)
Wrigley (Wm) Jr 68,363 4,217,997
Furniture & appliances (0.5%)
Mohawk Inds 31,429(b) 2,424,433
Health care products (8.5%)
Amgen 100,702(b) 5,666,502
Gilead Sciences 90,575(b) 5,509,677
Johnson & Johnson 219,932 11,882,925
Laboratory Corp of America Holdings 171,359(b) 6,809,807
Myogen 291,000(b) 3,355,230
St. Jude Medical 72,570(b) 5,534,188
Zimmer Holdings 38,044(b) 3,037,813
Total 41,796,142
Household products (1.8%)
Procter & Gamble81,120 8,578,440
Insurance (1.8%)
American Intl Group 75,131 5,383,136
Prudential Financial 79,799 3,506,368
Total 8,889,504
Media (0.8%)
DIRECTV Group 227,359(b) 4,069,726
Multi-industry (1.0%)
General Electric 163,276 4,890,116
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
11 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
United States (cont.)
Retail -- drugstores (0.8%)
Walgreen 109,179 $3,764,492
Retail -- general (2.5%)
Home Depot 177,503 6,246,331
Staples 154,161 3,971,187
Wal-Mart Stores 39,068 2,226,876
Total 12,444,394
Telecom equipment & services (1.0%)
Crown Castle Intl 351,190(b) 4,899,100
Utilities -- electric (1.5%)
Duke Energy 359,305 7,566,963
Total common stocks
(Cost: $454,694,723) $482,110,982
Preferred stock (1.1%)(c)
Issuer Shares Value(a)
Germany
Porsche 8,761 $5,431,720
Total preferred stock
(Cost: $4,439,478)
$5,431,720
Total investments in securities
(Cost: $459,134,201)(d) $487,542,702
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) At April 30, 2004, the cost of securities for federal income tax purposes
was approximately $459,134,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 40,667,000
Unrealized depreciation (12,258,000)
-----------
Net unrealized appreciation $ 28,409,000
------------
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12 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
World Growth Portfolio
April 30, 2004 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $459,134,201) $487,542,702
Foreign currency holdings (identified cost $3,058,801) (Note 1) 3,051,434
Dividends and accrued interest receivable 1,855,682
Receivable for investment securities sold 13,548,344
----------
Total assets 505,998,162
-----------
Liabilities
Bank overdraft 1,400,029
Payable for investment securities purchased 14,384,764
Accrued investment management services fee 10,694
Other accrued expenses 42,327
------
Total liabilities 15,837,814
----------
Net assets $490,160,348
============
See accompanying notes to financial statements.
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13 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Statement of operations
World Growth Portfolio
Six months ended April 30, 2004 (Unaudited)
Investment income
Income:
Dividends $ 4,152,499
Interest 1,207
Fee income from securities lending (Note 3) 58,793
Less foreign taxes withheld (259,404)
--------
Total income 3,953,095
---------
Expenses (Note 2):
Investment management services fee 1,719,410
Compensation of board members 5,933
Custodian fees 73,922
Audit fees 13,500
Other 5,279
-----
Total expenses 1,818,044
Earnings credits on cash balances (Note 2) (312)
----
Total net expenses 1,817,732
---------
Investment income (loss) -- net 2,135,363
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 29,434,854
Foreign currency transactions (31,355)
-------
Net realized gain (loss) on investments 29,403,499
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (2,337,798)
----------
Net gain (loss) on investments and foreign currencies 27,065,701
----------
Net increase (decrease) in net assets resulting from operations $29,201,064
===========
See accompanying notes to financial statements.
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14 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
World Growth Portfolio
April 30, 2004 Oct. 31, 2003
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss) -- net $ 2,135,363 $ 5,324,642
Net realized gain (loss) on investments 29,403,499 (27,567,565)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (2,337,798) 109,515,236
---------- -----------
Net increase (decrease) in net assets resulting from operations 29,201,064 87,272,313
---------- ----------
Proceeds from contributions 952,752 2,304,809
Fair value of withdrawals (54,001,772) (163,329,472)
----------- ------------
Net contributions (withdrawals) from partners (53,049,020) (161,024,663)
----------- ------------
Total increase (decrease) in net assets (23,847,956) (73,752,350)
Net assets at beginning of period 514,008,304 587,760,654
----------- -----------
Net assets at end of period $490,160,348 $ 514,008,304
============ =============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
15 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Notes to Financial Statements
World Growth Portfolio
(Unaudited as to April 30, 2004)
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. Pursuant to procedures adopted by the
Board of Trustees of the portfolios, American Express Financial Corporations
(AEFC) utilizes Fair Value Pricing (FVP). FVP determinations are made in good
faith in accordance with the procedures. If a development or event is so
significant that there is a reasonably high degree of certainty that the effect
of the development or event has actually caused the closing price to no longer
reflect the actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the New York Stock Exchange.
Significant events include material movements in the U.S. securities markets
prior to the opening of foreign markets on the following trading day. FVP
results in an estimated price that reasonably reflects the current market
conditions in order to value the portfolio holdings such that shareholder
transactions receive a fair NAV. 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 GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. As of April 30, 2004, foreign currency holdings consisted of
multiple denominations.
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17 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL 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 to the Lipper Global
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 adjustment
decreased the fee by $305,156 for the six months ended April 30, 2004.
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.
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18 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
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.
During the six months ended April 30, 2004, the Portfolio's custodian fees were
reduced by $312 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 $330,275,049 and $377,629,629, respectively, for the six
months ended April 30, 2004. Realized gains and losses are determined on an
identified cost basis.
Income from securities lending amounted to $58,793 for the six months ended
April 30, 2004. 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, 2004(e) 2003 2002 2001 2000
Ratio of expenses to average daily net assets(a) .70%(c) .74% .72% .62% .73%
Ratio of net investment income (loss) to average daily net assets .83%(c) 1.01% .67% .95% .27%
Portfolio turnover rate (excluding short-term securities) 65% 132% 123% 218% 131%
Total return(b) 5.61%(d) 18.91% (15.58%) (34.42%) 4.95%
(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.
(c) Adjusted to an annual basis.
(d) Not annualized.
