<PAGE>
AXP(SM) Global
Balanced Fund
1999 ANNUAL REPORT
(PROSPECTUS ENCLOSED)
American
Express(R)
Funds
(icon of) compass
AXP Global Balanced Fund seeks to provide shareholders with a balance of growth
of capital and current income.
(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.)
AMERICAN
EXPRESS(R) (logo)
<PAGE>
An International Blend
AXP Global Balanced Fund offers a logical first step for investors who want to
have some exposure to foreign markets, but also want to avoid the greater
volatility of a portfolio consisting of only foreign stocks.
AXP GLOBAL BALANCED FUND (This annual report is not part of the prospectus.)
<PAGE>
Table of Contents
1999 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the Chairman 4
From the Portfolio Managers 4
Fund Facts 6
The 10 Largest Holdings 7
Making the Most of the Fund 8
The Fund's Long-term Performance 9
Independent Auditors' Report 10
Financial Statements 11
Notes to Financial Statements 14
Investments in Securities 22
Federal Income Tax Information 37
1999 prospectus
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
The Fund 3p
Goal 3p
Investment Strategy 3p
Risks 4p
Past Performance 6p
Fees and Expenses 8p
Management 9p
Buying and Selling Shares 9p
Valuing Fund Shares 9p
Investment Options 10p
Purchasing Shares 11p
Transactions through Third Parties 14p
Sales Charges 14p
Exchanging/Selling Shares 18p
Distributions and Taxes 23p
Other Information 25p
Financial Highlights 26p
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
American Express(R) Funds held shareholder meetings in June 1999. Shareholders
approved all of the proposals advanced by management. Among the proposals were:
o The election of Board members and the selection of KPMG LLP as independent
auditor.
o Change in the Fund name from "IDS" to "AXP."
o A new shareholder service and distribution plan.
o A change in the investment management services agreement.
o Changes with respect to fundamental investment policies.
No other business was presented at the meeting, which was concluded by a report
to shareholders from the Investment Department of American Express Financial
Corporation.
Thanks to all of you for your effort in reviewing the proxy material and voting
your proxies.
I also want to announce a change in Portfolio Managers for this Fund. Michael Ng
was the portfolio manager at the time this letter was prepared. As of December
15, 1999, Ian King replaced Michael Ng as co-manager of the Fund.
Arne H. Carlson
(pictures of) Peter Lamaison and Michael Ng
Peter Lamaison and Michael Ng
Portfolio Managers
From the Portfolio Managers
AXP Global Balanced Fund produced a double-digit gain during the past fiscal
year, as it benefited from generally strong stock markets in the United States
and Europe. For the 12 months -- November 1998 through October 1999 -- the
Fund's Class A shares (before sales charge) generated a total return of 15.53%.
Conditions in the investment world could hardly have been more inviting when the
period began. Inflation and interest rates were low in most major countries,
while economic growth was improving in Europe and downright robust in the U.S.
AXP GLOBAL BALANCED FUND (This annual report is not part of the prospectus.)
<PAGE>
Against that positive backdrop, and spurred by interest-rate cuts in the U.S.
and parts of Europe, stocks and, to a lesser degree, bonds mounted a powerful
rally. Over the winter and early spring, the Fund recorded solid gains in five
of the first six months -- the exception being February, when fear of higher
inflation sent U.S. interest rates higher and stocks and bonds lower.
The second half of the fiscal year was more of a struggle, though, as rising
interest rates and concerns about potentially higher interest rates in the U.S.
kept stocks off balance and sent bonds into a rapid retreat. However, the period
did end on a positive note as a more positive tone returned to the markets,
allowing the Fund to record a healthy gain in October.
THE U.S. LEADS THE WAY
To the Fund's benefit, we concentrated the biggest portion (between 35% and 50%)
of the stock investments in the U.S., whose market was among the strongest in
the world over the 12 months. The bulk of the rest of the stock holdings were in
Europe, primarily the United Kingdom, Germany and France. While those markets
gained ground, the returns were reduced by overall weakness in the region's new
currency, the euro. Among other major markets, Japan, where we increased our
investment exposure as the period progressed, provided good results, partly
because of appreciation in the yen. Although a small area of investment for the
Fund, holdings in the emerging markets of South Korea, Mexico, Argentina, Hong
Kong and Venezuela also enhanced performance.
Over the period, the asset allocation ranged from roughly 60%-70% stocks,
30%-35% bonds and a negligible amount of cash reserves. On the bond side, we
split investments in the U.S. and Europe into essentially equal portions. The
U.S. bond market rallied strongly early in the period, then retreated over the
ensuing months. In Europe, bond performance was lackluster, and, as with stocks,
returns were hampered by the euro's decline.
Looking toward the new fiscal year, the outlook for stocks appears brightest in
Europe and Japan, where the economies are in the recovery phase and inflation
pressure is very subdued. This contrasts with the U.S., where the economy has
been on a long growth cycle and inflation pressure could be on the rise. On the
bond side, a strong rally seems unlikely, but we do expect a somewhat better
environment.
