N-30D 1 s6451m.txt AXP GLOBAL GROWTH FUND AXP(R) Global Growth Fund 2001 SEMIANNUAL REPORT American Express(R) Funds (icon of) compass AXP Global Growth Fund seeks to provide shareholders with long-term capital growth. It's a Big World After All No one needs to be told that the world is changing rapidly. For example, some years ago U.S. stocks accounted for about two-thirds of the total value of stocks worldwide. Today, that figure is down to about one-third, as many foreign stock markets have enjoyed explosive growth. AXP Global Growth Fund seeks to take advantage of that trend by investing in companies throughout the world, not just the United States. For the most part, these are fast-growing foreign companies involved in essential businesses such as infrastructure creation, finance and environmental clean-up. As they prosper, AXP Global Growth Fund offers investors the potential to prosper along with them. 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) 16 Notes to Financial Statements (Portfolio) 18 Investments in Securities 21 ------------------------------------------------------------------------------- 2 AXP GLOBAL GROWTH 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) Richard Leadem Richard Leadem Portfolio manager From the Portfolio Manager Stock markets around the world slumped during the past six months, as a weakening global economy and a worsening outlook for corporate profits took a toll on share prices. For AXP Global Growth Fund, the result was a loss of 17.74% (excluding the sales charge) for Class A shares over first half of the fiscal year -- November 2000 and April 2001. ------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 3 Stocks had already begun to slide when the period began, as indications of a slowdown in economic growth in the U.S. also cast a cloud over the economies of the major European markets. In such an environment, investors reasoned, corporate profits would soon suffer a similar fate. That, in turn, would make it increasingly difficult to justify the still-high prices on many stocks. The resulting downturn in the markets didn't level off until late December. THE FED'S SURPRISE The new year got off to a better start, as a surprise cut in short-term interest rates by the Federal Reserve sparked a month-long rally in the U.S. and Europe. But the concerns about the economy and profits quickly resurfaced, driving the markets into another rapid retreat during February and March. The period did end on an encouraging note, though, as the markets rebounded sharply in April on the hope of economic and profit improvement before year-end. The driving force behind most of the markets' twists and turns was the technology sector, which, for the six months as a whole, suffered a severe decline as investors lost faith in tech companies' ability to continue to generate superior sales and profit growth. Although the Fund avoided the worst of the sector's problems, its performance was penalized by its tech holdings. Among other growth-stock sectors, pharmaceuticals provided the best performance. On a regional basis, the biggest portion of the Fund's investments was in the U.S. I gradually increased the U.S. exposure to about half of the portfolio at period-end, as the market sell-off there created increasingly attractive prices on a number of promising stocks. Holdings in Europe (the United Kingdom, France, Germany and Italy) and Japan comprised about 25% and 7.5%, respectively. I added a bit to investments in Japan because I became more encouraged that political changes there would benefit stock prices. All told, the Fund held 55 stocks in 15 countries at period-end. In a broader change, I shifted the emphasis from secular growth stocks (those largely unaffected by economic conditions) to cyclical growth stocks (those that benefit first and most from an improving economy). This fits with my expectation that the global economy and, thus, corporate profits will pick up in the second half of 2001. More specifically, I think the "cyclicals," particularly in the tech sector, could enjoy a strong recovery. Overall, the emphasis remains on U.S. and European companies that are leaders in their respective businesses. Richard Leadem ------------------------------------------------------------------------------- 