-----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, SDeA1WnGMBj44Nr+79bGeXV1bIMinitjqjbZDAu6PygfzlRXWsOYDSc3E+mWXI3a wfQYOF4Rs+15OPzGJX5kDA== 0000820027-01-500263.txt : 20010614 0000820027-01-500263.hdr.sgml : 20010614 ACCESSION NUMBER: 0000820027-01-500263 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010430 FILED AS OF DATE: 20010613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP GLOBAL SERIES INC CENTRAL INDEX KEY: 0000842918 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05696 FILM NUMBER: 1659646 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 s6396c.txt AXP INNOVATIONS FUND AXP(R) Innovations Fund 2001 SEMIANNUAL REPORT American Express(R) Funds (icon of) ruler AXP Innovations Fund seeks to provide shareholders with long-term capital growth. Focusing on the Future It's been said that the only constant in the world is change. Consider, for example, developments in technology, which have transformed how we communicate, learn, conduct business ... in short, how the world works. AXP Innovations Fund taps into change by investing in companies that are on the cutting edge of providing products and services that, before long, may become fundamental in our lives. CONTENTS From the Chairman 3 From the Portfolio Manager 3 Fund Facts 5 The 10 Largest Holdings 6 Financial Statements (Fund) 7 Notes to Financial Statements (Fund) 10 Financial Statements (Portfolio) 17 Notes to Financial Statements (Portfolio) 19 Investments in Securities 23 - -------------------------------------------------------------------------------- 2 AXP INNOVATIONS FUND (picture of) Arne H. Carlson Arne H. Carlson Chairman of the board From the Chairman The financial markets have always had their ups and downs, but in recent months volatility has become more frequent and intense. While no one can say with certainty what the markets will do, American Express Financial Corporation, the Fund's investment manager, expects economic growth to continue, accompanied by a modest rise in long-term interest rates. But no matter what transpires, this is a great time to take a close look at your goals and investments. We encourage you to: o Consult a professional investment advisor who can help you cut through mountains of data. o Set financial goals that extend beyond those achievable through the retirement plan of your employer. o Learn as much as you can about your current investments. The portfolio manager's letter that follows provides a review of the Fund's investment strategies and performance. The semiannual report contains other valuable information as well. The Fund's prospectus describes its investment objectives and how it intends to achieve those objectives. As experienced investors know, information is vital to making good investment decisions. So, take a moment and decide again whether the Fund's investment objectives and management style fit with your other investments to help you reach your financial goals. And make it a practice on a regular basis to assess your investment options. On behalf of the Board, Arne H. Carlson (picture of) Louis Giglio Louis Giglio Portfolio manager From the Portfolio Manager A dramatic decline in technology-related stocks took a heavy toll on AXP Innovations Fund's performance during the first half of the fiscal year. For the six months -- November 2000 through April 2001 -- the Fund's Class A shares lost 53.61% (excluding the sales charge). The stock market, and technology stocks in particular, were in trouble from the outset of the period. (Actually, the seeds of the problem were sown some time before, when companies increased their spending in preparation for the Y2K computer changeover. But with the passing of that event, companies began to cut back on tech-related spending.) Adding to the already difficult environment - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 3 last fall were indications of a slowing economy. That, in turn, cast increasing doubt on the abilities of tech companies to generate superior profit growth to justify their generally high prices. What began as a mild downturn quickly turned into a steep sell-off that didn't level off until late December. SURPRISE RATE CUT The new year brought some welcome relief in the form of a surprise cut in short-term interest rates by the Federal Reserve. Led by tech stocks, the market soared for most of January. But the euphoria soon came to an abrupt end, as renewed concerns about the economy and corporate profits drove stocks down sharply in February and March. The period did end on a positive note, though, as the market, again led by the tech sector, rebounded in April. The Fund's performance followed a similar path during the six months, a result of its emphasis on tech-related stocks. Although the long-term outlook for most of the holdings appeared to remain positive, the sell-off was largely indiscriminate as it drove down share prices of promising companies as well as the fluky