(e) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
19 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Equity Fund
April 30, 2004 (Unaudited)
Assets
Investment in Portfolio (Note 1) $ 490,099,683
Capital shares receivable 69,663
------
Total assets 490,169,346
-----------
Liabilities
Capital shares payable 32,204
Accrued distribution fee 6,163
Accrued service fee 13
Accrued transfer agency fee 4,209
Accrued administrative services fee 780
Other accrued expenses 92,321
------
Total liabilities 135,690
-------
Net assets applicable to outstanding capital stock $ 490,033,656
==============
Represented by
Capital stock -- $.01 par value (Note 1) $ 1,022,330
Additional paid-in capital 1,105,278,313
Net operating loss (234,127)
Accumulated net realized gain (loss) (Note 5) (644,559,558)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 28,526,698
----------
Total -- representing net assets applicable to outstanding capital stock $ 490,033,656
==============
Net assets applicable to outstanding shares: Class A $ 350,489,908
Class B $ 134,032,621
Class C $ 980,888
Class Y $ 4,530,239
Net asset value per share of outstanding capital stock: Class A shares 72,048,015 $ 4.86
Class B shares 29,047,608 $ 4.61
Class C shares 213,388 $ 4.60
Class Y shares 923,994 $ 4.90
------- --------------
See accompanying notes to financial statements.
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20 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Statement of operations
AXP Global Equity Fund
Six months ended April 30, 2004 (Unaudited)
Investment income
Income:
Dividends $ 4,152,007
Interest 1,214
Fee income from securities lending 58,786
Less foreign taxes withheld (259,373)
--------
Total income 3,952,634
---------
Expenses (Note 2):
Expenses allocated from Portfolio 1,817,518
Distribution fee
Class A 459,065
Class B 707,913
Class C 4,902
Transfer agency fee 757,372
Incremental transfer agency fee
Class A 58,368
Class B 40,371
Class C 277
Service fee -- Class Y 2,441
Administrative services fees and expenses 147,760
Compensation of board members 5,542
Printing and postage 136,965
Registration fees 35,525
Audit fees 4,500
Other 11,136
------
Total expenses 4,189,655
Earnings credits on cash balances (Note 2) (3,053)
------
Total net expenses 4,186,602
---------
Investment income (loss) -- net (233,968)
--------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 29,431,485
Foreign currency transactions (31,339)
-------
Net realized gain (loss) on investments 29,400,146
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (2,337,448)
----------
Net gain (loss) on investments and foreign currencies 27,062,698
----------
Net increase (decrease) in net assets resulting from operations $26,828,730
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
21 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
AXP Global Equity Fund
April 30, 2004 Oct. 31, 2003
Six months ended Year ended
(Unaudited)
Operations and distributions
Investment income (loss) -- net $ (233,968) $ 183,979
Net realized gain (loss) on investments 29,400,146 (27,567,201)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (2,337,448) 109,506,308
---------- -----------
Net increase (decrease) in net assets resulting from operations 26,828,730 82,123,086
---------- ----------
Distributions to shareholders from:
Net investment income
Class A (95,223) --
Class Y (2,414) --
---------- ----------
Total distributions (97,637) --
---------- ----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 12,262,266 35,389,682
Class B shares 4,151,595 6,481,182
Class C shares 189,323 483,450
Class Y shares 716,527 1,478,386
Reinvestment of distributions at net asset value
Class A shares 93,330 --
Class Y shares 2,414 --
Payments for redemptions
Class A shares (47,035,674) (134,289,060)
Class B shares (Note 2) (18,759,359) (60,198,322)
Class C shares (Note 2) (234,648) (553,226)
Class Y shares (1,911,276) (4,612,498)
---------- ----------
Increase (decrease) in net assets from capital share transactions (50,525,502) (155,820,406)
----------- ------------
Total increase (decrease) in net assets (23,794,409) (73,697,320)
Net assets at beginning of period 513,828,065 587,525,385
----------- -----------
Net assets at end of period $490,033,656 $ 513,828,065
============ =============
Undistributed (excess of distributions over) net investment income $ (234,127) $ 97,478
------------ -------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
22 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Notes to Financial Statements
AXP Global Equity Fund
(Unaudited as to April 30, 2004)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Global Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. AXP Global Series, Inc. has 10 billion authorized
shares of capital stock that can be allocated among the separate series as
designated by the board.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, incremental transfer agency fee and service fee (class
specific expenses) differ among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on investments
are allocated to each class of shares based upon its relative net assets.
Investment in World Growth Portfolio
The Fund invests all of its assets in World Growth Portfolio (the Portfolio), a
series of World Trust (the Trust), an open-end investment company that has the
same objectives as the Fund. The Portfolio invests primarily in equity
securities of companies around the world that are positioned to meet market
needs in a changing world economy.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at the value that is equal to
the Fund's proportionate ownership interest in the Portfolio's net assets. The
percentage of the Portfolio owned by the Fund as of April 30, 2004 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 EQUITY FUND -- 2004 SEMIANNUAL REPORT
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
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.
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.
- --------------------------------------------------------------------------------
24 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
In addition, AECSC is entitled to charge 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 currently not
effective.
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
$209,402 for Class A, $56,457 for Class B and $72 for Class C for the six months
ended April 30, 2004.
During the six months ended April 30, 2004, the Fund's transfer agency fees were
reduced by $3,053 as a result of earnings credits from overnight cash balances.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 2004
Class A Class B Class C Class Y
Sold 2,478,647 888,051 40,582 144,878
Issued for reinvested distributions 19,607 -- -- 504
Redeemed (9,618,436) (4,028,938) (50,053) (391,159)
---------- ---------- ------- --------
Net increase (decrease) (7,120,182) (3,140,887) (9,471) (245,777)
---------- ---------- ------ --------
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)
----------- ----------- ------- --------
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25 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
4. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The Fund must
maintain asset coverage for borrowings of at least 300%. The agreement, which
enables the Fund to participate with other American Express mutual funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the
IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime
Lending Rate. Borrowings are payable within 60 days after such loan is executed.
The Fund also pays a commitment fee equal to its pro rata share of the amount of
the credit facility at a rate of 0.09% per annum. The Fund had no borrowings
outstanding during the six months ended April 30, 2004.
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.
