-----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, VRFpJII74lXGiF1FohAA1K0UeTMOg0NFd+df7lwtex1RK6VH7TP5u0+swIhCtvP2 SEwqYwvgnO9uM1liOrCzFA== 0000820027-99-000475.txt : 19990630 0000820027-99-000475.hdr.sgml : 19990630 ACCESSION NUMBER: 0000820027-99-000475 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990430 FILED AS OF DATE: 19990629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDS 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: 99654307 BUSINESS ADDRESS: STREET 1: IDS TOWER 10 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126712772 FORMER COMPANY: FORMER CONFORMED NAME: IDS GLOBAL BOND FUND INC DATE OF NAME CHANGE: 19901011 N-30D 1 AXP(SM) Global Growth Fund 1999 SEMIANNUAL REPORT (icon of) compass The goal of AXP Global Growth Fund is long-term capital growth. Distributed by American Express Financial Advisors Inc. AMERICAN EXPRESS Financial Advisors 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. 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, Global Growth Fund offers investors the potential to prosper along with them. CONTENTS From the Chairman 3 From the Portfolio Manager 4 Fund Facts 5 The 10 Largest Holdings 6 Financial Statements (Fund) 7 Notes to Financial Statements (Fund) 10 Financial Statements (Portfolio) 16 Notes to Financial Statements (Portfolio) 19 Investments in Securities 24 (picture of) Arne H. Carlson Arne H. Carlson Chairman of the board From the Chairman It is an honor for me to join the American Express(R) Funds as chairman of the board and chief executive officer for each of the funds. I have served for the past eight years as governor of Minnesota and also for the past 20 years as a constitutional officer responsible for the pension investments made on behalf of overnment employees. My responsibility in the upcoming years is to serve your interests. By law, half the members of a mutual fund board must be independent of their investment manager and distributor. I am one of those persons. I am not an employee of American Express Financial Corporation (AEFC), nor do I own stock in American Express Company. Both are fine companies, but the law clearly states that to fully represent your interests I must be independent. Having said that, I have a great deal of respect for the capabilities of AEFC and for the services it provides to investors. Your financial advisor assists you in financial planning, conducts regular investment reviews and responds to your questions and needs. This is a very personal service that makes AEFC a partner in your financial future. I know that AEFC has an investment focus on the long-term performance of our economy and that it wants you to participate in that growth. Consistent with that, our board is here to serve you and represent your interests in a professional manner. I also want to let you know that, on June 16, 1999, there will be a regular meeting of shareholders. These meetings are held about every five years to elect directors and consider other proposals. One proposal that is expected to be approved is to change "IDS" to "AXP"in the Fund's name. We will discuss the action taken on other proposals in future reports. Arne H. Carlson (picture of) John O'Brien John O' Brien Portfolio manager From the Portfolio Manager A calmer global investment environment and healthy stock markets in Europe and the United States set the stage for a strong performance by AXP Global Growth Fund in the first half of the fiscal year. For the six months -- November 1998 through April 1999 -- the Fund's Class A shares generated a total return of 19.96%. (This figure compares with the 19.07% generated by the Morgan Stanley Capital International All Country World Free Index, an unmanaged group of stocks commonly used to measure the performance of major worldwide markets.) Showing few ill effects from the global financial turmoil that had hit just a few months earlier, stocks were already on the move in most major markets when the period began last year. Supported by continued low inflation and reductions in interest rates in the U.S. and Europe, stocks in those regions recorded strong gains through January. In that month, Europe's new currency, the euro, enjoyed a smooth launch, which added to the positive investment tone in that region. After a moderate retreat in February brought on by a temporary rise in interest rates, U.S. stocks quickly got back on track and finished the period with