ones. Many stocks had their prices cut in half and, in some cases, much more. In light of the environment, I adjusted the portfolio somewhat by selling stocks that appear less likely to experience a meaningful rebound. In addition, I added some stocks in the media and service sectors, which should take some volatility out of performance in the months ahead. I also raised the level of cash reserves, again to lessen volatility. Taking a broader perspective, I think the past six months reinforces the importance of making sure that the makeup of one's personal portfolio is consistent with one's risk tolerance, as well as the importance of taking a long-term approach to investing. It is persistence, above all, that is the hallmark of successful investors. Looking to the second half of the fiscal year, the tech sector's rebound in April may prove to be the beginning of a recovery in such stocks, although the going is likely to be rocky at times. In light of that outlook, I am concentrating investments in the computer software, fiber optics, semiconductor, storage and telecommunications equipment areas, which strike me as having the best potential for gain. Louis Giglio - -------------------------------------------------------------------------------- 4 AXP INNOVATIONS FUND Fund Facts Class A -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $2.44 Oct. 31, 2000 $5.26 Decrease $2.82 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $ -- From long-term capital gains $ -- Total distributions $ -- Total return* -53.61% Class B -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $2.20 Oct. 31, 2000 $4.77 Decrease $2.57 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $ -- From long-term capital gains $ -- Total distributions $ -- Total return* -53.88% Class C -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $2.20 Oct. 31, 2000 $4.77 Decrease $2.57 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $ -- From long-term capital gains $ -- Total distributions $ -- Total return* -53.88% Class Y -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $2.43 Oct. 31, 2000 $5.25 Decrease $2.82 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $ -- From long-term capital gains $ -- Total distributions $ -- Total return* -53.71% * The total return is a hypothetical investment in the Fund with all distributions reinvested. Returns do not include sales load. The prospectus discusses the effect of sales charges, if any, on the various classes. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 5 The 10 Largest Holdings Percent Value (of net assets) (as of April 30, 2001) Micromuse 7.74% $24,750,000 BEA Systems 5.75 18,382,500 CIENA 4.48 14,315,600 VERITAS Software 3.92 12,518,100 Juniper Networks 3.23 10,330,250 Aeroflex 2.80 8,946,000 Synopsys 2.70 8,614,500 Rational Software 2.65 8,473,500 Brocade Communications Systems 2.38 7,598,000 Peregrine Systems 1.81 5,800,500 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 37.46% of net assets - -------------------------------------------------------------------------------- 6 AXP INNOVATIONS FUND Financial Statements Statement of assets and liabilities AXP Innovations Fund
April 30, 2001 (Unaudited) Assets Investment in World Technologies Portfolio (Note 1) $ 319,606,944 Capital shares receivable 31,377 ------ Total assets 319,638,321 ----------- Liabilities Accrued distribution fee 12,098 Accrued service fee 1 Accrued transfer agency fee 10,510 Accrued administrative services fee 1,457 Other accrued expenses 103,935 ------- Total liabilities 128,001 ------- Net assets applicable to outstanding capital stock $ 319,510,320 ============= Represented by Capital stock -- $.01 par value (Note 1) $ 1,357,044 Additional paid-in capital 632,791,801 Net operating loss (2,164,652) Accumulated net realized gain (loss) (Note 6) (240,304,146) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (72,169,727) ----------- Total -- representing net assets applicable to outstanding capital stock $ 319,510,320 ============= Net assets applicable to outstanding shares: Class A $ 216,854,936 Class B $ 99,155,776 Class C $ 3,389,437 Class Y $ 110,171 Net asset value per share of outstanding capital stock: Class A shares 89,047,386 $ 2.44 Class B shares 45,070,486 $ 2.20 Class C shares 1,541,231 $ 2.20 Class Y shares 45,298 $ 2.43 ------ ------------- See accompanying notes to financial statements. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 7
Statement of operations AXP Innovations Fund
