-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SHAkKd1KaRLDI5WrStW+r1mBxvLt7NmuLHcHvKUc+o8QubAnFseuZWeJYm7s9+AF ZYwgvrOyhS6frnbTtyA6Ag== 0000820027-01-500264.txt : 20010614 0000820027-01-500264.hdr.sgml : 20010614 ACCESSION NUMBER: 0000820027-01-500264 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010430 FILED AS OF DATE: 20010613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP GLOBAL SERIES INC CENTRAL INDEX KEY: 0000842918 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05696 FILM NUMBER: 1659647 BUSINESS ADDRESS: STREET 1: IDS TOWER 10 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126712772 FORMER COMPANY: FORMER CONFORMED NAME: IDS GLOBAL SERIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: IDS GLOBAL BOND FUND INC DATE OF NAME CHANGE: 19901011 N-30D 1 s6346f.txt AXP GLOBAL BALANCED FUND AXP(R) Global Balanced Fund 2001 SEMIANNUAL REPORT American Express(R) Funds (icon of) compass AXP Global Balanced Fund seeks to provide shareholders with a balance of growth of capital and current income. An International Blend AXP Global Balanced Fund offers a logical first step for investors who want to have some exposure to foreign markets, but also want to avoid the greater volatility of a portfolio consisting of only foreign stocks. CONTENTS From the Chairman 3 From the Portfolio Managers 3 Fund Facts 5 The 10 Largest Holdings 6 Financial Statements 7 Notes to Financial Statements 10 Investments in Securities 18 - -------------------------------------------------------------------------------- 2 AXP GLOBAL BALANCED FUND (picture of) Arne H. Carlson Arne H. Carlson Chairman of the board From the Chairman The financial markets have always had their ups and downs, but in recent months volatility has become more frequent and intense. While no one can say with certainty what the markets will do, American Express Financial Corporation, the Fund's investment manager, expects economic growth to continue, accompanied by a modest rise in long-term interest rates. But no matter what transpires, this is a great time to take a close look at your goals and investments. We encourage you to: o Consult a professional investment advisor who can help you cut through mountains of data. o Set financial goals that extend beyond those achievable through the retirement plan of your employer. o Learn as much as you can about your current investments. The portfolio managers' letter that follows provides a review of the Fund's investment strategies and performance. The semiannual report contains other valuable information as well. The Fund's prospectus describes its investment objectives and how it intends to achieve those objectives. As experienced investors know, information is vital to making good investment decisions. So, take a moment and decide again whether the Fund's investment objectives and management style fit with your other investments to help you reach your financial goals. And make it a practice on a regular basis to assess your investment options. On behalf of the Board, Arne H. Carlson (picture of) Elizabeth Tran Elizabeth Tran Portfolio manager From the Portfolio Managers AXP Global Balanced Fund experienced a loss during the first half of the fiscal year, as concerns about a slowdown in global economic growth and weakening corporate profits depressed stocks in the major markets of the U.S. and Europe. For the six months -- November 2000 through April 2001 -- the Fund's Class A shares lost 9.74% (excluding the sales charge). When the period began, the markets were in the middle of a downturn that didn't level off until late December. Some relief arrived early in the new year, as the U.S. Federal Reserve surprised investors by cutting short-term interest rates. That sparked a sharp - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 3 (picture of) Mark Fawcett Mark Fawcett Portfolio manager (picture of) Michael Ng Michael Ng Portfolio manager rally in January. But more bad news on the economic and profit fronts quickly drove the markets back down in February and March. The period ended on an encouraging note, though, as the likelihood of an improving investment environment in the second half of 2001 led to a strong rebound by stocks in April. Given that we expected that the slowdown in the U.S. economy would be followed by a rebound in the second half of 2001, we emphasized stocks that would benefit from an economic