4 AXP GLOBAL GROWTH FUND Fund Facts Class A -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $5.92 Oct. 31, 2000 $8.74 Decrease $2.82 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $0.10 From long-term capital gains $1.26 Total distributions $1.36 Total return* -17.74% Class B -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $5.75 Oct. 31, 2000 $8.53 Decrease $2.78 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $0.08 From long-term capital gains $1.26 Total distributions $1.34 Total return* -17.97% Class C -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $5.73 Oct. 31, 2000 $8.54 Decrease $2.81 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $0.10 From long-term capital gains $1.26 Total distributions $1.36 Total return* -18.07% Class Y -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 2001 $5.94 Oct. 31, 2000 $8.76 Decrease $2.82 Distributions -- Nov. 1, 2000 - April 30, 2001 From income $0.11 From long-term capital gains $1.26 Total distributions $1.37 Total return* -17.58% * 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) Tyco Intl (Bermuda) 3.28% $48,353,220 Standard & Poor's Depositary Receipts (United States) 3.04 44,930,127 Citigroup (United States) 3.03 44,733,037 Home Depot (United States) 2.75 40,581,360 Pfizer (United States) 2.66 39,251,017 Wal-Mart Stores (United States) 2.55 37,679,655 American Intl Group (United States) 2.47 36,400,754 Microsoft (United States) 2.41 35,505,743 Medtronic (United States) 2.38 35,109,120 Qwest Communications Intl (United States) 2.32 34,278,289
Note: Certain foreign investment risks include: changes in currency exchange rates, adverse political or economic order and lack of similar regulatory requirements followed by U.S. companies. For further detail about these holdings, please refer to the section entitled "Investments in Securities." (picture of) pie chart The 10 holdings listed here make up 26.89% of net assets ------------------------------------------------------------------------------- 6 AXP GLOBAL GROWTH FUND Financial Statements Statement of assets and liabilities AXP Global Growth Fund
April 30, 2001 (Unaudited) Assets Investment in World Growth Portfolio (Note 1) $1,475,919,192 Capital shares receivable 26,977 ------ Total assets 1,475,946,169 ------------- Liabilities Accrued distribution fee 56,785 Accrued service fee 122 Accrued transfer agency fee 4,159 Accrued administrative services fee 5,823 Other accrued expenses 93,191 ------ Total liabilities 160,080 ------- Net assets applicable to outstanding capital stock $1,475,786,089 -------------- Represented by Capital stock -- $.01 par value (Note 1) $ 2,514,156 Additional paid-in capital 1,772,439,766 Undistributed net investment income 1,714,398 Accumulated net realized gain (loss) (254,929,374) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (45,952,857) ----------- Total -- representing net assets applicable to outstanding capital stock $1,475,786,089 ============== Net assets applicable to outstanding shares: Class A $1,015,866,890 Class B $ 443,600,186 Class C $ 1,282,373 Class Y $ 15,036,640 Net asset value per share of outstanding capital stock: Class A shares 171,497,534 $ 5.92 Class B shares 77,160,983 $ 5.75 Class C shares 223,677 $ 5.73 Class Y shares 2,533,393 $ 5.94 --------- -------------- See accompanying notes to financial statements. ------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 7
Statement of operations AXP Global Growth Fund
Six months ended April 30, 2001 (Unaudited) Investment income Income: Dividends $ 14,163,761 Interest 2,620,843 Less foreign taxes withheld (528,439) -------- Total income 16,256,165 ---------- Expenses (Note 2): Expenses allocated from World Growth Portfolio 5,091,803 Distribution fee Class A 1,400,395 Class B 2,428,105 Class C 5,283 Transfer agency fee 1,586,320 Incremental transfer agency fee Class A 121,207 Class B 93,303 Class C 303 Service fee -- Class Y 8,059 Administrative services fees and expenses 389,167 Compensation of board members 4,850 Printing and postage 180,313 Registration fees 80,892 Audit fees 4,000 Other 6,202 ----- Total expenses 11,400,202 Earnings credits on cash balances (Note 2) (39,150) ------- Total net expenses 11,361,052 ---------- Investment income (loss) -- net 4,895,113 --------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (246,274,685) Foreign currency transactions 1,167,516 --------- Net realized gain (loss) on investments (245,107,169) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (98,964,016) ----------- Net gain (loss) on investments and foreign currencies (344,071,185) ------------ Net increase (decrease) in net assets resulting from operations $(339,176,072) ============= See accompanying notes to financial statements. ------------------------------------------------------------------------------- 8 AXP GLOBAL GROWTH FUND