Six months ended April 30, 2001 (Unaudited) Investment income Income: Dividends $ 21,867 Interest 1,386,906 Less foreign taxes withheld (492) ---- Total income 1,408,281 --------- Expenses (Note 2): Expenses allocated from World Technologies Portfolio 1,461,275 Distribution fee Class A 333,616 Class B 593,809 Class C 16,696 Transfer agency fee 618,316 Incremental transfer agency fee Class A 46,532 Class B 37,738 Class C 1,288 Service fee -- Class Y 38 Administrative services fees and expenses 112,950 Compensation of board members 3,950 Printing and postage 150,010 Registration fees 194,526 Audit fees 2,500 Other 5,223 ----- Total expenses 3,578,467 Earnings credits on cash balances (Note 2) (5,534) ------ Total net expenses 3,572,933 --------- Investment income (loss) -- net (2,164,652) ---------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (230,498,723) Options contracts written 2,368,197 --------- Net realized gain (loss) on investments (228,130,526) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (83,685,283) ----------- Net gain (loss) on investments and foreign currencies (311,815,809) ------------ Net increase (decrease) in net assets resulting from operations $(313,980,461) ============= See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 8 AXP INNOVATIONS FUND
Statements of changes in net assets AXP Innovations Fund
April 30, 2001 Oct. 31, 2000 Six months ended Year ended (Unaudited) Operations and distributions Investment income (loss) -- net $ (2,164,652) $ (923,731) Net realized gain (loss) on investments (228,130,526) (12,166,298) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (83,685,283) 7,561,646 ----------- --------- Net increase (decrease) in net assets resulting from operations (313,980,461) (5,528,383) ------------ ---------- Distributions to shareholders from: Net realized gain Class A -- (915,066) Class B -- (27,931) Class Y -- (27,725) Tax return of capital Class A -- (8,349,632) Class B -- (254,856) Class Y -- (252,980) -- -------- Total distributions -- (9,828,190) ---------- Capital share transactions (Note 3) Proceeds from sales Class A shares (Notes 2 and 5) 162,019,541 357,455,224 Class B shares 66,397,156 146,420,757 Class C shares 3,071,833 3,572,743 Class Y shares 85,675 95,903 Reinvestment of distributions at net asset value Class A shares -- 9,264,698 Class B shares -- 282,787 Class Y shares -- 280,705 Payments for redemptions Class A shares (48,750,879) (44,738,915) Class B shares (Note 2) (10,086,283) (3,674,884) Class C shares (Note 2) (336,261) (29,954) Class Y shares (5,576) (357,630) ------ -------- Increase (decrease) in net assets from capital share transactions 172,395,206 468,571,434 ----------- ----------- Total increase (decrease) in net assets (141,585,255) 453,214,861 Net assets at beginning of period 461,095,575 7,880,714 ----------- --------- Net assets at end of period $ 319,510,320 $461,095,575 ============= ============ See accompanying notes to financial statements. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 9
Notes to Financial Statements AXP Innovations Fund (Unaudited as to April 30, 2001) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AXP Innovations Fund (a series of AXP Global Series, Inc.) 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. Prior to April 19, 2000, the Fund had not engaged in a broad public offering of its shares. American Express Financial Corporation (AEFC) was the only investor. Class C shares of the Fund were offered to the public on June 26, 2000. Prior to this date, AEFC purchased 384 shares of capital stock at $5.21 per share, which represented the initial capital in Class C. The Fund offers Class A, Class B, Class C and Class Y shares. o Class A shares are sold with a front-end sales charge. o Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth calendar year of ownership. o Class C shares may be subject to a CDSC. o Class Y shares have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend and liquidation rights. The distribution fee, incremental transfer agency fee and service fee (class specific expenses) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. Investment in World Technologies Portfolio The Fund invests all of its assets in World Technologies Portfolio (the Portfolio), a series of World Trust (the Trust), an open-end investment company that has the same objectives as the Fund. World Technologies Portfolio invests in technology common stocks. 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, 2001 was 99.99%. 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. - -------------------------------------------------------------------------------- 10 AXP INNOVATIONS FUND 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 last income dividend. A capital gain distribution was declared and distributed to the single corporate shareholder prior to the broad public offering. 