1997 SEMIANNUAL REPORT
IDS
Emerging
Markets Fund
(icon of) world globe
The goal of IDS Emerging Markets Fund, a part of IDS Global Series, Inc., is
long-term growth of capital.
Distributed by American Express Financial Advisors Inc., Member SIPC.
<PAGE>
(icon of) world globe
Expanding your opportunities
As free enterprise expands around the world, so do investment opportunities.
Some of the most exciting ones can be found in the so-called "emerging markets"
- - smaller economies located largely in Asia, Latin America and Eastern Europe.
Attracted by their rapid growth potential, many aggressive investors have made
these markets, which have a higher-than-average risk level, an integral part of
their portfolios.
Contents
From the 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) 15
Notes to financial statements (Portfolio) 18
Investments in securities 24
Board members and officers 27
IDS mutual funds 28
<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 towards 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
IDS Emerging Markets enjoyed strong performance during its initial
reporting period -- Nov. 13, 1996 through April 30, 1997. The Fund's 13.5%
gain by its Class A shares over that time put it comfortably ahead of the
Lipper Emerging Market Index, a commonly used benchmark for measuring the
performance of mutual funds such as this one.
The first several weeks of the period were largely devoted to putting
investors' money to work by purchasing shares of stocks in a wide range of
countries including Asia, Eastern Europe, South America, Africa and the
Middle East. At the end of the period, the Fund's largest country
exposures were Hong Kong, Brazil, Russia, Mexico and Malaysia.
For the most part, I concentrated on stocks of companies involved in
infrastructure (construction of roads, bridges, utilities, sewage systems,
etc.) and industrial development, which are in their early stages in many
emerging markets. My investment approach is to focus first on countries
with the fastest-growing economies, then try to identify the stocks in
those countries that appear to have the best long-term appreciation
potential.
Russia, Latin America, Egypt all strong
Reviewing some highlights of the past five and one-half months, Russian
stocks kept up the powerful pace they established at the outset of 1996.
Clearly, many investors have begun to appreciate the opportunity created
by the substantial under-valuation of Russian stocks and the declining
political risk in that country. Latin America also was a generally strong
performer, with Brazil being a standout. A trend toward privatization of
state assets helped drive the Brazilian market. In Eastern Europe results
were mixed as a stock rally ultimately fizzled over concerns stemming from
a rise in U.S. interest rates. Although a small investment for the Fund,
holdings in Egypt, which appear to hold excellent long-term promise,
appreciated sharply.
Looking to the rest of 1997, nothing has happened to alter my optimism
regarding investment opportunities in emerging markets. Three key factors
- low inflation throughout most of the world, robust economic growth in
many developing countries and a global trend toward free markets and
capitalism - continue to work in our favor. That notwithstanding, it's a
virtual certainty that there will be setbacks, perhaps substantial ones,
along the way. Such is the nature of investing in smaller,
less-established markets. In the meantime, I look forward to bringing you
up to date on our progress in the next report, six months from now.
(picture of) Ian King
Ian King
Portfolio Manager
<PAGE>
To our shareholders
Class A
Nov. 13, 1996* - April 30, 1997
(All figures per share)
Net asset value (NAV)
April 30, 1997 $ 5.67
Nov. 13, 1996* $ 5.00
--------
Increase $ 0.67
Distributions
Nov. 13, 1996* - April 30, 1997
From income $ 0.01
From capital gains $ --
------
Total distributions $ 0.01
Total return** +13.5
Class B
Nov. 13, 1996* - April 30, 1997
(All figures per share)
Net asset value (NAV)
April 30, 1997 $ 5.65
Nov. 13, 1996* $ 5.00
--------
Increase $ 0.65
Distributions
Nov. 13, 1996* - April 30, 1997
From income $ --
From capital gains $ --
-----
Total distributions $ --
Total return** +13.1
Class Y
Nov. 13, 1996* - April 30, 1997
(All figures per share)
Net asset value (NAV)
April 30, 1997 $ 5.67
Nov. 13, 1996* $ 5.00
--------
Increase $ 0.67
Distributions
Nov. 13, 1996* - April 30, 1997
From income $ 0.01
From capital gains $ --
------
Total distributions $ 0.01
Total return** +13.6
*Inception date.
