-----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, BNPT3DBqaTyMDJGbON64d4i+x7XkcSUGTN1G99g3FHIM0Cw51BLpORwOUxHKwW+h tVjwRx7BWB7FSx9nuLG8Zw== 0000820027-01-500605.txt : 20020413 0000820027-01-500605.hdr.sgml : 20020413 ACCESSION NUMBER: 0000820027-01-500605 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011031 FILED AS OF DATE: 20011221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP GLOBAL SERIES INC CENTRAL INDEX KEY: 0000842918 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05696 FILM NUMBER: 1821180 BUSINESS ADDRESS: STREET 1: IDS TOWER 10 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126712772 FORMER COMPANY: FORMER CONFORMED NAME: IDS GLOBAL BOND FUND INC DATE OF NAME CHANGE: 19901011 FORMER COMPANY: FORMER CONFORMED NAME: IDS GLOBAL SERIES INC DATE OF NAME CHANGE: 19920703 N-30D 1 s6309.txt AXP GLOBAL SERIES, INC. - GLOBAL BOND FUND ANNUAL AXP(R) Global Bond Fund 2001 ANNUAL REPORT (PROSPECTUS ENCLOSED) American Express(R) Funds (icon of) compass AXP Global Bond Fund seeks to provide shareholders with high total return through income and growth of capital. (This annual report includes a prospectus that describes in detail the Fund's objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money.) A Bounty of Bonds In today's global economy, investment opportunities don't stop at the water's edge. While bonds issued by the U.S. government and corporations once made up almost all of the bond market, today more than half of the world's debt securities are issued from outside the United States. This means expanded opportunity for investors. AXP Global Bond Fund's aim is to take advantage of opportunities in bond markets at any time and in any place, providing investors with greater portfolio diversification. Table of Contents 2001 ANNUAL REPORT The purpose of this annual report is to tell investors how the Fund performed. From the Chairman 3 From the Portfolio Manager 3 Fund Facts 5 The 10 Largest Holdings 6 Making the Most of the Fund 7 The Fund's Long-term Performance 8 Board Members and Officers 10 Independent Auditors' Report (Fund) 12 Financial Statements (Fund) 13 Notes to Financial Statements (Fund) 16 Independent Auditors' Report (Portfolio) 22 Financial Statements (Portfolio) 23 Notes to Financial Statements (Portfolio) 25 Investments in Securities 28 Federal Income Tax Information 31 - ------------------------------------------------------------------------------- 2 AXP GLOBAL BOND FUND -- ANNUAL REPORT (picture of) Arne H. Carlson Arne H. Carlson Chairman of the board From the Chairman For most of us investors, the past several months proved to be an extremely trying time. More recently, the events of this past September and the prospect of what may follow have added to our collective concern. While nothing can change what has happened, we can control how we respond. In broad terms, I would strongly advise that you keep a focus on your long-term financial goals and not let specific events dictate your investment decisions. Ultimately, it is where you finish, not where you are at the moment, that matters most. Your financial advisor plays an essential role in this process, so please let him or her help you by reviewing your situation and plotting the proper investment course. As I have indicated in the past, the role our Board plays in your financial future is to monitor and confirm that each American Express mutual fund meets its investment objective and that its management style stays on target. We want each fund to be able to deliver to you, the shareholder, the type of performance you expect and the best results that can be obtained. Toward that end, American Express has made significant changes in its investment management capability, and will continue to make changes as it strives to provide a consistent standard of excellence. On behalf of the Board, Arne H. Carlson (picture of) Nic Pifer Nic Pifer Portfolio manager From the Portfolio Manager A slowdown in global economic growth and substantial interest-rate cuts by central banks in the U.S. and Europe provided support for bond prices in most major markets during the past 12 months. For AXP Global Bond Fund's Class A shares, the result was a total return of 10.83% (excluding the sales charge) for the fiscal year -- November 2000 through October 2001. This compares with a return of 10.10% for the Lipper Global Income Funds Index, a group of mutual funds used to compare the performance of funds such as this. - ------------------------------------------------------------------------------- 3 AXP GLOBAL BOND FUND -- ANNUAL REPORT The period got off to a good start as indications of a sharp slowdown in U.S. economic growth got investors focused on the likelihood of cuts in short-term interest rates by central banks in the U.S. and, later, Europe. While the U.S. Federal Reserve's first rate cut didn't arrive until January, strong bond-buying in anticipation of that event drove down interest rates in November and December, pushing up bond prices in the process. (Falling rates inflate bond prices, while rising rates depress them.) A STRONG FINISH The rest of the winter proved to be relatively quiet for the bond markets as investors eased off on their buying. But by early March, investors, who by then had begun to focus on the possibility of a pick-up in global economic growth in the second half of 2001, began to shy away from bonds, setting in motion a downturn that lasted until mid-summer. Still, the period would end on a positive note, as weak economic data prompted more interest-rate cuts in the U.S. and Europe, resulting in a strong rally during the final four months. The other influence on the Fund's performance worth noting was the value of the euro, Europe's new common currency. After considerable fluctuation, the euro finished somewhat higher, which enhanced returns from the Fund's European holdings. The yen, however, fell sharply, justifying my strategy of holding few Japanese bonds. Looking at the composition of the Fund's portfolio, I kept about a third invested in the U.S., with most of the rest in Europe, principally in Germany, Italy, the United Kingdom and Belgium. The rest consisted of relatively modest investments in Japan and some smaller, "emerging" markets in Latin America and Asia, plus cash reserves. On a bond-sector basis, the great majority of assets were invested in government and corporate bonds, with the bulk of the latter in the U.S. Included in the U.S. corporate bond holdings were a small amount of high-yield/low-grade issues. As for what the new fiscal year may hold for bond investors, I look for inflation and interest rates to remain low, at least early in the period. On the economic front, I think the U.S. will begin to recover as early as the first quarter of 2002, followed by Europe -- a scenario that could increase concern about a potential upturn in inflation. So, we could have something of a tug-of-war developing in the bond markets. In light of that, I think price appreciation is likely to be limited, leaving interest income as the key return component for the year as a