<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<FILENAME>s6309w.txt
<DESCRIPTION>AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<TEXT>
AXP(R)
Global
Bond
Fund
2002 ANNUAL REPORT
(Prospectus Enclosed)
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.)
--------------------------------------------------------------------------------
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
--------------------------------------------------------------------------------
<PAGE>
Table of Contents
From the Chairman 3
Economic and Market Update 4
Fund Snapshot 6
Questions & Answers with Portfolio Management 7
The Fund's Long-term Performance 10
Investments in Securities 11
Financial Statements (Portfolio) 16
Notes to Financial Statements (Portfolio) 19
Independent Auditors' Report (Portfolio) 23
Financial Statements (Fund) 24
Notes to Financial Statements (Fund) 27
Independent Auditors' Report (Fund) 33
Federal Income Tax Information 34
Board Members and Officers 35
Results of Meetings of Shareholders 38
--------------------------------------------------------------------------------
2 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
(photo of) Arne H. Carlson
From the Chairman
Arne H. Carlson
Chairman of the board
Dear Shareholders,
It is a very difficult period for investors caused by corporate management
misconduct and its impact on the market as well as the economy. The integrity of
corporations at large is being questioned. However, there is optimism that the
resulting reforms will give Americans the kind of integrity they deserve. Many
corporate leaders are strongly supportive of these reforms. We all have a right
to expect financial statements to be fully accurate and business leaders to
place the interests of shareholders above personal desires. Your Board is truly
independent, comprised of 10 members (nominated by independent members) and
three recommended by American Express Financial Corporation. These individuals
come from a variety of geographic areas with the diverse skill sets necessary to
oversee the operations of the Fund. Investment performance is, and remains, our
primary concern.
The Fund's auditors, KPMG LLP, are truly independent of American Express
Financial Corporation. KPMG serves the interest of shareholders by supporting
the work of the Board and certifying unbiased financial reports.
The Board has confidence in Ted Truscott, American Express Financial
Corporation's Chief Investment Officer, and shares his enthusiasm in the
management changes he has effected to improve the investment performance of all
American Express funds. The focus of the Board and American Express Financial
Corporation is simple; we strive for consistent, competitive investment
performance.
All of the proposals in the proxy statement you received in September were
approved at the shareholder meeting on November 13, 2002, and will be
implemented in the coming weeks.
On behalf of the Board,
Arne H. Carlson
--------------------------------------------------------------------------------
3 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Economic and Market Update
FROM CIO WILLIAM F. "TED" TRUSCOTT
(photo of) William F. "Ted" Truscott
William F. "Ted" Truscott
Chief Investment Officer
American Express Financial Corporation
Dear Shareholders,
The past several months* have proven that the economy isn't the only force
driving the stock market. Although, early this year the U.S. recession was
pronounced over, accounting scandals and shaky consumer confidence kept the
downtrend in stock prices in place until mid-summer. September lived up to its
reputation as the cruelest month for stocks, erasing all of the summertime gains
-- and more. It remains to be seen whether the late-October rally -- among the
strongest market performances in years -- will hold its own.
Yet even as the stock market grapples with questions of corporate integrity,
there are several factors working in stocks' favor: low interest rates, improved
earnings (achieved in many cases by wringing out excess costs built up in the
`90s) and a growing economy. The latest cut in interest rates enacted by the
Federal Reserve could be the key to a sustainable rebound. At 1.25%, the Fed's
overnight bank lending rate is now at its lowest level since July 1961.
Today, stock market investors are in a better position than they have been for
some time, with improving prospects for both consumers and businesses. That may
just prove to be the winning combination for corporate earnings -- and for the
stock market -- in 2003.
KEY POINTS
-- Stocks are continuing to get less expensive.
-- Credit "crunch" for business sector persists.
-- Those saving for long-term goals should maintain an allocation to equities.
--------------------------------------------------------------------------------
4 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Economic and Market Update
One of the more striking changes we've seen in the past couple of years has
occurred in investor behavior. U.S. investors have gone from being a
risk-seeking population, willing to buy stocks at outrageous valuations, to a
risk-averse group that has embraced interest rates at 40-year lows as acceptable
for long-term returns. For example, the yield on 10-year U.S. Treasury Notes was
at historic lows in early October -- about 3.7%. Since bond yields move
inversely to prices, the low yield means that prices of U.S. Treasury securities
have risen substantially. Investors are seeking the comparative safety of Uncle
Sam in a very uncertain environment. The threat of war with Iraq and the
prospect of higher oil prices stoked investors' fears toward the end of the
period.
It's also important to note that a bear market in corporate bonds has developed
alongside one in stocks. Recent irregularities in corporate accounting have no
doubt played a role in investors' concerns about non-government bonds.
Nevertheless, opportunities do exist in corporate and high-yield securities
because of the bear market of recent months. Investors who can tolerate some
risk should not abandon these securities in a flight to safety. For more
information about different kinds of bonds, speak to your financial advisor or
retirement plan administrator.
While the latest market declines are indeed painful, they are creating more
opportunity in stocks in the form of a steadily declining price/earnings ratio.
On both a relative and absolute basis, stocks continue to get less and less
expensive. Those saving for long-term goals should maintain a significant
allocation to equities. Over time, they have provided the best returns of
virtually any investment. There's no compelling reason to believe this will be
different going forward. As always, diversification is the best strategy for
meeting your financial goals.
Thank you for investing with American Express Funds.
William F. Truscott
* Please see portfolio manager Q&A for fiscal period economic coverage.
--------------------------------------------------------------------------------
5 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Fund Snapshot
AS OF OCT. 31, 2002
PORTFOLIO MANAGER
Portfolio manager Nic Pifer, CFA
Tenure/since 5/00
Years in industry 12
FUND OBJECTIVE
For investors seeking high total return through income and growth of capital.
Inception dates
A: 3/20/89 B: 3/20/95 C: 6/26/00 Y: 3/20/95
Ticker symbols
A: IGBFX B: IGLOX C: -- Y: --
Total net assets $503.1 million
Number of holdings approximately 100
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
DURATION
SHORT INT. LONG
X X HIGH
MEDIUM QUALITY
LOW
PORTFOLIO ASSET MIX
Percentage of portfolio assets
Bonds 93.2%
Cash equivalents 6.8%
TOP FIVE COUNTRIES
Percentage of portfolio assets
United States 31.8%
Germany 16.7
Italy 9.3
Canada 6.2
France 4.3
CREDIT QUALITY SUMMARY
Percentage of portfolio assets
AAA bonds 56.7%
AA bonds 14.9
A bonds 7.6
BAA bonds 4.5
Non-investment grade bonds 9.5
There are special risk considerations associated with international investing
related to market, currency, economic, political and other factors.
Fund holdings are subject to change.
--------------------------------------------------------------------------------
6 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Q. How did AXP Global Bond Fund perform for the 12-month period ended Oct. 31,
2002?
A. For the period, the Fund's Class A shares returned 6.24% (excluding sales
charge). In comparison, the Fund underperformed the Salomon Smith Barney
World Government Bond Index, which returned 9.15% during the fiscal year.
The Fund outperformed the Lipper Global Income Funds Index, which returned
4.90% over the same timeframe.
Q: What factors significantly impacted performance?
A. Rising interest rates during the beginning of the period negatively affected
the Fund. Rates rose during this time because investors sold their bonds,
anticipating improvement in the world's economies. For most of the winter,
the dollar gained against the euro and also had a negative impact on the
Fund.