**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)
Telecomunicacoes Brasileiras- 3.99% $6,414,525
Telebras ADR (Brazil)
Mosenergo ADR (Russia) 3.81 6,132,852
Banco de Galicia - 3.48 5,595,469
Buenos Aires (Argentina)
Telefonica de Argentina (Argentina) 3.31 5,320,000
Petroleo Brasileiro ADR (Brazil) 3.13 5,037,598
Chernogorneft ADR (Russia) 2.97 4,781,250
Suez Cement GDR (Egypt) 2.92 4,706,000
Beijing Datang Power 2.89 4,650,321
Generation (China)
Sasol (South Africa) 2.87 4,614,866
CEMIG ADR (Brazil) 2.81 4,515,000
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 32.18% of the Portfolio's net assets
<PAGE>
Financial statements
Statement of assets and liabilities
IDS Emerging Markets Fund
April 30, 1997
Assets
(Unaudited)
Investment in Emerging Markets Portfolio (Note 1) $160,246,151
Expense receivable from AEFC 43,548
Organizational costs 44
--
Total assets 160,289,743
-----------
Liabilities
Accrued distribution fee 925
Accrued service fee 751
Accrued transfer agency fee 1,180
Accrued administrative services fee 429
Other accrued expenses 57,253
------
Total liabilities 60,538
------
Net assets applicable to outstanding capital stock $160,229,205
============
Represented by
Capital stock-- $.01 par value (Note 1) $ 282,933
Additional paid-in capital 156,461,234
Excess of distributions over net investment income (153,107)
Accumulated net realized loss (Note 1) (1,120,887)
Unrealized appreciation of investments and on translation
of assets and liabilities in foreign currencies 4,759,032
---------
Total-- representing net assets applicable to outstanding
capital stock $160,229,205
============
Net assets applicable to outstanding shares: Class A $114,193,690
Class B $ 46,016,356
Class Y $ 19,159
Net asset value per share of outstanding capital stock:
Class A shares 20,147,683 $ 5.67
Class B shares 8,142,245 $ 5.65
Class Y shares 3,378 $ 5.67
See accompanying notes to financial statements.
<PAGE>
Statement of operations
IDS Emerging Markets Fund
For the period from Nov. 13, 1996
(commencement of operations) to April 30, 1997
Investment income
(Unaudited)
Income:
Interest $ 369,975
Dividends 146,684
-------
Total income 516,659
-------
Expenses (Note 2):
Expenses, including investment management services fee,
allocated from Emerging Markets Portfolio 358,179
Distribution fee -- Class B 61,181
Transfer agency fee 75,905
Incremental transfer agency fee-- Class B 1,645
Service fee
Class A 37,276
Class B 14,276
Administrative services fees and expenses 29,459
Compensation of board members 3,996
Compensation of officers 75
Postage 16,980
Registration fees 105,820
Reports to shareholders 7,718
Audit fees 803
Other 3,945
-----
Total expenses 717,258
Less expenses voluntarily reimbursed by AEFC (Note 2) (74,865)
-------
642,393
Earnings credits on cash balances (Note 2) (191)
----
Total net expenses 642,202
-------
Investment loss-- net (125,543)
--------
Realized and unrealized gain (loss) -- net
Net realized loss on security and foreign currency transactions (1,120,887)
Net change in unrealized appreciation or depreciation of
investments and on translation of assets and liabilities
in foreign currencies 4,759,032
---------
Net gain on investments and foreign currencies 3,638,145
---------
Net increase in net assets resulting from operations $3,512,602
==========
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statement of changes in net assets
IDS Emerging Markets Fund
For the period from Nov. 13, 1996
(commencement of operations) to April 30, 1997
Operations and distributions
(Unaudited)
Investment loss-- net $ (125,543)
Net realized loss on investments and foreign currencies (1,120,887)
Net change in unrealized appreciation or depreciation of
investments and on translation of assets and liabilities
in foreign currencies 4,759,032
---------
Net increase in net assets resulting from operations 3,512,602
---------
Distributions to shareholders from:
Net investment income
Class A (21,999)
Class B (5,563)
Class Y (2)
--
Total distributions (27,564)
-------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 121,380,436
Class B shares 45,649,545
Class Y shares 18,000
Reinvestment of distributions at net asset value
Class A shares 21,329
Class B shares 5,559
Class Y shares 2
Payments for redemptions
Class A shares (9,749,828)
Class B shares (Note 2) (583,876)
--------
Increase in net assets from capital share transactions 156,741,167
-----------
Total increase in net assets 160,226,205
Net assets at beginning of period (Note 1) 3,000
-----
Net assets at end of period
(excess of distributions over net investment income
of $(153,107)) $160,229,205
============
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
IDS Emerging Markets Fund
(Unaudited as to April 30, 1997)
1.Summary of significant accounting policies
IDS Emerging Markets Fund (a series of IDS Global Series, Inc.) is registered
under the Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. IDS Global Series, Inc. has 10 billion authorized
shares of capital stock that can be freely allocated among the separate series
as designated by the board. On Nov. 12, 1996, American Express Financial
Corporation (AEFC) invested $3,000 in the Fund which represented 200 shares for
Class A, Class B and Class Y. Operations commenced on Nov. 13, 1996.