whole. As for market sectors, corporate bonds would seem to have an advantage, and I expect to increase those holdings in the months ahead. Nic Pifer - ------------------------------------------------------------------------------- 4 AXP GLOBAL BOND FUND -- ANNUAL REPORT Fund Facts Class A -- 12-month performance (All figures per share) Net asset value (NAV) Oct. 31, 2001 $5.81 Oct. 31, 2000 $5.39 Increase $0.42 Distributions -- Nov. 1, 2000 - Oct. 31, 2001 From income $0.15 From long-term capital gains $ -- Total distributions $0.15 Total return* +10.83% Class B -- 12-month performance (All figures per share) Net asset value (NAV) Oct. 31, 2001 $5.79 Oct. 31, 2000 $5.38 Increase $0.41 Distributions -- Nov. 1, 2000 - Oct. 31, 2001 From income $0.11 From long-term capital gains $ -- Total distributions $0.11 Total return* +9.73% Class C -- 12-month performance (All figures per share) Net asset value (NAV) Oct. 31, 2001 $5.79 Oct. 31, 2000 $5.38 Increase $0.41 Distributions -- Nov. 1, 2000 - Oct. 31, 2001 From income $0.11 From long-term capital gains $ -- Total distributions $0.11 Total return* +9.84% Class Y -- 12-month performance (All figures per share) Net asset value (NAV) Oct. 31, 2001 $5.80 Oct. 31, 2000 $5.40 Increase $0.40 Distributions -- Nov. 1, 2000 - Oct. 31, 2001 From income $0.16 From long-term capital gains $ -- Total distributions $0.16 Total return* +10.71% * 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. - ------------------------------------------------------------------------------- 5 AXP GLOBAL BOND FUND -- ANNUAL REPORT The 10 Largest Holdings Percent Value (of net assets) (as of Oct. 31, 2001) U.S. Treasury 7.50% 2016 9.1% $45,562,126 Buoni Poliennali Del Tes 8.50% 2004 6.4 32,180,341 Federal Republic of Germany 7.50% 2004 5.9 29,760,311 Federal Republic of Germany 6.50% 2027 4.1 20,522,087 Belgium Kingdom 7.25% 2004 4.0 20,035,436 Federal Republic of Germany 8.00% 2002 3.4 17,169,791 Govt of Canada 7.50% 2003 2.9 14,514,263 United Kingdom Treasury 8.00% 2003 2.6 12,917,842 U.S. Treasury 6.50% 2006 2.2 10,942,764 Allgemeine Hypo Bank 5.00% 2009 2.0 9,896,523 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." (picture of) pie chart The 10 holdings listed here make up 42.6% of net assets - ------------------------------------------------------------------------------- 6 AXP GLOBAL BOND FUND -- ANNUAL REPORT Making the Most of the Fund BUILD YOUR ASSETS SYSTEMATICALLY One of the best ways to invest in the Fund is by dollar-cost averaging -- a time-tested strategy that can make market fluctuations work for you. To dollar-cost average, simply invest a fixed amount of money regularly. You'll automatically buy more shares when the Fund's share price is low, fewer shares when it is high. The chart below shows how dollar-cost averaging works. In these three hypothetical scenarios, you will see six months of share price fluctuations. This strategy does not ensure a profit or avoid a loss if the market declines. But, if you can continue to invest regularly through changing market conditions even when the price of your shares falls or the market declines, it can be an effective way to accumulate shares to meet your long-term goals. How dollar-cost averaging works Jan Feb Mar Apr May Jun $15 $16 $18 $20 $10 $10 $12 $14 $ 5 Accumulated shares* Average market Your average price per share cost per share 42.25 $15 $14.20 - ------------------------------------------------------------------------------- Jan Feb Mar Apr May Jun $15 $10 $10 $10 $ 5 $8 $5 $5 $8 Accumulated shares* Average market Your average price per share cost per share 85.0 $7.66 $7.05 - ------------------------------------------------------------------------------- Jan Feb Mar Apr May Jun $15 $10 $10 $ 5 $8 $6 $4 $4 $7 Accumulated shares* Average market Your average price per share cost per share 103.5 $6.50 $5.80 - ------------------------------------------------------------------------------- $100 invested per month. Total invested: $600. * Shares purchased is determined by dividing the amount invested per month by the current share price. THREE WAYS TO BENEFIT FROM A MUTUAL FUND: o your shares increase in value when the Fund's investments do well o you receive capital gains when the gains on investments sold by the Fund exceed losses o you receive income when the Fund's stock dividends, interest and short-term gains exceed its expenses. All three make up your total return. You potentially can increase your investment if, like most investors, you reinvest your dividends and capital gain distributions to buy additional shares of the Fund or another fund. - ------------------------------------------------------------------------------- 7 AXP GLOBAL BOND FUND -- ANNUAL REPORT The Fund's Long-term Performance Value of your $10,000 in AXP Global Bond Fund (line chart) $30,000 $20,000 $17,852 AXP Global Bond Salomon Smith Barney Fund Class A World Gov't Bond Index $9,525 Lipper Global Income Funds Index '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 Average Annual Total Returns (as of Oct. 31, 2001) Since 1 year 5 years 10 years inception AXP Global Bond Fund Class A +5.56% +1.95% +5.97% N/A Class B +5.73% +1.97% N/A +4.55%* Class C +8.84% N/A N/A +5.22%** Class Y +10.71% +3.08% N/A +5.23%* * Inception date was March 20, 1995. ** Inception date was June 26, 2000. Assumes: Holding period from 11/1/91 to 10/31/01. Returns do not reflect taxes payable on distributions. Reinvestment of all income and capital gain distributions for the Fund has a value of $8,369. Also see "Past Performance" in the Fund's current prospectus. On the graph above you can see how the Fund's total return compared to two widely cited unmanaged performance indexes, the Salomon Smith Barney World Government Bond Index and the Lipper Global Income Funds Index. In comparing AXP Global Bond Fund (Class A) to these indexes, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 4.75%, while such charges are not reflected in the performance of the indexes. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Average annual total return figures reflect the impact of the maximum applicable sales charge. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. - ------------------------------------------------------------------------------- 8 AXP GLOBAL BOND FUND -- ANNUAL REPORT Salomon Smith Barney 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. The Lipper Global Income Funds Index, an unmanaged 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. - ------------------------------------------------------------------------------- 9 AXP GLOBAL BOND FUND -- ANNUAL REPORT Board Members and Officers Shareholders elect a board that oversees the Fund's operations. The board appoints officers who are responsible for day-to-day business decisions based on policies set by the board. The following is a list of the Fund's board members. Each member oversees 15 Master Trust portfolios and 72 American Express mutual funds. Board members serve until the next regular shareholders' meeting or until he or she reaches the mandatory retirement age established by the board.