When investors realized that the economic recovery was falling short of
expectations, global equity prices plummeted and investors poured their
money into less risky asset classes such as bonds. This and a strengthening
euro against the dollar were positives for the Fund throughout the second
half of the fiscal year.
Yields on government bonds, a large percentage of our holdings, moved lower
for much of the third quarter. However, this asset class had a generally
positive impact on Fund performance. Investors continued to shun corporate
bonds in the wake of corporate governance issues, but corporates produced
positive returns. Investors' risk aversion also spread to emerging market
debt and this asset class performed poorly.
(bar graph)
PERFORMANCE COMPARISON
For the year ended Oct. 31, 2002
10% (bar 2)
8% (bar 1) +9.15%
6% +6.24% (bar 3)
4% +4.90%
2%
0%
(bar 1) AXP Global Bond Fund Class A (excluding sales charge)
(bar 2) Salomon Smith Barney World Government Bond Index (unmanaged)
(bar 3) Lipper Global Income Funds Index
(see "The Fund's Long-term Performance" for Index descriptions)
Past performance is no guarantee of future results. The 4.75% sales charge
applicable to Class A shares of the Fund is not reflected in the bar chart; if
reflected, returns would be lower than those shown. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
sales charges and fees.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
--------------------------------------------------------------------------------
7 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Questions & Answers
(begin callout quote) > We believe the U.S. economy will remain in a slow-motion
recovery, and that global economies will follow suit. (end callout quote)
Toward period's end, the dollar's decline against the euro stabilized and
eventually reversed itself. This had a slightly negative impact on
performance, but currency trends generally were neutral for the Fund during
the period.
Q. What changes did you make to the Fund's portfolio?
A. At the beginning of the period, concern that interest rates in the U.S. had
reached bottom prompted us to shift assets away from domestic bonds and into
European debt. This overweight in Europe helped performance. Our outlook on
Japan, however, remained cautious as the nation struggles with both economic
turmoil and extremely low interest rates. As a result, we changed our
weighting in Japan several times early in the period.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
as of Oct. 31, 2002
Class A Class B Class C Class Y
(Inception dates) (3/20/89) (3/20/95) (6/26/00) (3/20/95)
NAV(1) POP(2) NAV(1) After CDSC(3) NAV(1) After CDSC(4) NAV(5) POP(5)
<C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year +6.24% +1.19% +5.59% +1.59% +5.51% +5.51% +6.72% +6.72%
5 years +3.21% +2.21% +2.42% +2.25% N/A N/A +3.40% +3.40%
10 years +5.66% +5.15% N/A N/A N/A N/A N/A N/A
Since inception N/A N/A +4.69% +4.69% +5.34% +5.34% +5.43% +5.43%
</TABLE>
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 4.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be worth
more or less than the original cost. The performance shown for each class of
shares will vary due to differences in sales charges and fees. Short term
performance may be higher or lower than the figures shown. Visit
americanexpress.com for current information.
--------------------------------------------------------------------------------
8 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Questions & Answers
Entering the new year, we expected a global economic recovery. Thus, we
emphasized corporate bonds, reduced the Fund's duration and shifted more
assets into overseas debt. This recovery did not fully materialize and
possibly hurt performance. We believe this view will eventually become
reality, but market turmoil could last a while longer. As a result, we
reduced the size of some corporate debt positions and adjusted the Fund's
duration slightly higher toward period's end.
Q. What is your outlook for the coming months?
A. We expect more of the same, at least initially. We believe the U.S. economy
will remain in a slow-motion recovery, but it will eventually recover. We
anticipate that global economies will follow suit, although we don't expect
help from European central banks, which seem intent on keeping interest
rates stable.
With bond yields at historic lows, we believe that yields will begin rising
slightly as the economy gains some steam. As for currency trends, the dollar
appears susceptible to some weakness over the long term.
We will continue to structure the portfolio somewhat defensively because of
low current interest rates. Corporate debt, however promises to play an
important role in the Fund's future performance. Attractively valued and
with potentially attractive yields, corporate bonds offer investors value
relative to other debt classes. Finally, we plan to continue a large
overweight in overseas bonds, with a lesser emphasis on domestic debt.
--------------------------------------------------------------------------------
9 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
The Fund's Long-term Performance
This chart illustrates the total value of an assumed $10,000 investment in AXP
Global Bond Fund Class A shares (from 11/1/92 to 10/31/02) as compared to the
performance of two widely cited performance indices, Salomon Smith Barney World
Government Bond Index and the Lipper Global Income Funds Index. In comparing the
Fund's Class A shares to these indices, you should take into account the fact
that the Fund's performance reflects the maximum sales charge of 4.75%, while
such charges are not reflected in the performance of the indices. Returns for
the Fund include the reinvestment of any distribution paid during each period.
Past performance is no guarantee of future results. Your investment and return
values fluctuate so that your shares, when redeemed, may be worth more or less
than the original cost. Returns do not reflect taxes payable on distributions
and redemptions. Also see "Past Performance" in the Fund's current prospectus.
(line graph)
VALUE OF A HYPOTHETICAL $10,000 INVESTMENT
IN AXP GLOBAL BOND FUND
$20,000
$15,000 (solid line) AXP Global Bond Fund Class A
$10,000 (dotted line) Salomon Smith Barney World Government Bond Index(1)
$5,500 (dashed line) Lipper Global Income Funds Index(2)
'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02
(solid line) AXP Global Bond Fund Class A $16,526
(dotted line) Salomon Smith Barney World Government Bond Index(1) $17,899
(dashed line) Lipper Global Income Funds Index(2) $17,022
(1) 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.
(2) The Lipper Global Income Funds Index, published by Lipper Inc., includes
the 30 largest funds that are generally similar to the Fund, although some
funds in the index may have somewhat different investment policies or
objectives.
Average Annual Total Returns
Class A with Sales Charge as of Oct. 31, 2002
1 year +1.19%
5 years +2.21%
10 years +5.15%
Since inception N/A
Results for other share classes can be found on page 8.