- --------------------------------------------------------------------------------
26 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
6. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Class A
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $4.62 $3.92 $4.69 $ 8.74 $ 9.18
Income from investment operations:
Net investment income (loss) -- .01 -- .02 (.02)
Net gains (losses) (both realized and unrealized) .24 .69 (.77) (2.71) .58
Total from investment operations .24 .70 (.77) (2.69) .56
Less distributions:
Dividends from and in excess of net investment income -- -- -- (.02) (.04)
Distributions from realized gains -- -- -- (1.34) (.96)
Total distributions -- -- -- (1.36) (1.00)
Net asset value, end of period $4.86 $4.62 $3.92 $ 4.69 $ 8.74
Ratios/supplemental data
Net assets, end of period (in millions) $350 $366 $406 $714 $1,356
Ratio of expenses to average daily net assets(b) 1.41%(d) 1.50% 1.39% 1.18% 1.22%
Ratio of net investment income (loss) to average daily net assets .12%(d) .26% .01% .39% (.21%)
Portfolio turnover rate (excluding short-term securities) 65% 132% 123% 218% 131%
Total return(c) 5.22%(e) 17.86% (16.42%) (34.83%) 4.74%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Total return does not reflect payment of a sales charge.
(d) Adjusted to an annual basis.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
27 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $4.40 $3.76 $4.53 $ 8.53 $9.01
Income from investment operations:
Net investment income (loss) -- (.03) (.04) (.02) (.08)
Net gains (losses) (both realized and unrealized) .21 .67 (.73) (2.64) .56
Total from investment operations .21 .64 (.77) (2.66) .48
Less distributions:
Distributions from realized gains -- -- -- (1.34) (.96)
Net asset value, end of period $4.61 $4.40 $3.76 $ 4.53 $8.53
Ratios/supplemental data
Net assets, end of period (in millions) $134 $142 $173 $309 $575
Ratio of expenses to average daily net assets(b) 2.19%(d) 2.27% 2.16% 1.95% 1.98%
Ratio of net investment income (loss) to average daily net assets (.65%)(d) (.52%) (.77%) (.38%) (.95%)
Portfolio turnover rate (excluding short-term securities) 65% 132% 123% 218% 131%
Total return(c) 4.77%(e) 17.02% (17.00%) (35.38%) 3.89%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Total return does not reflect payment of a sales charge.
(d) Adjusted to an annual basis.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
28 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(g) 2003 2002 2001 2000(b)
Net asset value, beginning of period $4.38 $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) .22 .66 (.73) (2.64) (1.02)
Total from investment operations .22 .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 $4.60 $4.38 $3.75 $ 4.52 $ 8.54
Ratios/supplemental data
Net assets, end of period (in millions) $1 $1 $1 $1 $1
Ratio of expenses to average daily net assets(c) 2.19%(e) 2.29% 2.19% 1.95% 1.98%(e)
Ratio of net investment income (loss) to average daily net assets (.64%)(e) (.52%) (.78%) (.42%) (1.15%)(e)
Portfolio turnover rate (excluding short-term securities) 65% 132% 123% 218% 131%
Total return(d) 5.02%(f) 16.80% (17.04%) (35.37%) (10.76%)(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 2000.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Total return does not reflect payment of a sales charge.
(e) Adjusted to an annual basis.
(f) Not annualized.
(g) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
29 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(f) 2003 2002 2001 2000
Net asset value, beginning of period $4.65 $3.94 $4.70 $ 8.76 $9.20
Income from investment operations:
Net investment income (loss) -- .02 .01 .04 (.01)
Net gains (losses) (both realized and unrealized) .25 .69 (.77) (2.73) .58
Total from investment operations .25 .71 (.76) (2.69) .57
Less distributions:
Dividends from and in excess of net investment income -- -- -- (.03) (.05)
Distributions from realized gains -- -- -- (1.34) (.96)
Total distributions -- -- -- (1.37) (1.01)
Net asset value, end of period $4.90 $4.65 $3.94 $ 4.70 $8.76
Ratios/supplemental data
Net assets, end of period (in millions) $5 $5 $8 $12 $20
Ratio of expenses to average daily net assets(b) 1.23%(d) 1.30% 1.21% 1.01% 1.05%
Ratio of net investment income (loss) to average daily net assets .28%(d) .43% .18% .55% (.06%)
Portfolio turnover rate (excluding short-term securities) 65% 132% 123% 218% 131%
Total return(c) 5.42%(e) 18.02% (16.17%) (34.78%) 4.86%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Total return does not reflect payment of a sales charge.
(d) Adjusted to an annual basis.
(e) Not annualized.
(f) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
30 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
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. 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. In addition, after Aug.
1, 2004, information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 will be
available at http://www.sec.gov.
- --------------------------------------------------------------------------------
31 -- AXP GLOBAL EQUITY FUND -- 2004 SEMIANNUAL REPORT
(logo)
AMERICAN
EXPRESS
(R)
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and
is not a broker-dealer.
AXP(R)
Global
Technology
Fund
Semiannual Report
for the Period Ended
April 30, 2004
AXP Global Technology Fund seeks to provide shareholders with long-term capital
growth.
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
Investments in Securities 9
Financial Statements (Portfolio) 12
Notes to Financial Statements (Portfolio) 15
Financial Statements (Fund) 19
Notes to Financial Statements (Fund) 22
Proxy Voting 29
(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.
- --------------------------------------------------------------------------------
2 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Fund Snapshot
AS OF APRIL 30, 2004
PORTFOLIO MANAGERS
Portfolio manager Since Years in industry
Telis Bertsekas 6/02 7
Nina Hughes 6/02 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 $216.3 million
Number of holdings 65
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
STYLE
VALUE BLEND GROWTH
X LARGE
X MEDIUM SIZE
X SMALL
SECTOR COMPOSITION
Percentage of portfolio assets
(pie chart)
Electronics 31.9%
Computer software & services 28.2%
Computer hardware 12.9%
Cellular communications 9.8%
Short-term securities 5.4%
Telecom equipment & services 5.1%
Media 4.2%
Utilities - telephone 1.3%
Retail - general 1.0$
Other 0.2%
TOP TEN HOLDINGS
Percentage of portfolio assets
Cisco Systems (Computer hardware) 4.9%
Dell (Computer hardware) 4.3
Analog Devices (Electronics) 4.1
Intel (Electronics) 4.0
Western Wireless Cl A (Cellular telecommunications) 3.8
EMC (Computer hardware) 3.4
Alamosa Holdings (Cellular telecommunications) 3.0
Yahoo! (Media) 2.9
MAXIMUS (Computer software & services) 2.7
Samsung Electronics (Electronics) 2.5
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. 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 small- and medium-sized companies
may be subject to more abrupt or erratic price movements than stocks of larger
companies.
