AXP(SM)
Emerging
Markets Fund
1999 SEMIANNUAL REPORT
(icon of)compass
The goal of AXP Emerging Markets Fund
is long-term growth of capital.
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
<PAGE>
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 Chairman 3
From the Portfolio Manager 3
Fund Facts 5
The 10 Largest Holdings 6
Financial Statements (Fund) 7
Notes to Financial Statements (Fund) 10
Financial Statements (Portfolio) 18
Notes to Financial Statements (Portfolio) 21
Investments in Securities 28
<PAGE>
(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
It is an honor for me to join the American Express(R) Funds as chairman of the
board and chief executive officer for each of the funds. I have served for the
past eight years as governor of Minnesota and also for the past 20 years as a
constitutional officer responsible for the pension investments made on behalf of
government employees. My responsibility in the upcoming years is to serve your
interests.
By law, half the members of a mutual fund board must be independent of their
investment manager and distributor. I am one of those persons. I am not an
employee of American Express Financial Corporation (AEFC), nor do I own stock in
American Express Company. Both are fine companies, but the law clearly states
that to fully represent your interests I must be independent.
Having said that, I have a great deal of respect for the capabilities of AEFC
and for the services it provides to investors. Your financial advisor assists
you in financial planning, conducts regular investment reviews and responds to
your questions and needs. This is a very personal service that makes AEFC a
partner in your financial future. I know that AEFC has an investment focus on
the long-term performance of our economy and that it wants you to participate in
that growth. Consistent with that, our board is here to serve you and represent
your interests in a professional manner.
I also want to let you know that, on June 16, 1999, there will be a regular
meeting of shareholders. These meetings are held about every five years to elect
directors and consider other proposals. One proposal that is expected to be
approved is to change "IDS" to "AXP" in the Fund's name. We will discuss the
action taken on other proposals in future reports.
Arne H. Carlson
(picture of) Ian King
Ian King
Portfolio manager
From the Portfolio Manager
Rebounds in the stock markets of many smaller countries set the stage for an
exceptionally strong period for AXP Emerging Markets Fund. Over the first half
of the fiscal year, November 1998 through April 1999, the Fund's Class A shares
generated a gain of 37.02%.
The period began with the emerging markets trying to recover from the
devastation of a second bout of the so-called "Asian flu," the financial plague
that resurfaced in the summer and early fall of 1998 and sent many stock markets
into a virtual free fall. But, thanks in large part to three reductions in
short-term interest rates by the Federal Reserve in the U.S., enough hope had
returned to the emerging markets that they were able to make good progress
during November.
After a lackluster winter that yielded practically flat results, the markets
regained their positive momentum. Taking support from a rebound in commodity
prices, particularly oil, as well as surging stock markets in the U.S. and, to a
lesser degree, Europe, they quickly turned an advance into a spectacular rally
that produced double-digit returns in both March and April.
A VARIETY OF WINNERS
Among those leading the charge were Turkey, Mexico, South Korea, Thailand and
South Africa, each of which was well-represented in the Fund's portfolio.
Investments in other markets made positive contributions as well, including
Brazil, Greece and Taiwan. The great majority of the assets (92% at period-end)
were invested in emerging markets, with the modest remainder in cash.
As for changes to the portfolio, I greatly reduced the cash reserves in the
portfolio last November (from roughly 18% to 7%) and put the extra funds to work
in stocks. This strategy worked to the Fund's advantage over the ensuing months,
when many markets rallied.
Looking forward, while the past six months certainly have been gratifying, I
would caution investors that the recent success does not guarantee smooth
sailing from here on out. Conditions in emerging markets can -- and do -- change
with great speed. Still, I do think that, on the whole, these markets are on
more solid ground than a year or even six months ago. My view as this is being
written in mid-May is that as long as the U.S. stock market holds together and
interest in cyclical, largely commodity-driven stocks remains healthy, the
emerging markets can be expected to deliver positive performance.
