-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IVN1tNOsEJl7dnzIsZDUkg0jsOjJsdKOxBKohaYIoRVWy4cF7hcZAj2BRt9BGzVR JBR4OWwmKMYG6l41zP/FOw== /in/edgar/work/20000615/0000820027-00-000530/0000820027-00-000530.txt : 20000919 0000820027-00-000530.hdr.sgml : 20000919 ACCESSION NUMBER: 0000820027-00-000530 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000430 FILED AS OF DATE: 20000615 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP GLOBAL SERIES INC CENTRAL INDEX KEY: 0000842918 STANDARD INDUSTRIAL CLASSIFICATION: [0000 ] STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05696 FILM NUMBER: 655820 BUSINESS ADDRESS: STREET 1: IDS TOWER 10 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126712772 FORMER COMPANY: FORMER CONFORMED NAME: IDS GLOBAL SERIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: IDS GLOBAL BOND FUND INC DATE OF NAME CHANGE: 19901011 N-30D 1 0001.txt AXPSM Emerging Markets Fund 2000 SEMIANNUAL REPORT American Express Funds (icon of) compass AXP Emerging Markets Fund seeks to provide shareholders with long-term capital growth. Expanding Your Opportunities As free enterprise expands around the world, so do investment opportunities. Some of the most exciting ones can be found in the so-called "emerging markets" - -- smaller economies located largely in Asia, Latin America and Eastern Europe. Attracted by their rapid growth potential, many aggressive investors have made these markets, which have a higher-than-average risk level, an integral part of their portfolios. CONTENTS From the Chairman 3 From the Portfolio Managers 3 Fund Facts 5 The 10 Largest Holdings 6 Financial Statements (Fund) 7 Notes to Financial Statements (Fund) 10 Financial Statements (Portfolio) 16 Notes to Financial Statements (Portfolio)19 Investments in Securities 23 (picture of) Arne H. Carlson Arne H. Carlson Chairman of the board From the Chairman The financial markets have always had their ups and downs, but in recent months volatility has become more frequent and intense. While no one can say with certainty what the markets will do, American Express Financial Corporation, the Fund's investment manager, expects economic growth to continue this year, accompanied by a modest rise in long-term interest rates. But no matter what transpires, this is a great time to take a close look at your goals and investments. We encourage you to: o Consult a professional investment advisor who can help you cut through mountains of data. o Set financial goals that extend beyond those achievable through retirement plans of your employer. o Learn as much as you can about your current investments. The portfolio managers' letter that follows provides a review of the Fund's investment strategies and performance. The semiannual report contains other valuable information as well. The Fund's prospectus describes its investment objectives and how it intends to achieve those objectives. As experienced investors know, information is vital to making good investment decisions. So, take a moment and decide again whether the Fund's investment objectives and management style fit with your other investments to help you reach your financial goals. And make it a practice on a regular basis to assess your investment options. On behalf of the Board, Arne H. Carlson From the Portfolio Managers In a volatile but overall positive period for stocks in emerging markets, AXP Emerging Markets Fund enjoyed a very successful six months. For the first half of the fiscal year -- November 1999 through April 2000 -- the Fund's Class A shares generated a return of 20.85% (excluding the sales charge). The period got off to an extremely strong start, as an Internet-led buying frenzy in technology and telecommunications stocks in the U.S. spilled over into many emerging markets. Illustrating the strength of the rally, by the end of December, the Fund was up approximately 30%. NEW YEAR, NEW MARKET MOOD But by the time the new year rolled around, concerns about potentially higher inflation and higher interest rates had surfaced in the U.S. and were spreading overseas. In addition, the stunning run-ups many stocks had experienced were causing investors to question whether their sometimes-stratospheric price levels could be justified on a sustained basis. Things finally came to a head in mid-March, when most markets went into a month-long decline. The Fund held up relatively