Statements of changes in net assets AXP Global Growth Fund
April 30, 2001 Oct. 31, 2000 Six months ended Year ended (Unaudited) Operations and distributions Investment income (loss) -- net $ 4,895,113 $ (8,855,567) Net realized gain (loss) on investments (245,107,169) 291,895,851 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (98,964,016) (220,876,588) ----------- ------------ Net increase (decrease) in net assets resulting from operations (339,176,072) 62,163,696 ------------ ---------- Distributions to shareholders: From and in excess of net investment income Class A (3,109,898) (6,033,123) Class B -- (18,731) Class C (2,451) -- Class Y (68,366) (156,601) From net realized gain Class A (199,861,498) (130,885,134) Class B (88,922,654) (50,476,975) Class C (161,091) -- Class Y (3,034,269) (2,678,427) ---------- ---------- Total distributions (295,160,227) (190,248,991) ------------ ------------ Capital share transactions (Note 3) Proceeds from sales Class A shares (Notes 2 and 5) 148,833,980 432,687,264 Class B shares 34,280,022 191,323,295 Class C shares 810,136 972,111 Class Y shares 3,427,696 15,217,714 Reinvestment of distributions at net asset value Class A shares 198,818,801 131,692,852 Class B shares 87,966,457 50,019,267 Class C shares 163,542 -- Class Y shares 3,102,635 2,835,028 Payments for redemptions Class A shares (251,891,328) (385,483,073) Class B shares (Note 2) (62,267,937) (85,590,573) Class C shares (Note 2) (182,516) (32,617) Class Y shares (4,564,654) (24,050,428) ---------- ----------- Increase (decrease) in net assets from capital share transactions 158,496,834 329,590,840 ----------- ----------- Total increase (decrease) in net assets (475,839,465) 201,505,545 Net assets at beginning of period 1,951,625,554 1,750,120,009 ------------- ------------- Net assets at end of period $1,475,786,089 $1,951,625,554 ============== ============== Undistributed net investment income $ 1,714,398 $ -- -------------- -------------- See accompanying notes to financial statements. ------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 9
Notes to Financial Statements AXP Global Growth Fund (Unaudited as to April 30, 2001) 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. Class C shares of the Fund were offered to the public on June 26, 2000. Prior to this date, American Express Financial Corporation (AEFC) purchased 204 shares of capital stock at $9.81 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 Growth Portfolio The Fund invests all of its assets in World Growth 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 capital growth by investing primarily in equity securities of companies throughout the world. 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 GLOBAL GROWTH 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 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 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 $889,581 for Class A, $175,467 for Class B and $460 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 $39,150 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 22,781,420 5,211,110 122,946 512,517 Issued for reinvested distributions 31,260,818 14,211,058 26,506 487,070 Redeemed (37,704,638) (9,716,871) (26,595) (698,220) ----------- ---------- ------- -------- Net increase (decrease) 16,337,600 9,705,297 122,857 301,367 ---------- --------- ------- ------- Year ended Oct. 31, 2000 Class A Class B Class C* Class Y Sold 44,022,903 19,748,080 104,588 1,543,173 Issued for reinvested distributions 13,174,504 5,092,617 -- 283,787 Redeemed (39,266,681) (8,913,132) (3,768) (2,407,176) ----------- ---------- ------ ---------- Net increase (decrease) 17,930,726 15,927,565 100,820 (580,216) ---------- ---------- ------- -------- *Inception date was June 26, 2000. 