--------------------------------------------------------------------------------
10 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Investments in Securities
World Income Portfolio
Oct. 31, 2002
(Percentages represent value of investments compared to net assets)
Bonds (94.5%)(c)
Issuer Coupon Principal Value(a)
rate amount
Australia (1.0%)
New South Wales Treasury
(Australian Dollar)
03-01-08 8.00% 8,000,000 $4,945,356
Bahamas (0.1%)
Imexsa Export Trust
(U.S. Dollar) Company Guaranty
05-31-05 10.63 635,899(d) 324,309
Brazil (0.4%)
Federal Republic of Brazil
(U.S. Dollar)
01-11-06 10.25 2,400,000 1,788,000
Canada (6.2%)
Calpine Canada Energy Finance
(U.S. Dollar) Company Guaranty
05-01-08 8.50 3,500,000 1,137,500
Govt of Canada
(Canadian Dollar)
12-01-03 7.50 21,100,000 14,127,767
(Japanese Yen)
03-23-09 1.90 980,000,000 8,766,964
Province of British Columbia
(Canadian Dollar)
08-23-10 6.38 6,400,000 4,378,002
Province of Ontario
(Japanese Yen)
01-25-10 1.88 340,000,000 3,020,125
Total 31,430,358
China (1.3%)
Greater Beijing First Expressways
(U.S. Dollar) Sr Nts
06-15-04 9.25 3,500,000(b) 1,925,000
06-15-07 9.50 8,750,000(b) 4,812,500
Total 6,737,500
Costa Rica (0.5%)
Republic of Costa Rica
(U.S. Dollar)
02-01-12 8.11 2,500,000(d) 2,512,500
Denmark (1.4%)
Depfa Pfandbriefbank
(Japanese Yen)
07-13-05 1.25 240,000,000 2,012,080
Kingdom of Denmark
(Danish Krone)
03-15-06 8.00 16,000,000 2,405,345
Realkredit Danmark
(Danish Krone)
01-01-05 4.00 18,000,000 2,411,689
Total 6,829,114
Dominican Republic (0.5%)
Dominican Republic
(U.S. Dollar)
09-27-06 9.50 2,400,000(d) 2,520,000
France (4.4%)
Cie Financement Foncier
(European Monetary Unit)
06-24-05 5.00 1,900,000 1,952,242
France Telecom
(U.S. Dollar)
03-01-06 8.70 1,200,000 1,285,575
Govt of France
(European Monetary Unit)
04-25-05 7.50 8,710,000 9,500,106
10-25-11 5.00 9,100,000 9,324,419
Total 22,062,342
Germany (16.9%)
Allgemeine Hypo Bank
(European Monetary Unit)
09-02-09 5.00 10,760,000(d) 10,821,387
Federal Republic of Germany
(European Monetary Unit)
11-11-04 7.50 29,600,000 31,775,104
07-04-08 4.13 9,000,000 8,964,848
07-04-27 6.50 19,005,512 22,336,801
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
11 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
Germany (cont.)
Hypothekenbk In Essen
(European Monetary Unit)
02-20-07 5.50% 4,700,000 $4,905,306
Kredit Fuer Wiederaufbau
(European Monetary Unit)
08-18-06 4.75 6,100,000 6,274,471
Total 85,077,917
Greece (1.5%)
Hellenic Republic
(European Monetary Unit)
02-19-06 6.00 6,900,000 7,371,311
Hungary (1.8%)
Govt of Hungary
(Hungarian Forint)
04-12-05 7.75 1,510,000,000 5,998,458
02-12-11 7.50 700,000,000 2,932,822
Total 8,931,280
Italy (9.4%)
Buoni Poliennali Del Tes
(European Monetary Unit)
01-01-04 8.50 32,321,533 33,966,649
11-01-26 7.25 6,686,283 8,427,063
Republic of Italy
(Japanese Yen)
03-27-08 3.80 500,000,000 4,853,481
Total 47,247,193
Japan (1.2%)
Development Bank of Japan
(Japanese Yen)
06-20-12 1.40 700,000,000 5,919,631
Malaysia (0.3%)
Petronas Capital
(U.S. Dollar) Company Guaranty
05-22-12 7.00 1,500,000(d) 1,630,485
Mexico (0.9%)
United Mexican States
(U.S. Dollar)
01-14-11 8.38 4,000,000 4,310,000
Netherlands (0.1%)
Vodafone Finance
(European Monetary Unit) Company Guaranty
05-27-09 4.75 740,000 709,893
New Zealand (0.9%)
Govt of New Zealand
(New Zealand Dollar)
02-15-05 6.50 9,200,000 4,540,238
Norway (1.9%)
A/S Eksportfinans
(Japanese Yen)
06-21-10 1.80 340,000,000 3,002,094
Govt of Norway
(Norwegian Krone)
05-16-11 6.00 49,000,000 6,507,526
Total 9,509,620
Panama (0.4%)
Republic of Panama
(U.S. Dollar)
02-08-11 9.63 2,100,000 2,194,500
Peru (0.4%)
Republic of Peru
(U.S. Dollar)
02-21-12 9.13 2,300,000(d) 2,029,750
Philippines (0.3%)
Republic of Philippines
(U.S. Dollar)
01-15-19 9.88 1,600,000 1,586,000
Poland (0.2%)
Republic of Poland
(U.S. Dollar)
10-27-14 6.00 1,028,600(i) 1,048,966
Russia (0.5%)
Federation of Russia
(U.S. Dollar)
06-26-07 10.00 2,100,000(d) 2,394,000
Singapore (0.8%)
PSA
(U.S. Dollar)
08-01-05 7.13 3,500,000(d) 3,932,187
Spain (3.6%)
Govt of Spain
(European Monetary Unit)
07-30-09 5.15 17,500,000 18,203,868
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
12 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
Supra National (2.8%)
European Investment Bank
(British Pound)
12-07-06 7.63% 2,900,000 $5,041,401
Inter-American Development Bank
(Japanese Yen)
07-08-09 1.90 1,035,000,000 9,283,479
Total 14,324,880
United Kingdom (2.7%)
United Kingdom Treasury
(British Pound)
06-10-03 8.00 8,380,000 13,447,014
United States (32.2%)
Allied Waste North America
(U.S. Dollar) Company Guaranty Series B
04-01-08 8.88 3,500,000 3,465,000
AT&T
(U.S. Dollar) Sr Nts
11-15-06 6.50 500,000(i) 500,000
AT&T Wireless Services
(U.S. Dollar) Sr Nts
03-01-11 7.88 1,500,000 1,305,000
Bank of America
(U.S. Dollar) Sr Nts
02-01-07 5.25 1,000,000 1,070,461
Citicorp
(Deutsche Mark)
09-19-09 6.25 10,800,000 5,745,824
DaimlerChrysler North America Holding
(European Monetary Unit) Company Guaranty
01-16-07 5.63 670,000 678,911
Del Monte
(U.S. Dollar) Company Guaranty Series B
05-15-11 9.25 1,500,000 1,492,500
Federal Home Loan Mtge Corp
(European Monetary Unit)
01-15-06 5.25 1,800,000 1,865,403
(U.S. Dollar)
11-01-17 6.00 2,500,000(g) 2,603,906
08-01-32 6.50 2,371,897(g) 2,461,090
Federal Natl Mtge Assn
(U.S. Dollar)
02-15-08 5.75 8,500,000 9,450,564
12-01-15 5.50 4,800,000(g) 4,936,500
12-01-30 6.00 4,900,000(g) 5,019,438
08-01-32 6.50 2,395,582(g) 2,483,420
Ford Motor Credit
(Japanese Yen)
02-07-05 1.20 180,000,000 1,398,523
(U.S. Dollar)
02-01-06 6.88 1,000,000 921,949
GMAC
(U.S. Dollar)
09-15-06 6.13 2,500,000 2,403,405
HCA
(U.S. Dollar)
06-01-06 7.13 3,700,000 3,888,685
Household Finance
(U.S. Dollar)
05-09-05 8.00 1,200,000 1,128,316
IBM
(Japanese Yen)
04-14-03 .90 880,000,000 7,202,331
Intl Paper
(European Monetary Unit)
08-11-06 5.38 4,000,000 3,978,649
J.P. Morgan Chase
(U.S. Dollar) Sub Nts
02-01-11 6.75 2,500,000 2,699,745
L-3 Communications
(U.S. Dollar) Sr Sub Nts
06-15-12 7.63 1,570,000(d) 1,624,950
LaBranche
(U.S. Dollar) Sr Sub Nts
03-02-07 12.00 2,100,000(f) 2,226,000
Morgan Stanley, Dean Witter
(European Monetary Unit)
03-16-06 5.25 2,400,000 2,416,704
Northwest Airlines
(U.S. Dollar) Company Guaranty 1st Series 1996
01-02-15 7.67 2,057,326 1,756,010
NRG Energy
(U.S. Dollar)
04-01-31 8.63 2,300,000(b) 437,000
Overseas Private Investment
(U.S. Dollar) U.S. Govt Guaranty Series 1996A
01-15-09 6.99 5,000,000 5,586,100
PDV America
(U.S. Dollar) Sr Nts
08-01-03 7.88 1,500,000 1,515,912
Starwood Hotels Resorts
(U.S. Dollar)
05-01-12 7.88 2,300,000(d) 2,202,250
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
13 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Bonds (continued)
Issuer Coupon Principal Value(a)
rate amount
United States (cont.)