well during that time, but still saw a good portion of its gain eroded during the sell-off. Despite their ups and downs, technology and telecommunications clearly contributed the most to the Fund's return over the six months. They comprised about 30% of assets. The next-biggest area of investment was utility stocks, which made up about 25% of the portfolio and proved to be modestly positive performers. Financial services stocks accounted for about 15%, and generated weak results. Looking at the geographic allocation, we kept about 40% of assets in Southeast Asia, followed by about 25% in Latin America and about 20% in Eastern Europe. On a country basis, the largest investment exposures were to Brazil, Taiwan, Korea and Mexico -- each in the 10%-15% range during the six months. All told, we held investments in approximately 20 countries. Although the past period ended on a down note, we remain enthusiastic about the potential for emerging markets, especially those that are rapidly becoming more integrated with the global economic and political environment. Over the near term, sustained progress probably will be difficult to come by, as investors are likely to take a wait-and-see approach while the Federal Reserve tries to cool off the U.S. economy and thereby head off a run-up in inflation. But once that matter is resolved, we think the emerging markets will be in a good position to advance. Julian Thompson Ian King Fund Facts Class A -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2000 $6.03 Oct. 31, 1999 $4.99 Increase $1.04 Distributions -- Nov. 1, 1999 - April 30, 2000 From income $ -- From capital gains $ -- Total distributions $ -- Total return* +20.85%** Class B -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2000 $5.88 Oct. 31, 1999 $4.88 Increase $1.00 Distributions -- Nov. 1, 1999 - April 30, 2000 From income $ -- From capital gains $ -- Total distributions $ -- Total return* +20.49%** Class Y -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2000 $6.03 Oct. 31, 1999 $4.99 Increase $1.04 Distributions -- Nov. 1, 1999 - April 30, 2000 From income $ -- From capital gains $ -- Total distributions $ -- Total return* +20.84%** *Returns do not include sales load. 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. The 10 Largest Holdings Percent Value (of net assets) (as of April 30, 2000) Taiwan Semiconductor Mfg (Taiwan) 3.77% $18,088,587 Samsung Electronics (South Korea) 3.63 17,449,876 Yapi Kredit Finance (Turkey) 3.11 14,941,439 Embratel Participacoes ADR (Brazil) 2.92 14,009,489 Lukoil Holding ADR (Russia) 2.64 12,676,643 United Microelectronics (Taiwan) 2.50 12,016,081 Telefonos de Mexico ADR Cl L (Mexico) 2.40 11,533,131 China Telecom (Hong Kong) 2.31 11,092,281 Hon Hai Precision Inds (Taiwan) 2.08 9,975,715 Organizacion Soriana Cl B (Mexico) 2.03 9,734,418 Note: Certain foreign investment risks include: changes in currency exchange rates, adverse political or economic order, and lack of similar regulatory requirements followed by U.S. companies. For further detail about these holdings, please refer to the section entitled "Investments in Securities." (icon of) pie chart The 10 holdings listed here make up 27.39% of net assets
Financial Statements Statement of assets and liabilities AXP Emerging Markets Fund April 30, 2000 (Unaudited) Assets Investment in Emerging Markets Portfolio (Note 1) $479,472,660 Capital shares receivable 8,344 ----- Total assets $479,481,004 ------------ Liabilities Accrued distribution fee 6,529 Accrued transfer agency fee 4,082 Accrued administrative services fee 1,228 Other accrued expenses 49,217 ------ Total liabilities 61,056 ------ Net assets applicable to outstanding capital stock $479,419,948 ============ Represented by Capital stock-- $.01 par value (Note 1) $ 802,380 Additional paid-in capital 479,947,853 Net operating loss (743,064) Accumulated net realized gain (loss) (Note 4) (31,785,630) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 31,198,409 ---------- Total -- representing net assets applicable to outstanding capital stock $479,419,948 ============ Net assets applicable to outstanding shares: Class A $314,730,628 Class B $164,589,438 Class Y $ 99,882 Net asset value per share of outstanding capital stock: Class A shares 52,228,968 $ 6.03 Class B shares 27,992,483 $ 5.88 Class Y shares 16,554 $ 6.03 See accompanying notes to financial statements.