two straight positive months. PUTTING CASH TO WORK To take advantage of the improving environment, I began reducing the level of cash reserves in the portfolio at the outset of the period. I put the extra funds to work in stocks, which enhanced the Fund's performance over the ensuing months. I kept most of the portfolio invested in Europe during the period, chiefly in the United Kingdom, France, Italy, Germany and the Netherlands. That strategy stemmed from the relationship of potential corporate earnings growth to the level of stock prices in Europe, which appeared more attractive, compared with other regions. The U.S. comprised the next-largest exposure. For the most part, I avoided Japan, whose economy continued to struggle but whose stock market did show occasional signs of recovery, and the emerging markets of Southeast Asia and Latin America, which were in the earliest stage of recovery from the financial meltdown of last summer. Looking toward the second half of the fiscal year, the investment environment continues to be largely favorable. In the U.S., the economy remains robust, while inflation and interest rates remain low. In Europe, while the economies are growing at slower rates, stock valuations continue to be relatively more attractive. Therefore, I expect to stick with an emphasis on Europe unless a change in conditions warrants a shift. John O'Brien Fund Facts Class A -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 1999 $8.91 Oct. 31, 1998 $7.80 Increase $1.11 Distributions -- Nov. 1, 1998 - April 30, 1999 From income $0.16 From capital gains $0.26 Total distributions $0.42 Total return* +19.96%** Class B -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 1999 $8.78 Oct. 31, 1998 $7.68 Increase $1.10 Distributions -- Nov. 1, 1998 - April 30, 1999 From income $0.11 From capital gains $0.26 Total distributions $0.37 Total return* +19.50%** Class Y -- 6-month performance (All figures per share) Net asset value (NAV) April 30, 1999 $8.91 Oct. 31, 1998 $7.81 Increase $1.10 Distributions -- Nov. 1, 1998 - April 30, 1999 From income $0.16 From capital gains $0.26 Total distributions $0.42 Total return* +20.01%** *The prospectus discusses the effect of sales charges, if any, on the various classes. **The total return is a hypothetical investment in the Fund with all distributions reinvested. SEMIANNUAL REPORT -- 1999The 10 Largest Holdings Percent Value (of net assets) (as of April 30, 1999) General Electric (United Kingdom) 3.62% $58,881,171 UBS (Switzerland) 3.47 56,327,954 Mannesmann (Germany) 3.36 54,655,230 Total Petroleum Cl B (France) 2.87 46,615,960 Philips Electronics (Netherlands) 2.78 45,181,372 Vodafone (United Kingdom) 2.77 45,003,186 Ericsson (LM) Cl B (Sweden) 2.64 42,836,657 Telefonica de Espana (Spain) 2.44 39,624,985 Equant (Netherlands) 2.42 39,381,588 Orange (United Kingdom) 2.24 36,411,903 Note: Certain foreign investment risks include changes in currency exchange rates, adverse political or economic order and lack of similar regulatory requirements followed by U.S. companies. For further detail about these holdings, please refer to the section entitled "Investments in Securities." (icon of) pie chart The 10 holdings listed here make up 28.61% of net assets
Financial Statements Statement of assets and liabilities AXP Global Growth Fund April 30, 1999 (Unaudited) Assets Investment in World Growth Portfolio (Note 1) $1,624,594,645 -------------- Liabilities Accrued distribution fees 8,376 Accrued service fee 7,782 Accrued transfer agency fee 8,815 Accrued administrative services fee 2,133 Other accrued expenses 39,410 ------ Total liabilities 66,516 ------ Net assets applicable to outstanding capital stock $1,624,528,129 ============== Represented by Capital stock -- $.01 par value (Note 1) $ 1,829,966 Additional paid-in capital 1,219,989,632 Excess of distributions over net investment income (6,433,924) Accumulated net realized gain (loss) 71,853,645 Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 337,288,810 ----------- Total -- representing net assets applicable to outstanding capital stock $1,624,528,129 ============== Net assets applicable to outstanding shares: Class A $1,192,286,486 Class B $ 406,197,028 Class Y $ 26,044,615 Net asset value per share of outstanding capital stock: Class A shares 133,794,760 $ 8.91 Class B shares 46,279,362 $ 8.78 Class Y shares 2,922,446 $ 8.91 See accompanying notes to financial statements.