Tenet Healthcare
(U.S. Dollar) Sr Nts
12-01-11 6.38% $1,000,000 $1,058,863
Toyota Motor Credit
(Japanese Yen)
06-09-08 .75 120,000,000 992,097
TRAINS 10-2002
(U.S. Dollar)
01-15-12 6.85 2,964,000(d,e) 3,211,878
U.S. Treasury (U.S. Dollar)
01-31-04 3.00 15,000,000 15,288,915
10-15-06 6.50 2,000,000(f) 2,299,452
08-15-10 5.75 4,000,000 4,567,656
11-15-16 7.50 29,500,000 38,029,659
02-15-26 6.00 5,100,000 5,701,642
Verizon Global Funding
(U.S. Dollar)
06-15-07 6.13 1,000,000 1,060,720
Washington Mutual
(U.S. Dollar) Sr Nts
01-15-07 5.63 2,500,000 2,633,653
Wells Fargo
(U.S. Dollar) Sr Nts
02-15-07 5.13 1,000,000 1,068,958
Zurich Capital
(U.S. Dollar) Company Guaranty
06-01-37 8.38 2,025,000(d) 1,793,927
Total 162,171,966
Total bonds
(Cost: $486,814,677) $475,730,178
Other (--%)(b,c)
Issuer Shares Value(a)
Mexico
Mexico Value
Rights 1,000 $220
Total other
(Cost: $--) $220
Short-term securities (6.9%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (6.4%)
Federal Home Loan Bank Disc Nt
01-08-03 1.68% $3,900,000 $3,888,877
Federal Home Loan Mtge Corp Disc Nt
11-12-02 1.68 3,100,000 3,098,264
Federal Natl Mtge Assn Disc Nts
11-01-02 1.67 4,300,000 4,299,800
11-06-02 1.70 1,800,000 1,799,490
11-15-02 1.64 3,000,000 2,997,950
11-27-02 1.66 2,300,000 2,297,137
12-20-02 1.66 2,500,000 2,494,236
12-24-02 1.65 4,300,000 4,289,342
01-22-03 1.56 2,100,000 2,092,446
01-22-03 1.70 5,000,000 4,982,806
Total 32,240,348
Commercial paper (0.5%)
Preferred Receivables Funding
12-02-02 1.78 1,300,000(h) 1,297,943
SBC Intl
11-08-02 1.77 800,000(h) 799,685
Southern Co Funding
11-13-02 1.75 600,000(h) 599,621
Total 2,697,249
Total short-term securities
(Cost: $34,935,507) $34,937,597
Total investments in securities
(Cost: $521,750,184)(j) $510,667,995
See accompanying notes to investments in securities.
--------------------------------------------------------------------------------
14 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
has been determined to be liquid under guidelines established by the board.
(e) Represents ownership in a cash TRAINS (Targeted Return Index Securities)
comprised of a portfolio of 23 corporate bonds selected to target a
maturity range of 7 to 15 years in the corresponding Lehman Brothers Credit
Index with a current maturity date of Jan. 15, 2012.
(f) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Purchase contracts
German Euro, Dec. 2002, 10-year $10,000,000
Sale contracts
U.S. Treasury Notes, Dec. 2002, 10-year 17,000,000
(g) At Oct. 31, 2002, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$17,412,032.
(h) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid
under guidelines established by the board.
(i) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Oct. 31,
2002.
(j) At Oct. 31, 2002, the cost of securities for federal income tax purposes
was $523,126,153 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $ 11,466,362
Unrealized depreciation (23,924,520)
-----------
Net unrealized depreciation $(12,458,158)
------------
--------------------------------------------------------------------------------
15 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Financial Statements
<TABLE>
<CAPTION>
Statement of assets and liabilities
World Income Portfolio
Oct. 31, 2002
Assets
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $521,750,184) $510,667,995
Dividends and accrued interest receivable 10,577,745
Receivable for investment securities sold 5,032,458
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 4) 9,145
-----
Total assets 526,287,343
-----------
Liabilities
Disbursements in excess of cash on demand deposit 114,738
Payable for investment securities purchased 22,467,562
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 4) 320,323
Accrued investment management services fee 10,401
Other accrued expenses 52,828
------
Total liabilities 22,965,852
----------
Net assets $503,321,491
============
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
16 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
World Income Portfolio
Year ended Oct. 31, 2002
Investment income
Income:
<S> <C>
Interest $ 21,750,891
Less foreign taxes withheld (158,174)
--------
Total income 21,592,717
----------
Expenses (Note 2):
Investment management services fee 3,677,461
Compensation of board members 10,546
Custodian fees 107,544
Audit fees 24,750
Other 8,749
-----
Total expenses 3,829,050
Earnings credits on cash balances (Note 2) (1,972)
------
Total net expenses 3,827,078
---------
Investment income (loss) -- net 17,765,639
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (11,765,799)
Foreign currency transactions (1,135,600)
Futures contracts (1,073,732)
----------
Net realized gain (loss) on investments (13,975,131)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 28,002,434
----------
Net gain (loss) on investments and foreign currencies 14,027,303
----------
Net increase (decrease) in net assets resulting from operations $ 31,792,942
============
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
17 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
World Income Portfolio
Year ended Oct. 31, 2002 2001
Operations
<S> <C> <C>
Investment income (loss) -- net $ 17,765,639 $ 27,344,107
Net realized gain (loss) on investments (13,975,131) (15,366,355)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 28,002,434 43,790,272
---------- ----------
Net increase (decrease) in net assets resulting from operations 31,792,942 55,768,024
---------- ----------
Proceeds from contributions 27,551,027 13,294,921
Fair value of withdrawals (58,048,238) (111,539,809)
----------- ------------
Net contributions (withdrawals) from partners (30,497,211) (98,244,888)
----------- -----------
Total increase (decrease) in net assets 1,295,731 (42,476,864)
Net assets at beginning of year 502,025,760 544,502,624
----------- -----------
Net assets at end of year $503,321,491 $502,025,760
============ ============
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
18 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
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 Portfolio, are
expected to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into account.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
--------------------------------------------------------------------------------
19 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete its contract obligations.
Securities purchased on a forward-commitment basis
Delivery and payment for securities that have been purchased by the Portfolio on
a forward-commitment basis, including when-issued securities and other
forward-commitments, can take place one month or more after the transaction
date. During this period, such securities are subject to market fluctuations,
and they may affect the Portfolio's net assets the same as owned securities. The
Portfolio designates cash or liquid securities at least equal to the amount of
its forward-commitments. As of Oct. 31, 2002, the Portfolio has entered into
outstanding when-issued securities of $12,482,904 and other forward-commitments
of $4,929,128.