pick-up and lower interest rates. These included advertising, retailing and banking stocks. In the technology sector, the Fund's largest area of investment, we shifted away from stocks of high-growth companies and toward those whose profits would be enhanced by an improving economy. BONDS BENEFIT Things were considerably better on the bond side. Thanks to the weak economic news and non-threatening inflation data, longer-term interest rates declined early in the period, boosting bond prices in the process. U.S. government bonds enjoyed particularly good gains. As the period progressed and investors became less concerned about the possibility of economic recession in the U.S., longer-term interest rates crept up, causing some erosion in government bond prices. Overall, we emphasized investments in the U.S. over Europe. Looking more closely at the portfolio, the largest component was U.S. stocks, followed by foreign stocks, foreign bonds and U.S. bonds. On a geographical basis, about half of the investments were in the U.S., with the bulk of the rest in Europe, mainly Germany, United Kingdom, France and Italy. We kept only a small exposure to Japan, where the investment climate remained largely uninviting. As for the rest of the fiscal year, we're taking a more aggressive approach by increasing stock holdings, particularly among large-capitalization technology and industrial stocks, which we expect to benefit from an improving global economy. On the bond side, we're adding to investments in Europe, which we believe offers the best opportunity for price appreciation in the months ahead. Elizabeth Tran Mark Fawcett Michael Ng - -------------------------------------------------------------------------------- 4 AXP GLOBAL BALANCED FUND Fund Facts Class A -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $5.16 Oct. 31, 2000 $6.27 Decrease $1.11 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $0.24 From long-term capital gains $0.29 Total distributions $0.53 Total return* -9.74% Class B -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $5.10 Oct. 31, 2000 $6.21 Decrease $1.11 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $0.22 From long-term capital gains $0.29 Total distributions $0.51 Total return* -10.10% Class C -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $5.09 Oct. 31, 2000 $6.21 Decrease $1.12 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $0.24 From long-term capital gains $0.29 Total distributions $0.53 Total return* -10.07% Class Y -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $5.18 Oct. 31, 2000 $6.30 Decrease $1.12 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $0.25 From long-term capital gains $0.29 Total distributions $0.54 Total return* -9.74% * The total return is a hypothetical investment in the Fund with all distributions reinvested. Returns do not include sales load. The prospectus discusses the effect of sales charges, if any, on the various classes. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 5 The 10 Largest Holdings Percent Value (of net assets) (as of April 30, 2001) Standard & Poor's Depositary Receipts (United States) 2.60% $4,196,976 Tyco Intl (Bermuda) 2.19 3,538,432 U.S. Treasury (United States) 7.50% 2016 2.18 3,510,479 Citigroup (United States) 2.03 3,271,570 Home Depot (United States) 1.85 2,981,430 Wal-Mart Stores (United States) 1.82 2,939,867 Pfizer (United States) 1.78 2,869,491 U.S. Treasury (United States) 9.25% 2016 1.66 2,683,739 American Intl Group (United States) 1.65 2,663,449 Microsoft (United States) 1.61 2,596,383 Note: Certain foreign investment risks include: changes in currency exchange rates, adverse political or economic order, and lack of similar regulatory requirements followed by U.S. companies. For further detail about these holdings, please refer to the section entitled "Investments in Securities." (icon of) pie chart The 10 holdings listed here make up 19.37% of net assets - -------------------------------------------------------------------------------- 6 AXP GLOBAL BALANCED FUND Financial Statements Statement of assets and liabilities AXP Global Balanced Fund