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 Emerging Markets Portfolio
Effective Nov. 13, 1996, the Fund began investing all of its assets in Emerging
Markets Portfolio (the Portfolio), a series of World Trust (the Trust), an
open-end investment company that has the same objectives as the Fund. Emerging
Markets Portfolio seeks to provide shareholders with a long-term growth of
capital by investing primarily in stocks of companies in developing countries
throughout the world that are believed to offer growth potential.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at value which 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 99.60%.
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
An annual dividend declared and paid at the end of the calendar year from net
investment income 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 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 0.10% to 0.05% 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:
o Class A $15
o Class B $16
o Class Y $15
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 $1,045,832 for Class A and $1,779 for Class B for
the period ended April 30, 1997.
During the period ended April 30, 1997, the Fund's transfer agency fees were
reduced by $191 as a result of earnings credits from overnight cash balances.
AEFC has agreed to waive certain fees and reimburse expenses until Oct. 31,
1997. Under this agreement, the Fund's total expenses will not exceed 2.10% for
Class A, 2.86% for Class B and 1.93% for Class Y of the Fund's average daily net
assets.
3. Capital share transactions
Transactions in shares of capital stock for the period indicated is as follows:
Period ended April 30, 1997*
Class A Class B Class Y
Sold 21,888,390 8,244,770 3,178
Issued for reinvested 4,179 1,090 --
distributions
Redeemed (1,745,086) (103,815) --
---------- -------- ---
Net increase 20,147,483 8,142,045 3,178
========== ========= =====
* Inception date was Nov. 13, 1996.
<PAGE>
<TABLE>
4. Financial highlights
The table below shows certain important financial information for evaluating
the Fund's results.
Period ended April 30,
Per share income and capital changesa
<CAPTION>
Class A Class B Class Y
1997b 1997b 1997b
<S> <C> <C> <C>
Net asset value, $5.00 $5.00 $5.00
beginning of period
Income from investment operations:
Net investment income (loss) -- (.01) .01
Net gains (both realized .68 .66 .67
and unrealized)
Total from investment operations .68 .65 .68
Less distributions:
Distributions from net (.01) -- (.01)
investment income
Net asset value, $5.67 $5.65 $5.67
end of period
Ratios/supplemental data
Class A Class B Class Y
1997b 1997b 1997b
Net assets, end of period $114 $46 $ --
(in millions)
Ratio of expenses to 1.97%cg 2.74%cg 1.73%cg
average daily net assetse
Ratio of net income (loss) (.21%)c (1.00%)c .25%c
to average daily net assets
Portfolio turnover rate 13% 13% 13%
(excluding short-term securities
for the underlying Portfolio)
Total returnd 13.5% 13.1% 13.6%
Average brokerage commission $.0030 $.0030 $.0030
rate for the underlying Portfoliof
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Period from Nov. 13, 1996 (inception date) to April 30, 1997 (Unaudited).
c Adjusted to an annual basis.
d Total return does not reflect payment of a sales charge.
e Expense ratio is based on total expense of the Fund before reduction of
earning credits on cash balances.
f The Fund is required to disclose an average brokerage commission rate per
share for security trades on which commissions are charged. The comparability of
this information may be affected by the fact that commission rates per share
vary significantly among foreign countries.
g During the period from Nov. 13, 1996 to April 30, 1997, AEFC reimbursed the
Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses
would have been 2.22%, 2.99% and 2.76% for Class A, B and Y, respectively.