Statement of operations AXP Emerging Markets Fund Six months ended April 30, 2000 (Unaudited) Investment income Income: Dividends $ 3,503,006 Interest 1,052,564 Less foreign taxes withheld (299,547) -------- Total income 4,256,023 --------- Expenses (Note 2): Expenses allocated from Emerging Markets Portfolio 2,833,668 Distribution fee Class A 400,880 Class B 829,238 Transfer agency fee 570,191 Incremental transfer agency fee Class A 42,921 Class B 36,204 Service fee-- Class Y 43 Administrative services fees and expenses 231,140 Compensation of board members 3,554 Printing and postage 26,137 Registration fees 29,725 Audit fees 3,000 Other 2,769 ----- Total expenses 5,009,470 Earnings credits on cash balances (Note 2) (10,375) ------- Total net expenses 4,999,095 --------- Investment income (loss) -- net (743,072) -------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (includes foreign transaction tax of $247,360) 98,221,019 Foreign currency transactions (936,445) -------- Net realized gain (loss) on investments 97,284,574 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (19,659,483) ----------- Net gain (loss) on investments and foreign currencies 77,625,091 ---------- Net increase (decrease) in net assets resulting from operations $76,882,019 =========== See accompanying notes to financial statements.
Statements of changes in net assets AXP Emerging Markets Fund April 30, 2000 Oct. 31, 1999 Six months ended Year ended (Unaudited) Operations and distributions Investment income (loss)-- net $ (743,072) $ (421,971) Net realized gain (loss) on investments 97,284,574 8,866,980 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (19,659,483) 110,378,637 ----------- ----------- Net increase (decrease) in net assets resulting from operations 76,882,019 118,823,646 ---------- ----------- Distributions to shareholders from: Net investment income Class A (33,577) (289,880) Class Y -- (77) ----- --- Total distributions (33,577) (289,957) ------- -------- Capital share transactions (Note 3) Proceeds from sales Class A shares (Note 2) 116,549,969 170,245,380 Class B shares 27,106,217 28,172,307 Class Y shares 151,141 1,545,981 Reinvestment of distributions at net asset value Class A shares 32,724 282,640 Class Y shares -- 77 Payments for redemptions Class A shares (104,624,083) (184,535,441) Class B shares (Note 2) (17,786,182) (35,974,427) Class Y shares (111,396) (1,543,520) -------- ---------- Increase (decrease) in net assets from capital share transactions 21,318,390 (21,807,003) ---------- ----------- Total increase (decrease) in net assets 98,166,832 96,726,686 Net assets at beginning of period 381,253,116 284,526,430 ----------- ----------- Net assets at end of period $479,419,948 $381,253,116 ============ ============ Undistributed net investment income $ (743,064) $ 33,585 ------------ ------------ See accompanying notes to financial statements.
Notes to Financial Statements AXP Emerging Markets Fund (Unaudited as to April 30, 2000) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of AXP Global Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. AXP Global Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the board. The Fund offers Class A, Class B 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 and automatically convert to Class A shares during the ninth calendar year of ownership. 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 Emerging Markets Portfolio The Fund invests all of its assets in Emerging Markets Portfolio (the Portfolio), a series of World Trust (the Trust), an open-end investment company that has the same objectives as the Fund. The Portfolio seeks to provide shareholders with long-term growth of capital by investing primarily in stocks of companies in developing countries offering growth potential. The Fund records daily its share of the Portfolio's income, expenses and realized and unrealized gains and losses. The financial statements of the Portfolio are included elsewhere in this report and should be read in conjunction with the Fund's financial statements. The Fund records its investment in the Portfolio at the value that is equal to the Fund's proportionate ownership interest in the Portfolio's net assets. The percentage of the Portfolio owned by the Fund as of April 30, 2000 was 99.84%. 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 and liabilities) that could differ from actual results. Federal taxes The Fund's policy is to comply with all sections of the Internal Revenue Code that apply to regulated investment companies and to distribute substantially all of its taxable income to the shareholders. No provision for income or excise taxes is thus required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of deferred losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. Dividends to shareholders An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. 