Fund holdings are subject to change.
- --------------------------------------------------------------------------------
3 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Below, Portfolio Managers Telis Bertsekas and Nina Hughes discuss AXP(R) Global
Technology Fund's positioning and results for the first half of fiscal year
2004.
Q: How did AXP Global Technology Fund perform for the six months ended April
30, 2004?
A: AXP Global Technology Fund's Class A shares gained 0.58% (excluding sales
charge) for the six months ended April 30, 2004. This outpaced the Fund's
benchmark, the unmanaged Goldman Sachs Technology Composite Index, which
fell 3.58% during the period. The Fund also outperformed the Lipper Science
and Technology Funds Index, representing the Fund's peer group, which fell
4.01% over the same period.
Q: What factors most significantly affected performance during the
semiannual period?
A: Corporate earnings reports from many technology companies were strong during
the semiannual period. However, the sector overall lagged the broader equity
market. Following an extended period of outperformance by the technology
sector, market expectations during these six months became progressively
optimistic. We attribute the Fund's strong relative returns primarily to
effective stock selection and, to a lesser degree, to industry allocation.
The Fund also benefited from its multi-cap approach.
(bar chart)
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2004
5.0%
2.5%
(bar 1)
0.0% +0.58%
- -2.5% (bar 2) (bar 3)
-3.58% -4.01%
- -5.0%
(bar 1) AXP Global Technology Fund Class A (excluding sales charge)
(bar 2) The Goldman Sachs Technology Composite Index(1) (unmanaged)
(bar 3) Lipper Science and Technology Funds Index(2)
(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.
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 -- 2004 SEMIANNUAL REPORT
Questions & Answers
(begin callout quote)> We attribute the Fund's strong relative returns primarily
to effective stock selection and, to a lesser degree, to industry
allocation.(end callout quote)
The flexibility to invest in large-cap, mid-cap, and small-cap stocks within
the technology sector enabled us to seek the most attractive individual
investment opportunities wherever they are and to emphasize whatever market
capitalization may be in favor at any given time.
AVERAGE ANNUAL TOTAL RETURNS
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)
as of April 30, 2004
6 months* +0.58% -5.21% +0.00% -4.00% +0.00% -1.00% +0.58% +0.58%
1 year +40.65% +32.57% +40.37% +36.37% +40.37% +40.37% +40.65% +40.65%
5 years -7.29% -8.38% -7.98% -8.02% N/A N/A -7.29% -7.29%
Since inception +2.87% +2.06% +2.11% +2.11% -26.70% -26.70% +2.87% +2.87%
as of March 31, 2004
6 months* +21.29% +14.29% +20.29% +16.29% +21.01% +20.01% +21.94% +21.94%
1 year +69.37% +59.59% +67.68% +63.68% +68.69% +68.69% +70.27% +70.27%
5 years -6.13% -7.24% -6.87% -6.92% N/A N/A -6.03% -6.03%
Since inception +4.07% +3.24% +3.26% +3.26% -25.49% -25.49% +4.14% +4.14%
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.
The performance information shown represents the past performance and is not a
guarantee of future results. The investment return and principal value of your
investment and returns will fluctuate so that your shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower or
higher than the performance information shown. You may obtain performance
information current to the most recent month-end by calling (888) 723-8476 or
visiting www.americanexpress.com/funds. You should consider the investment
objectives, risks, and charges and expenses of the Fund carefully before
investing.
* Not annualized.
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
- --------------------------------------------------------------------------------
5 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
The Fund's biggest contributor to performance for the semiannual period was
a small-cap company known as Blue Coat Systems. Blue Coat Systems is an
Internet security firm that provides a Web security appliance designed to
protect businesses' computer networks against Web-based viruses, unfiltered
communications, and undesirable Web content. Another small-cap winner for
the Fund was iVillage, an online women's network. Following a period where
bankruptcy threatened, iVillage became profitable sooner than most
anticipated under a new management and sales team. We sold the Fund's
positions in Blue Coat Systems and iVillage during the first calendar
quarter of 2004 when they hit the respective price target we had established
for each.
The Fund also benefited from a lower-than-index position in semiconductors,
which performed poorly during the semiannual period. At the same time,
Samsung Electronics, the large-cap Korean-based consumer electronics and
semiconductor leader, was a top performer for the Fund. Samsung Electronics'
share price rose during the period, as it gained market share and continued
to execute well.
The Fund was further helped during the six-month period from a
higher-than-index position in telecommunications services. We sought
companies trading at attractive valuations that were actively adding
subscribers and that may benefit from ongoing industry consolidation.
Indeed, Sprint PCS, which was rolled into Sprint Corp. during the semiannual
period, was a strong performer for the Fund in this industry.
Finally, the Fund benefited from a significantly lower-than-index position
in software giant Microsoft, whose share price suffered during the period
primarily from a widespread reluctance among businesses to sign site-wide
license agreements with the company.
Of course, there were disappointments as well. Detracting from the Fund's
performance during the semiannual period was Photon Dynamics, a
semiconductor firm that provides LCD flat panel testing technology to most
of the major electronics manufacturers, including Panasonic, Samsung, Sony,
and Toshiba. Due to strong demand, the firm built out its infrastructure
somewhat ahead of expectations, which temporarily depressed its share price.
However, we believe Photon Dynamics' fundamental prospects remain strong and
so we continued to hold this stock. Another semiconductor holding that
disappointed was industry leader Intel. Due to an inventory back-up of
notebook computers among the manufacturers, Intel did not ship as much of
its product. This delayed
- --------------------------------------------------------------------------------
6 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
Intel's flow of revenues, and its share price declined. Again, we continue
to hold this stock, as its fundamental prospects, including a line of new
products, remain attractive.
Q: What changes did you make to the portfolio and how is it currently
positioned?
A: In the last months of 2003, we maintained an aggressive stance in the
portfolio. This posture enabled the Fund to take advantage of the strong
performance of many technology stocks during the fourth quarter, as
information technology demand strengthened toward the end of many
businesses' fiscal years. Indeed, while the level of capital spending was
still well below the peak of early 2000, computer and related capital goods
orders surged during the fourth quarter of 2003. We were able to take
profits during the first quarter of 2004 in several names that had
experienced significant gains over the prior months.