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 0.035% annually. A minor portion of additional administrative service expenses paid by the Fund are consultants' fees and fund office expenses. Under this agreement, the Fund also pays taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees and any other expenses properly payable by the Fund and approved by the board. Under a separate Transfer Agency Agreement, American Express Client Service Corporation (AECSC) maintains shareholder accounts and records. The Fund pays AECSC an annual fee per shareholder account for this service as follows: o Class A $19.00 o Class B $20.00 o Class C $19.50 o Class Y $17.00 The Fund has agreements with American Express Financial Advisors Inc. (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund pays a distribution fee at an annual rate up to 0.25% of the Fund's average daily net assets attributable to Class A shares and up to 1.00% for Class B and Class C shares. Under a Shareholder Service Agreement, the Fund pays the Distributor a fee for service provided to shareholders by financial advisors and other servicing agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net assets attributable to Class Y shares. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 11 Sales charges received by the Distributor for distributing Fund shares were $1,397,405 for Class A, $44,488 for Class B and $678 for Class C for the six months ended April 30, 2001. During the six months ended April 30, 2001, the Fund's transfer agency fees were reduced by $5,534 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, 2001 Class A Class B Class C Class Y Sold 43,561,776 19,715,021 971,484 30,020 Issued for reinvested distributions -- -- -- -- Redeemed (15,203,913) (3,699,786) (122,334) (1,531) ----------- ---------- -------- ------ Net increase (decrease) 28,357,863 16,015,235 849,150 28,489 ---------- ---------- ------- ------ From April 19, 2000* to Oct. 31, 2000 Class A Class B Class C Class Y Sold 66,739,589 29,692,979 698,058 16,809 Issued for reinvested distributions 1,695,924 56,694 -- 51,383 Redeemed (8,405,990) (714,422) (5,977) (71,383) ---------- -------- ------ ------- Net increase (decrease) 60,029,523 29,035,251 692,081 (3,191) ---------- ---------- ------- ------ * Prior to April 19, 2000, shares of the Fund were not publicly available (AEFC owned 100% of the outstanding shares). 4. BANK BORROWINGS The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund must have asset coverage for borrowings not to exceed the aggregate of 333% of advances equal to or less than five business days plus 367% of advances over five business days. The agreement, which enables the Fund to participate with other American Express mutual funds, permits borrowings up to $200 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.05% per annum. The Fund had no borrowings outstanding during the six months ended April 30, 2001. - -------------------------------------------------------------------------------- 12 AXP INNOVATIONS FUND 5. FUND MERGER As of the close of business on July 14, 2000, AXP Innovations Fund acquired the assets and assumed the identified liabilities of Strategist World Technologies Fund. The aggregate net assets of AXP Innovations Fund immediately before the acquisition were $287,671,349. The merger was accomplished by a tax-free exchange of 225,987 shares of Strategist World Technologies Fund valued at $2,199,768. In exchange for the Strategist World Technologies Fund shares and net assets, AXP Innovations Fund issued the following number of shares: Shares Net assets Class A 354,082 $2,199,768 Strategist World Technologies Fund's net assets at that date consisted of capital stock of $1,749,611 and unrealized appreciation of $450,157. 6. CAPITAL LOSS CARRY-OVER For federal income tax purposes the Fund had a capital loss carry-over of $10,907,404 as of Oct. 31, 2000, that will expire in 2008 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. 7. NEW ACCOUNTING PRONOUNCEMENT In November 2000, the AICPA issued a revised Audit and Accounting Guide, Audits of Investment Companies, which is effective for fiscal years beginning after Dec. 15, 2000. Adopting the revised Guide is not expected to have a significant impact on the Fund's financial position, results of operations or changes in its net assets. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 13 8. FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating the Fund's results. Class A
Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001(l) 2000 1999 1998 1997(b) Net asset value, beginning of period $ 5.26 $ 11.27 $ 5.41 $5.27 $5.00 Income from investment operations: Net investment income (loss) (.01) (.01) (.08) (.07) (.06) Net gains (losses) (both realized and unrealized) (2.81) 7.05 5.94 .21 .33 Total from investment operations (2.82) 7.04 5.86 .14 .27 Less distributions: Distributions from realized gains -- (1.29) -- -- -- Tax return of capital(i) -- (11.76) -- -- -- Total distributions -- (13.05) -- -- -- Net asset value, end of period $ 2.44 $ 5.26 $11.27 $5.41 $5.27 Ratios/supplemental data: Net assets, end of period (in thousands) $216,855 $319,164 $7,435 $3,572 $3,476 Ratio of expenses to average daily net assets(h) 1.59%(j) 1.24%(d) 1.11%(d) 1.33%(d) 1.35%(d,j) Ratio of net investment income (loss) to average daily net assets (.87%)(j) (.38%) (1.01%) (1.29%) (1.26%)(j) Portfolio turnover rate (excluding short-term securities) 95% 116% 113% 200% 164% Total return(k) (53.61%) 