Statement of operations AXP Global Growth Fund Six months ended April 30, 1999 (Unaudited) Investment income Income: Dividends $ 6,606,867 Interest 2,219,777 Less foreign taxes withheld (748,012) -------- Total income 8,078,632 --------- Expenses (Note 2): Expenses allocated from World Growth Portfolio 5,806,026 Distribution fee-- Class B 1,320,005 Transfer agency fee 1,216,741 Incremental transfer agency fee Class A 90,179 Class B 58,424 Service fee Class A 948,109 Class B 306,533 Class Y 12,032 Administrative services fees and expenses 358,767 Compensation of board members 5,559 Postage 205,997 Reports to shareholders 38,578 Registration fees 57,291 Audit fees 3,750 Other 6,988 ----- Total expenses 10,434,979 Earnings credits on cash balances (Note 2) (28,137) ------- Total net expenses 10,406,842 ---------- Investment income (loss) -- net (2,328,210) ---------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions 72,414,949 Foreign currency transactions (537,383) -------- Net realized gain (loss) on investments 71,877,566 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 189,212,131 ----------- Net gain (loss) on investments and foreign currencies 261,089,697 ----------- Net increase (decrease) in net assets resulting from operations $258,761,487 ============ See accompanying notes to financial statements.
Statements of changes in net assets AXP Global Growth Fund April 30, 1999 Oct. 31, 1998 Six months ended Year ended (Unaudited) Operations and distributions Investment income (loss) -- net $ (2,328,210) $ 2,374,735 Net realized gain (loss) on investments 71,877,566 69,842,751 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 189,212,131 104,552,683 ----------- ----------- Net increase (decrease) in net assets resulting from operations 258,761,487 176,770,169 ----------- ----------- Distributions to shareholders from: Net investment income Class A (5,494,180) (7,470,795) Class B (913) (382,513) Class Y (142,169) (218,480) Net realized gain Class A (45,913,293) (21,935,266) Class B (14,747,605) (5,756,015) Class Y (1,056,181) (560,473) ---------- -------- Total distributions (67,354,341) (36,323,542) ----------- ----------- Capital share transactions (Note 3) Proceeds from sales Class A shares (Note 2) 191,462,089 632,620,737 Class B shares 74,995,721 89,227,669 Class Y shares 7,121,549 12,429,035 Reinvestment of distributions at net asset value Class A shares 49,847,979 28,787,516 Class B shares 14,639,712 6,102,193 Class Y shares 1,198,351 778,953 Payments for redemptions Class A shares (153,397,109) (701,086,667) Class B shares (Note 2) (23,958,014) (49,085,247) Class Y shares (8,047,122) (13,337,213) ---------- ----------- Increase (decrease) in net assets from capital share transactions 153,863,156 6,436,976 ----------- --------- Total increase (decrease) in net assets 345,270,302 146,883,603 Net assets at beginning of period 1,279,257,827 1,132,374,224 ------------- ------------- Net assets at end of period $1,624,528,129 $1,279,257,827 ============== ============== Undistributed (excess of distributions over) net investment income $ (6,433,924) $ 1,531,548 -------------- -------------- See accompanying notes to financial statements.