--------------------------------------------------------------------------------
20 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
The Fund also enters into transactions to sell purchase commitments to third
parties at current market values and concurrently acquires other purchase
commitments for similar securities at later dates. As an inducement for the Fund
to "roll over" its purchase commitments, the Fund receives negotiated amounts in
the form of reductions of the purchase price of the commitment.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium and discount using the effective
interest method, is accrued daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with American Express Financial Corporation (AEFC) to manage its
portfolio. Under this agreement, AEFC determines which securities will be
purchased, held or sold. The management fee is a percentage of the Portfolio's
average daily net assets in reducing percentages from 0.77% to 0.67% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
During the year ended Oct. 31, 2002, the Portfolio's custodian fees were reduced
by $1,972 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 $235,087,547 and $251,747,427, respectively, for the
year ended Oct. 31, 2002. For the same period, the portfolio turnover rate was
51%. Realized gains and losses are determined on an identified cost basis.
Income from securities lending amounted to $4,279 for the year ended Oct. 31,
2002. 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.
--------------------------------------------------------------------------------
21 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
4. FORWARD FOREIGN CURRENCY CONTRACTS
As of Oct. 31, 2002, the Portfolio has forward foreign currency exchange
contracts that obligate it to deliver currencies at specified future dates. The
unrealized appreciation and/or depreciation on these contracts is included in
the accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
<TABLE>
<CAPTION>
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
<S> <C> <C> <C> <C>
Nov. 21, 2002 14,300,000 13,914,329 $ -- $236,263
European Monetary Unit U.S. Dollar
Dec. 4, 2002 697,970,000 5,621,129 -- 84,060
Japanese Yen U.S. Dollar
Dec. 4, 2002 8,650,000 4,794,436 5,969 --
Australian Dollar U.S. Dollar
Dec 4, 2002 6,227,000 3,020,406 3,176 --
New Zealand Dollar U.S. Dollar
------ --------
Total $9,145 $320,323
------ --------
</TABLE>
5. INTEREST RATE FUTURES CONTRACTS
As of Oct. 31, 2002, investments in securities included securities valued at
$621,302 that were pledged as collateral to cover initial margin deposits on 100
open purchase contracts denominated in Euros and 170 open sale contracts. The
notional market value of the open purchase contracts as of Oct. 31, 2002 was
$11,034,913 with a net unrealized gain of $12,639. The notional market value of
the open sale contracts as of Oct. 31, 2002 was $19,502,188 with a net
unrealized loss of $536,734. See "Summary of significant accounting policies."
--------------------------------------------------------------------------------
22 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
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, 2002, 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, 2002. 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, 2002, by correspondence with the custodian and brokers or by other
appropriate auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of World Income Portfolio as of
October 31, 2002, 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 13, 2002
--------------------------------------------------------------------------------
23 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Financial Statements
<TABLE>
<CAPTION>
Statement of assets and liabilities
AXP Global Bond Fund
Oct. 31, 2002
Assets
<S> <C> <C>
Investment in Portfolio (Note 1) $503,205,620
Capital shares receivable 125,232
-------
Total assets 503,330,852
-----------
Liabilities
Capital shares payable 171,642
Accrued distribution fee 6,591
Accrued transfer agency fee 2,229
Accrued administrative services fee 789
Other accrued expenses 85,085
------
Total liabilities 266,336
-------
Net assets applicable to outstanding capital stock $503,064,516
============
Represented by
Capital stock -- $.01 par value (Note 1) $ 838,966
Additional paid-in capital 537,426,978
Undistributed net investment income 1,228,206
Accumulated net realized gain (loss) (Note 5) (24,758,953)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (11,670,681)
-----------
Total -- representing net assets applicable to outstanding capital stock $503,064,516
============
Net assets applicable to outstanding shares: Class A $348,350,295
Class B $152,058,247
Class C $ 2,580,172
Class Y $ 75,802
Net asset value per share of outstanding capital stock: Class A shares 58,060,845 $ 6.00
Class B shares 25,391,386 $ 5.99
Class C shares 431,753 $ 5.98
Class Y shares 12,611 $ 6.01
------ ------------
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
24 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
AXP Global Bond Fund
Year ended Oct. 31, 2002
Investment income
Income:
<S> <C>
Interest $ 21,745,004
Less foreign taxes withheld (158,139)
--------
Total income 21,586,865
----------
Expenses (Note 2):
Expenses allocated from Portfolio 3,826,213
Distribution fee
Class A 850,680
Class B 1,421,569
Class C 15,436
Transfer agency fee 853,898
Incremental transfer agency fee
Class A 64,845
Class B 48,328
Class C 606
Service fee -- Class Y 71
Administrative services fees and expenses 279,674
Compensation of board members 10,463
Printing and postage 128,196
Registration fees 61,034
Audit fees 8,250
Other 5,442
-----
Total expenses 7,574,705
Earnings credits on cash balances (Note 2) (3,068)
------
Total net expenses 7,571,637
---------
Investment income (loss) -- net 14,015,228
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (11,765,697)
Foreign currency transactions (1,139,195)
Futures contracts (1,073,737)
----------
Net realized gain (loss) on investments (13,978,629)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 28,002,459
----------
Net gain (loss) on investments and foreign currencies 14,023,830
----------
Net increase (decrease) in net assets resulting from operations $ 28,039,058
============
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
25 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
AXP Global Bond Fund
Year ended Oct. 31, 2002 2001
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ 14,015,228 $ 23,430,380
Net realized gain (loss) on investments (13,978,629) (15,368,676)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 28,002,459 43,787,031
---------- ----------
Net increase (decrease) in net assets resulting from operations 28,039,058 51,848,735
---------- ----------
Distributions to shareholders from:
Net investment income
Class A (9,644,735) (10,394,416)
Class B (2,850,093) (2,969,230)
Class C (18,570) (7,342)
Class Y (1,859) (1,888)
------ ------
Total distributions (12,515,257) (13,372,876)
----------- -----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 85,865,445 62,825,835
Class B shares 39,838,214 20,979,915
Class C shares 2,477,135 693,932
Class Y shares 39,390 44,000
Reinvestment of distributions at net asset value
Class A shares 9,451,955 8,857,094
Class B shares 2,694,998 2,774,203
Class C shares 18,429 6,659
Class Y shares 2,055 1,727
Payments for redemptions
Class A shares (112,854,832) (133,156,929)
Class B shares (Note 2) (40,086,791) (44,412,190)
Class C shares (Note 2) (813,795) (129,429)
Class Y shares (34,448) --
------- -----
Increase (decrease) in net assets from capital share transactions (13,402,245) (81,515,183)
----------- -----------
Total increase (decrease) in net assets 2,121,556 (43,039,324)
Net assets at beginning of year 500,942,960 543,982,284
----------- -----------
Net assets at end of year $ 503,064,516 $ 500,942,960
============= =============
Undistributed net investment income $ 1,228,206 $ 896,452
------------- -------------
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
26 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Notes to Financial Statements
AXP Global Bond Fund
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Global Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a non-diversified open-end
management investment company. AXP Global Series, Inc. has 10 billion authorized
shares of capital stock that can be allocated among the separate series as
designated by the board.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, incremental transfer agency fee and service fee (class
specific expenses) differ among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on investments
are allocated to each class of shares based upon its relative net assets.
Investment in World Income Portfolio
The Fund invests all of its assets in the World Income Portfolio (the
Portfolio), a series of World Trust, an open-end investment company that has the
same objectives as the Fund. The Portfolio 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, 2002 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.
