AXP(SM)
Global
Growth Fund
1999 SEMIANNUAL REPORT
(icon of) compass
The goal of AXP Global Growth Fund
is long-term capital growth.
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
<PAGE>
It's a Big World After All
No one needs to be told that the world is changing rapidly. For example, some
years ago U.S. stocks accounted for about two-thirds of the total value of
stocks worldwide. Today, that figure is down to about one-third, as many foreign
stock markets have enjoyed explosive growth. Global Growth Fund seeks to take
advantage of that trend by investing in companies throughout the world, not just
the United States. For the most part, these are fast-growing foreign companies
involved in essential businesses such as infrastructure creation, finance and
environmental clean-up. As they prosper, Global Growth Fund offers investors the
potential to prosper along with them.
CONTENTS
From the Chairman 3
From the Portfolio Manager 4
Fund Facts 5
The 10 Largest Holdings 6
Financial Statements (Fund) 7
Notes to Financial Statements (Fund) 10
Financial Statements (Portfolio) 16
Notes to Financial Statements (Portfolio) 19
Investments in Securities 24
<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
overnment employees. My responsibility in the upcoming years is to serve your
interests.
By law, half the members of a mutual fund board must be independent of their
investment manager and distributor. I am one of those persons. I am not an
employee of American Express Financial Corporation (AEFC), nor do I own stock in
American Express Company. Both are fine companies, but the law clearly states
that to fully represent your interests I must be independent.
Having said that, I have a great deal of respect for the capabilities of AEFC
and for the services it provides to investors. Your financial advisor assists
you in financial planning, conducts regular investment reviews and responds to
your questions and needs. This is a very personal service that makes AEFC a
partner in your financial future. I know that AEFC has an investment focus on
the long-term performance of our economy and that it wants you to participate in
that growth. Consistent with that, our board is here to serve you and represent
your interests in a professional manner.
I also want to let you know that, on June 16, 1999, there will be a regular
meeting of shareholders. These meetings are held about every five years to elect
directors and consider other proposals. One proposal that is expected to be
approved is to change "IDS" to "AXP"in the Fund's name. We will discuss the
action taken on other proposals in future reports.
Arne H. Carlson
<PAGE>
(picture of) John O'Brien
John O' Brien
Portfolio manager
From the Portfolio Manager
A calmer global investment environment and healthy stock markets in Europe and
the United States set the stage for a strong performance by AXP Global Growth
Fund in the first half of the fiscal year. For the six months -- November 1998
through April 1999 -- the Fund's Class A shares generated a total return of
19.96%. (This figure compares with the 19.07% generated by the Morgan Stanley
Capital International All Country World Free Index, an unmanaged group of stocks
commonly used to measure the performance of major worldwide markets.)
Showing few ill effects from the global financial turmoil that had hit just a
few months earlier, stocks were already on the move in most major markets when
the period began last year. Supported by continued low inflation and reductions
in interest rates in the U.S. and Europe, stocks in those regions recorded
strong gains through January. In that month, Europe's new currency, the euro,
enjoyed a smooth launch, which added to the positive investment tone in that
region. After a moderate retreat in February brought on by a temporary rise in
interest rates, U.S. stocks quickly got back on track and finished the period
with two straight positive months.
PUTTING CASH TO WORK
To take advantage of the improving environment, I began reducing the level of
cash reserves in the portfolio at the outset of the period. I put the extra
funds to work in stocks, which enhanced the Fund's performance over the ensuing
months.
I kept most of the portfolio invested in Europe during the period, chiefly in
the United Kingdom, France, Italy, Germany and the Netherlands. That strategy
stemmed from the relationship of potential corporate earnings growth to the
level of stock prices in Europe, which appeared more attractive, compared with
other regions. The U.S. comprised the next-largest exposure. For the most part,
I avoided Japan, whose economy continued to struggle but whose stock market did
show occasional signs of recovery, and the emerging markets of Southeast Asia
and Latin America, which were in the earliest stage of recovery from the
financial meltdown of last summer.
Looking toward the second half of the fiscal year, the investment environment
continues to be largely favorable. In the U.S., the economy remains robust,
while inflation and interest rates remain low. In Europe, while the economies
are growing at slower rates, stock valuations continue to be relatively more
attractive. Therefore, I expect to stick with an emphasis on Europe unless a
change in conditions warrants a shift.