Ian King
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1999 $4.71
Oct. 31, 1998 $3.44
Increase $1.27
Distributions -- Nov. 1, 1998 - April 30, 1999
From income $0.01
From capital gains $ --
Total distributions $0.01
Total return* +37.02%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1999 $4.63
Oct. 31, 1998 $3.39
Increase $1.24
Distributions -- Nov. 1, 1998 - April 30, 1999
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +36.50%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1999 $4.71
Oct. 31, 1998 $3.45
Increase $1.26
Distributions -- Nov. 1, 1998 - April 30, 1999
From income $0.01
From capital gains $ --
Total distributions $0.01
Total return* +37.02%**
*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>
<TABLE>
<CAPTION>
The 10 Largest Holdings
Percent Value
(of net assets) (as of April 30, 1999)
<S> <C> <C>
Grupo Televisa (Mexico) 3.20% $11,393,900
Grupo Financiero Banamex Accival (Mexico) 3.17 11,284,299
Petroleo Brasileiro ADR (Brazil) 3.12 11,109,518
Korea Telecom (South Korea) 3.04 10,850,652
Yapi Kredit Finance (Turkey) 2.86 10,198,114
Uniao de Bancos Brasileiros GDR (Brazil) 2.82 10,049,063
Telesp Participacoes (Brazil) 2.73 9,728,821
Fomento Economico Mexicano ADR (Mexico) 2.58 9,184,688
Thai Farmers Bank (Thailand) 2.48 8,827,640
YPF Sociedad Anonima ADR (Argentina) 2.34 8,358,000
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.
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here
make up 28.34% of net assets
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
AXP Emerging Markets Fund
April 30, 1999 (Unaudited)
Assets
<S> <C>
Investment in Emerging Markets Portfolio (Note 1) $355,929,686
------------
Liabilities
Accrued distribution fee 2,500
Accrued service fee 1,695
Accrued transfer agency fee 2,909
Accrued administrative services fee 940
Other accrued expenses 22,392
------
Total liabilities 30,436
------
Net assets applicable to outstanding capital stock $355,899,250
============
Represented by
Capital stock -- $.01 par value (Note 1) $ 760,282
Additional paid-in capital 455,638,417
Excess of distributions over net investment income (1,166,508)
Accumulated net realized gain (loss) (165,365,935)
Unrealized appreciation (depreciation) on investments and on translation
of assets and liabilities in foreign currencies 66,032,994
----------
Total -- representing net assets applicable to outstanding capital stock $355,899,250
============
Net assets applicable to outstanding shares: Class A $232,939,674
Class B $122,764,424
Class Y $ 195,152
Net asset value per share of outstanding capital stock: Class A shares 49,468,818 $ 4.71
Class B shares 26,517,917 $ 4.63
Class Y shares 41,464 $ 4.71
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
AXP Emerging Markets Fund
Six months ended April 30, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 2,093,811
Interest 732,248
Less foreign taxes withheld (107,200)
--------
Total income 2,718,859
---------
Expenses (Note 2):
Expenses allocated from Emerging Markets Portfolio 2,042,747
Distribution fee-- Class B 389,499
Transfer agency fee 535,883
Incremental transfer agency fee
Class A 34,494
Class B 32,561
Service fee
Class A 169,403
Class B 90,279
Class Y 29
Administrative services fees and expenses 148,067
Compensation of board members 5,138
Postage 101,702
Registration fees 23,724
Reports to shareholders 23,115
Audit fees 2,750
Other 2,628
-----
Total expenses 3,602,019
Earnings credits on cash balances (Note 2) (6,925)
------
Total net expenses 3,595,094
---------
Investment income (loss) -- net (876,235)
--------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (26,360,466)
Foreign currency transactions (552,221)
--------
Net realized gain (loss) on investments (26,912,687)
Net change in unrealized appreciation (depreciation) on investments and
on translation of assets and liabilities in foreign currencies 125,553,739
-----------
Net gain (loss) on investments and foreign currencies 98,641,052
----------
Net increase (decrease) in net assets resulting from operations $ 97,764,817
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
AXP Emerging Markets Fund
April 30, 1999 Oct. 31, 1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ (876,235) $ 2,097,732
Net realized gain (loss) on investments (26,912,687) (139,214,944)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 125,553,739 (10,110,207)
----------- -----------
Net increase (decrease) in net assets resulting from operations 97,764,817 (147,227,419)
---------- ------------
Distributions to shareholders from:
Net investment income
Class A (289,786) --
Class B -- --
Class Y (78) --
Net realized gain
Class A -- (6,690,278)
Class B -- (3,376,992)
Class Y -- (28)
---
Total distributions (289,864) (10,067,298)
-------- -----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 69,399,399 228,859,553
Class B shares 12,768,817 70,357,289
Class Y shares 232,673 69,513
Reinvestment of distributions at net asset value
Class A shares 282,552 6,531,285
Class B shares -- 3,367,493
Class Y shares 78 28
Payments for redemptions
Class A shares (87,804,427) (188,924,322)
Class B shares (Note 2) (20,871,594) (36,066,245)
Class Y shares (109,631) (700)
-------- ----
Increase (decrease) in net assets from capital share transactions (26,102,133) 84,193,894
----------- ----------
Total increase (decrease) in net assets 71,372,820 (73,100,823)
Net assets at beginning of period 284,526,430 357,627,253
----------- -----------
Net assets at end of period $355,899,250 $284,526,430
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
AXP Emerging Markets Fund
(Unaudited as to April 30, 1999)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Global Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. AXP Global Series, Inc. has 10 billion authorized
shares of capital stock that can be allocated among the separate series as
designated by the board.