--------------------------------------------------------------------------------
27 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
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
$1,168,217 and accumulated net realized loss has been decreased by $1,168,217.
The tax character of distributions paid for the years indicated is as follows:
Year ended Oct. 31, 2002 2001
Class A
Distributions paid from:
Ordinary income $9,644,735 $10,394,416
Long-term capital gain -- --
Class B
Distributions paid from:
Ordinary income 2,850,093 2,969,230
Long-term capital gain -- --
Class C
Distributions paid from:
Ordinary income 18,570 7,342
Long-term capital gain -- --
Class Y
Distributions paid from:
Ordinary income 1,859 1,888
Long-term capital gain -- --
As of Oct. 31, 2002, the components of distributable earnings on a tax basis are
as follows:
Undistributed ordinary income $ 2,438,762
Accumulated gain (loss) $(24,197,023)
Unrealized appreciation (depreciation) $(13,443,167)
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.
--------------------------------------------------------------------------------
28 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
2. EXPENSES AND SALES CHARGES
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
The Fund has an agreement with AEFC to provide administrative services. Under an
Administrative Services Agreement, the Fund pays AEFC a fee for administration
and accounting services at a percentage of the Fund's average daily net assets
in reducing percentages from 0.06% to 0.04% annually. A minor portion of
additional administrative service expenses paid by the Fund are consultants'
fees and fund office expenses. Under this agreement, the Fund also pays taxes,
audit and certain legal fees, registration fees for shares, compensation of
board members, corporate filing fees and any other expenses properly payable by
the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The incremental
transfer agency fee is the amount charged to the specific classes for the
additional expense above the fee for Class Y. The Fund pays AECSC an annual fee
per shareholder account for this service as follows:
o Class A $19.50
o Class B $20.50
o Class C $20.00
o Class Y $17.50
The Fund has agreements with American Express Financial Advisors Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution, the Fund pays a 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
$420,409 for Class A, $94,486 for Class B and $865 for Class C for the year
ended Oct. 31, 2002.
During the year ended Oct. 31, 2002, the Fund's transfer agency fees were
reduced by $3,068 as a result of earnings credits from overnight cash balances.
--------------------------------------------------------------------------------
29 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the years indicated are as follows:
<TABLE>
<CAPTION>
Year ended Oct. 31, 2002
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Sold 14,885,496 6,883,558 432,176 6,938
Issued for reinvested distributions 1,684,541 480,718 3,287 366
Redeemed (19,692,200) (6,992,384) (140,508) (6,113)
----------- ---------- -------- ------
Net increase (decrease) (3,122,163) 371,892 294,955 1,191
---------- ------- ------- -----
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
----------- ---------- ------- -----
</TABLE>
4. BANK BORROWINGS
The Fund has a revolving credit agreement with Deutsche Bank, whereby the Fund
is permitted to have bank borrowings for temporary or emergency purposes to fund
shareholder redemptions. The agreement went into effect Sept. 24, 2002. The Fund
must maintain asset coverage for borrowings not to exceed the aggregate of at
least 300%. The agreement, which enables the Fund to participate with other
American Express mutual funds, permits borrowings up to $500 million,
collectively. Interest is charged to each Fund based on its borrowings at a rate
equal to either the LIBOR plus 0.50%, the IBOR plus 0.50% or the higher of the
Federal Funds Rate plus 0.25% and the Prime Lending Rate. Borrowings are payable
within 60 days after such loan is executed. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.09% per annum. Prior to this agreement, the Fund had a revolving credit
agreement that permitted borrowings up to $200 million with U.S. Bank, N.A. The
Fund had no borrowings outstanding during the year ended Oct. 31, 2002.
5. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund has a capital loss carry-over of
$24,197,023 as of Oct. 31, 2002, that will expire in 2006 through 2010 if not
offset by capital gains. It is unlikely the board will authorize a distribution
of any net realized capital gains until the available capital loss carry-over
has been offset or expires.
--------------------------------------------------------------------------------
30 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
6. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
<TABLE>
<CAPTION>
Class A
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2002 2001 2000 1999 1998
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.81 $5.39 $5.87 $6.17 $6.26
Income from investment operations:
Net investment income (loss) .19 .27 .34 .33 .39
Net gains (losses) (both realized and unrealized) .17 .30 (.63) (.36) (.05)
Total from investment operations .36 .57 (.29) (.03) .34
Less distributions:
Dividends from net investment income (.17) (.15) (.19) (.26) (.29)
Distributions from realized gains -- -- -- (.01) (.14)
Total distributions (.17) (.15) (.19) (.27) (.43)
Net asset value, end of period $6.00 $5.81 $5.39 $5.87 $6.17
Ratios/supplemental data
Net assets, end of period (in millions) $348 $355 $389 $598 $724
Ratio of expenses to average daily net assets(c) 1.34% 1.32% 1.30% 1.22% 1.16%
Ratio of net investment income (loss)
to average daily net assets 3.12% 4.75% 5.49% 5.49% 5.86%
Portfolio turnover rate (excluding short-term securities) 51% 24% 48% 48% 27%
Total return(e) 6.24% 10.83% (5.16%) (.35%) 5.52%
</TABLE>
<TABLE>
<CAPTION>
Class B
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2002 2001 2000 1999 1998
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.79 $5.38 $5.87 $6.17 $6.26
Income from investment operations:
Net investment income (loss) .13 .21 .29 .28 .33
Net gains (losses) (both realized and unrealized) .19 .31 (.62) (.35) (.04)
Total from investment operations .32 .52 (.33) (.07) .29
Less distributions:
Dividends from net investment income (.12) (.11) (.16) (.22) (.24)
Distributions from realized gains -- -- -- (.01) (.14)
Total distributions (.12) (.11) (.16) (.23) (.38)
Net asset value, end of period $5.99 $5.79 $5.38 $5.87 $6.17
Ratios/supplemental data
Net assets, end of period (in millions) $152 $145 $155 $235 $263
Ratio of expenses to average daily net assets(c) 2.10% 2.09% 2.07% 1.98% 1.92%
Ratio of net investment income (loss)
to average daily net assets 2.36% 3.99% 4.73% 4.72% 5.11%
Portfolio turnover rate (excluding short-term securities) 51% 24% 48% 48% 27%
Total return(e) 5.59% 9.73% (5.77%) (1.10%) 4.73%
</TABLE>
See accompanying notes to financial highlights.