</TABLE>
<PAGE>
Financial statements
Statement of assets and liabilities
Emerging Markets Portfolio
April 30, 1997
Assets
(Unaudited)
Investments in securities, at value (Note 1)
(identified cost $156,405,542) $161,232,759
Cash in bank on demand deposit 1,274,238
Dividends and accrued interest receivable 11,928
Receivable for investment securities sold 1,406,233
Unrealized appreciation on foreign currency
contracts held, at value (Notes 1 and 4) 63
--
Total assets 163,925,221
-----------
Liabilities
Payable for investment securities purchased 3,026,880
Unrealized depreciation on foreign currency contracts
held, at value (Notes 1 and 4) 84
Accrued investment management services fee 4,741
Other accrued expenses 13,124
------
Total liabilities 3,044,829
---------
Net assets $160,880,392
============
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statement of operations
Emerging Markets Portfolio
For the period from Nov. 13, 1996
(commencement of operations) to April 30, 1997
Investment income
(Unaudited)
Income:
Interest (net of foreign taxes withheld of $2,946) $ 374,710
Dividends (net of foreign taxes withheld of $8,380) 148,148
-------
Total income 522,858
-------
Expenses (Note 2):
Investment management services fee 326,973
Compensation of board members 1,706
Custodian fees 26,140
Audit fees 6,246
Administrative services fees and expenses 95
Other 1,094
-----
Total expenses 362,254
Earnings credits on cash balances (Note 2) (989)
- ----
Total net expenses 361,265
Investment income -- net 161,593
-------
Realized and unrealized gain (loss) -- net
Net realized loss on security and foreign currency transactions
(including loss of $55,682 from foreign currency
transactions) (Note 3) (1,121,703)
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies 4,826,619
---------
Net gain on investments and foreign currencies 3,704,916
---------
Net increase in net assets resulting from operations $3,866,509
==========
See accompanying notes to financial statements.
<PAGE>
Statement of changes in net assets
Emerging Markets Portfolio
For the period from Nov. 13, 1996
(commencement of operations) to April 30, 1997
Operations
(Unaudited)
Investment income-- net $ 161,593
Net realized loss on investments and foreign currencies (1,121,703)
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies 4,826,619
---------
Net increase in net assets resulting from operations 3,866,509
Net contributions 157,009,883
-----------
Total increase in net assets 160,876,392
Net assets at beginning of period (Note 1) 4,000
-----
Net assets at end of period $160,880,392
============
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
Emerging Markets Portfolio
(Unaudited as to April 30, 1997)
1. Summary of significant accounting policies
Emerging Markets Portfolio (the Portfolio) is a series of World Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. Emerging Markets
Portfolio seeks to provide a long-term growth of capital by investing primarily
in common stocks and securities convertible into common stocks of companies
throughout the world. The Declaration of Trust permits the Trustees to issue
non-transferable interests in the Portfolio. On Nov. 12, 1996, AEFC contibuted
$4,000 to the Portfolio. Operations commenced on Nov. 13, 1996.
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 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 date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including level-yield amortization of premium and discount, is accrued
daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with American Express Financial Corporation (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 1.10% to 1.00%
annually.
Under the agreement, the Trust also pays taxes, brokerage commissions 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, and any other expenses properly payable by the Trust or
Portfolio, approved by the board.