Independent Board Members Name, Position Principal Other address, held with occupations directorships age Registrant during past five and length years of service - ---------------------------- -------------- ------------------- ------------------- H. Brewster Atwater, Jr. Board member Retired chair and 4900 IDS Tower since 1996 chief executive Minneapolis, MN 55402 officer, General Born in 1931 Mills, Inc. (consumer foods) - ---------------------------- -------------- ------------------- ------------------- Arne H. Carlson Chair of the Chair, Board 901 S. Marquette Ave. Board since Services Minneapolis, MN 1999 Corporation 55402 (provides Born in 1934 administrative services to boards), former Governor of Minnesota - ---------------------------- -------------- ------------------- ------------------- Lynne V. Cheney Board member Distinguished The Reader's American Enterprise since 1994 Fellow, AEI Digest Institute for Public Association Inc. Policy Research (AEI) 1150 17th St., N.W. Washington, D.C. 20036 Born in 1941 - ---------------------------- -------------- ------------------- ------------------- Livio D. DeSimone Board member Retired chair of Cargill, 30 Seventh Street East since 2001 the board and Incorporated Suite 3050 chief executive (commodity St. Paul, MN 55101-4901 officer, merchants and Born in 1936 Minnesota Mining processors), and Manufacturing Target (3M) Corporation (department stores), General Mills, Inc. (consumer foods), Vulcan Materials Company (construction materials/chemicals) and Milliken & Company (textiles and chemicals) - ---------------------------- -------------- ------------------- ------------------- Ira D. Hall Board member Treasurer, Texaco Texaco, Inc. since 2001 Inc. since 1998. 2000 Westchester Avenue Prior to that, White Plains, NY 10650 director, Born in 1944 International Operations IBM Corp. - ---------------------------- -------------- ------------------- ------------------- Heinz F. Hutter Board Retired president P.O. Box 2187 member and chief Minneapolis, MN since 1994 operating 55402 officer, Cargill, Born in 1929 Incorporated (commodity merchants and processors) - ---------------------------- -------------- ------------------- ------------------- Anne P. Jones Board member Attorney and Motorola, Inc. 5716 Bent Branch Rd. since 1985 consultant (electronics) Bethesda, MD 20816 Born in 1935 - ---------------------------- -------------- ------------------- ------------------- William R. Pearce Board RII Weyerhaeuser 2050 One Financial Plaza member World Timberfund, Minneapolis, MN 55402 since 1980 L.P. (develops Born in 1927 timber resources) - management committee; former chair, American Express Funds - ---------------------------- -------------- ------------------- -------------------
- ------------------------------------------------------------------------------- 10 AXP GLOBAL BOND FUND -- ANNUAL REPORT
Independent Board Members (continued) Name, Position Principal Other address, held with occupations directorships age Registrant during past five and length years of service - ---------------------------- -------------- ------------------- -------------------- Alan K. Simpson Board member Former three-term Biogen, Inc. 1201 Sunshine Ave. since 1997 United States (bio-pharmaceuticals) Cody, WY 82414 Senator for Born in 1931 Wyoming - ---------------------------- -------------- ------------------- -------------------- C. Angus Wurtele Board Retired chair of Bemis Corporation 4900 IDS Tower member the board and (packaging) Minneapolis, MN 55402 since 1994 chief executive Born in 1934 officer, The Valspar Corporation - ---------------------------- -------------- ------------------- -------------------- Board Members Affiliated with American Express Financial Corporation (AEFC) Name, Position Principal Other directorships address, held with occupations age Registrant during past five and length years of service - ---------------------------- -------------- ------------------- -------------------- David R. Hubers Board Retired chief Chronimed Inc. 50643 AXP Financial Center member executive officer (specialty Minneapolis, MN 55474 since 1993 and director of pharmaceutical Born in 1943 AEFC distribution), RTW Inc. (manages workers compensation programs), Lawson Software, Inc. (technology based business applications) - ---------------------------- -------------- ------------------- -------------------- John R. Thomas Board Senior vice 50652 AXP Financial Center member president - Minneapolis, MN 55474 since 1987, information and Born in 1937 president technology of since 1997 AEFC - ---------------------------- -------------- ------------------- -------------------- The board has appointed officers who are responsible for day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the board. In addition to Mr. Thomas, who is president, the Fund's other officers are: Other Officers Name, Position Principal Other directorships address, held with occupations age Registrant during past five and length years of service - ---------------------------- -------------- ------------------- -------------------- John M. Knight Treasurer Vice president - 50005 AXP Financial Center since 1999 investment Minneapolis, MN 55474 accounting of Born in 1952 AEFC - ---------------------------- -------------- ------------------- -------------------- Leslie L. Ogg Vice President of 901 S. Marquette Ave. president, Board Services Minneapolis, MN 55402 general Corporation Born in 1938 counsel and secretary since 1978 - ---------------------------- -------------- ------------------- --------------------
The SAI has additional information about the Fund's directors and is available, without charge, upon request by calling (800) 862-7919. - ------------------------------------------------------------------------------- 11 AXP GLOBAL BOND FUND -- ANNUAL REPORT Independent Auditors' Report THE BOARD AND SHAREHOLDERS AXP GLOBAL SERIES, INC. We have audited the accompanying statement of assets and liabilities of AXP Global Bond Fund (a series of AXP Global Series, Inc.) as of October 31, 2001, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period ended October 31, 2001, and the financial highlights for each of the years in the five-year period ended October 31, 2001. These financial statements and the financial highlights are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AXP Global Bond Fund as of October 31, 2001, and the results of its operations, changes in its net assets and the financial highlights for each of the periods stated in the first paragraph above, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Minneapolis, Minnesota December 7, 2001 - ------------------------------------------------------------------------------- 12 AXP GLOBAL BOND FUND -- ANNUAL REPORT Financial Statements Statement of assets and liabilities AXP Global Bond Fund