The Fund offers Class A, Class B and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge and
automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class specific
expenses) and realized and unrealized gains or losses on investments are
allocated to each class of shares based upon its relative net assets.
Investment in Emerging Markets Portfolio
The Fund invests 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. The Portfolio seeks to provide
shareholders with long-term growth of capital by investing primarily in stocks
of companies in developing countries offering 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 the value that is equal to
the Fund's proportionate ownership interest in the Portfolio's net assets. The
percentage of the Portfolio owned by the Fund as of April 30, 1999 was 99.83%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's "Notes to financial statements" (included elsewhere in this report).
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute all of its
taxable income to the shareholders. No provision for income or excise taxes is
thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
2. EXPENSES AND SALES CHARGES
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
The Fund has an agreement with American Express Financial Corporation (AEFC) to
provide administrative services. Under an Administrative Services Agreement, the
Fund pays AEFC a fee for administration and accounting services at a percentage
of the Fund's average daily net assets in reducing percentages from 0.10% 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 and any other expenses properly payable by the Fund and approved by the
board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $19
o Class B $20
o Class Y $17
Under terms of a prior agreement that ended Jan. 31, 1999, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $15 for Class A
and $16 for Class B. Under terms of a prior agreement that ended March 31, 1999,
the Fund paid a transfer agency fee at an annual rate per shareholder account of
$15 for Class Y.
The Fund has agreements with American Express Financial Advisors Inc. for
distribution and shareholder services. Under a Plan and Agreement of
Distribution, the Fund pays a distribution fee at an annual rate of 0.75% of the
Fund's average daily net assets attributable to Class B shares for distribution
services.
Under a Shareholder Service Agreement, the Fund pays a fee for service provided
to shareholders by financial advisors and other servicing agents. The fee is
calculated at a rate of 0.175% of the Fund's average daily net assets
attributable to Class A and Class B shares and 0.10% of the Funds average daily
net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $384,193 for Class A and $100,375 for Class B for
the six months ended April 30, 1999.
During the six months ended April 30, 1999, the Fund's transfer agency fees were
reduced by $6,925 as a result of earnings credits from overnight cash balances.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 1999
Class A Class B Class Y
Sold 17,951,064 3,365,296 56,812
Issued for reinvested distributions 77,137 -- 21
Redeemed (22,905,710) (5,551,873) (30,341)
----------- ---------- -------
Net increase (decrease) (4,877,509) (2,186,577) 26,492
Year ended Oct. 31, 1998
Class A Class B Class Y
Sold 51,479,915 14,823,640 14,979
Issued for reinvested distributions 1,259,650 654,772 5
Redeemed (44,030,447) (8,384,612) (212)
----------- ---------- ----
Net increase (decrease) 8,709,118 7,093,800 14,772
4. CAPITAL LOSS CARRYOVER
For federal income tax purposes, the Fund had a capital loss carryover of
$138,453,248 as of Oct. 31, 1998, that will expire in 2006 if not offset by
capital gains. It is unlikely the board will authorize a distribution of any net
realized capital gains until the available capital loss carryover has been
offset or expires.