--------------------------------------------------------------------------------
31 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Class C
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2002 2001 2000(b)
<S> <C> <C> <C>
Net asset value, beginning of period $5.79 $5.38 $5.52
Income from investment operations:
Net investment income (loss) .14 .21 .10
Net gains (losses) (both realized and unrealized) .18 .31 (.24)
Total from investment operations .32 .52 (.14)
Less distributions:
Dividends from net investment income (.13) (.11) --
Net asset value, end of period $5.98 $5.79 $5.38
Ratios/supplemental data
Net assets, end of period (in millions) $3 $1 $--
Ratio of expenses to average daily net assets(c) 2.10% 2.09% 2.07%(d)
Ratio of net investment income (loss)
to average daily net assets 2.29% 3.84% 4.80%(d)
Portfolio turnover rate (excluding short-term securities) 51% 24% 48%
Total return(e) 5.51% 9.84% (2.49%)
</TABLE>
<TABLE>
<CAPTION>
Class Y
Per share income and capital changes(a)
Fiscal period ended Oct. 31, 2002 2001 2000 1999 1998
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.80 $5.40 $5.87 $6.17 $6.26
Income from investment operations:
Net investment income (loss) .20 .29 .35 .34 .40
Net gains (losses) (both realized and unrealized) .19 .27 (.62) (.36) (.06)
Total from investment operations .39 .56 (.27) (.02) .34
Less distributions:
Dividends from net investment income (.18) (.16) (.20) (.27) (.29)
Distributions from realized gains -- -- -- (.01) (.14)
Total distributions (.18) (.16) (.20) (.28) (.43)
Net asset value, end of period $6.01 $5.80 $5.40 $5.87 $6.17
Ratios/supplemental data
Net assets, end of period (in millions) $-- $-- $-- $-- $--
Ratio of expenses to average daily net assets(c) 1.17% 1.16% 1.14% 1.07% .99%
Ratio of net investment income (loss)
to average daily net assets 3.29% 4.90% 5.75% 5.63% 6.10%
Portfolio turnover rate (excluding short-term securities) 51% 24% 48% 48% 27%
Total return(e) 6.72% 10.71% (4.88%) (.19%) 5.62%
</TABLE>
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.
--------------------------------------------------------------------------------
32 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
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, 2002,
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, 2002, and the financial highlights for each of the years in the five-year
period ended October 31, 2002. These financial statements and the financial
highlights are the responsibility of fund management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AXP
Global Bond Fund as of October 31, 2002, 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 13, 2002
--------------------------------------------------------------------------------
33 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
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, 2002
Class A
Income distributions taxable as dividend income, none qualifying for deduction
by corporations.
Payable date Per share
Dec. 20, 2001 $0.12371
March 21, 2002 0.03089
June 21, 2002 0.01995
Total distributions $0.17455
Class B
Income distributions taxable as dividend income, none qualifying for deduction
by corporations.
Payable date Per share
Dec. 20, 2001 $0.09073
March 21, 2002 0.01726
June 21, 2002 0.00912
Total distributions $0.11711
Class C
Income distributions taxable as dividend income, none qualifying for deduction
by corporations.
Payable date Per share
Dec. 20, 2001 $0.09814
March 21, 2002 0.01790
June 21, 2002 0.00908
Total distributions $0.12512
Class Y
Income distributions taxable as dividend income, none qualifying for deduction
by corporations.
Payable date Per share
Dec. 20, 2001 $0.12626
March 21, 2002 0.03333
June 21, 2002 0.02225
Total distributions $0.18184
--------------------------------------------------------------------------------
34 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
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 77 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.
<TABLE>
<CAPTION>
Independent Board Members
Name, Position held with Fund and Principal occupation Other directorships
address, length of service during past five years
age
-------------------------------------- ------------------------------ --------------------------- ----------------------------
<S> <C> <C> <C>
Arne H. Carlson Board member since 1999 Chair, Board Services
901 S. Marquette Ave. Corporation (provides
Minneapolis, MN 55402 administrative services
Born in 1934 to boards). Former
Governor of Minnesota
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Philip J. Carroll, Jr. Board member since 2002 Retired Chairman and CEO, Boise Cascade Corporation
901 S. Marquette Ave. Fluor Corporation (forest products),
Minneapolis, MN 55402 (engineering and Scottish Power PLC, Vulcan
Born in 1937 construction) since 1998. Materials Company, Inc.
Former President and CEO, (construction
Shell Oil Company materials/chemicals)
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Livio D. DeSimone Board member since 2001 Retired Chair of the Cargill, Incorporated
30 Seventh Street East Board and Chief Executive (commodity merchants and
Suite 3050 Officer, Minnesota Mining processors), General
St. Paul, MN 55101-4901 and Manufacturing (3M) Mills, Inc. (consumer
Born in 1936 foods), Vulcan Materials
Company (construction
materials/ chemicals),
Milliken & Company
(textiles and chemicals),
and Nexia
Biotechnologies, Inc.
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Ira D. Hall Board member since 2001 Private investor; Imagistics International,
183 Long Close Road formerly with Texaco Inc. (office equipment),
Stamford, CT 06902 Inc., Treasurer, Reynolds & Reynolds
Born in 1944 1999-2001 and General Company (information
Manager, Alliance services), TECO Energy,
Management Operations, Inc. (energy holding
1998-1999. Prior to that, company), The Williams
Director, International Companies, Inc. (energy
Operations IBM Corp. distribution company)
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Heinz F. Hutter* Board member since 1994 Retired President and
P.O. Box 2187 Chief Operating Officer,
Minneapolis, MN 55402 Cargill, Incorporated
Born in 1929 (commodity merchants and
processors)
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Anne P. Jones Board member since 1985 Attorney and Consultant Motorola, Inc.
5716 Bent Branch Rd. (electronics)
Bethesda, MD 20816
Born in 1935
-------------------------------------- ------------------------------ --------------------------- ----------------------------
</TABLE>
* Interested person of AXP Partners International Aggressive Growth Fund by
reason of being a security holder of J P Morgan Chase & Co., parent company
of American Century Investment Management, L.P., one of the fund's
subadvisers.
--------------------------------------------------------------------------------
35 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Independent Board Members (continued)
Name, Position held with Fund and Principal occupation Other directorships
address, length of service during past five years
age
-------------------------------------- ------------------------------ --------------------------- ----------------------------
<S> <C> <C> <C>
Stephen R. Lewis, Jr.** Board member since 2002 Retired President and
901 S. Marquette Ave. Professor of Economics,
Minneapolis, MN 55402 Carleton College
Born in 1939
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Alan G. Quasha Board member since 2002 President, Quadrant Compagnie Financiere
720 Fifth Avenue Management, Inc. Richemont AG (luxury goods)
New York, NY 10019 (management of private
Born in 1949 equities)
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Alan K. Simpson Board member since 1997 Former three-term United Biogen, Inc.
1201 Sunshine Ave. States Senator for Wyoming (biopharmaceuticals)
Cody, WY 82414
Born in 1931
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Alison Taunton-Rigby Board member since 2002 President, Forester Synaptic Pharmaceuticals
8 Farrar Road Biotech since 2000. Corporation
Lincoln, MA 01773 Former President and CEO,
Born in 1944 Aquila
Biopharmaceuticals, Inc.
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Board Members Affiliated with AEFC***
Name, Position held with Fund and Principal occupation Other directorships
address, length of service during past five years
age
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Barbara H. Fraser Board member since 2002 Executive Vice President
1546 AXP Financial Center - AEFA Products and
Minneapolis, MN 55474 Corporate Marketing of
Born in 1949 AEFC since 2002.
President - Travelers
Check Group, American
Express Company,
2001-2002. Management
Consultant, Reuters,
2000-2001. Managing
Director - International
Investments, Citibank
Global, 1999-2000.
Chairman and CEO,
Citicorp Investment
Services and Citigroup
Insurance Group, U.S.,
1998-1999. Head of
Marketing and Strategic
Planning - Investment
Products and
Distribution, Citibank
Global, 1995-1998
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Stephen W. Roszell Board member since 2002; Senior Vice President -
50238 AXP Financial Center Vice President since 2002 Institutional Group of
Minneapolis, MN 55474 AEFC
Born in 1949
-------------------------------------- ------------------------------ --------------------------- ----------------------------
</TABLE>
** Interested person of AXP Partners International Aggressive Growth Fund by
reason of being a security holder of FleetBoston Financial Corporation,
parent company of Liberty Wanger Asset Management, L.P., one of the fund's
subadvisers.
