1997 SEMIANNUAL REPORT
IDS
Global Bond
Fund
(icon of) globe
The goal of IDSGlobal Bond Fund, a part of IDSGlobal Series, Inc., is a high
total return through income and growth of capital.
Distributed by American Express Financial Advisors Inc., Member SIPC.
<PAGE>
A bounty of bonds
In today's global economy, investment opportunities don't stop at the water's
edge. While bonds issued by the U.S. government and corporations once made up
almost all of the bond market, today more than half of the world's debt
securities are issued from outside the United States. This means expanded
opportunity for investors. Global Bond Fund's aim is to take advantage of
opportunities in bond markets at any time and in any place, providing investors
with greater portfolio diversification.
Contents
From the president 3
From the portfolio manager 3
The Portfolio's ten largest holdings 5
Financial statements (Fund) 6
Notes to financial statements (Fund) 9
Financial statements (Portfolio) 18
Notes to financial statements (Portfolio) 21
Investments in securities 28
Board members and officers 35
IDS mutual funds 36
<PAGE>
To our shareholders
From the president
If you're an experienced investor, you know that the past two years have
been unusually strong ones in many financial markets. Perhaps just as
important, you also know that history shows that bull markets don't last
forever. Though they're often unpredictable, declines -- whether they're
brief or long-lasting, moderate or substantial -- are always a
possibility.
That fact reinforces the need for investors to periodically review their
long-term goals and examine whether their investment program remains on
track to achieving them. Your quarterly investment statements are one part
of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes even more important if there's a
major change in your financial situation or in the financial markets.
William R. Pearce
(picture of William Pearce)
William R. Pearce
President of the Fund
From the portfolio manager
Worldwide bond markets yielded mixed results during the past six months.
While IDS Global Bond Fund's performance was better than average (as
measured by the Salomon World Government Bond Index), its Class A shares
incurred a slight loss of 0.8% for the November 1996 through April 1997
period.
The period began well enough, with the U.S. bond market rallying strongly
during November on news of ongoing low inflation. During the past period,
with more than 20% of assets invested in U.S. government bonds, the Fund's
net asset value rose accordingly.
From that point, things became more of a struggle. In the U.S.,
indications of a strengthening economy gave rise to fear of higher
inflation, which in turn resulted in periodic run-ups in long-term
interest rates and overall erosion in the bond market. Overseas, there
were problems, too. While the European bond markets performed well,
declining currency values in Europe, as well as in Japan, sharply reduced
returns to U.S.-based investors.
Latin America is strong performer
The brightest spot over the period was Latin America -- specifically, the
so-called "emerging" markets of Mexico, Argentina and Brazil. Although
their performance was not spectacular, they proved best overall, partly
because investments in those markets are denominated in U.S. dollars,
thereby avoiding the effect of a potential decline in local currencies. I
kept between 8% and 10% of assets invested in those markets during the six
months.
As for changes to the Portfolio, I made several asset shifts designed to
provide a buffer against deteriorating market conditions. In the U.S. I
reduced holdings among Treasury bonds, which took the brunt of the
interest-rate rise. In Europe I "hedged" some of the local currency
exposure to lessen the effect of currency declines in those markets. I
also sold some European bonds whose proceeds I used to build up the Fund's
cash reserves (to about 16% at period-end) and further insulate the Fund
from weakness in the markets.
A cautious approach
Although the U.S. bond market finished the last several days of the period
on a strong note, I doubt that momentum will be sustained in the second
half of the fiscal year. My expectation is that the Federal Reserve is
likely to follow up its March interest-rate increase with at least a few
more in the months ahead. If that proves true, appreciation in bond
markets here and abroad almost surely will be constrained.
The longer-term outlook is more encouraging. Inflation has yet to become a
problem in the major markets, and in the U.S., from which most markets
take their cue, the federal deficit continues to decline and an effort is
underway to balance the budget. All of these factors work in favor of a
decline in long-term interest rates -- bonds' best benefactor. Moreover, I
think the worst of foreign markets' currency declines are behind them,
while the emerging markets are becoming much more creditworthy. All in
all, it's a favorable scenario for a patient global bond investor.
Ray Goodner
(picture of) Ray Goodner
Ray Goodner
Portfolio manager
<PAGE>
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1997 $6.02
Oct. 31, 1996 $6.28
Decrease $0.26
Distributions
Nov. 1, 1996 - April 30, 1997
From income $0.17
From capital gains $0.04
Total distributions $0.21
Total return* -.8%
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1997 $6.02
Oct. 31, 1996 $6.28
Decrease $0.26
Distributions
Nov. 1, 1996 - April 30, 1997
From income $0.14
From capital gains $0.04
Total distributions $0.18
Total return* -1.2%
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1997 $6.02
Oct. 31, 1996 $6.30
Decrease $0.28
Distributions
Nov. 1, 1996 - April 30, 1997
From income $0.17
From capital gains $0.04
Total distributions $0.21
Total return* -.7%
*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.