2. EXPENSES AND SALES CHARGES In addition to the expenses allocated from the Portfolio, the Fund accrues its own expenses as follows: The Fund has an agreement with American Express Financial Corporation (AEFC) to provide administrative services. Under an Administrative Services Agreement, the Fund pays AEFC a fee for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.10% to 0.05% annually. A minor portion of additional administrative service expenses paid by the Fund are consultants' fees and fund office expenses. Under this agreement, the Fund also pays taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees and any other expenses properly payable by the Fund and approved by the board. Under a separate Transfer Agency Agreement, American Express Client Service Corporation (AECSC) maintains shareholder accounts and records. The Fund pays AECSC an annual fee per shareholder account for this service as follows: o Class A $19 o Class B $20 o Class Y $17 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 shares. Under a Shareholder Service Agreement, the Fund's Class Y shares pay a fee for service provided to shareholders by financial advisors and other servicing agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net assets attributable to Class Y shares. Sales charges received by the Distributor for distributing Fund shares were $672,094 for Class A and $106,706 for Class B for the six months ended April 30, 2000. During the six months ended April 30, 2000, the Fund's transfer agency fees were reduced by $10,375 as a result of earnings credits from overnight cash balances. 3. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows: Six months ended April 30, 2000 Class A Class B Class Y Sold 18,459,672 4,312,581 23,248 Issued for reinvested distributions 5,206 -- -- Redeemed (16,672,411) (2,893,842) (17,767) ----------- ---------- ------- Net increase (decrease) 1,792,467 1,418,739 5,481 Year ended Oct. 31, 1999 Class A Class B Class Y Sold 38,402,305 6,532,285 317,355 Issued for reinvested distributions 77,135 -- 21 Redeemed (42,389,266) (8,663,035) (321,275) ----------- ---------- -------- Net increase (decrease) (3,909,826) (2,130,750) (3,899) 4. CAPITAL LOSS CARRYOVER For federal income tax purposes, the Fund had a capital loss carryover of $129,070,204 as of Oct. 31, 1999, that will expire in 2006 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 carryover has been offset or expires. 5. BANK BORROWINGS The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund must have asset coverage for borrowings not to exceed the aggregate of 333% of advances equal to or less than five business days plus 367% of advances over five business days. The agreement, which enables the Fund to participate with other American Express mutual funds, permits the borrowings up to $200 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.05% per annum. The Fund had no borrowings outstanding during the six months ended April 30, 2000.
6. FINANCIAL HIGHLIGHTS The tables below show certain important finanicial information for evaluating the Fund's results. Fiscal period ended Oct. 31, Per share income and capital changesa Class A 2000c 1999 1998 1997b Net asset value, beginning of period $4.99 $3.44 $5.33 $5.00 Income from investment operations: Net investment income (loss) .01 .02 .04 .01 Net gains (losses) (both realized and unrealized) 1.03 1.54 (1.79) .33 Total from investment operations 1.04 1.56 (1.75) .34 Less distributions: Dividends from net investment income -- (.01) -- (.01) Distributions from realized gains -- -- (.14) -- Total distributions -- (.01) (.14) (.01) Net asset value, end of period $6.03 $4.99 $3.44 $5.33 Ratios/supplemental data Net assets, end of period (in millions) $315 $251 $187 $243 Ratio of expenses to average daily net assetsd 1.79%e 2.03% 1.93% 1.90%e,f Ratio of net investment income (loss) to average daily net assets (.05%)e .14% .82% .28%e Portfolio turnover rate (excluding short-term securities) 79% 143% 108% 87% Total returng 20.85% 45.13% (33.74%) 6.84% a For a share outstanding throughout the period. Rounded to the nearest cent. b For the period from Nov. 13, 1996 (commencement of operations) to Oct. 31, 1997. c Six months ended April 30, 2000 (Unaudited). d Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. e Adjusted to an annual basis. f During the period from Nov. 13, 1996 to Oct. 31, 1997, AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratio of expenses would have been 1.92% for Class A. g Total return does not reflect payment of a sales charge.