Notes to Financial Statements AXP Global Growth Fund (Unaudited as to April 30, 1999) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of AXP Global Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. AXP Global Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the board. The Fund offers Class A, Class B and Class Y shares. o Class A shares are sold with a front-end sales charge. o Class B shares may be subject to a contingent deferred sales charge and automatically convert to Class A shares during the ninth calendar year of ownership. o Class Y shares have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend and liquidation rights. The distribution fee, transfer agency fee and service fee (class specific expenses) differs 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, an open-end investment company that has the same objectives as the Fund. World Growth 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 which 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, 1999 was 99.95%. 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 generally accepted accounting principles requires management to make estimates (e.g., on assets and liabilities) that could differ from actual results. Federal taxes The Fund's policy is to comply with all sections of the Internal Revenue Code that apply to regulated investment companies and to distribute 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 is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. 2. EXPENSES AND SALES CHARGES In addition to the expenses allocated from the Portfolio, the Fund accrues its own expenses as follows: The Fund has an agreement with American Express Financial Corporation (AEFC) to provide administrative services. Under an Administrative Services Agreement, the Fund pays AEFC a fee for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.06% to 0.035% annually. Additional administrative service expenses paid by the Fund are office expenses, consultants' fees and compensation of officers and employees. Under this agreement, the Fund also pays taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees and any other expenses properly payable by the Fund and approved by the board. Under a separate Transfer Agency Agreement, American Express Client Service Corporation (AECSC) maintains shareholder accounts and records. The Fund pays AECSC an annual fee per shareholder account for this service as follows: o Class A $19 o Class B $20 o Class Y $17 Under terms of a prior agreement that ended Jan. 31, 1999, the Fund paid a transfer agency fee at an annual rate per shareholder account of $15 for Class A and $16 for Class B. Under terms of a prior agreement that ended March 31, 1999, the Fund paid a transfer agency fee at an annual rate per shareholder account of $15 for Class Y. The Fund has agreements with American Express Financial Advisors Inc. for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund pays a distribution fee at an annual rate of 0.75% of the Fund's average daily net assets attributable to Class B shares for distribution services. Under a Shareholder Service Agreement, the Fund pays a fee for service provided to shareholders by financial advisors and other servicing agents. The fee is calculated at a rate of 0.175% of the Fund's average daily net assets attributable to Class A and Class B shares, and 0.10% of the Fund's average daily net assets attributable to Class Y shares. Sales charges received by American Express Financial Advisors Inc. for distributing Fund shares were $1,829,585 for Class A and $149,227 for Class B for the six months ended April 30, 1999. During the six months ended April 30, 1999, the Fund's transfer agency fees were reduced by $28,137 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, 1999 Class A Class B Class Y Sold 22,524,019 8,930,103 829,884 Issued for reinvested distributions 6,001,435 1,784,437 144,275 Redeemed (18,026,909) (2,847,546) (946,938) ----------- ---------- -------- Net increase (decrease) 10,498,545 7,866,994 27,221 Year ended Oct. 31, 1998 Class A Class B Class Y Sold 82,074,721 11,336,548 1,555,777 Issued for reinvested distributions 4,209,318 900,694 113,898 Redeemed (91,946,736) (6,545,440) (1,755,402) ----------- ---------- ---------- Net increase (decrease) (5,662,697) 5,691,802 (85,727) 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 Expressfunds, 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, 1999.
5.FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating the Fund's results. Fiscal period ended Oct. 31, Per share income and capital changesa Class A 1999b 1998 1997 1996 1995 Net asset value, beginning of period $7.80 $6.90 $7.12 $6.37 $6.96 Income from investment operations: Net investment income (loss) .01 .02 .03 .08 .10 Net gains (losses) (both realized and unrealized) 1.52 1.12 .39 .83 (.59) Total from investment operations 1.53 1.14 .42 .91 (.49) Less distributions: Dividends from net investment income (.05) (.06) (.22) (.13) (.05) Distributions from realized gains (.37) (.18) (.42) (.03) (.05) Total distributions (.42) (.24) (.64) (.16) (.10) Net asset value, end of period $8.91 $7.80 $6.90 $7.12 $6.37 Ratios/supplemental data Net assets, end of period (in millions) $1,192 $962 $889 $908 $659 Ratio of expenses to average daily net assetsc 1.24%d 1.22% 1.27% 1.37% 1.39% Ratio of net investment income (loss) to average daily net assets (.14%)d .35% .60% 1.45% 1.59% Portfolio turnover rate (excluding short-term securities) 38% 80% 199% 134% 90% Total returne 19.96% 17.00% 6.22% 14.51% (6.99%) a For a share outstanding throughout the period. Rounded to the nearest cent. b Six months ended April 30, 1999 (Unaudited). c Effective fiscal year 1996, 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.