66.58% 108.32% 2.68% 5.38% Class B Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001(l) 2000 1999 1998 1997(b) Net asset value, beginning of period $ 4.77 $ 11.02 $ 5.33 $5.23 $5.00 Income from investment operations: Net investment income (loss) (.02) (.04) (.14) (.11) (.09) Net gains (losses) (both realized and unrealized) (2.55) 6.84 5.83 .21 .32 Total from investment operations (2.57) 6.80 5.69 .10 .23 Less distributions: Distributions from realized gains -- (1.29) -- -- -- Tax return of capital(i) -- (11.76) -- -- -- Total distributions -- (13.05) -- -- -- Net asset value, end of period $ 2.20 $ 4.77 $11.02 $5.33 $5.23 Ratios/supplemental data: Net assets, end of period (in thousands) $99,156 $138,545 $220 $107 $105 Ratio of expenses to average daily net assets(h) 2.37%(j) 2.01%(e) 1.86%(e) 2.08%(e) 2.10%(e,j) Ratio of net investment income (loss) to average daily net assets (1.64%)(j) (1.16%) (1.76%) (2.04%) (2.00%)(j) Portfolio turnover rate (excluding short-term securities) 95% 116% 113% 200% 164% Total return(k) (53.88%) 65.25% 106.72% 1.91% 4.62% See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- 14 AXP INNOVATIONS FUND
Class C
Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001(l) 2000(c) Net asset value, beginning of period $ 4.77 $5.05 Income from investment operations: Net investment income (loss) (.02) (.01) Net gains (losses) (both realized and unrealized) (2.55) (.27) Total from investment operations (2.57) (.28) Less distributions: Distributions from realized gains -- -- Net asset value, end of period $ 2.20 $4.77 Ratios/supplemental data: Net assets, end of period (in thousands) $3,389 $3,298 Ratio of expenses to average daily net assets(h) 2.37%(j) 2.01%(f,j) Ratio of net investment income (loss) to average daily net assets (1.68%)(j) (1.17%)(j) Portfolio turnover rate (excluding short-term securities) 95% 116% Total return(k) (53.88%) (5.54%) Class Y Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001(l) 2000 1999 1998 1997(b) Net asset value, beginning of period $ 5.25 $ 11.27 $ 5.41 $5.27 $5.00 Income from investment operations: Net investment income (loss) (.01) -- (.08) (.07) (.06) Net gains (losses) (both realized and unrealized) (2.81) 7.03 5.94 .21 .33 Total from investment operations (2.82) 7.03 5.86 .14 .27 Less distributions: Distributions from realized gains -- (1.29) -- -- -- Tax return of capital(i) -- (11.76) -- -- -- Total distributions -- (13.05) -- -- -- Net asset value, end of period $ 2.43 $ 5.25 $11.27 $5.41 $5.27 Ratios/supplemental data: Net assets, end of period (in thousands) $110 $88 $225 $108 $105 Ratio of expenses to average daily net assets(h) 1.47%(j) .94%(g) 1.11%(g) 1.33%(g) 1.35%(g,j) Ratio of net investment income (loss) to average daily net assets (.77%)(j) (.80%) (1.01%) (1.29%) (1.25%)(j) Portfolio turnover rate (excluding short-term securities) 95% 116% 113% 200% 164% Total return(k) (53.71%) 66.27% 108.32% 2.68% 5.38% See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 15
Notes to financial highlights (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Inception date was Nov. 13, 1996. (c) Inception date was June 26, 2000. (d) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class A would have been 1.45%, 1.22%, 1.63% and 2.36% for the periods ended 2000, 1999, 1998 and 1997, respectively. (e) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class B would have been 2.26%, 1.97%, 2.38% and 3.11% for the periods ended 2000, 1999, 1998 and 1997, respectively. (f) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratio of expenses for Class C would have been 2.26% for the period ended 2000. (g) AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class Y would have been 1.19%, 1.12%, 1.63% and 2.36% for the periods ended 2000, 1999, 1998 and 1997, respectively. (h) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (i) A distribution payable to a single corporate shareholder. (j) Adjusted to an annual basis. (k) Total return does not reflect payment of a sales charge. (l) Six months ended April 30, 2001 (Unaudited). Prior to April 19, 2000, the Fund had not engaged in a broad public offering of its shares, or been subject to redemption requests. It had sold shares only to a single investor. One factor impacting the Fund's 2000 and 1999 performance was the high concentration in technology investments, particularly in securities of internet and communication companies. These investments performed well and had a greater effect on the Fund's performance than similar investments made by other funds because of high concentration, the lack of cash flows and the smaller size of the Fund. There is no assurance that the Fund's future investments will result in the same level of performance. - -------------------------------------------------------------------------------- 16 AXP INNOVATIONS FUND Financial Statements Statement of assets and liabilities World Technologies Portfolio