<PAGE>
The Portfolio's ten largest holdings
Percent Value
(of Portfolio's net assets) (as of April 30, 1997)
U.S. Treasury 8.38% $74,904,465
7.50% 2001
United Kingdom Treasury 5.02 44,838,225
8.00% 2003
Govt of Italy 4.86 43,419,029
8.50% 1999-2004
Govt of Sweden 3.91 34,958,684
8.00% 2007
United Mexican States 3.13 27,975,177
11.50% 2026
Govt of Venezuela 2.49 22,234,500
6.75% 2007
Govt of Canada 2.41 21,483,148
8.00% 2023
U.S. Treasury 2.32 20,757,924
7.50% 2016
Federal Republic of Germany 2.31 20,610,340
7.50% 2004
Federal Republic of Germany 2.26 20,225,542
6.00% 2016
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.
(icon of) pie chart
The ten holdings listed here make up 37.09% of the Portfolio's net assets
<PAGE>
<TABLE>
Financial statements
Statement of assets and liabilities
IDS Global Bond Fund
April 30, 1997
Assets
<CAPTION>
(Unaudited)
<S> <C>
Investment in World Income Portfolio (Note 1) $892,953,391
------------
Total assets 892,953,391
-----------
Liabilities
Dividends payable to shareholders 2,198,342
Accrued distribution fee 3,760
Accrued service fee 4,241
Accrued transfer agency fee 3,335
Accrued administrative services fee 1,296
Other accrued expenses 223,821
-------
Total liabilities 2,434,795
Net assets applicable to outstanding capital stock $890,518,596
============
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,478,066
Additional paid-in capital 891,833,874
Undistributed net investment income 4,897,848
Accumulated net realized gain 5,955,472
Unrealized depreciation of investments and on
translation of assets and liabiIities in foreign currencies (13,646,664)
-----------
Total-- representing net assets applicable to outstanding capital stock $890,518,596
============
Net assets applicable to outstanding shares: Class A $705,983,749
Class B $184,533,793
Class Y $ 1,054
Net asset value per share of outstanding capital stock: Class A shares 117,176,757 $ 6.02
Class B shares 30,629,697 $ 6.02
Class Y shares 175 $ 6.02
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of operations
IDS Global Bond Fund
Six months ended April 30, 1997
Investment income
<CAPTION>
(Unaudited)
Income:
<S> <C>
Dividends $ 11,969
Interest 29,910,684
----------
Total income 29,922,653
----------
Expenses (Note 2):
Expenses, including investment management services fee
allocated from World Income Portfolio 3,342,797
Distribution fee -- Class B 611,928
Transfer agency fee 585,917
Incremental transfer agency fee-- Class B 8,175
Service fee
Class A 605,074
Class B 142,071
Administrative services fees and expenses 230,845
Compensation of board members 9,044
Compensation of officers 1,165
Postage 89,350
Registration fees 117,894
Reports to shareholders 49,910
Audit fees 3,500
Other 4,313
-----
Total expenses 5,801,983
Earnings credits on cash balances (Note 2) (23,583)
-------
Total net expenses 5,778,400
---------
Investment income -- net 24,144,253
----------
Realized and unrealized gain (loss) -- net
Net realized gain on security and foreign currency transactions 6,329,307
Net realized loss on financial futures contracts (672,838)
Net realized gain on option contracts written 148,897
-------
Net realized gain on investments and foreign currencies 5,805,366
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies (40,409,700)
-----------
Net loss on investments and foreign currencies (34,604,334)
-----------
Net decrease in net assets resulting from operations $(10,460,081)
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Financial statements
Statements of changes in net assets
IDS Global Bond Fund
<CAPTION>
Operations and distributions April 30, 1997 Oct. 31, 1996
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income-- net $ 24,144,253 $ 39,830,735
Net realized gain on investments and foreign currencies 5,805,366 9,580,953
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies (40,409,700) 13,072,038
----------- ----------
Net increase (decrease) in net assets resulting from operations (10,460,081) 62,483,726
----------- ----------
Distributions to shareholders from:
Net investment income
Class A (17,385,622) (36,187,518)
Class B (3,416,477) (4,293,355)
Class Y (27) (8,652)
Net realized gain
Class A (4,577,136) --
Class B (1,029,102) --
Class Y (7) --
--
Total distributions (26,408,371) (40,489,525)
----------- -----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 105,100,250 227,607,179
Class B shares 59,129,764 109,476,537
Class Y shares -- 62,000
Reinvestment of distributions at net asset value
Class A shares 20,463,319 31,955,376
Class B shares 4,466,000 3,655,288
Class Y shares 34 44
Payments for redemptions
Class A shares (78,809,295) (137,380,123)
Class B shares (Note 2) (12,988,652) (12,674,430)
Class Y shares -- (2,134,493)
----------
Increase in net assets from capital share transactions 97,361,420 220,567,378
Total increase in net assets 60,492,968 242,561,579
Net assets at beginning of period 830,025,628 587,464,049
----------- -----------
Net assets at end of period
(including undistributed net investment income of
$4,897,848 and $1,555,721) $890,518,596 $830,025,628
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS Global Bond Fund
(Unaudited as to April 30, 1997)
1. Summary of significant accounting policies
IDS Global Bond Fund ( a series of IDS Global Series, Inc.) is registered under
the Investment Company Act of 1940 (as amended) as a non-diversified open-end
management investment company. IDS 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.