Oct. 31, 2001 Assets Investment in World Income Portfolio (Note 1) $501,917,360 Capital shares receivable 28,066 ------ Total assets 501,945,426 ----------- Liabilities Dividends payable to shareholders 928,244 Accrued distribution fee 6,419 Accrued transfer agency fee 2,646 Accrued administrative services fee 789 Other accrued expenses 64,368 ------ Total liabilities 1,002,466 --------- Net assets applicable to outstanding capital stock $500,942,960 ============ Represented by Capital stock -- $.01 par value (Note 1) $ 863,507 Additional paid-in capital 550,804,682 Undistributed net investment income 896,452 Accumulated net realized gain (loss) (Note 5) (11,948,541) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (39,673,140) ----------- Total -- representing net assets applicable to outstanding capital stock $500,942,960 ============ Net assets applicable to outstanding shares: Class A $355,169,798 Class B $144,915,126 Class C $ 791,764 Class Y $ 66,272 Net asset value per share of outstanding capital stock: Class A shares 61,183,008 $ 5.81 Class B shares 25,019,494 $ 5.79 Class C shares 136,798 $ 5.79 Class Y shares 11,420 $ 5.80 ------ ------------
See accompanying notes to financial statements. - ------------------------------------------------------------------------------- 13 AXP GLOBAL BOND FUND -- ANNUAL REPORT Statement of operations AXP Global Bond Fund
Year ended Oct. 31, 2001 Investment income Income: Interest $ 31,571,921 Less foreign taxes withheld (177,358) -------- Total income 31,394,563 ---------- Expenses (Note 2): Expenses allocated from World Income Portfolio 4,055,551 Distribution fee Class A 919,399 Class B 1,487,670 Class C 4,575 Transfer agency fee 893,675 Incremental transfer agency fee Class A 69,809 Class B 48,215 Class C 158 Service fee -- Class Y 60 Administrative services fees and expenses 297,761 Compensation of board members 9,985 Printing and postage 118,133 Registration fees 72,156 Audit fees 8,250 Other 6,359 ----- Total expenses 7,991,756 Earnings credits on cash balances (Note 2) (27,573) ------- Total net expenses 7,964,183 --------- Investment income (loss) -- net 23,430,380 ---------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (13,182,089) Foreign currency transactions (2,186,587) ---------- Net realized gain (loss) on investments (15,368,676) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 43,787,031 ---------- Net gain (loss) on investments and foreign currencies 28,418,355 ---------- Net increase (decrease) in net assets resulting from operations $ 51,848,735 ============
See accompanying notes to financial statements. - ------------------------------------------------------------------------------- 14 AXP GLOBAL BOND FUND -- ANNUAL REPORT Statements of changes in net assets AXP Global Bond Fund
Year ended Oct. 31, 2001 2000 Operations and distributions Investment income (loss) -- net $ 23,430,380 $ 35,953,855 Net realized gain (loss) on investments (15,368,676) (21,573,954) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 43,787,031 (50,725,089) ---------- ----------- Net increase (decrease) in net assets resulting from operations 51,848,735 (36,345,188) ---------- ----------- Distributions to shareholders from: Net investment income Class A (10,394,416) (17,281,200) Class B (2,969,230) (5,940,644) Class C (7,342) -- Class Y (1,888) (182) ------ ---- Total distributions (13,372,876) (23,222,026) ----------- ----------- Capital share transactions (Note 3) Proceeds from sales Class A shares (Notes 2 and 6) 62,825,835 69,296,414 Class B shares 20,979,915 30,557,395 Class C shares 693,932 187,591 Class Y shares 44,000 11,600 Reinvestment of distributions at net asset value Class A shares 8,857,094 14,146,128 Class B shares 2,774,203 5,709,236 Class C shares 6,659 -- Class Y shares 1,727 176 Payments for redemptions Class A shares (133,156,929) (249,932,402) Class B shares (Note 2) (44,412,190) (99,525,584) Class C shares (Note 2) (129,429) (1,500) -------- ------ Increase (decrease) in net assets from capital share transactions (81,515,183) (229,550,946) ----------- ------------ Total increase (decrease) in net assets (43,039,324) (289,118,160) Net assets at beginning of year 543,982,284 833,100,444 ----------- ----------- Net assets at end of year $ 500,942,960 $ 543,982,284 ============= ============= Undistributed net investment income $ 896,452 $ 1,179,408 ------------- -------------
See accompanying notes to financial statements. - ------------------------------------------------------------------------------- 15 AXP GLOBAL BOND FUND -- ANNUAL REPORT Notes to Financial Statements AXP Global Bond Fund 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of AXP Global Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a non-diversified open-end management investment company. AXP Global Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the board. 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 360 shares of capital stock at $5.55 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. 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 seeks to provide shareholders with high total return through income and growth of capital by investing primarily in debt securities of U.S. and foreign issuers. The Fund records daily its share of the Portfolio's income, expenses and realized and unrealized gains and losses. The financial statements of the Portfolio are included elsewhere in this report and should be read in conjunction with the Fund's financial statements. The Fund records its investment in the Portfolio at the value that is equal to the Fund's proportionate ownership interest in the Portfolio's net assets. The percentage of the Portfolio owned by the Fund as of Oct. 31, 2001 was 99.98%. Valuation of securities held by the Portfolio is discussed in Note 1 of the Portfolio's "Notes to financial statements" (included elsewhere in this report). Use of estimates Preparing financial statements that conform to accounting principles generally accepted in the United States of America requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. - ------------------------------------------------------------------------------- 16 AXP GLOBAL BOND FUND -- ANNUAL REPORT Federal taxes The Fund's policy is to comply with all sections of the Internal Revenue Code that apply to regulated investment companies and to distribute substantially