4. BANK BORROWINGS The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund must have asset coverage for borrowings not to exceed the aggregate of 333% of advances equal to or less than five business days plus 367% of advances over five business days. The agreement, which enables the Fund to participate with other American Express mutual funds, permits borrowings up to $200 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.05% per annum. The Fund had no borrowings outstanding during the six months ended April 30, 2001. ------------------------------------------------------------------------------- 12 AXP GLOBAL GROWTH FUND 5. FUND MERGER As of the close of business on July 14, 2000, AXP Global Growth Fund acquired the assets and assumed the identified liabilities of Strategist World Growth Fund. The aggregate net assets of AXP Global Growth Fund immediately before the acquisition were $2,262,095,197. The merger was accomplished by a tax-free exchange of 110,352 shares of Strategist World Growth Fund valued at $1,062,275. In exchange for the Strategist World Growth Fund shares and net assets, AXP Global Growth Fund issued the following number of shares: Shares Net assets Class A 105,321 $1,062,275 Strategist World Growth Fund's net assets at that date consisted of capital stock of $878,612 and unrealized appreciation of $183,663. 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 Fund's financial position, results of operations or changes in its net assets. 7. 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(f) 2000 1999 1998 1997 Net asset value, beginning of period $ 8.74 $ 9.18 $7.80 $6.90 $7.12 Income from investment operations: Net investment income (loss) .03 (.02) .02 .02 .03 Net gains (losses) (both realized and unrealized) (1.49) .58 1.78 1.12 .39 Total from investment operations (1.46) .56 1.80 1.14 .42 Less distributions: Dividends from and in excess of net investment income (.02) (.04) (.05) (.06) (.22) Distributions from realized gains (1.34) (.96) (.37) (.18) (.42) Total distributions (1.36) (1.00) (.42) (.24) (.64) Net asset value, end of period $ 5.92 $ 8.74 $9.18 $7.80 $6.90 Ratios/supplemental data Net assets, end of period (in millions) $1,016 $1,356 $1,260 $962 $889 Ratio of expenses to average daily net assets(c) 1.18%(d) 1.22% 1.25% 1.22% 1.27% Ratio of net investment income (loss) to average daily net assets .83%(d) (.21%) .14% .35% .60% Portfolio turnover rate (excluding short-term securities) 119% 131% 83% 80% 199% Total return(e) (17.74%) 4.74% 23.59% 17.00% 6.22% See accompanying notes to financial highlights. ------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 13
Class B
Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001(f) 2000 1999 1998 1997 Net asset value, beginning of period $ 8.53 $9.01 $7.68 $6.79 $7.05 Income from investment operations: Net investment income (loss) -- (.08) (.05) -- -- Net gains (losses) (both realized and unrealized) (1.44) .56 1.75 1.08 .35 Total from investment operations (1.44) .48 1.70 1.08 .35 Less distributions: Dividends from and in excess of net investment income -- -- -- (.01) (.19) Distributions from realized gains (1.34) (.96) (.37) (.18) (.42) Total distributions (1.34) (.96) (.37) (.19) (.61) Net asset value, end of period $ 5.75 $8.53 $9.01 $7.68 $6.79 Ratios/supplemental data Net assets, end of period (in millions) $444 $575 $464 $295 $222 Ratio of expenses to average daily net assets(c) 1.94%(d) 1.98% 2.02% 1.99% 2.03% Ratio of net investment income (loss) to average daily net assets .07%(d) (.95%) (.62%) (.40%) (.18%) Portfolio turnover rate (excluding short-term securities) 119% 131% 83% 80% 199% Total return(e) (17.97%) 3.89% 22.66% 16.13% 5.40% Class C Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001(f) 2000(b) Net asset value, beginning of period $ 8.54 $ 9.57 Income from investment operations: Net investment income (loss) -- (.01) Net gains (losses) (both realized and unrealized) (1.45) (1.02) Total from investment operations (1.45) (1.03) Less distributions: Dividends from and in excess of net investment income (.02) -- Distributions from realized gains (1.34) -- Total distributions (1.36) -- Net asset value, end of period $ 5.73 $ 8.54 Ratios/supplemental data Net assets, end of period (in millions) $1 $1 Ratio of expenses to average daily net assets(c) 1.94%(d) 1.98%(d) Ratio of net investment income (loss) to average daily net assets .28%(d) (1.15%)(d) Portfolio turnover rate (excluding short-term securities) 119% 131% Total return(e) (18.07%) (10.76%) See accompanying notes to financial highlights. ------------------------------------------------------------------------------- 14 AXP GLOBAL GROWTH FUND