Class A shares are sold with a front-end sales charge. Class B shares may be
subject to a contingent deferred sales charge and such shares automatically
convert to Class A after eight years. Class Y shares have no sales charge and
are offered only to qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation and other
rights, and the same terms and conditions, except that the level of 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 Income Portfolio
Effective May 13, 1996, the Fund began investing all of its assets in World
Income Portfolio (the Portfolio), a series of World Trust (the Trust), an
open-end investment company that has the same objectives as the Fund. This was
accomplished by transferring the Fund's assets to the Portfolio in return for a
proportionate ownership interest in the Portfolio. The Portfolio seeks to
provide shareholders with a high total return through income and, as a secondary
goal, steady growth of capital by investing primarily in debt securities of U.S.
and foreign issuers.
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 net assets of the Portfolio.
The percentage of the Portfolio owned by the Fund at April 30, 1997 was 99.93%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's "Notes to financial statements," which are included elsewhere in
this report.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Federal taxes
Since the Fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to the shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) allocated from the
Portfolio may differ for financial statement and tax purposes primarily because
of the deferral of 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
Dividends from net investment income, declared daily and paid each calendar
quarter, are reinvested in additional shares of the Fund at net asset value or
payable in cash. Capital gains, when available, are distributed along with the
last income dividend of the calendar year.
2. Expenses and sales charges
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
Effective March 20, 1995, the Fund entered into agreements with American Express
Financial Corporation (AEFC) for providing administrative services and serving
as transfer agent.
Under its 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 0.04% 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,
organizational expenses, and any other expenses properly payable by the Fund
approved by the board.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts
and records. The Fund pays AEFC an annual fee per shareholder account for this
service as follows:
oClass A $15.50
oClass B $16.50
oClass Y $15.50
Also effective March 20, 1995, the Fund entered into agreements with American
Express Financial Advisors Inc. for distribution and shareholder
servicing-related 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-related 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.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $1,419,607 for Class A and $56,170 for Class B for
the six months ended April 30, 1997.
During the six months ended April 30, 1997, the Fund's transfer agency fees were
reduced by $23,583 as a result of earnings credits from overnight cash balances.
Transactions in shares of capital stock for the periods indicated are as
follows:
3. Capital share transactions
Six months ended April 30, 1997
Class A Class B Class Y
Sold 16,974,100 9,545,778 --
Issued for reinvested 3,304,513 721,756 6
distributions
Redeemed (12,757,732) (2,109,399) --
----------- ----------
Net increase 7,520,881 8,158,135 6
Year ended Oct. 31, 1996
Class A Class B Class Y
Sold 37,177,268 17,890,911 10,116
Issued for reinvested 5,212,751 596,186 7
distributions
Redeemed (22,451,857) (2,073,906) (348,830)
----------- ---------- --------
Net increase (decrease) 19,938,162 16,413,191 (338,707)
<PAGE>
<TABLE>
Notes to financial statements
IDS Global Bond Fund
4. Financial highlights
The tables below show certain financial information for evaluating the Fund's
results.
Fiscal period ended Oct. 31,
Per share income and capital changesa
<CAPTION>
Class A
1997f 1996 1995 1994 1993 1992 1991 1990 1989b
Net asset value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period $6.28 $6.11 $5.76 $6.27 $5.91 $5.58 $5.46 $5.22 $5.00
Income from investment operations:
Net investment income .19 .38 .35 .36 .26 .33 .50 .40 .12
Net gains (losses) (.24) .18 .41 (.45) .62 .47 .12 .27 .22
(both realized
and unrealized)
Total from investment (.05) .56 .76 (.09) .88 .80 .62 .67 .34
operations
Less distributions:
Dividends from net (.17) (.39) (.33) (.35) (.27) (.30) (.50) (.40) (.12)
investment income
Distributions from (.04) -- (.02) (.07) (.10) (.06) -- (.03) --
realized gains
Excess distributions of -- -- (.06) -- (.15) (.11) -- -- --
realized gains
Total distributions (.21) (.39) (.41) (.42) (.52) (.47) (.50) (.43) (.12)
Net asset value,
end of period $6.02 $6.28 $6.11 $5.76 $6.27 $5.91 $5.58 $5.46 $5.22
Ratios/supplemental data
Class A
1997f 1996 1995 1994 1993 1992 1991 1990 1989b
Net assets, end of $706 $689 $548 $466 $255 $91 $50 $28 $11
period (in millions)
Ratio of expenses to 1.20%d 1.20% 1.25% 1.26% 1.31% 1.39% 1.34% 1.73%h 1.00%g
average daily net assetsc
Ratio of net income to 5.71%d 5.72% 6.15% 5.56% 5.11% 6.50% 7.15% 10.60%h 7.04%gd
to average daily
net assets
Portfolio turnover rate 33% 49% 92% 64% 90% 160% 123% 130% 91%
(excluding short-term
securities) for the
underlying Portfolio
Total returne (.8%) 8.9% 13.6% (1.5%) 15.8% 14.8% 11.9% 13.3% 6.7%
aFor a share outstanding throughout the period. Rounded to the nearest cent.
bInception date. Period from March 20, 1989 to Oct. 31, 1989.
cEffective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
dAdjusted to an annual basis.
eTotal return does not reflect payment of a sales charge.
fSix months ended April 30, 1997 (Unaudited).
gDuring the period from March 20, 1989 to Oct. 31, 1989, AEFC reimbursed
the Fund for expenses in excess of 1% of daily net assets. Has AEFC not done
so, the ratio of expenses and ratio of net investment income would have been
1.77% and 5.77%, respectively hFor the nine months ended July 31, 1990, AEFC
voluntarily reimbursed the Fund for a portion of its expenses. Had AEFC not
done so, the ratio of expenses and ratio of net investment income would have
been 1.87% and 10.46%, respectively.