April 30, 2001 (Unaudited) Assets Investments in securities, at value (Note 1) (identified cost $386,413,489) $314,583,789 Cash in bank on demand deposit 49,792 Dividends and accrued interest receivable 141,650 Receivable for investment securities sold 15,779,170 ---------- Total assets 330,554,401 ----------- Liabilities Payable for investment securities purchased 6,211,776 Payable upon return of securities loaned (Note 4) 3,880,000 Accrued investment management services fee 17,645 Other accrued expenses 30,985 Options contracts written, at value (premium received $417,661) (Note 5) 767,375 ------- Total liabilities 10,907,781 ---------- Net assets $319,646,620 ============ See accompanying notes to financial statements. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 17
Statement of operations World Technologies Portfolio
Six months ended April 30, 2001 (Unaudited) Investment income Income: Dividends $ 21,870 Interest 1,386,353 Less foreign taxes withheld (492) ---- Total income 1,407,731 --------- Expenses (Note 2): Investment management services fee 1,383,726 Compensation of board members 4,075 Custodian fees 54,800 Audit fees 7,500 Other 15,057 ------ Total expenses 1,465,158 Earnings credits on cash balances (Note 2) (3,675) ------ Total net expenses 1,461,483 --------- Investment income (loss) -- net (53,752) ------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) (230,532,508) Options contracts written (Note 5) 2,368,197 --------- Net realized gain (loss) on investments (228,164,311) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (83,697,109) ----------- Net gain (loss) on investments and foreign currencies (311,861,420) ------------ Net increase (decrease) in net assets resulting from operations $(311,915,172) ============= Statements of changes in net assets World Technologies Portfolio April 30, 2001 Oct. 31, 2000 Six months ended Year ended (Unaudited) Operations Investment income (loss) -- net $ (53,752) $ 160,090 Net realized gain (loss) on investments (228,164,311) (11,045,330) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (83,697,109) 7,514,286 ----------- --------- Net increase (decrease) in net assets resulting from operations (311,915,172) (3,370,954) Net contributions (withdrawals) from partners 170,347,268 455,562,304 ----------- ----------- Total increase (decrease) in net assets (141,567,904) 452,191,350 Net assets at beginning of period 461,214,524 9,023,174 ----------- --------- Net assets at end of period $ 319,646,620 $461,214,524 ============= ============ See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 18 AXP INNOVATIONS FUND
Notes to Financial Statements World Technologies Portfolio (Unaudited as to April 30, 2001) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES World Technologies 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 in common stocks of companies within the information technology sector. 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. 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. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 19 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. Illiquid securities As of April 30, 2001, investments in securities included issues that were illiquid which the Portfolio currently limits to 10% of net assets, at market value, at the time of purchase. The aggregate value of such securities as of April 30, 2001 was $12,941,698 representing 4.05% of net assets. These securities are valued at fair value according to methods selected in good faith by the board. According to board guidelines, certain unregistered securities are determined to be liquid and are not included within the 10% limitation specified above. Securities purchased on a forward-commitment basis Delivery and payment for securities that have been purchased by the Portfolio on a forward-commitment basis can take place one month or more after the transaction date. The Portfolio designates cash or liquid securities at least equal to the amount of its commitment. As of April 30, 2001, the Portfolio had entered into outstanding forward-commitments of $1,750,000. 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. - -------------------------------------------------------------------------------- 20 AXP INNOVATIONS FUND Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and 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 0.72% to 0.595% 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 six months ended April 30, 2001, the Portfolio's custodian fees were reduced by $3,675 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 $520,265,914 and $333,660,258, respectively, for the six months ended April 30, 2001. For the same period, the portfolio turnover rate was 95%. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with AEFC were $37,676 for the six months ended April 30, 2001. 