all of its taxable income to the shareholders. No provision for income or excise taxes is thus required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of deferred losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. On the statement of assets and liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been decreased by $10,340,460 and accumulated net realized loss has been decreased by $10,340,460. Dividends to shareholders Dividends from net investment income, declared daily and paid each calendar quarter, when available, are reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the last income dividend of the calendar year. 2. EXPENSES AND SALES CHARGES In addition to the expenses allocated from the Portfolio, the Fund accrues its own expenses as follows: The Fund has an agreement with AEFC to provide administrative services. Under an Administrative Services Agreement, the Fund pays AEFC a fee for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.06% to 0.04% annually. A minor portion of additional administrative service expenses paid by the Fund are consultants' fees and fund office expenses. Under this agreement, the Fund also pays taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees and any other expenses properly payable by the Fund and approved by the board. Under a separate Transfer Agency Agreement, American Express Client Service Corporation (AECSC) maintains shareholder accounts and records. The incremental transfer agency fee is the amount charged to the specific classes for the additional expense above the fee for Class Y. The Fund pays AECSC an annual fee per shareholder account for this service as follows: o Class A $19.50 o Class B $20.50 o Class C $20.00 o Class Y $17.50 - ------------------------------------------------------------------------------- 17 AXP GLOBAL BOND FUND -- ANNUAL REPORT 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 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 $355,978 for Class A, $112,411 for Class B and $498 for Class C for the year ended Oct. 31, 2001. During the year ended Oct. 31, 2001, the Fund's transfer agency fees were reduced by $27,573 as a result of earnings credits from overnight cash balances. 3. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the years indicated are as follows:
Year ended Oct. 31, 2001 Class A Class B Class C Class Y Sold 11,184,424 3,751,515 124,626 8,059 Issued for reinvested distributions 1,576,372 496,882 1,188 306 Redeemed (23,732,345) (7,958,269) (22,929) -- ----------- ---------- ------- ----- Net increase (decrease) (10,971,549) (3,709,872) 102,885 8,365 ----------- ---------- ------- ----- Year ended Oct. 31, 2000 Class A Class B Class C* Class Y Sold 12,401,507 5,455,930 34,187 2,128 Issued for reinvested distributions 2,496,141 1,007,920 -- 31 Redeemed (44,671,707) (17,812,973) (274) -- ----------- ----------- ---- ----- Net increase (decrease) (29,774,059) (11,349,123) 33,913 2,159 ----------- ----------- ------ -----
* Inception date was June 26, 2000. 4. 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 year ended Oct. 31, 2001. - ------------------------------------------------------------------------------- 18 AXP GLOBAL BOND FUND -- ANNUAL REPORT 5. CAPITAL LOSS CARRY-OVER For federal income tax purposes, the Fund has a capital loss carry-over of $11,872,794 as of Oct. 31, 2001, 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. 6. FUND MERGER As of the close of business on July 14, 2000, AXP Global Bond Fund acquired the assets and assumed the identified liabilities of Strategist World Income Fund. The aggregate net assets of AXP Global Bond Fund immediately before the acquisition were $621,976,856. The merger was accomplished by a tax-free exchange of 110,412 shares of Strategist World Income Fund valued at $614,512. In exchange for the Strategist World Income Fund shares and net assets, AXP Global Bond Fund issued the following number of shares: Shares Net assets Class A 111,010 $614,512 Strategist World Income Fund's net assets at that date consisted of capital stock of $661,596 and unrealized depreciation of $47,084. 7. NEW ACCOUNTING PRONOUNCEMENT In November 2000, the AICPA issued a revised Audit and Accounting Guide, Audits of Investment Companies, which is effective for fiscal years beginning after 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. - ------------------------------------------------------------------------------- 19 AXP GLOBAL BOND FUND -- ANNUAL 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, 2001 2000 1999 1998 1997 Net asset value, beginning of period $5.39 $5.87 $6.17 $6.26 $6.28 ----- ----- ----- ----- ----- Income from investment operations: Net investment income (loss) .27 .34 .33 .39 .35 Net gains (losses) (both realized and unrealized) .30 (.63) (.36) (.05) (.05) --- ---- ---- ---- ---- Total from investment operations .57 (.29) (.03) .34 .30 --- ---- ---- --- --- Less distributions: Dividends from net investment income (.15) (.19) (.26) (.29) (.28) Distributions from realized gains -- -- (.01) (.14) (.04) ---- ---- ---- ---- ---- Total distributions (.15) (.19) (.27) (.43) (.32) ---- ---- ---- ---- ---- Net asset value, end of period $5.81 $5.39 $5.87 $6.17 $6.26 ----- ----- ----- ----- ----- Ratios/supplemental data Net assets, end of period (in millions) $355 $389 $598 $724 $748 ---- ---- ---- ---- ---- Ratio of expenses to average daily net assets(c) 1.32% 1.30% 1.22% 1.16% 1.16% ---- ---- ---- ---- ---- Ratio of net investment income (loss) to average daily net assets 4.75% 5.49% 5.49% 5.86% 5.74% ---- ---- ---- ---- ---- Portfolio turnover rate (excluding short-term securities) 24% 48% 48% 27% 55% -- -- -- -- -- Total return(e) 10.83% (5.16%) (.35%) 5.52% 4.91% ----- ----- ---- ---- ---- Class B Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001 2000 1999 1998 1997 Net asset value, beginning of period $5.38 $5.87 $6.17 $6.26 $6.28 ----- ----- ----- ----- ----- Income from investment operations: Net investment income (loss) .21 .29 .28 .33 .31 Net gains (losses) (both realized and unrealized) .31 (.62) (.35) (.04) (.05) --- ---- ---- ---- ---- Total from investment operations .52 (.33) (.07) .29 .26 --- ---- ---- --- --- Less distributions: Dividends from net investment income (.11) (.16) (.22) (.24) (.24) Distributions from realized gains -- -- (.01) (.14) -- Excess distributions of realized gains -- -- -- -- (.04) --- ---- ---- --- --- Total distributions (.11) (.16) (.23) (.38) (.28) ---- ---- ---- ---- ---- Net asset value, end of period $5.79 $5.38 $5.87 $6.17 $6.26 ----- ----- ----- ----- ----- Ratios/supplemental data Net assets, end of period (in millions) $145 $155 $235 $263 $231 ---- ---- ---- ---- ---- Ratio of expenses to average daily net assets(c) 2.09% 2.07% 1.98% 1.92% 1.92% ---- ---- ---- ---- ---- Ratio of net investment income (loss) to average daily net assets 3.99% 4.73% 4.72% 5.11% 5.00% ---- ---- ---- ---- ---- Portfolio turnover rate (excluding short-term securities) 24% 48% 48% 27% 55% -- -- -- -- -- Total return(e) 9.73% (5.77%) (1.10%) 4.73% 4.12% ---- ----- ----- ---- ----