5. BANK BORROWINGS
The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund
is permitted to have bank borrowings for temporary or emergency purposes to fund
shareholder redemptions. The Fund must have asset coverage for borrowings not to
exceed the aggregate of 333% of advances equal to or less than five business
days plus 367% of advances over five business days. The agreement, which enables
the Fund to participate with other American Express funds, permits the
borrowings up to $200 million, collectively. Interest is charged to each Fund
based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or
the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to
90 days after such loan is executed. The Fund also pays a commitment fee equal
to its pro rata share of the amount of the credit facility at a rate of 0.05%
per annum. The Fund had no borrowings outstanding during the six months ended
April 30, 1999.
<PAGE>
<TABLE>
<CAPTION>
6. FINANCIAL HIGHLIGHTS
The table below shows certain important financial information for evaluating the
Fund's results.
Fiscal period ended Oct. 31,
Per share income and capital changesa
Class A Class B Class Y
1999c 1998 1997b 1999c 1998 1997b 1999c 1998 1997b
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $3.44 $5.33 $5.00 $3.39 $5.29 $5.00 $3.45 $5.33 $5.00
Income from investment operations:
Net investment income (loss) -- .04 .01 (.03) -- (.04) .01 .04 .01
Net gains (losses) (both realized
and unrealized) 1.28 (1.79) .33 1.27 (1.76) .33 1.26 (1.78) .33
Total from investment operations 1.28 (1.75) .34 1.24 (1.76) .29 1.27 (1.74) .34
Less distributions:
Dividends from net investment income (.01) -- (.01) -- -- -- (.01) -- (.01)
Distributions from realized gains -- (.14) -- -- (.14) -- -- (.14) --
Total distributions (.01) (.14) (.01) -- (.14) -- (.01) (.14) (.01)
Net asset value, end of period $4.71 $3.44 $5.33 $4.63 $3.39 $5.29 $4.71 $3.45 $5.33
Ratios/supplemental data
Net assets, end of period (in millions) $233 $187 $243 $123 $97 $114 $-- $-- $--
Ratio of expenses to
average daily net assetsd 2.14%e 1.93% 1.90%e,f 2.92%e 2.71% 2.67%e,f 2.06%e 1.86% 1.75%e,f
Ratio of net investment income (loss)
to average daily net assets (.32%)e .82% .28%e (1.09%)e .07% (.50%)e (.33%)e1.03% .33%e
Portfolio turnover rate
(excluding short-term securities) 79% 108% 87% 79% 108% 87% 79% 108% 87%
Total returng 37.02%(33.74%) 6.84% 36.50%(34.24%) 6.07% 37.02%(33.66%) 6.86%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date. Period from Nov. 13, 1996 to Oct. 31, 1997.
c Six months ended April 30, 1999 (Unaudited).
d Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
e Adjusted to an annual basis.
f During the period from Nov. 13, 1996 to Oct. 31, 1997, AEFC reimbursed the
Fund for certain expenses. Had AEFC not done so, the annual ratios of
expenses would have been 1.92%, 2.69% and 1.77% for Class A, B, and Y,
respectively.
g Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial
Statements Statement of assets and liabilities
Emerging Markets Portfolio
April 30, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $289,446,189) $355,446,467
Cash in bank on demand deposit 6,993,551
Dividends and accrued interest receivable 372,758
Receivable for investment securities sold 1,681,981
---------
Total assets 364,494,757
-----------
Liabilities
Payable for investment securities purchased 5,371,459
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 5) 3,137
Payable upon return of securities loaned (Note 4) 2,487,200
Accrued investment management services fee 10,625
Other accrued expenses 88,607
------
Total liabilities 7,961,028
---------
Net assets $356,533,729
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Emerging Markets Portfolio
Six months ended April 30, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 2,097,225
Interest 733,739
Less foreign taxes withheld (107,376)
--------
Total income 2,723,588
---------
Expenses (Note 2):
Investment management services fee 1,643,145
Compensation of board members 5,138
Custodian fees 378,898
Audit fees 8,250
Other 13,228
------
Total expenses 2,048,659
Earnings credits on cash balances (Note 2) (2,620)
------
Total net expenses 2,046,039
---------
Investment income (loss) -- net 677,549
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (26,398,848)
Foreign currency transactions (552,250)
--------
Net realized gain (loss) on investments (26,951,098)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 125,755,397
-----------
Net gain (loss) on investments and foreign currencies 98,804,299
----------
Net increase (decrease) in net assets resulting from operations $99,481,848
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Emerging Markets Portfolio
April 30, 1999 Oct. 31, 1998
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss) -- net $ 677,549 $ 5,371,569
Net realized gain (loss) on investments (26,951,098) (139,437,993)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 125,755,397 (10,113,028)
----------- -----------
Net increase (decrease) in net assets resulting from operations 99,481,848 (144,179,452)
Net contributions (withdrawals) from partners (27,944,992) 70,718,053
----------- ----------
Total increase (decrease) in net assets 71,536,856 (73,461,399)
Net assets at beginning of period 284,996,873 358,458,272
----------- -----------
Net assets at end of period $356,533,729 $284,996,873
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Emerging Markets Portfolio
(Unaudited as to April 30, 1999)
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 invests primarily in equity securities of issuers in countries with
developing or emerging markets. The Declaration of Trust permits the Trustees to
issue non-transferable interests in the Portfolio.
The Portfolio's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions,
if any, may arise from sales of foreign currency, closed forward contracts,
exchange gains or losses realized between the trade date and settlement date on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete its contract obligations.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including level-yield amortization of premium and discount, is accrued
daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with AEFC to manage its portfolio. Under this agreement, AEFC
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Portfolio's average daily net assets in reducing
percentages from 1.10% to 1.00% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
AEFC has a sub-investment Advisory Agreement with American Express Asset
Management International Inc. (International), a wholly-owned subsidiary of
AEFC.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
During the six months ended April 30, 1999, the Portfolio's custodian fees were
reduced by $2,620 as a result of earnings credits from overnight cash balances.
According to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $217,387,112 and $225,023,757, respectively, for the six
months ended April 30, 1999. For the same period, the portfolio turnover rate