4. LENDING OF PORTFOLIO SECURITIES As of April 30, 2001, securities valued at $4,021,400 were on loan to brokers. For collateral, the Portfolio received $3,880,000 in cash. As of April 30, 2001, due to fluctuating market conditions, the Fund requested additional collateral which was received on May 1, 2001. Income from securities lending amounted to $79,718 for the six months ended April 30, 2001. The risks to the Portfolio of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 21 5. OPTIONS CONTRACTS WRITTEN Contracts and premium amounts associated with options contracts written are as follows: Six months ended April 30, 2001 Puts Calls Contracts Premium Contracts Premium Balance Oct. 31, 2000 200 $ 174,207 100 $ 120,321 Opened 5,770 2,053,364 4,095 2,022,626 Closed (3,130) (915,756) (2,795) (1,655,118) Exercised (1,650) (637,499) -- -- Expired (940) (591,348) (400) (153,136) ---- -------- ---- -------- Balance April 30, 2001 250 $ 82,968 1,000 $ 334,693 --- ---------- ----- ----------- See "Summary of significant accounting policies." 6. NEW ACCOUNTING PRONOUNCEMENT In November 2000, the AICPA issued a revised Audit and Accounting Guide, Audits of Investment Companies, which is effective for fiscal years beginning after Dec. 15, 2000. Adopting the revised Guide is not expected to have a significant impact on the Portfolio's financial position, results of operations or changes in its net assets. - -------------------------------------------------------------------------------- 22 AXP INNOVATIONS FUND Investments in Securities World Technologies Portfolio April 30, 2001 (Unaudited) (Percentages represent value of investments compared to net assets) Common stocks (84.4%) Issuer Shares Value(a) Aerospace & defense (4.0%) Aeroflex 600,000(b) $8,946,000 General Motors Cl H 175,000(b) 3,718,750 Total 12,664,750 Communications equipment & services (12.7%) ADC Telecommunications 300,000(b) 2,253,000 Brocade Communications Systems 200,000(b) 7,598,000 CIENA 260,000(b,i) 14,315,600 EchoStar Communications Cl A 175,000(b) 5,243,000 Equinix 180,000(b) 237,600 Powerwave Technologies 200,000(b) 3,634,000 SignalSoft 150,000(b) 1,047,000 Sonus Networks 60,000(b) 1,527,600 Tellabs 45,000(b) 1,579,950 Time Warner Telecom Cl A 35,000(b) 1,772,750 Williams Communications Group 300,000(b) 1,356,000 Total 40,564,500 Computer software & services (22.7%) BEA Systems 450,000(b) 18,382,500 BMC Software 100,000(b) 2,419,000 Manugistics Group 75,000(b) 2,544,000 Micromuse 500,000(b) 24,750,000 Microsoft 12,000(b) 813,000 Moldflow 225,000(b) 2,778,750 Peregrine Systems 225,000(b) 5,800,500 VeriSign 50,000(b) 2,564,000 VERITAS Software 210,000(b) 12,518,100 Total 72,569,850 Computers & office equipment (18.4%) 3Com 250,000(b) 1,630,000 Check Point Software Technologies 60,000(b,c) 3,763,800 Cisco Systems 325,000(b) 5,518,500 Concord EFS 50,000(b) 2,327,500 EMC 100,000(b) 3,960,000 Emulex 105,000(b) 3,770,550 Juniper Networks 175,000(b) 10,330,250 MCSI 125,000(b) 2,250,000 NVIDIA 30,000(b) 2,499,000 Rational Software 350,000(b) 8,473,500 Solectron 100,000(b) 2,545,000 Sun Microsystems 75,000(b) 1,284,000 Synopsys 150,000(b) 8,614,500 Vastera 175,000(b) 1,912,750 Total 58,879,350 Electronics (9.4%) Celestica 40,000(b,c) 2,044,000 DuPont Photomasks 40,000(b) 2,232,000 EMCOR 40,000(b) 1,660,000 Maxim Integrated Products 45,000(b,i) 2,299,500 Micrel 118,000(b) 4,007,280 Micron Technology 50,000(b) 2,269,000 Novellus Systems 15,000(b) 827,250 Pericom Semiconductor 117,400(b) 2,112,026 PMC-Sierra 61,000(b) 2,540,650 Symbol Technologies 75,000 2,362,500 Teradyne 45,000(b) 1,777,500 TranSwitch 60,000(b) 1,041,000 TriQuint Semiconductor 90,000(b) 2,612,700 Xilinx 50,000(b,i) 2,373,500 Total 30,158,906 Financial services (0.6%) Paychex 60,000 2,073,600 Health care (0.5%) Luminex 125,000(b,f) 1,753,750 Household products (0.7%) Valence Technology 400,000(b,f) 2,220,000 Leisure time & entertainment (0.4%) Concord Camera 175,000(b) 1,128,750 Media (6.6%) Adelphia Communications Cl A 100,000(b) 3,636,000 Clear Channel Communications 60,000(b) 3,348,000 Comcast Special Cl A 70,000(b) 3,073,700 Macrovision 30,000(b) 1,715,400 Radio One Cl A 210,000 3,945,900 Univision Communications Cl A 120,000(b) 5,245,200 Total 20,964,200 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 23 Common stocks (continued) Issuer Shares Value(a) Miscellaneous (4.4%) Capstone Turbine 100,000(b,f) $2,930,000 Chapter 2 E-Services 150,411(g,j) -- Intersil Holding 90,000(b,i) 2,901,600 Nasdaq-100 Shares 110,000(b) 5,076,500 Semiconductor HOLDRs Trust 60,000 3,078,000 Total 13,986,100 Multi-industry conglomerates (1.0%) Tyco Intl 60,000(c) 3,202,200 Utilities -- electric (1.0%) Calpine 45,000(b) 2,564,550 Reliant Resources 20,950(b) 628,500 Total 3,193,050 Utilities -- telephone (2.0%) AT&T - Liberty Media Group Cl A 330,000(b) 5,280,000 Metromedia Fiber Network Cl A 200,000(b) 1,018,000 Total 6,298,000 Total common stocks (Cost: $338,195,167) $269,657,006 Preferred stocks & other (4.0%)(b) Issuer Shares Value(a) Adaytum Software Series E 95,694(g) $600,001 Agiliti Cv Series E 