See accompanying notes to financial highlights. - ------------------------------------------------------------------------------- 20 AXP GLOBAL BOND FUND -- ANNUAL REPORT Class C Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001 2000(b) Net asset value, beginning of period $5.38 $5.52 ----- ----- Income from investment operations: Net investment income (loss) .21 .10 Net gains (losses) (both realized and unrealized) .31 (.24) --- ---- Total from investment operations .52 (.14) --- ---- Less distributions: Dividends from net investment income (.11) -- ---- ---- Net asset value, end of period $5.79 $5.38 ----- ----- Ratios/supplemental data Net assets, end of period (in millions) $1 $-- -- --- Ratio of expenses to average daily net assets(c) 2.09% 2.07%(d) ---- ---- Ratio of net investment income (loss) to average daily net assets 3.84% 4.80%(d) ---- ---- Portfolio turnover rate (excluding short-term securities) 24% 48% -- -- Total return(e) 9.84% (2.49%) ---- -----
Class Y Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001 2000 1999 1998 1997 Net asset value, beginning of period $5.40 $5.87 $6.17 $6.26 $6.30 ----- ----- ----- ----- ----- Income from investment operations: Net investment income (loss) .29 .35 .34 .40 .35 Net gains (losses) (both realized and unrealized) .27 (.62) (.36) (.06) (.06) --- ---- ---- ---- ---- Total from investment operations .56 (.27) (.02) .34 .29 --- ---- ---- --- --- Less distributions: Dividends from net investment income (.16) (.20) (.27) (.29) (.29) Distributions from realized gains -- -- (.01) (.14) -- Excess distributions of realized gains -- -- -- -- (.04) --- ---- ---- --- --- Total distributions (.16) (.20) (.28) (.43) (.33) ---- ---- ---- ---- ---- Net asset value, end of period $5.80 $5.40 $5.87 $6.17 $6.26 ----- ----- ----- ----- ----- Ratios/supplemental data Net assets, end of period (in millions) $-- $-- $-- $-- $-- --- ---- ---- --- --- Ratio of expenses to average daily net assets(c) 1.16% 1.14% 1.07% .99% 1.01% ---- ---- ---- --- ---- Ratio of net investment income (loss) to average daily net assets 4.90% 5.75% 5.63% 6.10% 5.89% ---- ---- ---- ---- ---- Portfolio turnover rate (excluding short-term securities) 24% 48% 48% 27% 55% -- -- -- -- -- Total return(e) 10.71% (4.88%) (.19%) 5.62% 5.06% ----- ----- ---- ---- ----
Notes to financial highlights (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Inception date was June 26, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge. - ------------------------------------------------------------------------------- 21 AXP GLOBAL BOND FUND -- ANNUAL REPORT Independent Auditors' Report THE BOARD OF TRUSTEES AND UNITHOLDERS WORLD TRUST We have audited the accompanying statement of assets and liabilities, including the schedule of investments in securities, of World Income Portfolio (a series of World Trust) as of October 31, 2001, the related statement of operations for the year then ended, and the statements of changes in net assets for each of the years in the two-year period ended October 31, 2001. These financial statements are the responsibility of portfolio management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2001, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of World Income Portfolio as of October 31, 2001, and the results of its operations and the changes in its net assets for each of the periods stated in the first paragraph above, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Minneapolis, Minnesota December 7, 2001 - ------------------------------------------------------------------------------- 22 AXP GLOBAL BOND FUND -- ANNUAL REPORT Financial Statements Statement of assets and liabilities World Income Portfolio
Oct. 31, 2001 Assets Investments in securities, at value (Note 1)* (identified cost $524,553,019) $484,192,058 Cash in bank on demand deposit 296,171 Dividends and accrued interest receivable 15,739,660 Receivable for investment securities sold 3,425,717 Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 4) 568,411 ------- Total assets 504,222,017 ----------- Liabilities Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 4) 19,932 Payable upon return of securities loaned (Note 5) 2,120,000 Accrued investment management services fee 10,414 Other accrued expenses 45,911 ------ Total liabilities 2,196,257 --------- Net assets $502,025,760 ============ * Including securities on loan, at value (Note 5) $ 2,022,500 ------------
See accompanying notes to financial statements. - ------------------------------------------------------------------------------- 23 AXP GLOBAL BOND FUND -- ANNUAL REPORT Statement of operations World Income Portfolio
Year ended Oct. 31, 2001 Investment income Income: Interest $ 31,577,863 Less foreign taxes withheld (177,395) -------- Total income 31,400,468 ---------- Expenses (Note 2): Investment management services fee 3,918,640 Compensation of board members 9,985 Custodian fees 97,807 Audit fees 24,500 Other 10,827 ------ Total expenses 4,061,759 Earnings credits on cash balances (Note 2) (5,398) ------ Total net expenses 4,056,361 --------- Investment income (loss) -- net 27,344,107 ---------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) (13,181,196) Foreign currency transactions (2,185,159) ---------- Net realized gain (loss) on investments (15,366,355) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 43,790,272 ---------- Net gain (loss) on investments and foreign currencies 28,423,917 ---------- Net increase (decrease) in net assets resulting from operations $ 55,768,024 ============
Statements of changes in net assets World Income Portfolio
Year ended Oct. 31, 2001 2000 Operations Investment income (loss) -- net $ 27,344,107 $ 40,950,381 Net realized gain (loss) on investments (15,366,355) (21,588,091) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 43,790,272 (50,753,646) ---------- ----------- Net increase (decrease) in net assets resulting from operations 55,768,024 (31,391,356) Net contributions (withdrawals) from partners (98,244,888) (259,410,172) ----------- ------------ Total increase (decrease) in net assets (42,476,864) (290,801,528) Net assets at beginning of year 544,502,624 835,304,152 ----------- ----------- Net assets at end of year $502,025,760 $ 544,502,624 ============ =============