Fiscal period ended Oct. 31, Per share income and capital changesa Class B Class Y 2000c 1999 1998 1997b 2000c 1999 1998 1997b Net asset value, beginning of period $4.88 $3.39 $5.29 $5.00 $4.99 $3.45 $5.33 $5.00 Income from investment operations: Net investment income (loss) (.04) (.05) -- (.04) .01 .02 .04 .01 Net gains (losses) (both realized and unrealized) 1.04 1.54 (1.76) .33 1.03 1.53 (1.78) .33 Total from investment operations 1.00 1.49 (1.76) .29 1.04 1.55 (1.74) .34 Less distributions: Dividends from net investment income -- -- -- -- -- (.01) -- (.01) Distributions from realized gains -- -- (.14) -- -- -- (.14) -- Total distributions -- -- (.14) -- -- (.01) (.14) (.01) Net asset value, end of period $5.88 $4.88 $3.39 $5.29 $6.03 $4.99 $3.45 $5.33 Ratios/supplemental data Net assets, end of period (in millions) $165 $130 $97 $114 $-- $-- $-- $-- Ratio of expenses to average daily net assetsd 2.56%e 2.81% 2.71% 2.67%e,f 1.62%e 1.88% 1.86% 1.75%e,f Ratio of net investment income (loss) to average daily net assets (.81%)e(.63%) .07% (.50%)e .10%e 1.18% 1.03% .33%e Portfolio turnover rate (excluding short-term securities) 79% 143% 108% 87% 79% 143% 108% 87% Total returng 20.49% 43.87%(34.24%) 6.07% 20.84% 45.29% (33.66% 6.86% a For a share outstanding throughout the period. Rounded to the nearest cent. b For the period from Nov. 13, 1996 (commencement of operations) to Oct. 31, 1997. c Six months ended April 30, 2000 (Unaudited). d Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. e Adjusted to an annual basis. f During the period from Nov. 13, 1996 to Oct. 31, 1997, AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses would have been 2.69% and 1.77% for Class B and Y, respectively. g Total return does not reflect payment of a sales charge.
Financial Statements Statement of assets and liabilities Emerging Markets Portfolio April 30, 2000 (Unaudited) Assets Investments in securities, at value (Note 1) (identified cost $433,810,207) $465,088,677 Cash in bank on demand deposit (including foreign currency holdings of $17,302,075) 17,650,978 Dividends and accrued interest receivable 1,038,187 Receivable for investment securities sold 991,321 U.S. government securities held as collateral (Note 4) 27,375 ------ Total assets 484,796,538 ----------- Liabilities Payable for investment securities purchased 237,706 Payable upon return of securities loaned (Note 4) 4,148,475 Accrued investment management services fee 14,090 Other accrued expenses 154,004 ------- Total liabilities 4,554,275 --------- Net assets $480,242,263 ============ See accompanying notes to financial statements.
Statement of operations Emerging Markets Portfolio Six months ended April 30, 2000 (Unaudited) Investment income Income: Dividends $ 3,508,740 Interest 1,054,296 Less foreign taxes withheld (300,033) -------- Total income 4,263,003 --------- Expenses (Note 2): Investment management services fee 2,659,635 Compensation of board members 3,554 Custodian fees 160,731 Audit fees 9,000 Other 9,487 ----- Total expenses 2,842,407 Earnings credits on cash balances (Note 2) (4,091) ------ Total net expenses 2,838,316 --------- Investment income (loss) -- net 1,424,687 --------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) (includes foreign transaction tax of $247,760) 98,386,038 Foreign currency transactions (937,844) -------- Net realized gain (loss) on investments 97,448,194 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (19,689,074) ----------- Net gain (loss) on investments and foreign currencies 77,759,120 ---------- Net increase (decrease) in net assets resulting from operations $79,183,807 =========== See accompanying notes to financial statements.