Fiscal period ended Oct. 31, Per share income and capital changesa Class B Class Y 1999b 1998 1997 1996 1995c 1999b 1998 1997 1996 1995c Net asset value, beginning of period $7.68 $6.79 $7.05 $6.34 $5.82 $7.81 $6.91 $7.13 $6.38$ 5.82 Income from investment operations: Net investment income (loss) (.08) -- -- .05 .02 .02 .02 .03 .09 .06 Net gains (losses) (both realized and unrealized) 1.55 1.08 .35 .81 .50 1.50 1.13 .40 .83 .50 Total from investment operations 1.47 1.08 .35 .86 .52 1.52 1.15 .43 .92 .56 Less distributions: Dividends from net investment income -- (.01) (.19) (.12) -- (.05) (.07) (.23) (.14) -- Distributions from realized gains (.37) (.18) (.42) (.03) -- (.37) (.18) (.42) (.03) -- Total distributions (.37) (.19) (.61) (.15) -- (.42) (.25) (.65) (.17) -- Net asset value, end of period $8.78 $7.68 $6.79 $7.05 $6.34 $8.9 $7.81 $6.91 $7.13 $6.38 Ratios/supplemental data Net assets, end of period (in millions) $406 $295 $222 $146 $21 $26 $23 $21 $19 $24 Ratio of expenses to average daily net assetsd 2.01%e 1.99% 2.03% 2.14% 2.16%e 1.15%e 1.15% 1.15% 1.19% 1.20%e Ratio of net investment income (loss) to average daily net assets (.89%)e (.40%) (.18%) 1.05% .85%e (.07%)e .41% .72% 1.60% 2.37%e Portfolio turnover rate (excluding short-term securities) 38% 80% 199% 134% 90% 38% 80% 199% 134% 90% Total returnf 19.50% 16.13% 5.40% 13.64% 9.04% 20.01% 17.10% 6.34% 14.71% 9.66% a For a share outstanding throughout the period. Rounded to the nearest cent. b Six months ended April 30, 1999 (Unaudited). c Inception date was March 20, 1995. d Effective fiscal year 1996, expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. e Adjusted to an annual basis. f Total return does not reflect payment of a sales charge.
Financial Statements Statement of assets and liabilities World Growth Portfolio April 30, 1999 (Unaudited) Assets Investments in securities, at value (Note 1) (identified cost $1,464,745,530) $1,802,275,486 Cash in bank on demand deposit 2,263,140 Dividends and accrued interest receivable 3,023,298 Receivable for investment securities sold 59,591,744 Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 4) 224,928 U.S. government securities held as collateral (Note 5) 10,399,988 ---------- Total assets 1,877,778,584 ------------- Liabilities Payable for investment securities purchased 1,996,086 Payable upon return of securities loaned (Note 5) 250,150,738 Accrued investment management services fee 33,087 Other accrued expenses 120,711 ------- Total liabilities 252,300,622 ----------- Net assets $1,625,477,962 ============== See accompanying notes to financial statements.
Statement of operations World Growth Portfolio Six months ended April 30, 1999 (Unaudited) Investment income Income: Dividends $ 6,610,540 Interest 2,213,198 Less foreign taxes withheld (748,427) -------- Total income 8,075,311 --------- Expenses (Note 2): Investment management services fee 5,451,466 Compensation of board members 6,686 Custodian fees 320,725 Audit fees 11,250 Other 21,504 ------ Total expenses 5,811,631 Earnings credits on cash balances (Note 2) (2,339) ------ Total net expenses 5,809,292 --------- Investment income (loss) -- net 2,266,019 --------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) 72,456,796 Foreign currency transactions (537,612) -------- Net realized gain (loss) on investments 71,919,184 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 189,318,664 ----------- Net gain (loss) on investments and foreign currencies 261,237,848 ----------- Net increase (decrease) in net assets resulting from operations $263,503,867 ============ See accompanying notes to financial statements.
Statements of changes in net assets World Growth Portfolio April 30, 1999 Oct. 31, 1998 Six months ended Year ended (Unaudited) Operations Investment income (loss)-- net $ 2,266,019 $ 9,469,973 Net realized gain (loss) on investments 71,919,184 69,879,530 Net change in unrealized appreciation (depreciation ) on investments and on translation of assets and liabilities in foreign currencies 189,318,664 104,617,372 ----------- ----------- Net increase (decrease) in net assets resulting from operations 263,503,867 183,966,875 Net contributions (withdrawals) from partners 81,929,457 (37,038,141) ---------- ----------- Total increase (decrease) in net assets 345,433,324 146,928,734 Net assets at beginning of period 1,280,044,638 1,133,115,904 ------------- ------------- Net assets at end of period $1,625,477,962 $1,280,044,638 ============== ============== See accompanying notes to financial statements.