was 79%. Realized gains and losses are determined on an identified cost basis.
4. LENDING OF PORTFOLIO SECURITIES
As of April 30, 1999, securities valued at $2,454,640 were on loan to brokers.
For collateral, the Portfolio received $2,487,200 in cash. Income from
securities lending amounted to $39,849 for the six months ended April 30, 1999.
The risks to the Portfolio of securities lending are that the borrower may not
provide additional collateral when required or return the securities when due.
5. FOREIGN CURRENCY CONTRACTS
As of April 30, 1999, the Portfolio has foreign currency exchange contracts that
obligate it to deliver currencies at specified future dates. The unrealized
appreciation and/or depreciation on these contracts is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 3, 1999 1,681,291 1,681,628 $-- $ 353
Argentine Peso U.S. Dollar
May 4, 1999 1,413,500 8,584,186 -- 2,784
U.S. Dollar South African Rand
Total $-- $3,137
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
Emerging Markets Portfolio
April 30, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (92.2%)
Issuer Shares Value(a)
Argentina (2.3%)
Energy
<S> <C> <C>
YPF Sociedad Anonima ADR 199,000 $8,358,000
Brazil (13.1%)
Banks and savings & loans (2.8%)
Uniao de Bancos Brasileiros GDR 405,000 10,049,063
Energy (3.1%)
Petroleo Brasileiro ADR 687,700(b) 11,109,518
Utilities -- electric (0.9%)
Companhia Paranaense de Energia ADR 389,000 3,184,938
Utilities -- telephone (6.3%)
Tele Centro Sul Participacoes ADR 142,000(b) 7,543,750
Tele Sudeste Celular Participacoes ADR 185,260(b,c) 5,291,489
Telesp Participacoes 389,293,000 9,728,821
Total 22,564,060
Chile (1.9%)
Chemicals (1.0%)
Sociedad Quimica y Minera de Chile ADR 99,440 3,666,850
Utilities -- telephone (0.9%)
Compania de Telecomunicaciones de Chile ADR 126,224 3,337,047
Egypt (0.2%)
Building materials & construction
Suez Cement GDR 44,060(d) 739,107
Greece (6.0%)
Banks and savings & loans (3.3%)
Alpha Credit Bank 88,400 6,310,186
Commercial Bank of Greece 31,600 5,526,410
Total 11,836,596
Building materials & construction (1.4%)
Titan Cement 67,000 5,173,914
Utilities -- telephone (1.3%)
Panafon Hellenic Telecom 168,900(b,d) 4,499,250
Hong Kong (2.2%)
Multi-industry conglomerates
Cosco Pacific 11,440,000 7,748,312
Hungary (2.5%)
Banks and savings & loans (1.4%)
OTP Bank GDR 120,526(d) 5,155,500
Utilities -- telephone (1.1%)
Matav ADR 142,000(b) 3,993,750
India (5.0%)
Automotive & related (0.5%)
Tata Engineering & Locomotive GDR 551,000 1,804,525
Banks and savings & loans (0.4%)
State Bank of India GDR 150,000 1,338,750
Miscellaneous (2.2%)
Videsh Sanchar Nigam GDR 668,000(d) 7,999,300
Textiles & apparel (1.0%)
Reliance Inds GDR 488,000(d) 3,660,000
Utilities -- telephone (0.9%)
Mahanagar Telephone Nigam GDR 306,048(b,d) 3,190,550
Indonesia (1.3%)
Utilities -- telephone
Indosat 2,413,000 4,663,123
Israel (3.6%)
Banks and savings & loans (1.3%)
Bank Hapoalim 1,890,000 4,510,485
Communications equipment & services (1.6%)
ECI Telecommunications 155,000 5,715,625
Utilities -- telephone (0.7%)
Bezeq Israeli Telecommunication 647,170 2,515,032
Mexico (14.2%)
Banks and savings & loans (3.2%)
Grupo Financiero Banamex Accival 4,427,471(b) 11,284,299
Beverages & tobacco (4.2%)
Coca-Cola FEMSA ADR 285,200 5,900,075
Fomento Economico Mexicano ADR 252,500 9,184,688
Total 15,084,763
Media (3.2%)
Grupo Televisa 277,900(b) 11,393,900
Metals (0.9%)
Hylsamex 1,072,330 3,098,615
Paper & packaging (2.0%)
Kimberly-Clark de Mexico ADR 345,000 6,986,250
Retail (0.7%)
Organizacion Soriana Cl B 589,602 2,654,485
Peru (1.0%)
Utilities -- telephone
Telefonica del Peru ADR 237,000 3,569,813
Philippines (2.0%)
Banks and savings & loans (1.1%)
Bank of the Philippine Islands 1,247,000 3,935,283
Utilities -- telephone (0.9%)
Philippine Long Distance Telephone ADR 100,988(c) 3,256,863
Poland (1.0%)
Banks and savings & loans
Bank Rozwoju Eksportu 156,957 3,493,668
South Africa (6.9%)
Computers & office equipment (1.5%)
Comparex Holdings 712,900 5,389,238
Metals (3.4%)
Anglo American 90,300(b) 4,665,620
AngloGold ADR 323,800 7,730,726
Total 12,396,346
Multi-industry conglomerates (2.0%)
Barlow 1,163,300 6,977,939
South Korea (11.3%)