In the first months of 2004, we gradually shifted into a more conservative
stance based on the realization that technology sector share prices had
already moved sharply higher. We moved to a more defensive posture, by
expanding our focus on well-established large-cap industry leaders over
small-cap and mid-cap companies. We increased both the number of large-sized
companies in the portfolio and the allocation of assets to large-sized
companies, as valuations became more attractive and growth prospects
improved. We also shifted to a more balanced portfolio from an industry
perspective. For example, we reduced the portfolio's higher-than-index
position in telecommunications industry and increased its allocation to
semiconductors, though we still maintained a lower-than-index position.
Toward the end of the semiannual period, we slightly reduced the Fund's
allocation to the networking industry and increased its position in computer
software. While this repositioning resulted in a portfolio turnover rate of
209% for the semiannual period, it also helped Fund performance relative to
its peer group.
Throughout the period, we continued to seek growth stocks with reasonable
valuations using traditional fundamental analysis. At the end of the
semiannual period, the Fund held greater-than-benchmark positions in
computer hardware and computer software, neutral positions in
telecommunications services & equipment and networking, and
less-than-benchmark positions in semiconductors and computer services. We
continue to believe that the flexibility to move between the technology
- --------------------------------------------------------------------------------
7 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Questions & Answers
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 see several positive factors for the technology sector ahead. First
quarter demand for information technology is typically down following the
close of many businesses' fiscal years at the end of the calendar year.
However, this historically leads to a seasonal uptick in corporate demand
during the second quarter. Corporate earnings reports for the first quarter
of 2004 were generally strong in the sector, and we believe market
expectations and earnings should be more in line for the remainder of the
year than they were over the last several months. Capital spending has been
on an upward trend. There remain several new exciting products on the
horizon. We intend to continue to look for indicators that the global
economy is continuing to improve, keeping a particularly close watch on
developments in Asia and on enterprise and consumer spending trends. All of
that said, we believe that effective stock picking will be more important
than the overall economy going forward. 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.
- --------------------------------------------------------------------------------
8 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Investments in Securities
World Technologies Portfolio
April 30, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (98.3%)
Issuer Shares Value(a)
Cellular telecommunications (10.2%)
Alamosa Holdings 927,300(b) $6,676,560
Nextel Communications Cl A 100,000(b) 2,386,000
NTT DoCoMo ADR 74,700(c) 1,501,470
Vodafone Group ADR 125,000(c) 3,067,500
Western Wireless Cl A 406,000(b) 8,452,920
Total 22,084,450
Computer hardware (13.4%)
Cisco Systems 530,000(b) 11,061,100
Dell 282,000(b) 9,788,220
EMC 689,000(b) 7,689,240
Exabyte 675,400(b) 479,534
Total 29,018,094
Computer software & services (29.4%)
Activision 240,000(b) 3,614,400
Actuate 582,000(b) 1,903,140
Affiliated Computer Services Cl A 91,700(b) 4,447,450
Aspen Technology 571,000(b) 3,711,500
Check Point Software Technologies 185,000(b,c) 4,334,550
E.piphany 538,000(b) 2,356,440
First Data 50,000 2,269,500
Juniper Networks 238,000(b) 5,207,440
Macromedia 188,000(b) 3,872,800
MAXIMUS 176,000(b) 6,160,000
Microsoft 91,000 2,363,270
MRO Software 110,000(b) 1,466,300
OPNET Technologies 100,000(b) 1,458,000
Oracle 350,000(b) 3,927,000
Paychex 60,000 2,236,800
PeopleSoft 160,000(b) 2,700,800
Quest Software 290,000(b) 3,262,500
SAP ADR 85,000(c) 3,168,800
SeaChange Intl 249,000(b) 2,893,380
Take-Two Interactive Software 75,000(b) 2,166,750
Total 63,520,820
Electronics (33.3%)
Agere Systems Cl A 2,479,000(b) 5,602,540
Analog Devices 216,300 9,214,381
Cypress Semiconductor 240,000(b) 3,352,800
FormFactor 136,000(b) 2,392,240
Integrated Alarm Services Group 114,000(b) 1,105,800
Integrated Silicon Solutions 274,000(b) 3,762,020
Intel 353,000 9,082,690
LG Electronics 42,000(c) 2,549,361
Natl Semiconductor 79,000(b) 3,222,410
OmniVision Technologies 160,000(b) 3,568,320
Open Solutions 110,000(b) 2,720,300
Photon Dynamics 169,000(b) 5,239,000
PLX Technology 163,000(b) 2,115,740
Samsung Electronics 12,000(c) 5,698,209
Semtech 165,000(b) 3,468,300
SpatiaLight 268,925(b) 1,089,146
Taiwan Semiconductor Mfg ADR 543,000(c) 5,174,790
United Microelectronics ADR 471,000(c) 2,449,200
Total 71,807,247
Media (4.3%)
iVillage 450,000(b) 2,880,000
Yahoo! 129,000(b) 6,509,340
Total 9,389,340
Retail -- general (1.1%)
Circuit City Stores 200,000 2,336,000
Telecom equipment & services (5.3%)
Motorola 308,000 5,621,000
Nextel Partners Cl A 170,000(b) 2,269,500
Research in Motion 40,800(b,c) 3,539,808
Total 11,430,308
Utilities -- telephone (1.3%)
Sprint (FON Group) 163,000 2,916,070
Total common stocks
(Cost: $226,403,824) $212,502,329
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
9 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Preferred stocks & other (--%)(b)
Issuer Shares Value(a)
Marketsoft
Cv 225,410(f) $11,001
Paxonet Communications
Series C 106,383(d,f) --
Portera
Series G 425,374(d,f) --
UBI Soft Entertainment
Warrants 5,712 27,371
Sun Hill Software 25,751(d,f) --
Total preferred stocks & other
(Cost: $3,144,679) $38,372
Option purchased (0.2%)
Issuer Contracts Exercise Expiration Value(a)
price date
Call
Phil
Semiconductor 385 $450 May 2004 $435,050
Total option purchased
(Cost: $929,654) $435,050
Short-term securities (5.6%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (4.7%)
Federal Home Loan Bank Disc Nt
05-28-04 1.00% $800,000 $799,394
Federal Home Loan Mtge Corp Disc Nt
06-01-04 1.00 1,600,000 1,598,615
Federal Natl Mtge Assn Disc Nts
05-03-04 1.02 2,800,000 2,799,773
06-30-04 1.03 5,000,000 4,992,185
Total 10,189,967
Commercial paper (0.9%)
SPARC LLC
05-10-04 1.06 2,000,000(e) 1,999,411
Total short-term securities
(Cost: $12,188,791) $12,189,378
Total investments in securities
(Cost: $242,666,948)(g) $225,165,129
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
10 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. As of April 30, 2004,
the value of foreign securities represented 14.6% of net assets.