April 30, 2001 (Unaudited) Assets Investments in securities, at value (Note 1) (identified cost $166,288,980) $161,856,153 Cash in bank on demand deposit 271,525 Dividends and accrued interest receivable 1,272,697 Receivable for investment securities sold 1,575,794 Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 5) 943 --- Total assets 164,977,112 ----------- Liabilities Payable for investment securities purchased 3,681,617 Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 5) 2,609 Accrued investment management services fee 10,433 Accrued distribution fee 7,366 Accrued service fee 15 Accrued transfer agency fee 227 Accrued administrative services fee 792 Other accrued expenses 47,478 ------ Total liabilities 3,750,537 --------- Net assets applicable to outstanding capital stock $161,226,575 ============ Represented by Capital stock -- $.01 par value (Note 1) $ 314,026 Additional paid-in capital 181,571,310 Undistributed net investment income 525,602 Accumulated net realized gain (loss) (16,724,072) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (Note 5) (4,460,291) ---------- Total -- representing net assets applicable to outstanding capital stock $161,226,575 ============ Net assets applicable to outstanding shares: Class A $ 92,738,777 Class B $ 66,314,944 Class C $ 394,282 Class Y $ 1,778,572 Net asset value per share of outstanding capital stock: Class A shares 17,975,146 $ 5.16 Class B shares 13,006,730 $ 5.10 Class C shares 77,425 $ 5.09 Class Y shares 343,293 $ 5.18 ------- ------------ See accompanying notes to financial statements. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 7
Statement of operations AXP Global Balanced Fund
Six months ended April 30, 2001 (Unaudited) Investment income Income: Dividends $ 462,227 Interest 1,818,190 Less foreign taxes withheld (35,545) ------- Total income 2,244,872 --------- Expenses (Note 2): Investment management services fee 653,032 Distribution fee Class A 123,585 Class B 351,349 Class C 1,281 Transfer agency fee 157,307 Incremental transfer agency fee Class A 10,167 Class B 11,302 Class C 58 Service fee -- Class Y 707 Administrative services fees and expenses 51,340 Compensation of board members 4,075 Custodian fees 37,517 Printing and postage 25,351 Registration fees 35,365 Audit fees 8,750 Other 2,927 ----- Total expenses 1,474,113 Earnings credits on cash balances (Note 2) (9,378) ------ Total net expenses 1,464,735 --------- Investment income (loss) -- net 780,137 ------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) (16,057,023) Foreign currency transactions (21,587) ------- Net realized gain (loss) on investments (16,078,610) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (2,916,551) ---------- Net gain (loss) on investments and foreign currencies (18,995,161) ----------- Net increase (decrease) in net assets resulting from operations $(18,215,024) ============ See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 8 AXP GLOBAL BALANCED FUND
Statements of changes in net assets AXP Global Balanced Fund
April 30, 2001 Oct. 31, 2000 Six months ended Year ended (Unaudited) Operations and distributions Investment income (loss) -- net $ 780,137 $ 1,845,012 Net realized gain (loss) on investments (16,078,610) 12,652,945 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (2,916,551) (11,441,182) ---------- ----------- Net increase (decrease) in net assets resulting from operations (18,215,024) 3,056,775 ----------- --------- Distributions to shareholders from: Net investment income Class A (273,943) (460,788) Class B -- (188,858) Class C (475) -- Class Y (5,698) (7) Net realized gain Class A (8,653,890) (7,922,899) Class B (6,251,273) (5,406,811) Class C (14,106) -- Class Y (109,149) (108) -------- ---- Total distributions (15,308,534) (13,979,471) ----------- ----------- Capital share transactions (Note 4) Proceeds from sales Class A shares (Note 2) 14,115,967 46,893,342 Class B shares 5,886,196 23,477,082 Class C shares 302,189 131,377 Class Y shares 1,087,204 1,774,227 Reinvestment of distributions at net asset value Class A shares 8,710,934 7,831,573 Class B shares 6,145,934 5,514,191 Class C shares 14,581 -- Class Y shares 114,846 115 Payments for redemptions Class A shares (20,592,546) (38,753,765) Class B shares (Note 2) (8,823,352) (14,908,490) Class C shares (Note 2) (10,274) -- Class Y shares (284,480) (606,853) -------- -------- Increase (decrease) in net assets from capital share transactions 6,667,199 31,352,799 --------- ---------- Total increase (decrease) in net assets (26,856,359) 20,430,103 Net assets at beginning of period 188,082,934 167,652,831 ----------- ----------- Net assets at end of period $161,226,575 $188,082,934 ============ ============ Undistributed net investment income $ 525,602 $ 25,616 ------------ ------------ See accompanying notes to financial statements. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 9