See accompanying notes to financial statements. - ------------------------------------------------------------------------------- 24 AXP GLOBAL BOND FUND -- ANNUAL REPORT Notes to Financial Statements World Income Portfolio 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES World Income Portfolio (the Portfolio) is a series of World Trust (the Trust) and is registered under the Investment Company Act of 1940 (as amended) as a non-diversified, open-end management investment company. The Portfolio invests primarily in debt securities of U.S. and foreign issuers. The Declaration of Trust permits the Trustees to issue non-transferable interests in the Portfolio. The Portfolio's significant accounting policies are summarized below: Use of estimates Preparing financial statements that conform to accounting principles generally accepted in the United States of America requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. Valuation of securities All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which foreign securities are traded, and before the close of business of the Fund, are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Option transactions To produce incremental earnings, protect gains and facilitate buying and selling of securities for investments, the 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. - ------------------------------------------------------------------------------- 25 AXP GLOBAL BOND FUND -- ANNUAL REPORT Futures transactions To gain exposure to or protect itself from market changes, the Portfolio may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Portfolio also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Portfolio is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Portfolio each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Portfolio recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Portfolio may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Portfolio and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Portfolio is subject to the credit risk that the other party will not complete its contract obligations. 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 level-yield amortization of premium and discount, is accrued daily. - ------------------------------------------------------------------------------- 26 AXP GLOBAL BOND FUND -- ANNUAL REPORT 2. FEES AND EXPENSES The Trust, on behalf of the Portfolio, has an Investment Management Services Agreement with AEFC to manage its portfolio. Under this agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the Portfolio's average daily net assets in reducing percentages from 0.77% to 0.67% annually. Under the agreement, the Trust also pays taxes, brokerage commissions and nonadvisory expenses, which include custodian fees, audit and certain legal fees, fidelity bond premiums, registration fees for units, office expenses, consultants' fees, compensation of trustees, corporate filing fees, expenses incurred in connection with lending securities of the Portfolio and any other expenses properly payable by the Trust or Portfolio and approved by the board. During the year ended Oct. 31, 2001, the Portfolio's custodian fees were reduced by $5,398 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 $119,956,109 and $199,106,310, respectively, for the year ended Oct. 31, 2001. For the same period, the portfolio turnover rate was 24%. Realized gains and losses are determined on an identified cost basis. 4. FOREIGN CURRENCY CONTRACTS As of Oct. 31, 2001, the Portfolio 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 Nov. 19, 2001 6,227,000 2,615,340 $ 47,741 $ -- New Zealand Dollar U.S. Dollar Nov. 20, 2001 17,500,000 16,145,500 394,282 -- European Monetary Unit U.S. Dollar Nov. 20, 2001 7,000,000 6,426,875 126,388 -- European Monetary Unit U.S. Dollar Nov. 20, 2001 15,700,000 14,111,160 -- 19,932 European Monetary Unit U.S. Dollar - ---------------------------------------------------------------------------------------------------------- Total $568,411 $19,932 - ----------------------------------------------------------------------------------------------------------
5. LENDING OF PORTFOLIO SECURITIES As of Oct. 31, 2001, securities valued at $2,022,500 were on loan to brokers. For collateral, the Fund received $2,120,000 in cash. Income from securities lending amounted to $10,363 for the year ended Oct. 31, 2001. 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. 6. NEW ACCOUNTING PRONOUNCEMENT In November 2000, the AICPA issued a revised Audit and Accounting Guide, Audits of Investment Companies, which is effective for fiscal years beginning after Dec. 15, 2000. Adopting the revised Guide is not expected to have a significant impact on the Portfolio's financial position, results of operations or changes in its net assets. - ------------------------------------------------------------------------------- 27 AXP GLOBAL BOND FUND -- ANNUAL REPORT Investments in Securities World Income Portfolio Oct. 31, 2001 (Percentages represent value of investments compared to net assets) Bonds (94.6%)(c) Issuer Coupon Principal Value(a) rate amount Australia (0.9%) New South Wales Treasury (Australian Dollar) 03-01-08 8.00% 8,000,000 $4,640,543 Belgium (4.0%) Belgium Kingdom (European Monetary Unit) Series 14 04-29-04 7.25 20,400,000 20,035,436 Bermuda (0.2%) Imexsa Export Trust (U.S. Dollar) 05-31-03 10.13 1,002,376(d) 873,320 Bulgaria (0.4%) Govt of Bulgaria (U.S. Dollar) Series A 07-28-12 4.56 2,500,000(f) 2,025,000 Canada (6.2%) Calpine Canada Energy Finance (U.S. Dollar) Company Guaranty 05-01-08 8.50 3,500,000 3,504,305 Govt of Canada (Canadian Dollar) 12-01-03 7.50 21,100,000 14,514,263 (Japanese Yen) 03-23-09 1.90 980,000,000 8,709,234 Province of British Columbia (Canadian Dollar) 08-23-10 6.38 6,400,000 4,310,445 Total 31,038,247 Cayman Islands (0.2%) Zhuhai Highway (U.S. Dollar) Sub Nts 07-01-08 11.50 11,350,000(b,d) 1,248,500 China (0.9%) Greater Beijing First Expressways (U.S. Dollar) Sr Nts 06-15-04 9.25 3,500,000(b) 1,260,000 06-15-07 9.50 8,750,000(b) 3,150,000 Total 4,410,000 Colombia (0.6%) Republic of Colombia (U.S. Dollar) 04-23-09 9.75 3,000,000(e) 3,033,750 Denmark (1.7%) Govt of Denmark (Danish Krone) 05-15-03 8.00 68,000,000 8,742,695 Dominican Republic (0.5%) Dominican Republic (U.S. Dollar) 09-27-06 9.50 2,400,000(d) 2,367,000 France (3.6%) Govt of France (European Monetary Unit) 04-25-05 7.50 8,710,000 8,829,214 04-25-11 6.50 9,000,000 9,335,674 