Peter Lamaison
Michael Ng
(This annual report is not part of the prospectus) ANNUAL REPORT - 1999
<PAGE>
Fund Facts
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1999 $6.61
Oct. 31, 1998 $5.79
Increase $0.82
Distributions -- Nov. 1, 1998 - Oct. 31, 1999
From income $0.07
From capital gains $0.02
Total distributions $0.09
Total return* +15.53%**
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1999 $6.58
Oct. 31, 1998 $5.77
Increase $0.81
Distributions -- Nov. 1, 1998 - Oct. 31, 1999
From income $0.03
From capital gains $0.02
Total distributions $0.05
Total return* +14.89%**
Class Y --12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1999 $6.62
Oct. 31, 1998 $5.79
Increase $0.83
Distributions -- Nov. 1, 1998 - Oct. 31, 1999
From income $0.08
From capital gains $0.02
Total distributions $0.10
Total return* +15.76%**
*The prospectus discusses the effect of sales charges, if any, on the various
classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
AXP GLOBAL BALANCED FUND (This annual report is not part of the prospectus.)
<PAGE>
The 10 Largest Holdings
Percent Value
(of net assets) (as of Oct. 31, 1999)
U.S. Treasury (United States) 2.28% $3,816,949
7.50% 2016
General Electric (United Kingdom) 1.79 2,994,942
Ericsson (LM) Cl B (Sweden) 1.74 2,920,806
Development Bank of Japan (Japan) 1.69 2,827,845
6.50% 2001
Govt of Hungary (European Monetary Unit) 1.66 2,778,367
5.13% 2000
SBC Communications (United States) 1.60 2,689,499
Banque Natl de Paris (France) 1.55 2,592,761
U.S. Treasury (United States) 1.52 2,549,060
9.25% 2016
Fannie Mae (United States) 1.50 2,522,946
Total Petroleum Cl B (France) 1.50 2,509,414
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."
The 10 holdings listed here make up 16.83% of net assets
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
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 fall 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 $8 $6 $7
$ 5 $4 $4
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.
AXP GLOBAL BALANCED FUND (This annual report is not part of the prospectus.)
<PAGE>
The Fund's Long-term Performance
How $10,000 has grown in AXP Global Balanced Fund
$20,000
x MSCI World Index x $13,184
$10,000 x Salomon Smith Barney AXP Global
World Gov't. Bond Index Balanced
$9,500 Fund
Class A
12/1/96 10/97 10/98 10/99
Average annual total return (as of Oct. 31, 1999):
1 year Since inception*
Class A +9.75% +9.74%
Class B +10.89% +10.05%
Class Y +15.76% +11.83%
* Inception date was Nov. 13, 1996.
Assumes: Holding period from 12/1/96 to 10/31/99. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund has a value of $494. 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 performance indexes, the MSCI World Index and the Salomon Smith
Barney World Government Bond Index. In comparing AXP Global Balanced Fund (Class
A) to the two indexes, you should take into account the fact that the Fund's
performance reflects the maximum sales charge of 5%, 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 applicable sales charge, up to a maximum of
5%. This was a period of widely fluctuating security prices. Past performance is
no guarantee of future results.
Morgan Stanley Capital International (MSCI) World Index, an unmanaged market
index, compiled from a composite of over 1500 companies listed on the stock
exchange of North America, Europe, New Zealand and the Far East, is widely
recognized by investors as the measurement index for portfolios of global
securities.
Salomon Smith Barney World Government Bond Index, an unmanaged
market-capitalization weighted benchmark that 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 world government bond securities.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
The financial statements contained in Post-Effective Amendment #32 to
Registration Statement No. 33-25824 filed on or about December 27, 1999, are
incorporated herein by reference.
<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 Balanced Fund
Fiscal year ended Oct. 31, 1999
Class A
Income distribution taxable as dividend income, 4.72% qualifying for deduction
by corporations.
Payable date Per share
Dec. 22, 1998 $0.00340
March 25, 1999 $0.01726
June 24, 1999 $0.02800
Sept. 23, 1999 $0.02179
Total $0.07045
Capital gain distributions taxable for long-term capital gain.
Payable date Per share
Dec. 22, 1998 $0.02076
Total distributions $0.09121
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
Class B
Income distribution taxable as dividend income, 4.72% qualifying for deduction
by corporations.
Payable date Per share
Dec. 22, 1998 $0.00000
March 25, 1999 $0.00000
June 24, 1999 $0.01569
Sept. 23, 1999 $0.01001
Total $0.02570
Capital gain distributions taxable for long-term capital gain.
Payable date Per share
Dec. 22, 1998 $0.02076
Total distributions $0.04646
Class Y
Income distribution taxable as dividend income, 4.72% qualifying for deduction
by corporations.
Payable date Per share
Dec. 22, 1998 $0.00506
March 25, 1999 $0.01966
June 24, 1999 $0.03042
Sept. 23, 1999 $0.02531
Total $0.08045
Capital gain distributions taxable for long-term capital gain.
Payable date Per share
Dec. 22, 1998 $0.02076
Total distributions $0.10121
AXP GLOBAL BALANCED FUND (This annual report is not part of the prospectus.)
<PAGE>
This page left blank intentionally
<PAGE>
AXP Global Balanced Fund
IDS Tower 10
Minneapolis, MN 55440-0010
American
Express(R)
Funds
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.
AMERICAN
EXPRESS(R) (logo)
S-6352 D (12/99)
<PAGE>
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) There are pictures, icons 2) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