Notes to Financial Statements AXP Global Balanced Fund (Unaudited as to April 30, 2001) 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 companies 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. Class C shares of the Fund were offered to the public on June 26, 2000. Prior to this date, American Express Financial Corporation (AEFC) purchased 300 shares of capital stock at $6.67 per share, which represented the initial capital in Class C. The Fund offers Class A, Class B, Class C and Class Y shares. o Class A shares are sold with a front-end sales charge. o Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth calendar year of ownership. o Class C shares may be subject to a CDSC. o Class Y shares have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend and liquidation rights. The distribution fee, incremental transfer agency fee and service fee (class specific expenses) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: Use of estimates Preparing financial statements that conform to accounting principles generally accepted in the United States of America requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. Valuation of securities All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Option transactions To produce incremental earnings, protect gains, and facilitate buying and selling of securities for investments, the Fund may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. The Fund also may buy and sell put and call options and write - -------------------------------------------------------------------------------- 10 AXP GLOBAL BALANCED FUND covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. Futures transactions To gain exposure to or protect itself from market changes, the Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Fund also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The 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. 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. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 11 Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of deferred losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. Dividends to shareholders Dividends from net investment income, declared and paid each calendar quarter, when available are reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the last income dividend of the calendar year. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including level-yield amortization of premium and discount, 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 0.67% 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 Balanced Fund to the Lipper Global Flexible Fund Index. The maximum adjustment is 0.12% of the Fund's average daily net assets after deducting 1% from the performance difference. If the performance difference is less than 1%, the adjustment will be zero. The adjustment decreased the fee by $21,661 for the six months ended April 30, 2001. Under an Administrative Services Agreement, the Fund pays AEFC a fee for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.06% to 0.035% annually. A minor portion of additional administrative service expenses paid by the Fund are consultants' fees and fund office expenses. Under this agreement, the Fund also pays taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees and any other expenses properly payable by the Fund and approved by the board. Under a separate Transfer Agency Agreement, American Express Client Service Corporation (AECSC) maintains shareholder accounts and records. The Fund pays AECSC an annual fee per shareholder account for this service as follows: o Class A $19.00 o Class B $20.00 o Class C $19.50 o Class Y $17.00 - -------------------------------------------------------------------------------- 12 AXP GLOBAL BALANCED FUND The Fund has agreements with American Express Financial Advisors Inc. (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund pays a distribution fee at an annual rate up to 0.25% of the Fund's average daily net assets attributable to Class A shares and up to 1.00% for Class B 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 $109,746 for Class A, $25,845 for Class B and $30 for Class C for the six months ended April 30, 2001. The Fund also pays custodian fees to American Express Trust Company, an affiliate of AEFC. During the six months ended April 30, 2001, the Fund's custodian and transfer agency fees were reduced by $9,378 as a result of earnings credits from overnight cash balances. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $166,786,603 and $171,462,336, respectively, for the six months ended April 30, 2001. Realized gains and losses are determined on an identified cost basis. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows: Six months ended April 30, 2001 Class A Class B Class C Class Y Sold 2,584,212 1,085,435 56,220 199,168 Issued for reinvested distributions 1,594,489 1,136,032 2,698 20,963 Redeemed (3,719,986) (1,628,334) (2,116) (54,275) ---------- ---------- ------ ------- Net increase (decrease) 458,715 593,133 56,802 165,856 ------- ------- ------ ------- Year ended Oct. 31, 2000 Class A Class B Class C* Class Y Sold 7,069,430 3,551,107 20,623 267,763 Issued for reinvested distributions 1,178,972 832,844 -- 17 Redeemed (5,846,341) (2,266,065) -- (90,554) ---------- ---------- -- ------- Net increase (decrease) 2,402,061 2,117,886 20,623 177,226 --------- --------- ------ ------- * Inception date was June 26, 2000. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 13 5. FOREIGN CURRENCY CONTRACTS As of April 30, 2001, the Fund has foreign currency exchange contracts that obligate it to deliver currencies at specified future dates. The unrealized appreciation and/or depreciation on these contracts is included in the accompanying financial statements. See "Summary of significant accounting policies." The terms of the open contracts are as follows: Exchange date Currency to Currency to Unrealized Unrealized be delivered be received appreciation depreciation May 23, 2001 300,000 151,475 $ -- $1,766 Australian Dollar U.S. Dollar May 3, 2001 219,796 195,814 943 -- European Monetary Unit U.S. Dollar June 1, 2001 112,000,000 905,782 -- 843 Japanese Yen U. S. Dollar ---- ------ Total $943 $2,609 ---- ------ 6. BANK BORROWINGS The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund must have asset coverage for borrowings not to exceed the aggregate of 333% of advances equal to or less than five business days plus 367% of advances over five business days. The agreement, which enables the Fund to participate with other American Express mutual funds, permits borrowings up to $200 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.05% per annum. The Fund had no borrowings outstanding during the six months ended April 30, 2001. 7. NEW ACCOUNTING PRONOUNCEMENT In November, 2000, the AICPA issued a revised Audit and Accounting Guide, Audits of Investments Companies, which is effective for fiscal years beginning Dec. 15, 2000. Adopting the revised Guide is not expected to have a significant impact on the Fund's financial position, results of operations or changes in its net assets. - -------------------------------------------------------------------------------- 14 AXP GLOBAL BALANCED FUND 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, 2001(j) 2000 1999 1998 1997(b) Net asset value, beginning of period $6.27 $6.61 $5.79 $5.33 $5.00 Income from investment operations: Net investment income (loss) .04 .08 .09 .10 .09 Net gains (losses) (both realized and unrealized) (.62) .12 .82 .48 .31 Total from investment operations (.58) .20 .91 .58 .40 Less distributions: Dividends from net investment income (.02) (.03) (.07) (.11) (.07) Distributions from realized gains (.51) (.51) (.02) (.01) -- Total distributions (.53) (.54) (.09) (.12) (.07) Net asset value, end of period $5.16 $6.27 $6.61 $5.79 $5.33 Ratios/supplemental data Net assets, end of period (in millions) $93 $110 $100 $63 $31 Ratio of expenses to average daily net assets(d) 1.41%(h) 1.31% 1.40% 1.49%(e) 1.45%(e,h) Ratio of net investment income (loss) to average daily net assets 1.23%(h) 1.26% 1.43% 1.86% 2.18%(h) Portfolio turnover rate (excluding short-term securities) 101% 110% 99% 74% 44% Total return(i) (9.74%) 2.62% 15.53% 11.01% 8.10% Class B Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001(j) 2000 1999 1998 1997(b) Net asset value, beginning of period $6.21 $6.58 $5.77 $5.31 $5.00 Income from investment operations: Net investment income (loss) .01 .04 .03 .06 .06 Net gains (losses) (both realized and unrealized) (.61) .12 .83 .48 .30 Total from investment operations (.60) .16 .86 .54 .36 Less distributions: Dividends from net investment income -- (.02) (.03) (.07) (.05) Distributions from realized gains (.51) (.51) (.02) (.01) -- Total distributions (.51) (.53) (.05) (.08) (.05) Net asset value, end of period $5.10 $6.21 $6.58 $5.77 $5.31 Ratios/supplemental data Net assets, end of period (in millions) $66 $77 $68 $44 $19 Ratio of expenses to average daily net assets(d) 2.17%(h) 2.07% 2.16% 2.25%(f) 2.22%(f,h) Ratio of net investment income (loss) to average daily net assets .47%(h) .51% .66% 1.10% 1.41%(h) Portfolio turnover rate (excluding short-term securities) 101% 110% 99% 74% 44% Total return(i) (10.10%) 1.95% 14.89% 10.18% 7.31% See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 15
Class C
Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001(j) 2000(c) Net asset value, beginning of period $6.21 $6.58 Income from investment operations: Net investment income (loss) .03 .01 Net gains (losses) (both realized and unrealized) (.62) (.38) Total from investment operations (.59) (.37) Less distributions: Dividends from net investment income (.02) -- Distributions from realized gains (.51) -- Total distributions (.53) -- Net asset value, end of period $5.09 $6.21 Ratios/supplemental data Net assets, end of period (in millions) $-- $-- Ratio of expenses to average daily net assets(d) 2.17%(h) 2.07%(h) Ratio of net investment income (loss) to average daily net assets .50%(h) .47%(h) Portfolio turnover rate (excluding short-term securities) 101% 110% Total return(i) (10.07%) (5.62%) Class Y Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001(j) 2000 1999 1998 1997(b) Net asset value, beginning of period $6.30 $6.62 $5.79 $5.33 $5.00 Income from investment operations: Net investment income (loss) .05 .10 .09 .12 .10 Net gains (losses) (both realized and unrealized) (.63) .13 .84 .47 .31 Total from investment operations (.58) .23 .93 .59 .41 Less distributions: Dividends from net investment income (.03) (.04) (.08) (.12) (.08) Distributions from realized gains (.51) (.51) (.02) (.01) -- Total distributions (.54) (.55) (.10) (.13) (.08) Net asset value, end of period $5.18 $6.30 $6.62 $5.79 $5.33 Ratios/supplemental data Net assets, end of period (in millions) $2 $1 $-- $-- $-- Ratio of expenses to average daily net assets(d) 1.27%(h) 1.20% 1.15% 1.42%(g) 1.30%(g,h) Ratio of net investment income (loss) to average daily net assets 1.42%(h) 1.51% 1.65% 2.02% 2.46%(h) Portfolio turnover rate (excluding short-term securities) 101% 110% 99% 74% 44% Total return(i) (9.74%) 2.99% 15.76% 11.17% 8.24% See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- 16 AXP GLOBAL BALANCED FUND
Notes to financial highlights (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Nov. 13, 1996 (commencement of operations) to Oct. 31, 1997. (c) Inception date was June 26, 2000. (d) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (e) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class A would have been 1.53% and 2.29% for the periods ended 1998 and 1997, respectively. (f) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class B would have been 2.29% and 2.96% for the periods ended 1998 and 1997, respectively. (g) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class Y would have been 1.46% and 2.14% for the periods ended 1998 and 1997, respectively. (h) Adjusted to an annual basis. (i) Total return does not reflect payment of a sales charge. (j) Six months ended April 30, 2001 (Unaudited). - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 17 Investments in Securities AXP Global Balanced Fund April 30, 2001 (Unaudited) (Percentages represent value of investments compared to net assets) Common stocks (64.6%)(c) Issuer Shares Value(a) Bermuda (3.5%) Insurance (1.4%) ACE 61,100 $2,181,270 Multi-industry conglomerates (2.1%) Tyco Intl 66,300 3,538,432 Canada (1.1%) Multi-industry conglomerates Bombardier Cl B 122,302 1,763,091 Chile (--%) Utilities -- telephone Compania de Telecomunicaciones de Chile ADR 127(b) 1,814 Finland (1.4%) Communications equipment & services Nokia 69,848 2,309,887 France (1.6%) Household products (0.9%) Aventis 16,909 1,308,760 Miscellaneous (0.7%) Vivendi Universal 17,273 1,195,277 Germany (3.3%) Automotive & related (0.9%) Bayerische Motoren Werke 45,432 1,514,529 Banks and savings & loans (1.0%) Deutsche Bank 19,976 1,624,074 Computers & office equipment (1.4%) SAP 13,272 2,112,169 Hong Kong (0.9%) Financial services Cheung Kong Holdings 136,000 1,517,118 Israel (0.8%) Computers & office equipment Check Point Software Technologies 20,548(b) 1,288,976 Italy (1.4%) Energy (0.7%) ENI 163,844 1,121,439 Utilities -- telephone (0.7%) Olivetti 525,980 1,177,493 Japan (4.2%) Electronics (2.5%) Hitachi 164,000 1,590,416 Rohm 3,900 688,226 Tokyo Electron 25,100 1,828,631 Total 4,107,273 Media (1.0%) Sony 21,200 1,585,688 Utilities -- telephone (0.7%) NTT DoCoMo 51 1,048,610 Mexico (1.1%) Banks and savings & loans Grupo Financiero Banamex Accival 914,784 1,706,133 Netherlands (2.6%) Industrial equipment & services (1.4%) Koninklijke (Royal) Philips Electronics 76,125 2,234,675 Insurance (1.2%) ING Groep 28,313 1,932,125 South Korea (0.8%) Electronics Samsung Electronics 7,330 1,274,541 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 18 AXP GLOBAL BALANCED FUND Common stocks (continued) Issuer Shares Value(a) Spain (1.5%) Banks and savings & loans (0.8%) Banco Bilbao Vizcaya Argentaria 99,989 $1,420,177 Utilities -- telephone (0.7%) Telefonica 63,724 1,077,976 Switzerland (2.1%) Banks and savings & loans (1.1%) UBS 12,329 1,876,106 Multi-industry conglomerates (1.0%) Adecco 2,607 1,577,814 United Kingdom (2.6%) Media (1.3%) WPP Group 179,750 2,153,934 Utilities -- telephone (1.3%) Vodafone Group 688,949 2,092,250 United States (35.7%) Communications equipment & services (1.0%) QUALCOMM 29,200(b) 1,674,912 Computer software & services (1.6%) Microsoft 38,323(b) 2,596,383 Computers & office equipment (3.0%) Cisco Systems 34,598(b) 587,474 Dell Computer 72,664(b) 1,910,337 EMC 58,800(b) 2,328,480 Total 4,826,291 Electronics (3.7%) Intel 71,500 2,210,065 Micron Technology 33,100(b) 1,502,078 Texas Instruments 60,100 2,325,869 Total 6,038,012 Energy (1.3%) Chevron 22,200 2,143,632 Financial services (4.8%) Citigroup 66,563 3,271,570 Fannie Mae 28,960 2,324,330 Merrill Lynch 35,350 2,181,095 Total 7,776,995 Health care (5.7%) Abbott Laboratories 43,800 2,031,444 Medtronic 57,600 2,568,960 Pfizer 66,270 2,869,491 Pharmacia 30,700 1,604,382 Total 9,074,277 Insurance (1.7%) American Intl Group 32,560 2,663,449 Media (2.8%) Clear Channel Communications 38,700(b) 2,159,460 Interpublic Group of Companies 70,700 2,400,266 Total 4,559,726 Miscellaneous (3.3%) Nasdaq-100 Shares 22,700(b) 1,047,605 Standard & Poor's Depositary Receipts 33,600 4,196,976 Total 5,244,581 Multi-industry conglomerates (1.5%) General Electric 48,910 2,373,602 Retail (3.7%) Home Depot 63,300 2,981,430 Wal-Mart Stores 56,820 2,939,867 Total 5,921,297 Utilities -- telephone (1.6%) Qwest Communications Intl 61,300(b) 2,507,170 Total common stocks (Cost: $105,157,238) $104,141,958 Other (--%)(c) Issuer Shares Value(a) Italy Olivetti Warrants 19,720 $7,116 Total other (Cost: $--) $7,116 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 19 Bonds (31.7%)(c) Issuer Coupon Principal Value(a) rate amount Australia (0.3%) New South Wales Treasury (Australian Dollar) 03-01-08 8.00% 200,000 $113,627 Queensland Treasury (Australian Dollar) Local Govt Guaranty 05-14-03 8.00 565,000 302,510 Total 416,137 Austria (1.3%) Oesterreich Kontrollbank (Japanese Yen) 03-22-10 1.80 242,000,000 2,085,627 Bermuda (0.3%) Global Crossing Holdings (U.S. Dollar) Sr Sub Deb 08-01-07 8.70 450,000(d) 414,000 Brazil (0.6%) Federal Republic of Brazil (U.S.Dollar) 04-15-14 8.00 554,135 416,643 08-17-40 11.00 700,000 532,296 Total 948,939 Canada (0.9%) Govt of Canada (Canadian Dollar) 02-01-06 7.00 1,250,000 871,030 Laidlaw (U.S. Dollar) 05-15-06 7.65 250,000(b) 85,000 Province of British Columbia (Canadian Dollar) 12-01-06 5.25 500,000 319,071 Rogers Communication (Canadian Dollar) Sr Nts 07-15-07 8.75 300,000 192,564 Total 1,467,665 China (--%) Greater Beijing First Expressways (U.S. Dollar) Sr Nts 06-15-07 9.50 170,000(b) 68,000 Denmark (--%) Govt of Denmark (Danish Krone) 05-15-03 8.00 600,000 75,203 France (1.0%) Govt of France (European Monetary Unit) 04-25-10 5.50 1,800,000 1,633,296 Germany (6.9%) Allgemeine Hypo Bank (European Monetary Unit) 09-02-09 5.00 850,000 727,835 Bundesschatzanweisungen (European Monetary Unit) 12-14-01 4.00 2,000,000 1,763,719 03-15-02 4.50 1,550,000 1,370,517 Federal Republic of Germany (European Monetary Unit) 11-11-04 7.50 700,000 673,773 01-05-06 6.00 600,000 557,096 01-04-08 5.25 1,285,000 1,162,050 07-04-08 