Total 18,164,888 Germany (19.2%) Allgemeine Hypo Bank (European Monetary Unit) 09-02-09 5.00 10,760,000 9,896,523 Depfa Deutsche Pfandbriefbank (European Monetary Unit) 02-03-05 5.00 4,800,000 4,496,946 Federal Republic of Germany (European Monetary Unit) 07-22-02 8.00 18,471,330 17,169,791 07-15-03 6.50 6,300,000 5,968,773 11-11-04 7.50 29,600,000 29,760,311 07-04-27 6.50 19,005,512 20,522,087 Treuhandanstalt (European Monetary Unit) 01-29-03 7.13 9,300,000 8,757,621 Total 96,572,052 Hungary (1.1%) Govt of Hungary (Hungarian Forint) 05-12-06 8.50 1,525,000,000 5,426,698 See accompanying notes to investments in securities. - ------------------------------------------------------------------------------- 28 AXP GLOBAL BOND FUND -- ANNUAL REPORT Bonds (continued) Issuer Coupon Principal Value(a) rate amount Indonesia (0.1%) Tjiwi Kimia Finance Mauritius (U.S. Dollar) Company Guaranty 08-01-04 10.00% $2,450,000(b) $333,813 Italy (9.2%) Buoni Poliennali Del Tes (European Monetary Unit) 01-01-04 8.50 32,321,533 32,180,341 11-01-26 7.25 7,886,283 9,075,439 Republic of Italy (Japanese Yen) 03-27-08 3.80 500,000,000 4,886,880 Total 46,142,660 Mexico (2.3%) United Mexican States (British Pound) Medium-term Nts Series E 05-30-02 8.75 5,000,000 7,265,450 (U.S. Dollar) 01-14-11 8.38 4,000,000 4,102,000 Total 11,367,450 New Zealand (1.0%) Govt of New Zealand (New Zealand Dollar) 11-15-06 8.00 11,000,000 5,001,358 Norway (2.5%) Govt of Norway (Norwegian Krone) 11-30-04 5.75 60,000,000 6,742,915 01-15-07 6.75 48,000,000 5,625,736 Total 12,368,651 Panama (0.8%) Republic of Panama (U.S. Dollar) 02-08-11 9.63 4,200,000 4,250,010 Russia (0.6%) Ministry Finance Russia (U.S. Dollar) 06-26-07 10.00 3,200,000(d) 2,932,000 Supra-National (2.8%) European Investment Bank (British Pound) 12-07-06 7.63 2,900,000 4,717,662 Inter-American Development Bank (Japanese Yen) 07-08-09 1.90 1,035,000,000 9,171,002 Total 13,888,664 United Kingdom (2.6%) United Kingdom Treasury (British Pound) 06-10-03 8.00 8,380,000 12,917,842 United States (33.2%) Allied Waste North America (U.S. Dollar) Company Guaranty Series B 04-01-08 8.88 3,500,000 3,587,500 American Airlines (U.S. Dollar) 05-23-11 6.82 3,700,000(d) 3,696,497 Chesapeake (U.S. Dollar) 05-01-03 9.88 1,000,000 1,019,180 Citicorp (European Monetary Unit) 09-19-09 6.25 10,800,000 5,325,937 Delta Air Lines (U.S. Dollar) 09-18-11 7.11 2,800,000 2,914,016 Equistar Chemical (U.S. Dollar) Sr Nts 09-01-08 10.13 3,000,000(d) 2,807,310 Executive Risk Capital (U.S. Dollar) Company Guaranty Series B 02-01-27 8.68 3,500,000 3,834,159 Federal Home Loan Mtge Corp (U.S. Dollar) 07-01-31 7.50 7,442,176 7,792,423 Federal Natl Mtge Assn (U.S. Dollar) 08-15-04 6.50 3,000,000 3,263,394 06-01-15 7.50 4,400,239 4,654,767 12-01-29 7.00 7,749,586 8,106,574 Ford Motor Credit (Japanese Yen) 02-07-05 1.20 1,000,000,000 7,909,808 HCA (U.S. Dollar) 06-01-06 7.13 3,700,000 3,838,750 Household Finance (U.S. Dollar) 05-09-05 8.00 4,000,000 4,427,256 IBM (Japanese Yen) 04-14-03 .90 970,000,000 7,992,164 Intl Paper (European Monetary Unit) 08-11-06 5.38 7,000,000 6,320,448 See accompanying notes to investments in securities. - ------------------------------------------------------------------------------- 29 AXP GLOBAL BOND FUND -- ANNUAL REPORT Bonds (continued) Issuer Coupon Principal Value(a) rate amount United States (cont.) Overseas Private Investment (U.S. Dollar) U.S. Govt Guaranty Series 1996A 01-15-09 6.99% $5,833,333 $6,300,292 PDV America (U.S. Dollar) Sr Nts 08-01-03 7.88 3,500,000 3,619,298 Pulte Homes (U.S. Dollar) Sr Nts 08-01-11 7.88 1,900,000(d) 1,917,415 Salomon Smith Barney Holdings (U.S. Dollar) 01-15-03 6.13 6,000,000 6,232,500 U.S. Treasury (U.S. Dollar) 10-15-06 6.50 9,700,000 10,942,764 08-15-10 5.75 4,000,000 4,440,640 11-15-16 7.50 35,700,000 45,562,126 02-15-26 6.00 5,100,000 5,735,919 WorldCom (U.S. Dollar) 05-15-31 8.25 3,000,000 3,046,650 Zurich Capital Trust I (U.S. Dollar) Company Guaranty 06-01-37 8.38 2,025,000(d) 2,051,159 Total 167,338,946 Total bonds (Cost: $515,478,843) $475,119,523 Other (--%)(b,c) Issuer Shares Value(a) Mexico Mexico Value Rights 1,000 $530 Total other (Cost: $--) $530 Short-term securities (1.8%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agencies Federal Home Loan Mtge Corp Disc Nt 11-15-01 3.40% $300,000 $299,568 Federal Natl Mtge Assn Disc Nts 12-03-01 2.31 400,000 399,153 12-06-01 2.41 500,000 498,735 12-20-01 2.20 6,200,000 6,179,606 12-21-01 2.11 1,700,000 1,694,943 Total short-term securities (Cost: $9,074,176) $9,072,005 Total investments in securities (Cost: $524,553,019)(g) $484,192,058 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) Security is partially or fully on loan. See Note 4 to the financial statements. (f) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on Oct. 31, 2001. (g) At Oct. 31, 2001, the cost of securities for federal income tax purposes was $525,928,988 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 9,668,654 Unrealized depreciation (51,405,584) ----------- Net unrealized depreciation $(41,736,930) ------------ - ------------------------------------------------------------------------------- 30 AXP GLOBAL BOND FUND -- ANNUAL REPORT Federal Income Tax Information (Unaudited) The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below are reported to you on Form 1099-DIV, Dividends and Distributions. Shareholders should consult a tax advisor on how to report distributions for state and local tax purposes. AXP Global Bond Fund Fiscal year ended Oct. 31, 2001 Class A Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Dec. 20, 2000 $0.07975 June 27, 2001 0.03273 Sept. 27, 2001 0.03449 Total distributions $0.14697 Class B Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Dec. 20, 2000 $0.07345 June 27, 2001 0.02193 Sept. 27, 2001 0.01395 Total distributions $0.10933 Class C Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Dec. 20, 2000 $0.07356 June 27, 2001 0.02195 Sept. 27, 2001 0.01683 Total distributions $0.11234 Class Y Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Dec. 20, 2000 $0.08114 June 27, 2001 0.03515 Sept. 27, 2001 0.04445 Total distributions $0.16074 - ------------------------------------------------------------------------------- 31 AXP GLOBAL BOND FUND -- ANNUAL REPORT AXP Global Bond Fund PRSRT STD AUTO 70100 AXP Financial Center U.S. POSTAGE Minneapolis, MN 55474 PAID AMERICAN americanexpress.com EXPRESS Ticker Symbol Class A: IGBFX Class B: IGLOX Class C: N/A Class Y: N/A 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. (logo) AMERICAN EXPRESS S-6309 V (12/01) -----END PRIVACY-ENHANCED MESSAGE-----