Statements of changes in net assets Emerging Markets Portfolio April 30, 2000 Oct. 31, 1999 Six months ended Year ended (Unaudited) Operations Investment income (loss)-- net $ 1,424,687 $ 2,959,449 Net realized gain (loss) on investments 97,448,194 8,888,733 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (19,689,074) 110,553,123 ----------- ----------- Net increase (decrease) in net assets resulting from operations 79,183,807 122,401,305 Net contributions (withdrawals) from partners 19,104,097 (25,443,819) ---------- ----------- Total increase (decrease) in net assets 98,287,904 96,957,486 Net assets at beginning of period 381,954,359 284,996,873 ----------- ----------- Net assets at end of period $480,242,263 $381,954,359 ============ ============ See accompanying notes to financial statements.
Notes to Financial Statements Emerging Markets Portfolio (Unaudited as to April 30, 2000) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Emerging Markets Portfolio (the Portfolio) is a series of World Trust (the Trust) and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The Portfolio invests primarily in equity securities of issuers in countries with developing or emerging markets. 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 and liabilities) that could differ from actual results. Valuation of securities All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Option transactions To produce incremental earnings, protect gains and facilitate buying and selling of securities for investments, the Portfolio may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. The Portfolio also may buy and sell put and call options and write covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Portfolio gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Portfolio may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Portfolio pays a premium whether or not the option is exercised. The Portfolio also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Portfolio will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. Futures transactions To gain exposure to or protect itself from market changes, the Portfolio may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Portfolio also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Portfolio is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Portfolio each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Portfolio recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Portfolio may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Portfolio and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Portfolio is subject to the credit risk that the other party will not complete its contract obligations. Federal taxes For federal income tax purposes the Portfolio qualifies as a partnership and each investor in the Portfolio is treated as the owner of its proportionate share of the net assets, income, expenses and realized and unrealized gains and losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore does not pay any income dividends or capital gain distributions. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including level-yield amortization of premium and discount, is accrued daily. 2. FEES AND EXPENSES The Trust, on behalf of the Portfolio, has an Investment Management Services Agreement with AEFC to manage its portfolio. Under this agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the Portfolio's average daily net assets in reducing percentages from 1.10% to 1.00% annually. The fee may be adjusted upward or downward by a performance incentive adjustment based on a comparison of the performance of Class A shares of AXP Emerging Markets Fund to the Lipper Emerging Markets Funds Index. The maximum adjustment is 0.12% of the Portfolio's average daily net assets after deducting 1% from the performance difference. If the performance difference is less than 1%, the adjustment will be zero. The adjustment increased the fee by $2,869 for the six months ended April 30, 2000. 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 theTrust or Portfolio and approved by the board. AEFC has a Sub-investment Advisory Agreement with American Express Asset Management International Inc. (International), a wholly-owned subsidiary of AEFC. During the six months ended April 30, 2000, the Portfolio's custodian fees were reduced by $4,091 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 $362,724,083 and $355,766,609, respectively, for the six months ended April 30, 2000. For the same period, the portfolio turnover rate was 79%. Realized gains and losses are determined on an identified cost basis. 4. LENDING OF PORTFOLIO SECURITIES As of April 30, 2000, securities valued at $5,257,050 were on loan to brokers. For collateral, the Portfolio received $4,121,100 in cash and U.S. government securities valued at $27,375. As of April 30, 2000, due to fluctuating market conditions, the Portfolio requested additional collateral which was received on May 1, 2000. Income from securities lending amounted to $321,922 for the six months ended April 30, 2000. 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.