4.75 725,000 634,344 07-04-10 5.25 250,000 225,297 06-20-16 6.00 434,598 414,239 07-04-27 6.50 1,475,000 1,450,085 01-04-30 6.25 1,200,000 1,158,439 Treuhandanstalt (European Monetary Unit) 01-29-03 7.13 1,022,584 940,554 Total 11,077,948 Italy (2.5%) Buoni Poliennali Del Tes (European Monetary Unit) 01-01-04 8.50 800,000 772,380 07-01-05 4.75 1,830,000 1,611,590 11-01-29 5.25 1,400,000 1,122,874 Zero Coupon Bond 11-01-10 5.50 650,000(e) 582,284 Total 4,089,128 Japan (1.6%) Development Bank of Japan (Japanese Yen) 09-20-01 6.50 305,000,000 2,528,430 Mexico (0.2%) Bancomext Trust (U.S. Dollar) 05-30-06 11.25 150,000(d) 168,000 United Mexican States (British Pound) Medium-term Nts Series E 05-30-02 8.75 125,000 181,876 Total 349,876 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 20 AXP GLOBAL BALANCED FUND Bonds (continued) Issuer Coupon Principal Value(a) rate amount Norway (0.8%) Govt of Norway (Norwegian Krone) 11-30-04 5.75% 7,200,000 $768,383 05-15-09 5.50 5,000,000 518,567 Total 1,286,950 Singapore (0.5%) PSA (U.S. Dollar) 08-01-05 7.13 700,000(d) 732,559 Spain (0.6%) Govt of Spain (European Monetary Unit) 05-30-04 8.00 700,000 675,234 04-30-06 8.80 322,744 332,511 Total 1,007,745 United Kingdom (2.0%) United Kingdom Treasury (British Pound) 11-06-01 7.00 800,000 1,155,429 06-07-02 7.00 415,000 606,311 06-10-03 8.00 940,000 1,423,616 Total 3,185,356 United States (12.2%) California Infrastructure- Pacific Gas & Electric (U.S. Dollar) 06-25-03 6.16 32,577 32,641 Citicorp (European Monetary Unit) 09-19-09 6.25 1,000,000 458,693 DTE Burns Harbor LLC (U.S. Dollar) Sr Nts 01-30-03 6.57 45,620(d) 44,515 Federal Home Loan Mtge Corp (U.S. Dollar) 12-14-01 4.75 850,000 852,024 Federal Natl Mtge Assn (U.S. Dollar) 04-15-03 5.75 500,000 509,868 08-15-04 6.50 1,375,000 1,430,881 02-15-05 7.13 2,000,000 2,125,483 02-15-08 5.75 900,000 899,363 01-15-10 7.25 1,500,000 1,625,697 07-01-13 6.00 610,482 607,635 05-01-14 6.50 874,023 882,015 03-01-27 7.50 120,505 123,631 Ford Motor Credit (Japanese Yen) 02-07-05 1.20 61,000,000 496,306 Intl Paper (European Monetary Unit) 08-11-06 5.38 560,000 475,258 Phillips Petroleum (U.S. Dollar) 03-15-28 7.13 200,000 177,858 U.S. Treasury (U.S. Dollar) 02-28-03 5.50 350,000 357,109 11-15-08 4.75 200,000 193,468 08-15-10 5.75 1,900,000 1,948,393 02-15-16 9.25 2,000,000 2,683,739 11-15-16 7.50 3,000,000 3,510,479 TIPS 01-15-07 3.38 200,000(f) 225,545 Zurich Capital Trust I (U.S. Dollar) Company Guaranty 06-01-37 8.38 125,000(d) 124,663 Total 19,785,264 Total bonds (Cost: $54,575,884) $51,152,123 Short-term securities (4.1%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agencies Federal Home Loan Bank Disc Nts 06-22-01 4.60% $2,500,000 $2,482,552 06-22-01 4.61 600,000 595,904 Federal Home Loan Mtge Corp Disc Nt 07-05-01 4.63 1,200,000 1,190,386 Federal Natl Mtge Assn Disc Nts 05-18-01 4.69 300,000 299,298 06-21-01 4.64 2,000,000 1,986,816 Total short-term securities (Cost: $6,555,858) $6,554,956 Total investments in securities (Cost: $166,288,980)(g) $161,856,153 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 21 Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. For long-term debt securities, item identified is in default as to payment of interest and/or principal. (c) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the currency indicated. (d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the board. (e) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on April 30, 2001. (f) U.S. Treasury inflation-protection securities (TIPS) are securities in which the principal amount is adjusted for inflation and the semiannual interest payments equal a fixed percentage of the inflation-adjusted principal amount. (g) At April 30, 2001, the cost of securities for federal income tax purposes was approximately $166,289,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 4,569,000 Unrealized depreciation (9,002,000) ---------- Net unrealized depreciation $(4,433,000) ----------- - -------------------------------------------------------------------------------- 22 AXP GLOBAL BALANCED FUND AXP Global Balanced Fund 70100 AXP Financial Center Minneapolis, MN 55474 americanexpress.com Ticker Symbol Class A: IDGAX Class B: IGBBX Class C: N/A Class Y: N/A PRSRT STD AUTO U.S. POSTAGE PAID AMERICAN EXPRESS 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. S-6346 F (6/01) -----END PRIVACY-ENHANCED MESSAGE-----