Banks and savings & loans (2.7%)
Hana Bank GDR 356,766 4,914,452
Shinhan Bank 426,300 4,698,806
Total 9,613,258
Building materials & construction (--%)
Hyundai Engineering & Construction 6,140(b) 57,603
Electronics (2.6%)
LG Cable & Machinery 394,700 5,180,753
Samsung Display Devices 79,300 4,070,088
Total 9,250,841
Financial services (1.7%)
LG Securities 242,987 6,133,461
Utilities -- electric (1.3%)
Korea Electric Power 155,700(b) 4,480,387
Utilities -- telephone (3.0%)
Korea Telecom 248,000 10,850,652
Taiwan (7.1%)
Banks and savings & loans (0.5%)
Bank Sinopac 2,478,000 1,743,025
Computers & office equipment (1.5%)
Asustek Computer GDR 139,900(b) 1,892,148
Synnex Technology Intl 781,000(b) 3,558,705
Total 5,450,853
Electronics (4.2%)
Compal Electronics 1,990,573(b) 6,878,824
Hon Hai Precision Inds 830,000(b) 4,518,022
Taiwan Semiconductor Mfg 1,090,000(b) 3,683,328
Total 15,080,174
Metals (0.9%)
China Steel 4,173,000 3,317,952
Thailand (3.5%)
Banks and savings & loans (2.5%)
Thai Farmers Bank 3,184,000(b) 8,827,640
Media (1.0%)
BEC World Public 674,000 3,537,234
Turkey (6.3%)
Banks and savings & loans (4.9%)
Akbank T.A.S. 229,000,000 7,304,871
Yapi Kredit Finance 425,134,000 10,198,114
Total 17,502,985
Multi-industry conglomerates (1.4%)
Haci Omer Sabanci Holding 185,000,000 5,069,000
United Kingdom (0.5%)
Banks and savings & loans
Zagrebacka Banka 186,010 1,627,588
Total common stocks
(Cost: $263,527,123) $328,877,410
See accompanying notes to investment in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Preferred stock & other (0.5%)
Issuer Shares Value(a)
Chile (--%)
Sociedad Quimica
<S> <C> <C>
Rights 5,749(f) $--
Greece (--%)
Natl Bank of Greece
Rights 42,160 122,433
South Korea (0.2%)
LG Cable & Machinery
Rights 128,998 542,692
Thailand (0.3%)
Siam Commercial Bank
5.25% Cv 1,703,000(d) 1,184,695
Total preferred stock & other
(Cost: $1,197,846) $1,849,820
See accompanying notes to investment in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (6.9%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (5.9%)
Federal Home Loan Bank Disc Nt
<S> <C> <C> <C>
05-26-99 4.70% $3,200,000 $3,189,578
Federal Home Loan Mtge Corp Disc Nts
05-06-99 4.75 1,700,000 1,698,881
05-12-99 4.80 900,000 898,688
05-14-99 4.69 2,500,000 2,495,775
05-14-99 4.71 5,100,000 5,091,345
05-18-99 4.79 600,000 598,482
05-25-99 4.79 1,100,000 1,096,509
06-07-99 4.78 1,700,000 1,690,842
06-16-99 4.75 1,700,000 1,688,792
06-22-99 4.71 2,600,000 2,582,424
Total 21,031,316
Commercial paper (1.0%)
Ciesco LP
05-03-99 4.86 800,000 799,785
Delaware Funding
05-25-99 4.82 700,000(e) 697,760
Novartis Finance
05-13-99 4.82 500,000(e) 499,198
Salomon Smith Barney
06-09-99 4.82 1,700,000 1,691,178
Total 3,687,921
Total short-term securities
(Cost: $24,721,220) $24,719,237
Total investments in securities
(Cost: $289,446,189)(g) $355,446,467
See accompanying notes to investment in securities.
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements. Foreign security values are stated in U.S. dollars.
(b) Non-income producing.
(c) Security is partially or fully on loan. See Note 4 to the financial
statements.
(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) 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.
(f) Negligible market value.
(g) At April 30, 1999, the cost of securities for federal income tax purposes
was approximately $289,446,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $74,876,000
Unrealized depreciation (8,876,000)
----------
Net unrealized appreciation $66,000,000
<PAGE>
Quick telephone reference
AMERICAN EXPRESS FINANCIAL ADVISORS TELEPHONE TRANSACTION SERVICE
Sales and exchanges, dividend payments or reinvestments and automatic payment
arrangements: 800-437-3133
AMERICAN EXPRESS CLIENT SERVICE CORPORATION
Fund performance, fund prices, account values, recent account transactions and
account inquiries: 800-862-7919
TTY SERVICE
For the hearing impaired: 800-846-4852
TICKER SYMBOL
Class A: IDEAX Class B: IEMBX Class Y: N/A
S-6344 D (6/99)
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 85
SPENCER, IA
AXP Emerging Markets Fund
IDS Tower 10
Minneapolis, MN 55440-0010
AMERICAN EXPRESS Financial Advisors