Class Y
Per share income and capital changes(a) Fiscal period ended Oct. 31, 2001(f) 2000 1999 1998 1997 Net asset value, beginning of period $ 8.76 $ 9.20 $7.81 $6.91 $7.13 Income from investment operations: Net investment income (loss) .04 (.01) .03 .02 .03 Net gains (losses) (both realized and unrealized) (1.49) .58 1.78 1.13 .40 Total from investment operations (1.45) .57 1.81 1.15 .43 Less distributions: Dividends from and in excess of net investment income (.03) (.05) (.05) (.07) (.23) Distributions from realized gains (1.34) (.96) (.37) (.18) (.42) Total distributions (1.37) (1.01) (.42) (.25) (.65) Net asset value, end of period $ 5.94 $ 8.76 $9.20 $7.81 $6.91 Ratios/supplemental data Net assets, end of period (in millions) $15 $20 $26 $23 $21 Ratio of expenses to average daily net assets(c) 1.00%(d) 1.05% 1.13% 1.15% 1.15% Ratio of net investment income (loss) to average daily net assets 1.02%(d) (.06%) .24% .41% .72% Portfolio turnover rate (excluding short-term securities) 119% 131% 83% 80% 199% Total return(e) (17.58%) 4.86% 23.86% 17.10% 6.34% Notes to financial highlights (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Inception date was June 26, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge. (f) Six months ended April 30, 2001 (Unaudited). ------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 15
Financial Statements Statement of assets and liabilities World Growth Portfolio
April 30, 2001 (Unaudited) Assets Investments in securities, at value (Note 1) (identified cost $1,575,946,137) $1,530,125,028 Cash in bank on demand deposit 21,134 Dividends and accrued interest receivable 1,866,143 Receivable for investment securities sold 23,680,013 Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 5) 13,737 ------ Total assets 1,555,706,055 ------------- Liabilities Payable for investment securities purchased 32,664,929 Payable upon return of securities loaned (Note 4) 46,800,000 Accrued investment management services fee 89,118 Other accrued expenses 160,791 ------- Total liabilities 79,714,838 ---------- Net assets $1,475,991,217 ============== See accompanying notes to financial statements. ------------------------------------------------------------------------------- 16 AXP GLOBAL GROWTH FUND
Statement of operations World Growth Portfolio
Six months ended April 30, 2001 (Unaudited) Investment income Income: Dividends $ 14,164,434 Interest 2,628,838 Less foreign taxes withheld (528,464) -------- Total income 16,264,808 ---------- Expenses (Note 2): Investment management services fee 4,876,043 Compensation of board members 5,777 Custodian fees 188,401 Audit fees 12,000 Other 13,768 ------ Total expenses 5,095,989 Earnings credits on cash balances (Note 2) (3,950) ------ Total net expenses 5,092,039 --------- Investment income (loss) -- net 11,172,769 ---------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) (246,286,563) Foreign currency transactions 1,167,556 --------- Net realized gain (loss) on investments (245,119,007) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (98,967,938) ----------- Net gain (loss) on investments and foreign currencies (344,086,945) ------------ Net increase (decrease) in net assets resulting from operations $(332,914,176) ============= Statements of changes in net assets World Growth Portfolio April 30, 2001 Oct. 31, 2000 Six months ended Year ended (Unaudited) Operations Investment income (loss) -- net $ 11,172,769 $ 5,848,733 Net realized gain (loss) on investments (245,119,007) 292,038,542 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (98,967,938) (220,841,583) ----------- ------------ Net increase (decrease) in net assets resulting from operations (332,914,176) 77,045,692 Net contributions (withdrawals) from partners (142,993,461) 123,707,698 ------------ ----------- Total increase (decrease) in net assets (475,907,637) 200,753,390 Net assets at beginning of period 1,951,898,854 1,751,145,464 ------------- ------------- Net assets at end of period $1,475,991,217 $1,951,898,854 ============== ============== See accompanying notes to financial statements. ------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 17