John O'Brien
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1999 $8.91
Oct. 31, 1998 $7.80
Increase $1.11
Distributions -- Nov. 1, 1998 - April 30, 1999
From income $0.16
From capital gains $0.26
Total distributions $0.42
Total return* +19.96%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1999 $8.78
Oct. 31, 1998 $7.68
Increase $1.10
Distributions -- Nov. 1, 1998 - April 30, 1999
From income $0.11
From capital gains $0.26
Total distributions $0.37
Total return* +19.50%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1999 $8.91
Oct. 31, 1998 $7.81
Increase $1.10
Distributions -- Nov. 1, 1998 - April 30, 1999
From income $0.16
From capital gains $0.26
Total distributions $0.42
Total return* +20.01%**
*The prospectus discusses the effect of sales charges, if any, on the various
classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
<PAGE>
SEMIANNUAL REPORT -- 1999The 10 Largest Holdings
Percent Value
(of net assets) (as of April 30, 1999)
General Electric (United Kingdom) 3.62% $58,881,171
UBS (Switzerland) 3.47 56,327,954
Mannesmann (Germany) 3.36 54,655,230
Total Petroleum Cl B (France) 2.87 46,615,960
Philips Electronics (Netherlands) 2.78 45,181,372
Vodafone (United Kingdom) 2.77 45,003,186
Ericsson (LM) Cl B (Sweden) 2.64 42,836,657
Telefonica de Espana (Spain) 2.44 39,624,985
Equant (Netherlands) 2.42 39,381,588
Orange (United Kingdom) 2.24 36,411,903
Note: Certain foreign investment risks include changes in currency exchange
rates, adverse political or economic order and lack of similar regulatory
requirements followed by U.S. companies.
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here
make up 28.61% of net assets
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
AXP Global Growth Fund
April 30, 1999 (Unaudited)
Assets
<S> <C>
Investment in World Growth Portfolio (Note 1) $1,624,594,645
--------------
Liabilities
Accrued distribution fees 8,376
Accrued service fee 7,782
Accrued transfer agency fee 8,815
Accrued administrative services fee 2,133
Other accrued expenses 39,410
------
Total liabilities 66,516
------
Net assets applicable to outstanding capital stock $1,624,528,129
==============
Represented by
Capital stock -- $.01 par value (Note 1) $ 1,829,966
Additional paid-in capital 1,219,989,632
Excess of distributions over net investment income (6,433,924)
Accumulated net realized gain (loss) 71,853,645
Unrealized appreciation (depreciation) on investments and on translation
of assets and liabilities in foreign currencies 337,288,810
-----------
Total -- representing net assets applicable to outstanding capital stock $1,624,528,129
==============
Net assets applicable to outstanding shares: Class A $1,192,286,486
Class B $ 406,197,028
Class Y $ 26,044,615
Net asset value per share of outstanding capital stock: Class A shares 133,794,760 $ 8.91
Class B shares 46,279,362 $ 8.78
Class Y shares 2,922,446 $ 8.91
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
AXP Global Growth Fund
Six months ended April 30, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 6,606,867
Interest 2,219,777
Less foreign taxes withheld (748,012)
--------
Total income 8,078,632
---------
Expenses (Note 2):
Expenses allocated from World Growth Portfolio 5,806,026
Distribution fee-- Class B 1,320,005
Transfer agency fee 1,216,741
Incremental transfer agency fee
Class A 90,179
Class B 58,424
Service fee
Class A 948,109
Class B 306,533
Class Y 12,032
Administrative services fees and expenses 358,767
Compensation of board members 5,559
Postage 205,997
Reports to shareholders 38,578
Registration fees 57,291
Audit fees 3,750
Other 6,988
-----
Total expenses 10,434,979
Earnings credits on cash balances (Note 2) (28,137)
-------
Total net expenses 10,406,842
----------
Investment income (loss) -- net (2,328,210)
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 72,414,949
Foreign currency transactions (537,383)
--------
Net realized gain (loss) on investments 71,877,566
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 189,212,131
-----------
Net gain (loss) on investments and foreign currencies 261,089,697
-----------
Net increase (decrease) in net assets resulting from operations $258,761,487
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statements of changes in net assets
AXP Global Growth Fund
April 30, 1999 Oct. 31, 1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ (2,328,210) $ 2,374,735
Net realized gain (loss) on investments 71,877,566 69,842,751
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 189,212,131 104,552,683
----------- -----------
Net increase (decrease) in net assets resulting from operations 258,761,487 176,770,169
----------- -----------
Distributions to shareholders from:
Net investment income
Class A (5,494,180) (7,470,795)
Class B (913) (382,513)
Class Y (142,169) (218,480)
Net realized gain
Class A (45,913,293) (21,935,266)
Class B (14,747,605) (5,756,015)