Investments in Securities Emerging Markets Portfolio April 30, 2000 (Unaudited) (Percentages represent value of investments compared to net assets) Common stocks (92.3%)(c) Issuer Shares Value(a) Argentina (0.9%) Banks and savings & loans Banco de Galicia - Buenos Aires ADR 261,239 $4,522,700 Brazil (12.0%) Banks and savings & loans (0.9%) Uniao de Bancos Brasileiros GDR 166,909 4,162,293 Energy (1.5%) Petroleo Brasileiro ADR 32,602,000 7,222,819 Metals (1.3%) Gerdau 260,492,736 6,348,202 Miscellaneous (0.6%) Tele Centro Oeste Celular Participacoes ADR 238,500 2,742,750 Multi-industry conglomerates (0.9%) Itausa - Investimentos Itau 5,284,269 4,507,214 Utilities -- electric (1.3%) Companhia Paranaense de Energia 850,400 6,271,700 Utilities -- telephone (5.5%) Embratel Participacoes ADR 622,644 14,009,489 Tele Norte Leste Participacoes ADR 350,767 6,248,029 Telesp Celular Particpacoes ADR 143,700 6,340,763 Total 26,598,281 Chile (1.1%) Retail Distribucion y Servicio D&S ADR 301,649 5,128,033 Czech Federal Republic (1.4%) Utilities -- telephone Cesky Telecom 365,137(b) 6,793,756 Greece (2.8%) Banks and savings & loans (1.6%) Alpha Credit Bank 87,416 4,847,520 Commercial Bank of Greece 54,300 2,950,959 Total 7,798,479 Utilities -- telephone (1.2%) Hellenic Telecommunications Organization 247,460 5,553,873 Hong Kong (3.7%) Communications equipment & services (2.4%) China Telecom 1,536,000(b) 11,092,281 Multi-industry conglomerates (1.3%) Citic Pacific 1,407,000(b) 6,448,660 Hungary (1.1%) Banks and savings & loans OTP Bank GDR 120,526 5,360,394 India (6.3%) Automotive & related (0.7%) Tata Engineering & Locomotive GDR 1,051,000 3,284,375 Banks and savings & loans (0.9%) State Bank of India GDR 467,000 4,436,500 Building materials & construction (0.7%) Gujarat Ambuja Cements GDR 772,000 3,535,459 Miscellaneous (1.2%) Videsh Sanchar Nigam GDR 314,600 5,977,400 Textiles & apparel (1.9%) Reliance Inds GDR 328,104(d,f) 8,538,907 Utilities -- telephone (0.9%) Global TeleSystems Group 71,600 1,951,982 Himachal Futuristic Communications 129,700 2,478,563 Total 4,430,545 Israel (4.7%) Banks and savings & loans (1.2%) Bank Hapoalim 1,890,000 5,805,165 Communications equipment & services (1.0%) NICE-Systems ADR 76,347(b) 4,995,957 Electronics (1.5%) Orbotech 83,371(b) 7,107,378 Miscellaneous (1.0%) Partner Communications ADR 428,150(b) 4,575,853 Malaysia (2.5%) Electronics (1.1%) Malaysian Pacific Inds Berhad 479,000 5,357,166 Utilities -- electric (1.4%) Tenaga Nasional 2,010,000 6,664,649 Mexico (12.8%) Beverages & tobacco (2.0%) Fomento Economico Mexicano ADR 117,500 4,846,875 Grupo Modelo Series C 2,229,700 4,739,001 Total 9,585,876 Building materials & construction (1.0%) Cemex ADR 216,500(b) 4,735,938 Energy equipment & services (1.6%) Tubos de Acero de Mexico ADR 508,000 7,588,250 Media (0.9%) Grupo Televisa 70,852(b) 4,494,674 Multi-industry conglomerates (1.3%) Alfa Cl A 1,995,000 6,169,447 Paper & packaging (1.1%) Kimberly-Clark de Mexico 1,634,400 5,262,733 Retail (2.0%) Organizacion Soriana Cl B 2,452,500(b) 9,734,418 Utilities -- telephone (2.9%) Nuevo Grupo Iusacell ADR 172,311(b) 2,746,207 Telefonos de Mexico ADR Cl L 196,100 11,533,131 Total 14,279,338 Russia (3.2%) Energy (2.6%) Lukoil Holding ADR 210,296 12,676,643 Miscellaneous (0.6%) Surgutneftegaz ADR 190,619 2,811,630 South Africa (6.0%) Banks and savings & loans (0.9%) Nedcor 