(d) Negligible market value.
(e) 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. These securities may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. As of April 30, 2004, the value of these securities
amounted to $1,999,411 or 0.9% of net assets.
(f) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at April 30, 2004, is as follows:
Security Acquisition Cost
dates
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 07-21-00 300,001
(g) At April 30, 2004, the cost of securities for federal income tax purposes
was approximately $242,667,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 6,434,000
Unrealized depreciation (23,936,000)
-----------
Net unrealized depreciation $(17,502,000)
------------
- --------------------------------------------------------------------------------
11 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
World Technologies Portfolio
April 30, 2004 (Unaudited)
Assets
Investments in securities, at value (Note 1)*
(identified cost $242,666,948) $225,165,129
Cash in bank on demand deposit 68,239
Dividends and accrued interest receivable 7,200
Receivable for investment securities sold 24,161,814
----------
Total assets 249,402,382
-----------
Liabilities
Payable for investment securities purchased 20,896,910
Payable upon return of securities loaned (Note 4) 12,189,200
Accrued investment management services fee 4,353
Other accrued expenses 32,201
------
Total liabilities 33,122,664
----------
Net assets $216,279,718
============
*Including securities on loan, at value (Note 4) $ 10,535,360
------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
12 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Statement of operations
World Technologies Portfolio
Six months ended April 30, 2004 (Unaudited)
Investment income
Income:
Dividends $ 190,187
Interest 27,951
Fee income from securities lending (Note 4) 44,289
Less foreign taxes withheld (12,002)
-------
Total income 250,425
-------
Expenses (Note 2):
Investment management services fee 944,936
Compensation of board members 5,542
Custodian fees 30,832
Audit fees 10,500
Other 344
---
Total expenses 992,154
Earnings credits on cash balances (Note 2) (244)
----
Total net expenses 991,910
-------
Investment income (loss) -- net (741,485)
--------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 34,441,956
Foreign currency transactions (16,848)
-------
Net realized gain (loss) on investments 34,425,108
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (31,940,470)
-----------
Net gain (loss) on investments and foreign currencies 2,484,638
---------
Net increase (decrease) in net assets resulting from operations $ 1,743,153
============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
13 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
World Technologies Portfolio
April 30, 2004 Oct. 31, 2003
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss) -- net $ (741,485) $ (571,018)
Net realized gain (loss) on investments 34,425,108 64,893,772
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (31,940,470) 18,832,116
----------- ----------
Net increase (decrease) in net assets resulting from operations 1,743,153 83,154,870
--------- ----------
Proceeds from contributions 8,613,185 22,782,493
Fair value of withdrawals (8,048,822) (12,875,419)
---------- -----------
Net contributions (withdrawals) from partners 564,363 9,907,074
------- ---------
Total increase (decrease) in net assets 2,307,516 93,061,944
Net assets at beginning of period 213,972,202 120,910,258
----------- -----------
Net assets at end of period $216,279,718 $213,972,202
============ ============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Notes to Financial Statements
World Technologies Portfolio
(Unaudited as to April 30, 2004)
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. Pursuant to procedures adopted by the
Board of Trustees of the portfolios, American Express Financial Corporation
(AEFC) utilizes Fair Value Pricing (FVP). FVP determinations are made in good
faith in accordance with the procedures. If a development or event is so
significant that there is a reasonably high degree of certainty that the effect
of the development or event has actually caused the closing price to no longer
reflect the actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the New York Stock Exchange.
Significant events include material movements in the U.S. securities markets
prior to the opening of foreign markets on the following trading day. FVP
results in an estimated price that reasonably reflects the current market
conditions in order to value the portfolio holdings such that shareholder
transactions receive a fair NAV. Short-term securities maturing in more than 60
days from the valuation date are valued at the market price or approximate
market value based on current interest rates; those maturing in 60 days or less
are valued at amortized cost.
- --------------------------------------------------------------------------------
15 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
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.
- --------------------------------------------------------------------------------
16 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL 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.
Illiquid securities
As of April 30, 2004, investments in securities included issues that are
illiquid which the Portfolio currently limits to 10% of net assets, at market
value, at the time of purchase. The aggregate value of such securities as of
April 30, 2004 was $11,001 representing 0.005% 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. Assets are liquid if they can be sold or disposed of in the ordinary
course of business within seven days at approximately the value at which the
asset is valued by the Portfolio.
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. 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 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
adjustment increased the fee by $105,649 for the six months ended April 30,
2004.
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.
- --------------------------------------------------------------------------------
17 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL 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.
During the six months ended April 30, 2004, the Portfolio's custodian fees were
reduced by $244 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 $466,057,361 and $460,852,056, respectively, for the six
months ended April 30, 2004. Realized gains and losses are determined on an
identified cost basis.
Brokerage clearing fees paid to brokers affiliated with AEFC were $48,870 for
the six months ended April 30, 2004.
4. LENDING OF PORTFOLIO SECURITIES
As of April 30, 2004, securities valued at $10,535,360 were on loan to brokers.
For collateral, the Portfolio received $12,189,200 in cash. Cash collateral
received is invested in short-term securities, which are included in the
short-term section of the "Investments in securities." Income from securities
lending amounted to $44,289 for the six months ended April 30, 2004. 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, 2004(e) 2003 2002 2001 2000
Ratio of expenses to average daily net assets(a) .85%(c) .84% .77% .75% .74%
Ratio of net investment income (loss) to average daily net assets (.63%)(c) (.37%) (.51%) (.11%) .10%
Portfolio turnover rate (excluding short-term securities) 209% 546% 391% 233% 116%
Total return(b) .78%(d) 68.97% (34.78%) (69.21%) 66.70%
(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.