Notes to Financial Statements World Growth Portfolio (Unaudited as to April 30, 2001) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES World Growth 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 seeks to provide long-term capital growth by investing primarily in equity securities of companies throughout the world. 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. ------------------------------------------------------------------------------- 18 AXP GLOBAL GROWTH FUND 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 0.8% to 0.675% annually. The fee may be adjusted upward or downward by a performance incentive adjustment based on a comparison of the ------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 19 performance of Class A shares of AXP Global Growth Fund to the Lipper Global 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 decreased the fee by $1,139,643 for the six months ended April 30, 2001. 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. 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, 2001, the Portfolio's custodian fees were reduced by $3,950 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 $1,905,197,416 and $1,848,855,657, respectively, for the six months ended April 30, 2001. For the same period, the portfolio turnover rate was 119%. Realized gains and losses are determined on an identified cost basis. 4. LENDING OF PORTFOLIO SECURITIES As of April 30, 2001, securities valued at $45,555,800 were on loan to brokers. For collateral, the Portfolio received $46,800,000 in cash. Income from securities lending amounted to $59,816 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. 5. FOREIGN CURRENCY CONTRACTS As of April 30, 2001, the Portfolio has a foreign currency exchange contract that obligates it to deliver currency at a specified future date. The unrealized appreciation and/or depreciation on this contract is included in the accompanying financial statements. See "Summary of significant accounting policies." The terms of the open contract are as follows: Exchange date Currency to Currency to Unrealized Unrealized be delivered be received appreciation depreciation May 3, 2001 3,202,316 2,852,912 $13,737 $-- European Monetary Unit U.S. Dollar ---------------------- ----------- 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. ------------------------------------------------------------------------------- 20 AXP GLOBAL GROWTH FUND Investments in Securities World Growth Portfolio April 30, 2001 (Unaudited) (Percentages represent value of investments compared to net assets) Common stocks (98.7%)(c) Issuer Shares Value(a) Bermuda (5.3%) Insurance (2.0%) ACE 835,600 $29,830,920 Multi-industry conglomerates (3.3%) Tyco Intl 906,000 48,353,220 Canada (1.6%) Multi-industry conglomerates Bombardier Cl B 1,672,500 24,110,560 Finland (2.1%) Communications equipment & services Nokia 959,400 31,727,541 France (2.4%) Computers & office equipment (0.0%) Cap Gemini 3 433 Household products (1.3%) Aventis 234,011 18,112,499 Miscellaneous (1.1%) Vivendi Universal 240,040 16,610,564 Germany (5.1%) Automotive & related (1.5%) Bayerische Motoren Werke 661,949(d) 22,066,845 Banks and savings & loans (1.5%) Deutsche Bank 274,777(d) 22,339,712 Computers & office equipment (2.1%) SAP 196,213(d) 31,226,269 Hong Kong (1.5%) Financial services Cheung Kong Holdings 2,000,000 22,310,553 Israel (1.3%) Computers & office equipment Check Point Software Technologies 305,935(b) 19,191,303 Italy (2.1%) Energy (1.0%) ENI 2,260,510 15,472,183 Utilities -- telephone (1.1%) Olivetti 7,239,794(d) 16,207,479 Japan (7.4%) Electronics (4.7%) Hitachi 2,777,000 26,930,392 Rohm 90,500 15,970,373 Tokyo Electron 363,200 26,460,517 Total 69,361,282 Media (1.7%) Sony 337,400 25,236,378 Utilities -- telephone (1.0%) NTT DoCoMo 737 15,153,438 Mexico (1.7%) Banks and