Notes to Financial Statements World Growth Portfolio (Unaudited as to April 30, 1999) 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. World Growth 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 generally accepted accounting principles requires management to make estimates (e.g., on assets and liabilities) that could differ from actual results. Valuation of securities All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Option transactions To produce incremental earnings, protect gains and facilitate buying and selling of securities for investments, the Portfolio may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. The Portfolio also may buy and sell put and call options and write covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Portfolio gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Portfolio may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Portfolio pays a premium whether or not the option is exercised. The Portfolio also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Portfolio will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. Futures transactions To gain exposure to or protect itself from market changes, the Portfolio may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Portfolio also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Portfolio is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Portfolio each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Portfolio recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars at the closing rate of exchange. 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. For U.S. dollar denominated bonds, interest income, including level-yield amortization of premium and discount, is accrued daily. For foreign bonds, except for original issue discount, the Portfolio does not amortize premium and discount. 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. 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. The Portfolio also pays custodian fees to American Express Trust Company, an affiliate of AEFC. During the six months ended April 30, 1999, the Portfolio's custodian fees were reduced by $2,339 as a result of earnings credits from overnight cash balances. 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 $600,193,489 and $536,342,938, respectively, for the six months ended April 30, 1999. For the same period, the portfolio turnover rate was 38%. Realized gains and losses are determined on an identified cost basis.
4. FOREIGN CURRENCY CONTRACTS As of April 30, 1999, the Portfolio has foreign currency exchange contracts that obligate it to deliver currencies at specified future dates. The unrealized appreciation and/or depreciation on these contracts is included in the accompanying financial statements. See "Summary of significant accounting policies." The terms of the open contracts are as follows: Exchange date Currency to Currency to Unrealized Unrealized be delivered be received appreciation depreciation May 3, 1999 1,993,928 18,433,864 $ 1,079 $-- U.S. Dollar Mexican Peso May 3, 1999 1,426,841 1,518,231 10,630 -- European Monetary Unit U.S. Dollar May 7, 1999 438,852,431 3,683,502 7,867 -- Japanese Yen U.S. Dollar May 9, 1999 5,790,367,801 48,682,280 184,707 -- Japanese Yen U.S. Dollar May 28, 1999 2,319,713 2,471,654 20,645 -- European Monetary Unit U.S. Dollar Total $224,928 $-- 5. LENDING OF PORTFOLIO SECURITIES As of April 30, 1999, securities valued at $240,382,468 were on loan to brokers. For collateral, the Portfolio received $239,750,750 in cash and U.S. government securities valued at $10,399,988. Income from securities lending amounted to $309,508 for the six months ended April 30, 1999. The risks to the Portfolio of securities lending are that the borrower may not provide additional collateral when required or return the securities when due.