Class Y (1,056,181) (560,473)
---------- --------
Total distributions (67,354,341) (36,323,542)
----------- -----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 191,462,089 632,620,737
Class B shares 74,995,721 89,227,669
Class Y shares 7,121,549 12,429,035
Reinvestment of distributions at net asset value
Class A shares 49,847,979 28,787,516
Class B shares 14,639,712 6,102,193
Class Y shares 1,198,351 778,953
Payments for redemptions
Class A shares (153,397,109) (701,086,667)
Class B shares (Note 2) (23,958,014) (49,085,247)
Class Y shares (8,047,122) (13,337,213)
---------- -----------
Increase (decrease) in net assets from capital share transactions 153,863,156 6,436,976
----------- ---------
Total increase (decrease) in net assets 345,270,302 146,883,603
Net assets at beginning of period 1,279,257,827 1,132,374,224
------------- -------------
Net assets at end of period $1,624,528,129 $1,279,257,827
============== ==============
Undistributed (excess of distributions over) net investment income $ (6,433,924) $ 1,531,548
-------------- --------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
AXP Global Growth Fund
(Unaudited as to April 30, 1999)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Global Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. AXP Global Series, Inc. has 10 billion authorized
shares of capital stock that can be allocated among the separate series as
designated by the board.
The Fund offers Class A, Class B and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge and
automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class specific
expenses) and realized and unrealized gains or losses on investments are
allocated to each class of shares based upon its relative net assets.
Investment in World Growth Portfolio
The Fund invests all of its assets in World Growth Portfolio (the Portfolio), a
series of World Trust, an open-end investment company that has the same
objectives as the Fund. World Growth Portfolio seeks to provide shareholders
with long-term capital growth by investing primarily in equity securities of
companies throughout the world.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at the value which is equal to
the Fund's proportionate ownership interest in the Portfolio's net assets. The
percentage of the Portfolio owned by the Fund as of April 30, 1999 was 99.95%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's "Notes to financial statements" (included elsewhere in this report).
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute all of its
taxable income to the shareholders. No provision for income or excise taxes is
thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
An annual dividend from net investment income, declared and paid at the end of
the calendar year is reinvested in additional shares of the Fund at net asset
value or payable in cash. Capital gains, when available, are distributed along
with the income dividend.
2. EXPENSES AND SALES CHARGES
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
The Fund has an agreement with American Express Financial Corporation (AEFC) to
provide administrative services. Under an Administrative Services Agreement, the
Fund pays AEFC a fee for administration and accounting services at a percentage
of the Fund's average daily net assets in reducing percentages from 0.06% to
0.035% annually. Additional administrative service expenses paid by the Fund are
office expenses, consultants' fees and compensation of officers and employees.
Under this agreement, the Fund also pays taxes, audit and certain legal fees,
registration fees for shares, compensation of board members, corporate filing
fees and any other expenses properly payable by the Fund and approved by the
board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $19
o Class B $20
o Class Y $17
Under terms of a prior agreement that ended Jan. 31, 1999, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $15 for Class A
and $16 for Class B. Under terms of a prior agreement that ended March 31, 1999,
the Fund paid a transfer agency fee at an annual rate per shareholder account of
$15 for Class Y.
The Fund has agreements with American Express Financial Advisors Inc. for
distribution and shareholder services. Under a Plan and Agreement of
Distribution, the Fund pays a distribution fee at an annual rate of 0.75% of the
Fund's average daily net assets attributable to Class B shares for distribution
services.
Under a Shareholder Service Agreement, the Fund pays a fee for service provided
to shareholders by financial advisors and other servicing agents. The fee is
calculated at a rate of 0.175% of the Fund's average daily net assets
attributable to Class A and Class B shares, and 0.10% of the Fund's average
daily net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $1,829,585 for Class A and $149,227 for Class B
for the six months ended April 30, 1999.