(c) Adjusted to an annual basis.
(d) Not annualized.
(e) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
18 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Global Technology Fund
April 30, 2004 (Unaudited)
Assets
Investment in Portfolio (Note 1) $ 216,250,548
Capital shares receivable 25,117
------
Total assets 216,275,665
-----------
Liabilities
Capital shares payable 83,300
Accrued distribution fee 2,938
Accrued service fee 1
Accrued transfer agency fee 2,828
Accrued administrative services fee 362
Other accrued expenses 47,842
------
Total liabilities 137,271
-------
Net assets applicable to outstanding capital stock $ 216,138,394
=============
Represented by
Capital stock -- $.01 par value (Note 1) $ 1,301,439
Additional paid-in capital 626,276,124
Net operating loss (1,894,817)
Accumulated net realized gain (loss) (Note 5) (392,044,926)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (17,499,426)
-----------
Total -- representing net assets applicable to outstanding capital stock $ 216,138,394
=============
Net assets applicable to outstanding shares: Class A $ 147,476,545
Class B $ 63,995,543
Class C $ 4,291,309
Class Y $ 374,997
Net asset value per share of outstanding capital stock: Class A shares 85,202,497 $ 1.73
Class B shares 41,919,593 $ 1.53
Class C shares 2,805,231 $ 1.53
Class Y shares 216,542 $ 1.73
------- -------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
19 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Statement of operations
AXP Global Technology Fund
Six months ended April 30, 2004 (Unaudited)
Investment income
Income:
Dividends $ 190,161
Interest 27,942
Fee income from securities lending 44,289
Less foreign taxes withheld (12,000)
-------
Total income 250,392
-------
Expenses (Note 2):
Expenses allocated from Portfolio 991,779
Distribution fee
Class A 198,156
Class B 348,141
Class C 22,777
Transfer agency fee 464,985
Incremental transfer agency fee
Class A 34,651
Class B 26,713
Class C 706
Service fee -- Class Y 169
Administrative services fees and expenses 68,879
Compensation of board members 5,150
Printing and postage 74,962
Registration fees 49,682
Audit fees 3,500
Other 4,756
-----
Total expenses 2,295,006
Earnings credits on cash balances (Note 2) (1,099)
------
Total net expenses 2,293,907
---------
Investment income (loss) -- net (2,043,515)
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 34,437,306
Foreign currency transactions (16,846)
-------
Net realized gain (loss) on investments 34,420,460
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (31,936,167)
-----------
Net gain (loss) on investments and foreign currencies 2,484,293
---------
Net increase (decrease) in net assets resulting from operations $ 440,778
============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
20 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Statements of changes in net assets
AXP Global Technology Fund
April 30, 2004 Oct. 31, 2003
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss) -- net $ (2,043,515) $ (2,685,295)
Net realized gain (loss) on investments 34,420,460 64,884,382
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (31,936,167) 18,829,617
----------- ----------
Net increase (decrease) in net assets resulting from operations 440,778 81,028,704
------- ----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 22,226,159 40,338,279
Class B shares 6,268,965 11,875,873
Class C shares 925,820 1,324,959
Class Y shares 284,964 138,070
Payments for redemptions
Class A shares (20,536,553) (30,612,393)
Class B shares (Note 2) (6,716,673) (10,091,766)
Class C shares (Note 2) (619,671) (704,810)
Class Y shares (132,536) (29,506)
-------- -------
Increase (decrease) in net assets from capital share transactions 1,700,475 12,238,706
--------- ----------
Total increase (decrease) in net assets 2,141,253 93,267,410
Net assets at beginning of period 213,997,141 120,729,731
----------- -----------
Net assets at end of period $216,138,394 $213,997,141
============ ============
Undistributed (excess of distributions over) net investment income $ (1,894,817) $ 148,698
------------ ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
21 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Notes to Financial Statements
AXP Global Technology Fund
(Unaudited as to April 30, 2004)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AXP Global Technology Fund (a series of AXP Global Series, Inc.) is registered
under the Investment Company Act of 1940 (as amended) as a non-diversified,
open-end management investment company. AXP Global Series, Inc. has 10 billion
authorized shares of capital stock that can be allocated among the separate
series as designated by the board.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, incremental transfer agency fee and service fee (class
specific expenses) differ among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on investments
are allocated to each class of shares based upon its relative net assets.
Investment in World Technologies Portfolio
The Fund invests all of its assets in World Technologies Portfolio (the
Portfolio), a series of World Trust (the Trust), an open-end investment company
that has the same objectives as the Fund. The Portfolio invests in equity
securities of companies in the information technology industry throughout the
world.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at the value that is equal to
the Fund's proportionate ownership interest in the Portfolio's net assets. The
percentage of the Portfolio owned by the Fund as of April 30, 2004 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.
- --------------------------------------------------------------------------------
22 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
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.
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.
- --------------------------------------------------------------------------------
23 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
In addition, AECSC is entitled to charge 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 currently not
effective.
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
$330,199 for Class A, $55,685 for Class B and $577 for Class C for the six
months ended April 30, 2004.
During the six months ended April 30, 2004, the Fund's transfer agency fees were
reduced by $1,099 as a result of earnings credits from overnight cash balances.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 2004
Class A Class B Class C Class Y
Sold 11,906,365 3,801,068 562,762 155,274
Issued for reinvested distributions -- -- -- --
Redeemed (11,039,759) (4,063,789) (373,297) (71,658)
----------- ---------- -------- -------
Net increase (decrease) 866,606 (262,721) 189,465 83,616
------- -------- ------- ------
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
--------- --------- ------- ------
4. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The Fund must
maintain asset coverage for borrowings of at least 300%. The agreement, which
enables the Fund to participate with other American Express mutual funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the
IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime
Lending Rate. Borrowings are payable within 60 days after such loan is executed.
The Fund also pays a commitment fee equal to its pro rata share of the amount of
the credit facility at a rate of 0.09% per annum. The Fund had no borrowings
outstanding during the six months ended April 30, 2004.