Investments in Securities World Growth Portfolio April 30, 1999 (Unaudited) (Percentages represent value of investments compared to net assets) Common stocks (91.9%) Issuer Shares Value(a) Argentina (0.8%) Multi-industry conglomerates (0.4%) Perez Companc ADR 550,000(c) $6,844,806 Utilities -- telephone (0.4%) Telefonica de Argentina ADR 170,000 6,353,750 Australia (1.6%) Insurance (0.8%) AMP 1,096,000 12,801,170 Transportation (0.8%) Brambles Inds 465,000 13,664,025 Canada (2.0%) Communications equipment & services (0.8%) Nortel Networks 200,000(b,c) 13,637,500 Multi-industry conglomerates (0.5%) Bombardier Cl B 570,100(c) 8,841,793 Utilities -- telephone (0.7%) BCE 231,800 10,590,363 France (9.4%) Banks and savings & loans (2.2%) Banque Natl de Paris 429,496(c) 35,601,052 Electronics (5.8%) Elf Aquitaine 105,000 16,308,621 SGS-Thomson Microelectronics 304,000 31,670,962 Total Petroleum Cl B 340,423(b) 46,615,960 Total 94,595,543 Food (1.1%) Sodexho Alliance 112,548(b) 18,468,001 Utilities -- electric (0.3%) Suez Lyonnaise des Eaux 27,231 4,632,336 Germany (4.9%) Automotive & related (1.5%) Volkswagen 337,648 23,938,534 Industrial equipment & services (3.4%) Mannesmann 415,148 54,655,230 Italy (6.2%) Banks and savings & loans (5.9%) Banca Intesa 6,003,766(c) 31,971,855 Instituto Bancario San Paolo di Torino 1,891,494(c) 28,379,409 Unicredito Italiano 6,854,148(c) 34,762,182 Total 95,113,446 Utilities -- telephone (0.3%) Telecom Italia 482,653 5,135,428 Japan (0.1%) Electronics Fujikura 281,000(c) 1,463,898 Mexico (1.2%) Banks and savings & loans (0.1%) Grupo Financiero Banamex Accival 752,950(b) 1,919,044 Multi-industry conglomerate (0.5%) Grupo Financiero Banorte Cl B 6,000,000(b) 7,779,222 Paper & packaging (0.6%) Kimberly-Clark de Mexico 2,400,000 9,350,650 Netherlands (5.2%) Industrial equipment & services (2.8%) Philips Electronics 524,676 45,181,372 Utilities -- telephone (2.4%) Equant 433,900 39,381,588 Singapore (0.6%) Financial services DBS Land 5,296,000 9,803,426 Spain (3.4%) Building materials & construction (1.0%) Fomento de Construcciones y Contractas 273,596 16,708,918 Utilities -- telephone (2.4%) Telefonica de Espana 845,600 39,624,985 Sweden (3.3%) Banks and savings & loans (0.7%) Nordbanken Holding 1,785,832(c) 11,216,989 Communications equipment & services (2.6%) Ericsson (LM) Cl B 1,631,854 42,836,657 Switzerland (3.5%) Banks and savings & loans UBS 165,863(c) 56,327,954 United Kingdom (15.0%) Media (0.8%) British Sky Broadcasting Group 1,550,309 13,705,352 Multi-industry conglomerates (5.2%) General Electric 5,579,197 58,881,171 Williams 3,696,116 25,197,532 Total 84,078,703 Retail (1.6%) Great Universal Stores 2,350,454 26,791,415 Transportation (0.4%) Stagecoach Holdings 2,054,688 7,123,603 Utilities -- telephone (7.0%) Cable & Wireless Communications 2,856,859(c) 32,609,331 Orange 2,684,808 36,411,903 Vodafone 2,458,089 45,003,186 Total 114,024,420 United States (34.4%) Banks and savings & loans (1.5%) Bank of America 343,720 24,683,393 Chemicals (2.8%) Du Pont (EI) de Nemours 398,700 28,158,188 Monsanto 396,740 17,952,485 Total 46,110,673 Communications equipment & services (1.0%) Lucent Technologies 280,200 16,847,025 Computers & office equipment (7.4%) America Online 167,000 23,839,250 Cisco Systems 282,100(b) 32,177,030 Electronic Data Systems 343,000(c) 18,436,250 Hewlett-Packard 293,900 23,181,363 Intl Business Machines 109,000 22,801,438 Total 120,435,331 Electronics (1.5%) Intel 386,600 23,655,088 Energy (2.0%) Texaco 530,900 33,313,975 Financial services (3.4%) Citigroup 424,100 31,913,525 Fannie Mae 338,090 23,983,259 Total 55,896,784 Health care (2.7%) Boston Scientific 573,100(b) 24,392,569 Pfizer 168,000 19,330,500 Total 43,723,069 Household products (0.9%) Colgate-Palmolive 145,000 14,853,438 Insurance (1.3%) American Intl Group 182,100 21,385,369 Leisure time & entertainment (0.7%) Disney (Walt) 351,000 11,144,250 Multi-industry conglomerates (1.3%) General Electric 196,600 20,741,300 Retail (3.8%) Rite Aid 460,000 10,723,750 Safeway 272,000(b) 14,671,000 Wal-Mart Stores 543,800 25,014,800 Walgreen 430,000 11,556,250 Total 61,965,800 Utilities -- telephone (4.1%) MCI WorldCom 211,600(b) 17,390,875 AT&T 347,100 17,528,550 Frontier 308,300 17,014,306 SBC Communications 269,400 15,086,400 Total 67,020,131 Total common stocks (Cost: $1,162,691,566) $1,493,966,799 Other (0.5%) Issuer Shares Value(a) Italy Banca Intesa Warrants 6,003,766 $6,850,897 Spain Telefonica Rights 845,600 786,239 Total other (Cost: $1,321,579) $7,637,136 See accompanying notes to investments in securities.