</TABLE>
<PAGE>
Fiscal period ended Oct. 31,
Per share income and capital changesa
Class B Class Y
1997f 1996 1995b 1997f 1996 1995b
Net asset value, $6.28 $6.11 $5.74 $6.30 $6.11 $5.74
beginning of period
Income from investment operations:
Net investment income .17 .33 .24 .20 .29 .27
Net gains on securities (.25) .18 .41 (.27) .20 .41
(both realized and
unrealized)
Total from investment (.08) .51 .65 (.07) .49 .68
operations
Less distributions:
Dividends from net (.14) (.34) (.24) (.17) (.30) (.27)
investment income
Excess distributions of (.04) -- (.04) (.04) -- (.04)
realized gains
Total distributions (.18) (.34) (.28) (.21) (.30) (.31)
Net asset value, end
of period $6.02 $6.28 $6.11 $6.02 $6.30 $6.11
Ratios/supplemental data
Class B Class Y
1997f 1996 1995b 1997f 1996g 1995b
Net assets, end of $185 $141 $37 $-- $-- $2
period (in millions)
Ratio of expenses to 1.95%d 1.96% 2.05%d .76%d 1.01% 1.10%d
average daily net
assetsc
Ratio of net income to 4.98%d 4.96% 5.88%d 6.91%d 6.06% 6.68%d
average daily net assets
Portfolio turnover rate 33% 49% 92% 33% 49% 92%
(excluding short-term
securities) for the
underlying portfolio
Total Returne (1.2%) 8.1% 11.5% (.7) 7.3% 12.0%
aFor a share outstanding throughout the period. Rounded to the nearest cent.
bInception date was March 20, 1995 for Class B and Class Y.
cEffective fiscal year 1996, expense ratio is bases on total expenses of the
Fund before reduction of earnings credits on cash balances.
dAdjusted to an annual basis.
eTotal return does not reflect payment of a sales charge.
f Six months ended April 30, 1997 (Unaudited).
gPeriods from Nov. 1, 1995 to Nov. 20, 1995 and from Dec. 4, 1995 to Oct 31,
1996. From Nov. 20, 1995 to Dec. 4, 1995 there were no Class Y shares
outstanding.
<PAGE>
<TABLE>
Financial statements
Statement of assets and liabilities
World Income Portfolio
April 30, 1997
<CAPTION>
Assets
(Unaudited)
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $926,157,277) $913,299,964
Dividends and accrued interest receivable 21,131,312
Receivable for investment securities sold 14,297,336
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 4) 30,115
U.S. government securities held as collateral (Note 5) 2,249,747
---------
Total assets 951,008,474
-----------
Liabilities
Disbursements in excess of cash on demand deposit 39,840
Payable for investment securities purchased 24,257,022
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 4) 30,070
Payable upon return of securities loaned (Note 5) 33,092,247
Accrued investment management services fee 17,934
Other accrued expenses 31,452
------
Total liabilities 57,468,565
----------
Net assets $893,539,909
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of operations
World Income Portfolio
Six months ended April 30, 1997
Investment income
<CAPTION>
(Unaudited)
Income:
<S> <C>
Dividends (net of foreign taxes withheld of $2,114) $ 11,977
Interest (net of foreign taxes withheld of $123,150) 29,927,821
-------- ----------
Total income 29,939,798
----------
Expenses (Note 2):
Investment management services fee 3,199,239
Compensation of board members 10,114
Custodian fees 113,795
Audit fees 10,250
Administrative services fees and expenses 2,857
Other 13,711
------
Total expenses 3,349,966
Earnings credits on cash balances (Note 2) (4,968)
- ------
Total net expenses 3,344,998
---------
Investment income -- net 26,594,800
----------
Realized and unrealized gain (loss) -- net
Net realized gain on security and foreign currency transactions
(including gain of $728,367 from foreign currency transactions) (Note 3) 6,334,237
Net realized loss on financial futures contracts (673,275)
Net realized gain on option contracts writtten (Note 6) 149,000
-------
Net realized gain on investments and foreign currencies 5,809,962
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies (40,436,713)
-----------
Net loss on investments and foreign currencies (34,626,751)
-----------
Net decrease in net assets resulting from operations $ (8,031,951)
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Financial statements
Statements of changes in net assets
World Income Portfolio
<CAPTION>
Operations
Six months ended For the period from
April 30, 1997 May 13, 1996*
(Unaudited) to Oct. 31, 1996
<S> <C> <C>
Investment income-- net $ 26,594,800 $ 22,643,163
Net realized gain on investments and foreign currencies 5,809,962 3,494,043
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies (40,436,713) 26,719,774
----------- ----------
Net increase (decrease) in net assets resulting from operations (8,031,951) 52,856,980
Net contributions 66,845,889 781,818,991
---------- -----------
Total increase in net assets 58,813,938 834,675,971
Net assets at beginning of period (Note 1) 834,725,971 50,000
- ----------- ------
Net assets at end of period $893,539,909 $834,725,971
============ ============
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
World Income Portfolio
(Unaudited as to April 30, 1997)
1. Summary of significant accounting policies
The World Income 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 non-diversified, open-end management investment company. World Income
Portfolio invests primarily in debt securities of U.S. and foreign issuers. The
Declaration of Trust permits the Trustees to issue non-transferable interests in
the Portfolio. On April 15, 1996, American Express Financial Corporation (AEFA)
contributed $50,000 to the Portfolio. Operations did not formally commence until
May 13, 1996, at which time, an existing fund transferred its assets to the
Portfolio in return for an ownership percentage of the Portfolio.