savings & loans Grupo Financiero Banamex Accival 13,428,536 25,045,113 Netherlands (3.9%) Industrial equipment & services (2.1%) Koninklijke (Royal) Philips Electronics 1,047,857 30,760,193 Insurance (1.8%) ING Groep 392,875 26,810,428 South Korea (1.4%) Electronics Samsung Electronics 118,000 20,517,844 See accompanying notes to investments in securities. ------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 21 Common stocks (continued) Issuer Shares Value(a) Spain (2.4%) Banks and savings & loans (1.4%) Banco Bilbao Vizcaya Argentaria 1,490,430 $21,169,079 Utilities -- telephone (1.0%) Telefonica 883,138 14,939,457 Switzerland (3.3%) Banks and savings & loans (1.8%) UBS 171,263 26,061,117 Multi-industry conglomerates (1.5%) Adecco 36,232 21,928,411 United Kingdom (4.0%) Media (2.0%) WPP Group 2,494,250 29,888,460 Utilities -- telephone (2.0%) Vodafone Group 9,509,507 28,879,153 United States (53.2%) Communications equipment & services (1.6%) QUALCOMM 399,100(b) 22,892,376 Computer software & services (2.4%) Microsoft 524,070(b) 35,505,743 Computers & office equipment (4.5%) Cisco Systems 473,136(b) 8,033,849 Dell Computer 990,934(b) 26,051,655 EMC 804,400(b) 31,854,240 Total 65,939,744 Electronics (5.6%) Intel 975,700 30,158,887 Micron Technology 452,800(b) 20,548,064 Texas Instruments 822,300 31,823,009 Total 82,529,960 Energy (2.0%) Chevron 303,800 29,334,928 Financial services (7.2%) Citigroup 910,133 44,733,037 Fannie Mae 395,734 31,761,611 Merrill Lynch 484,026 29,864,404 Total 106,359,052 Health care (8.5%) Abbott Laboratories 598,600 27,763,068 Medtronic 787,200 35,109,120 Pfizer 906,490 39,251,017 Pharmacia 420,300 21,964,878 Total 124,088,083 Insurance (2.5%) American Intl Group 444,997 36,400,754 Media (4.1%) Clear Channel Communications 494,900(b) 27,615,420 Interpublic Group of Companies 967,400 32,843,231 Total 60,458,651 Miscellaneous (5.0%) Nasdaq-100 Shares 640,800(b) 29,572,920 Standard & Poor's Depositary Receipts 359,700 44,930,127 Total 74,503,047 Multi-industry conglomerates (2.2%) General Electric 669,400 32,485,982 Retail (5.3%) Home Depot 861,600 40,581,360 Wal-Mart Stores 728,250 37,679,655 Total 78,261,015 Utilities -- telephone (2.3%) Qwest Communications Intl 838,100(b) 34,278,289 Total common stocks (Cost: $1,497,842,142) $1,456,348,058 Other (--%)(c) Issuer Shares Value(a) Italy Olivetti Warrants 289,820 $104,580 United Kingdom DB UK Tech Basket Warrants 143,500 39,011 Total other (Cost: $4,455,155) $143,591 See accompanying notes to investments in securities. ------------------------------------------------------------------------------- 22 AXP GLOBAL GROWTH FUND Short-term securities (5.0%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agencies (3.6%) Federal Home Loan Bank Disc Nts 06-29-01 4.23% $8,600,000 $8,539,800 07-13-01 4.19 5,000,000 4,955,086 Federal Home Loan Mtge Corp Disc Nts 05-21-01 4.32 7,300,000 7,281,646 05-22-01 4.69 1,500,000 1,495,710 07-12-01 4.62 1,700,000 1,684,936 Federal Natl Mtge Assn Disc Nts 05-04-01 4.91 7,200,000 7,195,769 05-18-01 4.69 10,800,000 10,774,729 06-28-01 4.71 2,400,000 2,382,609 07-26-01 4.18 9,300,000 9,201,784 Total 53,512,069 Commercial paper (1.4%) Ford Motor Credit 05-11-01 5.02 1,900,000 1,896,942 Morgan Stanley, Dean Witter, Discover & Co 06-07-01 4.72 14,500,000 14,428,063 Salomon Smith Barney 05-07-01 5.00 3,800,000 3,796,305 Total 20,121,310 Total short-term securities (Cost: $73,648,840) $73,633,379 Total investments in securities (Cost: $1,575,946,137)(e) $1,530,125,028 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) Security is partially or fully on loan. See Note 4 to the financial statements. (e) At April 30, 2001, the cost of securities for federal income tax purposes was approximately $1,575,946,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 47,654,000 Unrealized depreciation (93,475,000) ----------- Net unrealized depreciation $(45,821,000) ------------ ------------------------------------------------------------------------------- SEMIANNUAL REPORT -- 2001 23 AXP Global Growth Fund 70100 AXP Financial Center Minneapolis, MN 55474 americanexpress.com Ticker Symbol Class A: IGLGX Class B: IDGBX Class C: N/A Class Y: IDGYX 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-6451 M (6/01)