During the period from Nov. 13, 1996 to April 30, 1997, the Portfolio's
custodian fees were reduced by $989 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 $135,013,929 and $7,589,748, respectively, for the
period from Nov. 13, 1996 to April 30, 1997. For the same period, the portfolio
turnover rate was 13%. 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 1, 1997 2,164,578 16,767,253 $-- $84
U.S. Dollar Hong Kong Dollar
May 2, 1997 4,213,404 543,931 63 --
Hong Kong Dollar U.S. Dollar
$63 $84
<PAGE>
Investments in securities
Emerging Markets Portfolio
April 30, 1997 (Unaudited)
(Percentages represent value of
investments compared to net assets)
Common stocks (81.5%)
Issuer Shares Value(a)
Argentina (8.3%)
Banks and savings & loans (3.5%)
Banco de Galicia -
Buenos Aires 230,000 $5,595,469
Metals (1.5%)
Siderar 600,000(b) 2,358,336
Utilities -- telephone (3.3%)
Telefonica de Argentina 160,000 5,320,000
Brazil (11.9%)
Energy (3.1%)
Petroleo Brasileiro ADR 240,000(b) 5,037,598
Utilities -- electric (4.8%)
CEMIG ADR 100,000 4,515,000
Companhia Energetica
de Sao Paulo 24,400,000(b) 1,296,128
Eletropaula 9,000,000(b) 1,806,840
Total 7,617,968
Utilities -- telephone (4.0%)
Telecomunicacoes Brasileiras -
Telebras ADR 55,900 6,414,525
Chile (1.6%)
Utilities -- telephone
Cia de Telecomunicaciones
de Chile ADR 80,000 2,590,000
China (5.4%)
Airlines (0.6%)
China Eastern Airlines 3,160,000(b) 989,219
Multi-industry conglomerates (1.9%)
China Merchants 2,900,000 3,107,208
Utilities -- electric (2.9%)
Beijing Datang Power
Generation 8,950,000(b) 4,650,321
Croatia (3.0%)
Banks and savings & loans (1.4%)
Zagrebacka Banka GDR 65,000(b) 2,307,500
Health care (1.6%)
Pliva GDR 160,000(b) 2,571,998
Czech Republic (0.4%)
Utilities -- telephone
SPT Telekom 6,000(b)$ 633,987
Egypt (2.9%)
Building materials & construction
Suez Cement GDR 260,000(b) 4,706,000
Hong Kong (10.5%)
Building materials & construction (0.5%)
New World Infrastructure 370,000(b) 1,046,021
Financial services (1.3%)
Guangzhou Investment Co 4,300,000 2,039,950
Food (2.4%)
Guangnan Holdings 2,660,000 3,828,695
Health care (0.9%)
Shandong Xinhau
Pharmaceutical 3,900,000 1,397,081
Household products (0.7%)
Guangdong Kelon
Elec Holdings 1,100,000 1,064,997
Industrial equipment & services (1.3%)
GZI Transportation 3,450,000(b) 2,070,935
Multi-industry conglomerates (3.4%)
China Travel Intl Investment4,000,000 2,104,176
Shanghai Industrial Holdings592,000 3,331,982
Total 5,436,158
Indonesia (1.9%)
Banks and savings & loans (0.4%)
Bank Negara 1,218,000 676,667
Building materials & construction (0.4%)
PT Semen Gresik 261,000 636,396
Retail (0.3%)
PT Matahari Putra Prima 381,500 533,795
Utilities -- telephone (0.8%)
PT Telekomunikasi 846,000 1,227,222
Malaysia (6.3%)
Automotive & related (0.9%)
Perusahaan Otomobil 250,000(b) $1,493,726
Banks and savings & loans (2.0%)
Malayan Banking 205,000(b) 2,041,426
Public Bank Malaysia 680,000(b) 1,126,787
Total 3,168,213
Building materials & construction (0.6%)
IJM400,000 876,319
Leisure time & entertainment (1.0%)
Tanjong 439,000 1,591,276
Media (0.6%)
New Straits Times Press 174,000 970,325
Utilities -- electric (1.2%)
Tenaga Nasional 425,000 1,963,752
Mexico (7.3%)
Beverages & tobacco (2.3%)
FEMSA 785,000 3,705,388
Building materials & construction (1.8%)
Cemex 800,000 2,930,328
Media (0.9%)
Grupo Televisa 60,000(b) 1,387,500
Paper & packaging (2.3%)
Kimberly-Clark de
Mexico ADR 200,000 3,746,000
Peru (1.9%)
Metals
Compania de Minas
Buenaventura ADR 137,300 2,986,275
Philippines (4.4%)
Banks and savings & loans (0.6%)
Bank of the Philippine
Islands 180,000(b) 972,695
Building materials & construction (1.1%)
HI Cement 5,220,000(b) 1,741,977
Utilities -- electric (1.0%)
Manila Electric 260,000 $1,616,989
Utilities -- telephone (1.7%)
Philippine Long Distance
Telephone ADR 48,000 2,676,000
Russia (8.8%)
Energy equipment & services (5.0%)
Chernogorneft ADR 500,000(b) 4,781,250
Surgutneftegaz ADR 90,000(b) 3,307,500
Total 8,088,750
Utilities -- electric (3.8%)