*** Interested person by reason of being an officer, director and/or employee
of AEFC.
--------------------------------------------------------------------------------
36 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
Board Members Affiliated with AEFC*** (continued)
Name, Position held with Fund and Principal occupation Other directorships
address, length of service during past five years
age
-------------------------------------- ------------------------------ --------------------------- ----------------------------
<S> <C> <C> <C>
William F. Truscott Board member since 2001, Senior Vice President -
53600 AXP Financial Center Vice President since 2002 Chief Investment Officer
Minneapolis, MN 55474 of AEFC since 2001.
Born in 1960 Former Chief Investment
Officer and Managing
Director, Zurich Scudder
Investments
-------------------------------------- ------------------------------ --------------------------- ----------------------------
*** Interested person by reason of being an officer, director and/or employee of
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. Roszell, who is vice president, and
Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers
Name, Position held with Fund and Principal occupation Other directorships
address, length of service during past five years
age
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -
50005 AXP Financial Center Investment Accounting,
Minneapolis, MN 55474 AEFC, since 2002; Vice
Born in 1955 President - Finance,
American Express Company,
2000-2002; Vice President
- Corporate Controller,
AEFC, 1996-2000
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Paula R. Meyer President since 2002 Senior Vice President and
596 AXP Financial Center General Manager - Mutual
Minneapolis, MN 55474 Funds, AEFC, since 2002;
Born in 1954 Vice President and
Managing Director -
American Express Funds,
AEFC, 2000-2002; Vice
President, AEFC,
1998-2000; President -
Piper Capital Management
1997-1998
-------------------------------------- ------------------------------ --------------------------- ----------------------------
Leslie L. Ogg Vice President, General President of Board
901 S. Marquette Ave. Counsel, and Secretary since Services Corporation
Minneapolis, MN 55402 1978
Born in 1938
-------------------------------------- ------------------------------ --------------------------- ----------------------------
</TABLE>
The SAI has additional information about the Fund's directors and is available,
without charge, upon request by calling (800) 862-7919.
--------------------------------------------------------------------------------
37 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
Results of Meeting of Shareholders
AXP GLOBAL BOND FUND
REGULAR MEETING OF SHAREHOLDERS HELD ON NOVEMBER 13, 2002
(UNAUDITED)
A brief description of each proposal voted upon at the meeting and the number of
votes cast for, against or withheld, as well as the number of abstentions and
broker non-votes as to each proposal is set forth below.
Proposal 1
To elect the thirteen nominees specified below as Board members*.
Shares Voted "For" Shares Withholding Authority to Vote
Arne H. Carlson 307,453,620.786 14,362,721.733
Philip J. Carroll, Jr. 308,412,076.160 13,404,266.359
Livio D. DeSimone 308,262,299.954 13,554,042.565
Barbara H. Fraser 308,553,589.276 13,262,753.243
Ira D. Hall 308,448,906.441 13,367,436.078
Heinz F. Hutter 308,072,355.120 13,743,987.399
Anne P. Jones 308,311,677.602 13,504,664.917
Stephen R. Lewis, Jr. 308,936,401.929 12,879,940.590
Alan G. Quasha 308,629,909.046 13,186,433.473
Stephen W. Roszell 308,744,782.085 13,071,560.434
Alan K. Simpson 307,351,873.663 14,464,468.856
Alison Taunton-Rigby 308,617,744.419 13,198,598.100
William F. Truscott 308,790,666.447 13,025,676.072
Proposal 2
To Amend the Articles of Incorporation/Declaration of Trust*:
2(a). To allow one vote/dollar instead of one vote/share.
Shares Voted "For" Shares Voted "Against" Abstentions Broker Non-Votes
261,361,542.848 30,761,596.724 9,739,751.947 19,953,451.000
* Denotes Registrant-wide proposals and voting results.
--------------------------------------------------------------------------------
38 -- AXP GLOBAL BOND FUND -- 2002 ANNUAL REPORT
<PAGE>
American Express(R) Funds
Growth Funds
AXP(R) Emerging Markets Fund
AXP Equity Select Fund
AXP Focused Growth Fund
AXP Global Growth Fund
AXP Growth Fund
AXP Growth Dimensions Fund
AXP New Dimensions Fund(R)
AXP Partners International Aggressive Growth Fund
AXP Partners Small Cap Growth Fund
AXP Strategy Aggressive Fund
Blend Funds
AXP Blue Chip Advantage Fund
AXP Discovery Fund*
AXP European Equity Fund
AXP Global Balanced Fund
AXP International Fund
AXP Large Cap Equity Fund
AXP Managed Allocation Fund
AXP Mid Cap Index Fund
AXP Partners International Core Fund
AXP Partners International Small Cap Fund
AXP Partners Small Cap Core Fund
AXP Research Opportunities Fund
AXP S&P 500 Index Fund
AXP Small Cap Advantage Fund
AXP Small Company Index Fund
AXP Stock Fund
Value Funds
AXP Diversified Equity Income Fund
AXP Equity Value Fund
AXP Large Cap Value Fund
AXP Mid Cap Value Fund
AXP Mutual
AXP Partners Fundamental Value Fund
AXP Partners International Select Value Fund
AXP Partners Select Value Fund
AXP Partners Small Cap Value Fund
AXP Partners Value Fund
AXP Progressive Fund*
Income/Tax-Exempt Income Funds
AXP Bond Fund
AXP Cash Management Fund**
AXP Extra Income Fund
AXP Federal Income Fund
AXP Global Bond Fund
AXP High Yield Tax-Exempt Fund
AXP Insured Tax-Exempt Fund
AXP Intermediate Tax-Exempt Fund
AXP Selective Fund
AXP State Tax-Exempt Funds
AXP Tax-Exempt Bond Fund
AXP Tax-Free Money Fund**
AXP U.S. Government Mortgage Fund
Sector Funds
AXP Global Technology Fund
AXP Precious Metals Fund
AXP Utilities Fund
These funds are also listed in the categories above.
AXP(R) Partners Funds
AXP Partners Fundamental Value Fund
AXP Partners International Aggressive Growth Fund
AXP Partners International Core Fund
AXP Partners International Select Value Fund
AXP Partners International Small Cap Fund
AXP Partners Select Value Fund
AXP Partners Small Cap Core Fund
AXP Partners Small Cap Growth Fund
AXP Partners Small Cap Value Fund
AXP Partners Value Fund
International Funds
AXP Emerging Markets Fund
AXP European Equity Fund
AXP Global Balanced Fund
AXP Global Bond Fund
AXP Global Growth Fund
AXP International Fund
AXP Partners International Aggressive Growth Fund
AXP Partners International Core Fund
AXP Partners International Select Value Fund
AXP Partners International Small Cap Fund
* Closed to new investors.
** An investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund.
For more complete information about our funds, including fees and expenses,
please call (800) 862-7919 for prospectuses. Read them carefully before you
invest.
(12/02)
<PAGE>
AXP Global Bond Fund
70100 AXP Financial Center
Minneapolis, MN 55474
americanexpress.com
--------------------------------------------------------------------------------
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
--------------------------------------------------------------------------------
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-6309 W (12/02)
</TEXT>
</DOCUMENT>