- --------------------------------------------------------------------------------
24 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL 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, 2004(h) 2003 2002 2001 2000
Net asset value, beginning of period $1.72 $1.03 $1.60 $ 5.26 $ 11.27
Income from investment operations:
Net investment income (loss) (.01) (.02) (.03) (.02) (.01)
Net gains (losses) (both realized and unrealized) .02 .71 (.54) (3.64) 7.05
Total from investment operations .01 .69 (.57) (3.66) 7.04
Less distributions:
Distributions from realized gains -- -- -- -- (1.29)
Tax return of capital -- -- -- -- (11.76)(e)
Total distributions -- -- -- -- (13.05)
Net asset value, end of period $1.73 $1.72 $1.03 $ 1.60 $ 5.26
Ratios/supplemental data
Net assets, end of period (in thousands) $147,477 $145,382 $80,831 $146,139 $319,164
Ratio of expenses to average daily net assets(b) 1.72%(c) 1.94% 1.91% 1.63% 1.24%(d)
Ratio of net investment income (loss) to average daily net assets (1.50%)(c) (1.47%) (1.65%) (.99%) (.38%)
Portfolio turnover rate (excluding short-term securities) 209% 546% 391% 233% 116%
Total return(f) .58%(g) 66.99% (35.62%) (69.58%) 66.58%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratio of expenses for Class A would have been 1.45% for the
period ended Oct. 31, 2000.
(e) A distibution payable to a single corporate shareholder.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
25 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(h) 2003 2002 2001 2000
Net asset value, beginning of period $1.53 $ .92 $1.44 $ 4.77 $ 11.02
Income from investment operations:
Net investment income (loss) (.02) (.03) (.04) (.04) (.04)
Net gains (losses) (both realized and unrealized) .02 .64 (.48) (3.29) 6.84
Total from investment operations -- .61 (.52) (3.33) 6.80
Less distributions:
Distributions from realized gains -- -- -- -- (1.29)
Tax return of capital -- -- -- -- (11.76)(e)
Total distributions -- -- -- -- (13.05)
Net asset value, end of period $1.53 $1.53 $ .92 $ 1.44 $ 4.77
Ratios/supplemental data
Net assets, end of period (in thousands) $63,996 $64,387 $37,877 $67,425 $138,545
Ratio of expenses to average daily net assets(b) 2.50%(c) 2.75% 2.71% 2.42% 2.01%(d)
Ratio of net investment income (loss) to average daily net assets (2.28%)(c) (2.27%) (2.45%) (1.78%) (1.16%)
Portfolio turnover rate (excluding short-term securities) 209% 546% 391% 233% 116%
Total return(f) --%(g) 66.30% (36.11%) (69.81%) 65.25%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratio of expenses for Class B would have been 2.26% for the
period ended Oct. 31, 2000.
(e) A distibution payable to a single corporate shareholder.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
26 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(h) 2003 2002 2001 2000(b)
Net asset value, beginning of period $1.53 $ .92 $1.44 $ 4.77 $5.05
Income from investment operations:
Net investment income (loss) (.02) (.03) (.04) (.04) (.01)
Net gains (losses) (both realized and unrealized) .02 .64 (.48) (3.29) (.27)
Total from investment operations -- .61 (.52) (3.33) (.28)
Net asset value, end of period $1.53 $1.53 $ .92 $ 1.44 $4.77
Ratios/supplemental data
Net assets, end of period (in thousands) $4,291 $4,000 $1,964 $4,069 $3,298
Ratio of expenses to average daily net assets(c) 2.45%(d) 2.72% 2.69% 2.42% 2.01%(d),(e)
Ratio of net investment income (loss) to average daily net assets (2.24%)(d) (2.26%) (2.39%) (1.84%) (1.17%)(d)
Portfolio turnover rate (excluding short-term securities) 209% 546% 391% 233% 116%
Total return(f) --%(g) 66.30% (36.11%) (69.81%) (5.54%)(g)
(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 ratio of expenses for Class C would have been 2.26% for the
period ended Oct. 31, 2000.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2004 (Unaudited).
- --------------------------------------------------------------------------------
27 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2004(h) 2003 2002 2001 2000
Net asset value, beginning of period $1.72 $1.03 $1.60 $ 5.25 $ 11.27
Income from investment operations:
Net investment income (loss) (.01) (.02) (.03) (.02) --
Net gains (losses) (both realized and unrealized) .02 .71 (.54) (3.63) 7.03
Total from investment operations .01 .69 (.57) (3.65) 7.03
Less distributions:
Distributions from realized gains -- -- -- -- (1.29)
Tax return of capital -- -- -- -- (11.76)(e)
Total distributions -- -- -- -- (13.05)
Net asset value, end of period $1.73 $1.72 $1.03 $ 1.60 $ 5.25
Ratios/supplemental data
Net assets, end of period (in thousands) $375 $229 $58 $57 $88
Ratio of expenses to average daily net assets(b) 1.53%(c) 1.69% 1.72% 1.49% .94%(d)
Ratio of net investment income (loss) to average daily net assets (1.31%)(c) (1.25%) (1.61%) (.89%) (.80%)
Portfolio turnover rate (excluding short-term securities) 209% 546% 391% 233% 116%
Total return(f) .58%(g) 66.99% (35.63%) (69.52%) 66.27%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratio of expenses for Class Y would have been 1.19% for the
period ended Oct. 31, 2000.
(e) A distibution payable to a single corporate shareholder.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2004 (Unaudited).
Prior to April 19, 2000, the Fund had not engaged in a broad public offering of
its shares, or been subject to redemption requests. It had sold shares only to a
single investor. One factor impacting the Fund's 2000 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.
- --------------------------------------------------------------------------------
28 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
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. 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. In addition, after Aug.
1, 2004, information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 will be
available at http://www.sec.gov.
- --------------------------------------------------------------------------------
29 --- AXP GLOBAL TECHNOLOGY FUND -- 2004 SEMIANNUAL REPORT
(logo)
AMERICAN
EXPRESS
(R)
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and
is not a broker-dealer.
Item 2. Code of Ethics. Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert. Not applicable for semi-annual
reports.
Item 4. Principal Accountant Fees and Services. Not applicable for
semi-annual reports.
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. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 9. Submission of matters to a vote of security holders. Not applicable.
Item 10. 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 11. Exhibits.
(a)(1) Not applicable for semi-annual reports.
(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.
(a)(3) Not applicable.
(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 July 1, 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 July 1, 2004
By /s/ Jeffrey P. Fox
------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date July 1, 2004