Short-term securities (18.5%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agencies (15.7%) Federal Home Loan Bank Disc Nts 05-21-99 4.77% $4,700,000 $4,687,623 05-26-99 4.70 16,400,000 16,346,586 Federal Home Loan Mtge Corp Disc Nts 05-04-99 4.76 8,600,000 8,596,603 05-14-99 4.69 4,600,000 4,592,226 05-17-99 4.80 7,500,000 7,482,050 05-18-99 4.79 13,400,000 13,366,096 05-20-99 4.76 17,700,000 17,655,767 05-25-99 4.74 9,100,000 9,071,365 06-07-99 4.78 13,400,000 13,327,815 06-11-99 4.74 34,700,000 34,513,863 06-15-99 4.77 22,300,000 22,156,026 06-16-99 4.75 43,500,000 43,213,196 06-18-99 4.75 16,300,000 16,188,192 06-21-99 4.72 9,400,000 9,335,349 Federal Natl Mtge Assn Disc Nts 05-18-99 4.70 13,800,000 13,769,437 05-18-99 4.77 19,400,000 19,356,485 Total 253,658,679 Commercial paper (2.9%) Ameritech Capital Funding 05-11-99 4.84 10,300,000(d) 10,286,209 BMW US Capital 05-05-99 4.86 4,400,000 4,397,639 Delaware Funding 06-17-99 4.83 3,700,000(d) 3,676,813 Fleet Funding 06-11-99 4.85 6,900,000(d) 6,862,123 Goldman Sachs Group 05-20-99 4.84 1,800,000 1,795,421 Natl Australia Funding (Delaware) 05-03-99 4.82 20,000,000 19,994,667 Total 47,012,872 Total short-term securities (Cost: $300,732,385) $300,671,551 Total investments in securities (Cost: $1,464,745,530)(e) $1,802,275,486 See accompanying notes to investments in securities.
Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements. Foreign security values are stated in U.S. dollars. (b) Non-income producing. (c) Security is partially or fully on loan. See Note 5 to the financial statements. (d) 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. (e) At April 30, 1999, the cost of securities for federal income tax purposes was approximately $1,464,746,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $362,548,000 Unrealized depreciation (25,019,000) ----------- Net unrealized appreciation $337,529,000 Quick telephone reference AMERICAN EXPRESS FINANCIAL ADVISORS TELEPHONE TRANSACTION SERVICE Sales and exchanges, dividend payments or reinvestments and automatic payment arrangements: 800-437-3133 AMERICAN EXPRESS CLIENT SERVICE CORPORATION Fund performance, fund prices, account values, recent account transactions and account inquiries: 800-862-7919 TTY SERVICE For the hearing impaired: 800-846-4852 TICKER SYMBOL Class A: IGLGX Class B: IDGBX Class Y: IDGYX S-6451 K (6/99) BULK RATE U.S. POSTAGE PAID PERMIT NO. 85 SPENCER, IA AXP Global Growth Fund IDS Tower 10 Minneapolis, MN 55440-0010 AMERICAN EXPRESS Financial Advisors -----END PRIVACY-ENHANCED MESSAGE-----