Significant accounting polices followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
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; securities for which market quotations
are not readily available are valued at fair value according to methods selected
in good faith by the board. Determination of fair value involves, among other
things, reference to market indexes, matrixes and data from independent brokers.
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
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy or
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent 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 and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of 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 not being
able 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 upon expiration or closing of the option
transaction. 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
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be 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
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates 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 the obligations of the contract.
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. Accordingly, as a "pass-through" entity, the Portfolio
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 notification or upon
receipt of ex-dividend notification in the case of certain foreign securities.
For U.S. dollar denominated bonds, interest income includes level-yield
amortization of premium and discount. 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 entered into an Investment Management
Services Agreement with AEFC for managing 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 0.77% to 0.67% annually.
Under the agreement, the Trust also pays taxes and nonadvisory expenses, which
include custodian fees to be paid to an affiliate of AEFC, 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 secruties of the Portfolio, and any
other expenses properly payable by the Trust or Portfolio, approved by the
board.
During the six months ended April 30, 1997, the Portfolio's custodian fees were
reduced by $4,968 as a result of earnings credits from overnight cash balances.
Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $257,468,026 and $270,534,927 respectively, for the six
months ended April 30, 1997. For the same period, the portfolio turnover rate
was 33%. Realized gains and losses are determined on an identified cost basis.
4. Foreign currency contracts
At April 30, 1997, the Portfolio had entered into two foreign currency exchange
contracts that obligate the Portfolio to deliver currencies at specified future
dates. The unrealized appreciation and/or depreciation (see Summary of
significant accounting policies) on these contracts is included in the
accompanying financial statements. The terms of the open contracts are as
follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 2, 1997 14,246,007 18,224,391 $ -- $30,070
U.S. Dollar Australian Dollar
May 2, 1997 18,251,590 14,267,268 30,115 --
------ ---
Australian Dollar U.S. Dollar
$30,115 $30,070
5. Lending of portfolio securities
At April 30, 1997, securities valued at $31,927,804 were on loan to brokers. For
collateral, the Portfolio received $30,842,500 in cash and U.S. government
securities valued at $2,249,747. Income from securities lending amounted to
$65,267 for the six months ended April 30, 1997. 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.
6. Option contracts written
The number of contracts and premium amounts associated with option contracts
written is as follows:
Six months ended April 30, 1997
Calls
Contracts Premium
Balance Oct. 31, 1996 -- $ --
Opened 100 154,188
Closed (100) (154,188)
---- --------
Balance April 30, 1997 -- $ --
<PAGE>
<TABLE>
Investments in securities
World Income Portfolio
April 30, 1997 (Unaudited)
(Percentages represent value of
investments compared to net assets)
Bonds (81.5%)(b)
<CAPTION>
Issuer Coupon Maturity Principal Value(a)
rate year amount
Argentina (3.5%)
Perez Companc
<S> <C> <C> <C> <C>