550,000(g) 1,650,000 Bluestream Ventures LP 2,500,000(e,g) 2,500,000 Chapter 2 E-Services Series B 300,820(g) 1,649,847 Covia Technologies Series E 232,502(g) 582,650 Equinix Cv 26,525(g) 31,512 Evoice Cv Series D 981,091(g) 1,101,226 Gorp.com Series B 97,087(g) 151,456 Marketsoft Cv 225,410(g) 1,100,001 Paxonet Series C 106,383(g) 300,000 Portera Series G 425,374(g) 1,425,003 Retail Exchange.com 314,286(g) 1,100,001 Warrants 111,789(j) -- Tellium Series E 15,000(g) 450,000 Vcommerce Cv Series C 64,378(g) 300,001 Total preferred stocks & other (Cost: $13,657,501) $12,941,698 Bond (0.7%) Issuer Coupon Principal Value(a) rate amount Mayan Networks 11-01-05 5.25% $5,000,000(d) $2,375,000 Total bond (Cost: $5,000,000) $2,375,000 Options purchased (0.4%) Issuer Contracts Exercise Expiration Value(a) price date Calls Cisco Systems 250 $45 July 2001 $1,250 Microsoft 100 70 Jan. 2002 90,500 Nasdaq 100 Index 150 48 Sept. 2001 82,500 Nasdaq 100 Index 1,000 45 Jan. 2002 875,000 PeopleSoft 100 40 July 2001 50,000 Portal Software 500 12.50 July 2001 47,500 Siebel Systems 100 50 Aug. 2001 69,000 Sun Microsystems 100 15 July 2001 38,000 Puts CIENA 150 60 June 2001 177,750 Total options purchased (Cost: $1,376,635) $1,431,500 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 24 AXP INNOVATIONS FUND Short-term securities (8.8%)(i) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agencies (8.1%) Federal Home Loan Bank Disc Nts 06-01-01 4.72% $900,000 $896,240 06-01-01 4.91 4,600,000 4,579,096 Federal Home Loan Mtge Corp Disc Nts 05-01-01 4.95 7,600,000 7,598,955 05-24-01 4.78 1,400,000 1,395,557 05-31-01 4.86 700,000 696,967 06-20-01 4.56 2,500,000 2,484,098 07-12-01 4.62 2,800,000 2,775,188 Federal Natl Mtge Assn Disc Nts 05-17-01 4.76 1,400,000 1,396,860 07-26-01 4.18 4,000,000 3,957,757 Total 25,780,718 Commercial paper (0.7%) Novartis Finance 05-07-01 4.57% $2,400,000(h) $2,397,867 Total short-term securities (Cost: $28,184,186) $28,178,585 Total investments in securities (Cost: $386,413,489)(k) $314,583,789 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 25 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. As of April 30, 2001, the value of foreign securities represented 2.82% of net assets. (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) The share amount for Limited Liability Companies (LLC) or Limited Partnerships (LP) represents capital contributions. At April 30, 2001, the amount of capital committed to the LLC or LP for future investment was $1,750,000. (f) Security is partially or fully on loan. See Note 4 to the financial statements. (g) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at April 30, 2001, is as follows: Security Acquisition Cost dates Adaytum Software Series E 09-15-00 $ 600,001 Agiliti Cv Series E 11-14-00 1,650,000 Bluestream Ventures LP 06-28-00 2,500,000 Chapter 2 E-Services 11-08-00 -- Series B 11-09-00 1,649,847 Covia Technologies Series E 08-16-00 582,650 Equinix Cv 02-26-01 399,997 Evoice Cv Series D 11-27-00 1,100,000 Gorp.com Series B 02-21-00 499,998 Marketsoft Cv 12-11-00 1,100,001 Paxonet Series C 04-23-01 300,000 Portera Series G 11-10-00 1,425,003 Retail Exchange.com 11-29-00 1,100,001 Tellium Series E 09-19-00 450,000 Vcommerce Cv Series C 07-21-00 300,001 (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. - -------------------------------------------------------------------------------- 26 AXP INNOVATIONS FUND (i) At April 30, 2001, securities valued at $73,412,500 were held to cover open call options written as follows (see Note 5 to the financial statements): Issuer Contracts Exercise Expiration Value(a) price date CIENA 150 $80 June 2001 $ 32,625 Intersil Holding 400 25 May 2001 318,000 Maxim Integrated Products 200 45 May 2001 161,000 Xilinx 250 40 May 2001 222,500 --- -- -------- ------- Total value $734,125 -------- At April 30, 2001, cash or short-term securities were designated to cover open put options written as follows (see Note 5 to the financial statements): Issuer Contracts Exercise Expiration Value(a) price date Micromuse 50 $40 May 2001 $ 8,750 VERITAS Software 200 45 May 2001 24,500 --- -- -------- ------ Total value $33,250 ------- (j) Negligible market value. (k) At April 30, 2001, the cost of securities for federal income tax purposes was approximately $386,413,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 12,208,000 Unrealized depreciation (84,037,000) ----------- Net unrealized depreciation $(71,829,000) ------------ - -------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 27 AXP Innovations Fund 70100 AXP Financial Center Minneapolis, MN 55474 americanexpress.com Ticker Symbol Class A: AXIAX Class B: INVBX Class C: AXICX Class Y: N/A PRSRT STD AUTO U.S. POSTAGE PAID AMERICAN EXPRESS This report must be accompanied or preceded by the Fund's current prospectus. Distributed by American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer. S-6396 C (6/01) -----END PRIVACY-ENHANCED MESSAGE-----