225,951 4,285,421 Metals (0.9%) AngloGold ADR 216,200 4,202,388 Multi-industry conglomerates (3.1%) Barlow 1,131,900 7,136,454 Johnnies Industrial ADR 628,000 7,965,194 Total 15,101,648 Paper & packaging (1.1%) Sappi 722,600 5,062,090 South Korea (9.9%) Communications equipment & services (2.3%) LG Information & Communication 80,400 6,194,368 SK Telecom ADR 17,000 4,519,036 Total 10,713,404 Computers & office equipment (0.5%) Trigem Computer 42,770 2,470,428 Electronics (5.0%) LG Cable & Machinery 394,700 6,295,283 Samsung Electronics 64,550 17,449,876 Total 23,745,159 Utilities -- electric (1.2%) Korea Electric Power 199,700 5,848,389 Utilities -- telephone (0.9%) Korea Telecom 64,000 4,371,435 Taiwan (12.9%) Computers & office equipment (1.9%) Synnex Technology Intl 1,351,000 9,140,611 Electronics (9.6%) Acer Peripherals 1,467,216 6,066,443 Hon Hai Precision Inds 1,034,600(b) 9,975,715 Taiwan Semiconductor Mfg 2,809,240(b) 18,088,587 United Microelectronics 3,552,000(b) 12,016,081 Total 46,146,826 Miscellaneous (1.4%) Winbond Electronics GDR 2,243,000(b) 6,928,044 Thailand (3.5%) Banks and savings & loans (1.3%) Thai Farmers Bank 6,095,000(b) 6,403,152 Media (1.0%) BEC World Public 741,000 4,865,397 Utilities -- telephone (1.2%) Advanced Info Service Public ADR 481,700(b) 5,642,500 Turkey (7.5%) Banks and savings & loans (4.6%) Garanti Banking 413,045,696(b) 6,957,953 Yapi Kredit Finance 468,502,200 14,941,439 Total 21,899,392 Furniture & appliances (1.5%) Arcelik 87,154,000 7,412,024 Media (1.4%) Hurriyet Gazetecilik ve Matbaacilik 259,211,000 6,570,997 Total common stocks (Cost: $412,124,522) $443,409,041
Short-term securities (4.5%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agencies (2.9%) Federal Home Loan Bank Disc Nts 05-19-00 5.89% $1,300,000 $1,295,552 05-24-00 5.92 1,300,000 1,294,244 05-26-00 5.85 1,800,000 1,791,136 05-31-00 5.91 1,500,000 1,491,915 06-09-00 5.96 1,700,000 1,687,874 Federal Home Loan Mtge Corp Disc Nts 05-09-00 5.87 2,600,000 2,595,345 05-23-00 5.99 600,000 597,512 06-06-00 6.00 600,000 596,123 Federal Natl Mtge Assn Disc Nt 05-25-00 5.87 2,700,000 2,687,384 Total 14,037,085 Commercial paper (1.6%) Alcoa 06-06-00 6.06% $3,300,000 $3,278,478 Barton Capital 06-27-00 6.19 1,600,000(e) 1,583,333 Ciesco LP 05-08-00 5.89 900,000 898,507 Delaware Funding 06-15-00 6.13 1,400,000(e) 1,388,651 Goldman Sachs Group 07-10-00 6.41 500,000 493,582 Total 7,642,551 Total short-term securities (Cost: $21,685,685) $21,679,636 Total investments in securities (Cost: $433,810,207)(g) $465,088,677
Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. (d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the board. (e) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board. (f) Security is partially or fully on loan. See Note 4 to the financial statements. (g) At April 30, 2000, the cost of securities for federal income tax purposes was approximately $433,810,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $72,559,000 Unrealized depreciation (41,280,000) Net unrealized appreciation $31,279,000 American Express Funds AXP Emerging Markets Fund 200 AXPFinancial Center Minneapolis, MN 55474 TICKER SYMBOL Class A: IDEAX Class B: IEMBX Class Y: N/A PRSRT STD AUTO U.S. POSTAGE PAID AMERICAN EXPRESS S-6344 E (6/00) 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. -----END PRIVACY-ENHANCED MESSAGE-----