During the six months ended April 30, 1999, the Fund's transfer agency fees were
reduced by $28,137 as a result of earnings credits from overnight cash balances.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 1999
Class A Class B Class Y
Sold 22,524,019 8,930,103 829,884
Issued for reinvested distributions 6,001,435 1,784,437 144,275
Redeemed (18,026,909) (2,847,546) (946,938)
----------- ---------- --------
Net increase (decrease) 10,498,545 7,866,994 27,221
Year ended Oct. 31, 1998
Class A Class B Class Y
Sold 82,074,721 11,336,548 1,555,777
Issued for reinvested distributions 4,209,318 900,694 113,898
Redeemed (91,946,736) (6,545,440) (1,755,402)
----------- ---------- ----------
Net increase (decrease) (5,662,697) 5,691,802 (85,727)
4. BANK BORROWINGS
The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund
is permitted to have bank borrowings for temporary or emergency purposes to fund
shareholder redemptions. The Fund must have asset coverage for borrowings not to
exceed the aggregate of 333% of advances equal to or less than five business
days plus 367% of advances over five business days. The agreement, which enables
the Fund to participate with other American Expressfunds, permits borrowings up
to $200 million, collectively. Interest is charged to each Fund based on its
borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the
Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90
days after such loan is executed. The Fund also pays a commitment fee equal to
its pro rata share of the amount of the credit facility at a rate of 0.05% per
annum. The Fund had no borrowings outstanding during the six months ended April
30, 1999.
<PAGE>
<TABLE>
<CAPTION>
5.FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating
the Fund's results.
Fiscal period ended Oct. 31,
Per share income and capital changesa
Class A
1999b 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.80 $6.90 $7.12 $6.37 $6.96
Income from investment operations:
Net investment income (loss) .01 .02 .03 .08 .10
Net gains (losses) (both realized and unrealized) 1.52 1.12 .39 .83 (.59)
Total from investment operations 1.53 1.14 .42 .91 (.49)
Less distributions:
Dividends from net investment income (.05) (.06) (.22) (.13) (.05)
Distributions from realized gains (.37) (.18) (.42) (.03) (.05)
Total distributions (.42) (.24) (.64) (.16) (.10)
Net asset value, end of period $8.91 $7.80 $6.90 $7.12 $6.37
Ratios/supplemental data
Net assets, end of period (in millions) $1,192 $962 $889 $908 $659
Ratio of expenses to average daily net assetsc 1.24%d 1.22% 1.27% 1.37% 1.39%
Ratio of net investment income (loss)
to average daily net assets (.14%)d .35% .60% 1.45% 1.59%
Portfolio turnover rate
(excluding short-term securities) 38% 80% 199% 134% 90%
Total returne 19.96% 17.00% 6.22% 14.51% (6.99%)
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended April 30, 1999 (Unaudited).
c Effective fiscal year 1996, expense ratio is based on total expenses of
the Fund before reduction of earnings credits on cash balances.
d Adjusted to an annual basis.
e Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal period ended Oct. 31,
Per share income and capital changesa
Class B Class Y
1999b 1998 1997 1996 1995c 1999b 1998 1997 1996 1995c
Net asset value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period $7.68 $6.79 $7.05 $6.34 $5.82 $7.81 $6.91 $7.13 $6.38$ 5.82
Income from investment operations:
Net investment
income (loss) (.08) -- -- .05 .02 .02 .02 .03 .09 .06
Net gains (losses)
(both realized and unrealized) 1.55 1.08 .35 .81 .50 1.50 1.13 .40 .83 .50
Total from investment
operations 1.47 1.08 .35 .86 .52 1.52 1.15 .43 .92 .56
Less distributions:
Dividends from net
investment income -- (.01) (.19) (.12) -- (.05) (.07) (.23) (.14) --
Distributions from
realized gains (.37) (.18) (.42) (.03) -- (.37) (.18) (.42) (.03) --
Total distributions (.37) (.19) (.61) (.15) -- (.42) (.25) (.65) (.17) --
Net asset value,
end of period $8.78 $7.68 $6.79 $7.05 $6.34 $8.9 $7.81 $6.91 $7.13 $6.38
Ratios/supplemental data
Net assets, end of
period (in millions) $406 $295 $222 $146 $21 $26 $23 $21 $19 $24
Ratio of expenses to
average daily net assetsd 2.01%e 1.99% 2.03% 2.14% 2.16%e 1.15%e 1.15% 1.15% 1.19% 1.20%e
Ratio of net investment
income (loss) to average
daily net assets (.89%)e (.40%) (.18%) 1.05% .85%e (.07%)e .41% .72% 1.60% 2.37%e
Portfolio turnover
rate (excluding
short-term securities) 38% 80% 199% 134% 90% 38% 80% 199% 134% 90%
Total returnf 19.50% 16.13% 5.40% 13.64% 9.04% 20.01% 17.10% 6.34% 14.71% 9.66%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended April 30, 1999 (Unaudited).