Mosenergo ADR 30,000(b,c) 1,187,004
Mosenergo ADR 125,000(b) 4,945,848
Total 6,132,852
South Africa (5.1%)
Energy equipment & services (3.7%)
Ingwe Coal 200,000 1,259,418
Sasol 360,000 4,614,866
Total 5,874,284
Retail (1.4%)
Meikles Africa ADR 1,000,000(b) 2,330,000
Turkey (1.8%)
Metals
Eregli Demir Ve Celik
Fabrikalari 30,000,000 2,931,840
Total common stocks
(Cost: $126,344,310) $131,042,535
Other (0.1%)
Issuer Shares Value(a)
Hong Kong
Guangnan Holdings
Warrants 300,857 $141,758
GZI Transportation
Warrants 50,000 968
Total other
(Cost: $13,734) $142,726
Short-term securities (18.7%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agency (1.7%)
Federal Home Loan Mtge Corp Disc Nts
05-06-97 5.46% $1,100,000 $1,099,169
05-06-97 5.37 1,400,000 1,398,958
05-08-97 5.43 300,000 299,684
Total 2,797,811
Commerical paper (14.8%)
AT&T
05-02-97 5.43 5,800,000 5,799,127
Dean Witter, Discover & Co
05-19-97 5.52 4,000,000 3,989,000
Fleet Funding
05-20-97 5.53 3,113,000(d) 3,103,947
MCI Communications
05-30-97 5.53 1,100,000(d) 1,095,126
Novartis Finance
05-02-97 5.57 3,000,000 2,999,538
Paccar Financial
05-05-97 5.57% $1,900,000$ 1,898,828
05-23-97 5.52 2,400,000 2,391,933
USAA Capital
05-23-97 5.51 2,500,000 2,491,613
Total 23,769,112
Letter of credit (2.2%)
Bank of New York - River Fuel Co
06-06-97 5.58 3,500,000(d) 3,480,575
Total short-term securities
(Cost: $30,047,498) $ 30,047,498
Total investment in securities
(Cost: $156,405,542) (e) $161,232,759
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) 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.
(d) Commercial paper sold within terms of a private placement memorandum, exempt
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, 1997, the cost of securities for federal income tax purposes
was approximately $156,406,000 and the approximate aggregate gross unrealized
appreciation and depreciation
Unrealized appreciation..........................................$11,446,000
Unrealized depreciation...........................................(6,619,000)
----------
Net unrealized appreciation.....................................$ 4,827,000
============
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Board members and officers
Board members and officers of the Fund
President and interested board member
William R. Pearce
Chief Executive Officer, Board Services Corporation (provides
administrative services to boards including the boards of the IDS and
IDS Life 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
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
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.
(icon of) light bulb
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.
(icon of) two puzzle pieces
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.
(icon of) scale of justice
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.
(icon of) two coins
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.
(icon of) Greek column
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.
(icon of) skyline
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.
(icon of) shield with eagle head
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.
(icon of) shield with Greek column
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.
(icon of) shield with star
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.)
(icon of) shield with U.S. enclosed
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.
(icon of) shield with basket of apples enclosed
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.
(icon of) shield with tree enclosed
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.
(icon of) piggy bank
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.
(icon of) shield with piggy bank enclosed
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.
<PAGE>
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
AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Emerging Markets Fund
IDS Tower 10
Minneapolis, MN 55440-0010
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