(U.S. Dollar) 9.00 2004 1,975,000(d) 1,999,688
Republic of Argentina Euro
(Japanese Yen) 5.50 2001 880,000,000 7,292,648
(U.S. Dollar) 5.50 2023 12,250,000 7,985,530
(U.S. Dollar) 6.75 2005 10,670,000(c) 9,783,110
(U.S. Dollar) 11.375 2017 4,300,000 4,560,709
Total 31,621,685
Austria (2.9%)
Asian Development Bank
(Japanese Yen) 5.00 2003 213,000,000 1,955,791
Autobahn Schnell
(Japanese Yen) 6.00 2000 397,000,000 3,545,619
IADB
(Japanese Yen) 6.00 2001 59,000,000 552,493
Intl Bank Reconstruction & Development
(Japanese Yen) 4.50 1997 1,940,000,000 15,664,258
Republic of Austria Euro
(Japanese Yen) 5.25 1998 540,000,000 4,410,666
Total 26,128,827
Australia (3.5%)
Australian Govt
(Australian Dollar) 9.75 2002 20,000,000 17,104,144
(Australian Dollar) 10.00 2007 15,760,000 13,961,784
Total 31,065,928
Brazil (0.6%)
CIA Paranaense de Energia
Copel
(U.S. Dollar) 9.75 2005 5,000,000(d) 5,062,500
Canada (2.6%)
Govt of Canada
(Canadian Dollar) 8.00 2023 27,310,000 21,483,148
Rogers Cable System
(Canadian Dollar) 9.65 2014 2,000,000 1,403,258
Total 22,886,406
China (2.3%)
Bank of China
(U.S. Dollar) 8.25 2014 5,000,000 4,967,250
People's Republic of China
(U.S. Dollar) 7.375 2001 4,450,000 4,477,813
Zhuhai Highway
(U.S. Dollar) 11.50 2008 9,550,000(d) 10,696,000
Total 20,141,063
Denmark (2.9%)
Govt of Denmark
(Danish Krone) 8.00 2003 113,200,000 19,052,461
(Danish Krone) 9.00 2000 40,000,000 6,860,992
Total 25,913,453
Ecuador (0.6%)
Republic of Ecuador
(U.S. Dollar) 10.81 2004 5,000,000(c,d) 5,081,250
France (1.2%)
Govt of France
(European Currency Unit) 7.75 2005 8,710,000 10,765,737
Germany (4.6%)
Federal Republic of Germany
(Deutsche Mark) 6.00 2016 36,700,000 20,225,542
(Deutsche Mark) 7.50 2004 31,870,000 20,610,340
Total 40,835,882
Indonesia (0.5%)
Pt Indah Kiat Euro
(U.S. Dollar) 8.875 2000 2,500,000 2,471,875
Tjiwi Kimia
(U.S. Dollar) 13.25 2001 2,000,000 2,242,500
Total 4,714,375
Italy (5.5%)
Govt of Italy
(Italian Lira) 8.50 1999-04 71,125,000,000 43,419,029
Republic of Italy
(U.S. Dollar) 6.875 2023 6,000,000 5,519,580
Total 48,938,609
Japan (2.7%)
Euro Investment Bank
(Japanese Yen) 5.875 1999 880,000,000 7,755,326
Japan Development Bank
(Japanese Yen) 6.50 2001 1,370,000,000 13,038,167
Matsushita Electric
(Japanese Yen) Cv 1.30 1999 325,000,000 2,616,487
Nippon Express
(Japanese Yen) Cv 1.00 2004 120,000,000 923,549
Total 24,333,529
Mexico (4.2%)
United Mexican States
(Japanese Yen) 5.00 1998 580,000,000 4,733,380
(U.S. Dollar) 11.375 2016 5,000,000 5,268,750
(U.S. Dollar) 11.50 2026 26,376,000(g) 27,975,177
Total 37,977,307
Netherlands (0.2%)
Deutsche Bank Finance
(U.S. Dollar) Zero Coupon 4.50 2017 3,410,000(d,e) 1,432,200
Philippines (0.6%)
Phillippine Long Distance
(U.S. Dollar) 7.85 2007 1,500,000(d) 1,420,365
(U.S. Dollar) 8.35 2017 4,700,000(d) 4,336,079
Total 5,756,444
Russia (0.9%)
ALFA Bank
(U.S. Dollar) 11.10 1997 3,000,000(c) 3,000,000
Rostelecom (AO)
(U.S. Dollar) 9.56 2000 5,000,000 5,000,000
Total 8,000,000
Spain (3.1%)
Govt of Spain
(Spanish Peseta) 4.625 2004 575,000,000 5,240,084
(Spanish Peseta) 8.00 2004 2,365,000,000 17,542,766
(Spanish Peseta) 8.80 2006 652,000,000 5,057,062
Total 27,839,912
Sweden (4.5%)
Govt of Sweden
(Swedish Krona) 8.00 2007 260,200,000 34,958,684
Kingdom of Sweden
(Swedish Krona) 3.875 1999 600,000,000 5,010,042
Total 39,968,726
United Kingdom (9.4%)
Abbey Natl
(U.S. Dollar) 8.20 2004 5,000,000 5,292,450
United Kingdom Treasury
(British Pound) 8.00 2003 26,700,000 44,838,225
(British Pound) 8.50 2005 9,200,000 15,906,476
(British Pound) 9.00 2000 10,700,000 18,174,793
Total 84,211,944
United States (22.7%)
Chesapeake
(U.S. Dollar) 9.875 2003 1,000,000 1,122,040
Cleveland Electric Illuminating
(U.S. Dollar) 9.50 2005 3,000,000 3,198,750
Dayton Hudson
(U.S. Dollar) 8.50 2022 3,265,000 3,281,619
Executive Risk Capital Trust
(U.S. Dollar) 8.675 2027 3,500,000(d) 3,489,920
Federal Natl Mtge Assn
(U.S. Dollar) 7.50 2027 4,956,626 4,917,915
Federal Natl Mtge Assn Global
(Japanese Yen) 2.00 1999 500,000,000 4,024,870
General Motors
(U.S. Dollar) 9.125 2001 2,000,000 2,157,080
Georgia-Pacific
(U.S. Dollar) Credit Sensitive Nts 9.85 1997 500,000 502,070
Govt Natl Mtge Assn
(U.S. Dollar) 8.00 2026 9,990,391 10,127,759
Imexsa Export Trust
(U.S. Dollar) 10.125 2003 3,000,000(d) 3,108,750
New York Life Insurance
(U.S. Dollar) Credit Sensitive Nts 7.50 2023 7,000,000(d) 6,564,880
Northwest Airlines
(U.S. Dollar) 8.97 2015 1,973,418 2,042,231
Overseas Private Investment
(U.S. Dollar) 6.99 2009 7,500,000 7,359,375
Pacific Bell
(U.S. Dollar) 8.50 2031 5,000,000 5,094,750
PDV America
(U.S. Dollar) 7.875 2003 3,500,000 3,464,685
Phillips Petroleum
(U.S. Dollar) 7.92 2023 3,115,000 3,008,654
Polysindo Intl Finance
(U.S. Dollar) 11.375 2006 2,300,000 2,449,500
Questar Pipeline
(U.S. Dollar) 9.375 2021 1,000,000 1,088,530
Southern California Gas
(U.S. Dollar) 7.375 2023 900,000 849,069
Texas Utilities
(U.S. Dollar) 1st Mtge 9.75 2021 3,500,000 3,925,215
TU Electric Capital
(U.S. Dollar) 8.175 2037 6,150,000 6,059,287
U.S. Treasury
(U.S. Dollar) 4.75 1998 14,535,000 14,293,428
(U.S. Dollar) 5.875 2000 10,000,000(g) 9,866,700
(U.S. Dollar) 7.50 2001 72,250,000 74,904,465
(U.S. Dollar) 7.50 2016 19,800,000(g) 20,757,924
U S WEST Communications
(U.S. Dollar) 7.20 2026 6,000,000 5,515,860
Total 203,175,326
Venezuela (2.5%)
Govt of Venezuela
(Swiss Franc) 6.75 2007 25,000,000(c) 22,234,500
Total bonds
(Cost: $740,868,102) $728,085,603
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
Investments in securities
World Income Portfolio
April 30, 1997 (Unaudited)
(Percentages represent value of
investments compared to net assets)
Other (--%)(b)
Issuer Shares Value(a)
Mexico Value
Rights 1,000(h) $--
Total other
(Cost: $--) $--
Option purchased (--%)
Issuer Number Exercise Expiration Value(a)
of contracts price date
Call
Deutsche Mark 200 $63 June 1997 $2,500
Total option purchased
(Cost: $73,500) $2,500
Short-term securities (20.7%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agency (1.3%)
Federal Home Loan Mtge Corp Disc Nts
05-13-97 5.43% $3,100,000 $ 3,094,410
05-15-97 5.41 8,500,000 8,482,183
Total 11,576,593
Commercial paper (17.6%)
Abbott Laboratories
05-12-97 5.49 6,000,000 5,989,972
Ameritech Capital Funding
05-15-97 5.51 6,000,000(f) 5,987,190
06-11-97 5.56 5,000,000(f) 4,966,754
Associates Corp North America
05-07-97 5.53 2,900,000 2,897,342
CAFCO
05-09-97 5.54 6,300,000(f) 6,292,272
Cargill
05-09-97 5.43 3,200,000 3,196,146
05-12-97 5.52 2,500,000 2,495,798
Clorox
05-05-97 5.54 3,700,000 3,697,731
06-16-97 5.60 2,600,000 2,581,528
Coca-Cola
05-27-97 5.49 6,500,000 6,474,368
Commerzbank U.S. Finance
05-29-97 5.52 4,500,000 4,480,750
Dean Witter, Discover & Co
05-19-97 5.52 3,000,000 2,991,750
Exxon Asset Management
05-13-97 5.41 1,200,000(f) 1,197,840
Fleet Funding
05-14-97 5.57 6,000,000(f) 5,987,997
Gannett
05-23-97 5.53 6,500,000(f) 6,478,153
06-02-97 5.53 7,100,000(f) 7,065,289
General Electric Capital
05-28-97 5.57 6,000,000 5,975,025
Goldman Sachs Group
05-27-97 5.55 6,500,000 6,474,086
05-30-97 5.55 5,300,000 5,276,433
MCI Communications
05-30-97 5.53 6,500,000(f) 6,471,201
Morgan Stanley Group
05-19-97 5.54 6,500,000 6,482,060
Motorola
05-06-97 5.58 5,300,000 5,295,914
05-08-97 5.58 5,700,000 5,693,849
NBD Bank Canada
05-01-97 5.60 2,400,000 2,400,000
06-02-97 5.57 5,200,000 5,174,347
Paccar Financial
05-29-97 5.53 4,500,000 4,480,715
Reed Elsevier
05-05-97 5.55 5,300,000(f) 5,296,749
SAFECO Credit
05-02-97 5.35 4,000,000 3,999,410
SBC Communications Capital
05-13-97 5.52 1,800,000(f) 1,796,700
05-30-97 5.53 2,000,000(f) 1,991,139
Southern California Gas
05-22-97 5.33 3,400,000(f) 3,387,605
Southwestwern Bell Telephone
05-07-97 5.54 5,000,000 4,995,400
Unilever Capital
06-03-97 5.56 3,200,000(f) 3,183,808
USAA Capital
05-06-97 5.59 6,500,000 6,494,980
Total 157,650,301
Letters of credit (1.8%)
Bank of America-
AES Barbers Point
05-15-97 5.52 4,600,000 4,590,161
Bank of America-
Formosa
05-15-97 5.54 6,000,000 5,987,143
Bank of New York-
River Fuel
06-05-97 5.58 5,437,000(f) 5,407,663
Total 15,984,967
Total short-term securities
(Cost: $185,215,675) $185,211,861
Total investments in securities
(Cost: $926,157,277)(i) $913,299,964
See accompanying notes to investments in securities.
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(c) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on April 30, 1997.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(e) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(f) 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.
(g) Security is partially or fully on loan. See Note 5 to the financial
statements.
(h) Presently negligible market value.
(i) At April 30, 1997, the cost of securities for federal income tax purposes
was approximately $925,445,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation...........................................$17,848,000
Unrealized depreciation...........................................(29,993,000)
-----------
Net unrealized depreciation......................................$(12,145,000)
<PAGE>
Board members and officers
Board members and officers of the Fund
President and interested board member
William R. Pearce
Chairman of the board, Board Services Corporation (provides administrative
services to boards including the boards of the IDS and IDSLife funds and
Master Trust portfolios).
Independent board members
H. Brewster Atwater Jr.
Former chairman and chief executive officer, General Mills, Inc.
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public Policy
Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
Alan K. Simpson
Former United States senator for Wyoming.
Edson W. Spencer
Former chairman and chief executive officer,
Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
Interested board members who are officers and/or employees of AEFC.
William H. Dudley
Senior advisor to the chief executive officer.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
Officers who also are officers and/or employees of AEFC.
Peter J. Anderson
Senior vice president, AEFC. Vice president - Investments for the Fund.
Melinda S. Urion
Senior vice president and chief financial officer, AEFC. Treasurer for
the Fund.
Other officer
Leslie L. Ogg
President, treasurer and corporate secretary of Board Services
Corporation. Vice president, general counsel and secretary for the Fund.
Refer to the SAI for the board members' and officers' biographies.
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world globe
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies throughout the
world that are positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
(icon of) world
IDS International Fund
Invests primarily in common stocks of foreign companies that offer potential for
superior growth. The Fund may invest up to 20% of its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks-and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale of globes
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and Quick
telephone reference foreign issuers to seek high total return through income and
growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies that TTY
Service explore for, mine and process or distribute gold and other precious
metals. A highly aggressive and speculative fund that seeks long-term growth of
capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies emphasizing
technological innovation and productivity enhancement. Buys and holds larger
growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected for their
potential for above-average growth. Above-average means that their growth
potential is better, in the opinion of the portfolio's investment manager, than
the Standard & Poor's Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) flower
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of companies with significant growth
potential due to superiority in technology, marketing or management. The Fund
frequently changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
(icon of) shooting star
Growth and income funds
These funds focus on securities of medium to large, well-established companies
that offer long-term growth of capital and reasonable income from dividends and
interest.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks, higher-yielding
equities and bonds. Seeks growth of capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities purchased are
those recommended by our research analysts as the best from each industry
represented on the index. Offers potential for long-term growth as well as
dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) spinning toy
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stocks of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek high current
income and growth of income and capital with reduced volatility.
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IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily in high-yielding common stocks to
seek high current income and, secondarily, to benefit from the growth potential
offered by stock investments.
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IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks and senior
securities (preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
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Income funds
The funds in this group invest their assets primarily in corporate bonds or
government securities to seek interest income. Secondary objective is capital
growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly in long-term, high-yielding corporate
fixed-income securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
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IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk
bond categories, or the equivalent, and in government bonds.
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IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality corporate bonds and
other highly rated debt instruments including government securities and
short-term investments. Seeks current income and preservation of capital.
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IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or guaranteed as
to the timely payment of principal and interest by the U.S. government, its
agencies and instrumentalities. Seeks a high level of current income and safety
of principal consistent with its type of investments.
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Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government units, with at
least 75% in the four highest rated, lowest risk bond categories.
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IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
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IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to provide
income to residents of each respective state that is exempt from federal, state
and local income taxes. (New York is the only state that is exempt at the local
level.)
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IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve greater
risk of principal and income.
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IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
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Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (CDs) and other bank securities.
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IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and local
governments to seek high current income exempt from federal income taxes.
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For more complete information about any of these funds, including charges and
expenses, you can obtain a prospectus by contacting your financial advisor or
writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534. Read it carefully before you invest or send money.
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Quick telephone reference
American Express Financial Advisors Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota:
800-437-3133
Mpls./St. Paul area:
671-3800
TTY Service
For the hearing impaired
800-846-4852
American Express Financial Advisors Easy Access Line
Automated account information (TouchTone(R) phones only), including current fund
prices and performance, account values and recent account transactions
800-862-7919
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AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Global Bond Fund
IDS Tower 10
Minneapolis, MN 55440-0010
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 85
SPENCER, IA