c Inception date was March 20, 1995.
d Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
e Adjusted to an annual basis.
f Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
World Growth Portfolio
April 30, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $1,464,745,530) $1,802,275,486
Cash in bank on demand deposit 2,263,140
Dividends and accrued interest receivable 3,023,298
Receivable for investment securities sold 59,591,744
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 4) 224,928
U.S. government securities held as collateral (Note 5) 10,399,988
----------
Total assets 1,877,778,584
-------------
Liabilities
Payable for investment securities purchased 1,996,086
Payable upon return of securities loaned (Note 5) 250,150,738
Accrued investment management services fee 33,087
Other accrued expenses 120,711
-------
Total liabilities 252,300,622
-----------
Net assets $1,625,477,962
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
World Growth Portfolio
Six months ended April 30, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 6,610,540
Interest 2,213,198
Less foreign taxes withheld (748,427)
--------
Total income 8,075,311
---------
Expenses (Note 2):
Investment management services fee 5,451,466
Compensation of board members 6,686
Custodian fees 320,725
Audit fees 11,250
Other 21,504
------
Total expenses 5,811,631
Earnings credits on cash balances (Note 2) (2,339)
------
Total net expenses 5,809,292
---------
Investment income (loss) -- net 2,266,019
---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 72,456,796
Foreign currency transactions (537,612)
--------
Net realized gain (loss) on investments 71,919,184
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 189,318,664
-----------
Net gain (loss) on investments and foreign currencies 261,237,848
-----------
Net increase (decrease) in net assets resulting from operations $263,503,867
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
World Growth Portfolio
April 30, 1999 Oct. 31, 1998
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 2,266,019 $ 9,469,973
Net realized gain (loss) on investments 71,919,184 69,879,530
Net change in unrealized appreciation (depreciation ) on investments
and on translation of assets and liabilities in foreign currencies 189,318,664 104,617,372
----------- -----------
Net increase (decrease) in net assets resulting from operations 263,503,867 183,966,875
Net contributions (withdrawals) from partners 81,929,457 (37,038,141)
---------- -----------
Total increase (decrease) in net assets 345,433,324 146,928,734
Net assets at beginning of period 1,280,044,638 1,133,115,904
------------- -------------
Net assets at end of period $1,625,477,962 $1,280,044,638
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
World Growth Portfolio
(Unaudited as to April 30, 1999)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
World Growth Portfolio (the Portfolio) is a series of World Trust (the Trust)
and is registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. World Growth Portfolio
seeks to provide long-term capital growth by investing primarily in equity
securities of companies throughout the world. The Declaration of Trust permits
the Trustees to issue non-transferable interests in the Portfolio.
The Portfolio's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions,
if any, may arise from sales of foreign currency, closed forward contracts,
exchange gains or losses realized between the trade date and settlement date on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete its contract obligations.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. For U.S.
dollar denominated bonds, interest income, including level-yield amortization of
premium and discount, is accrued daily. For foreign bonds, except for original
issue discount, the Portfolio does not amortize premium and discount.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with AEFC to manage its portfolio. Under this agreement, AEFC
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.8% to 0.675% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
AEFC has a sub-investment Advisory Agreement with American Express Asset
Management International Inc. (International), a wholly-owned subsidiary of
AEFC.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
During the six months ended April 30, 1999, the Portfolio's custodian fees were
reduced by $2,339 as a result of earnings credits from overnight cash balances.
According to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $600,193,489 and $536,342,938, respectively, for the six
months ended April 30, 1999. For the same period, the portfolio turnover rate
was 38%. Realized gains and losses are determined on an identified cost basis.
<PAGE>
<TABLE>
<CAPTION>
4. FOREIGN CURRENCY CONTRACTS
As of April 30, 1999, the Portfolio has foreign currency exchange contracts that
obligate it to deliver currencies at specified future dates. The unrealized
appreciation and/or depreciation on these contracts is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
<S> <C> <C> <C> <C>
May 3, 1999 1,993,928 18,433,864 $ 1,079 $--
U.S. Dollar Mexican Peso
May 3, 1999 1,426,841 1,518,231 10,630 --
European Monetary Unit U.S. Dollar
May 7, 1999 438,852,431 3,683,502 7,867 --
Japanese Yen U.S. Dollar
May 9, 1999 5,790,367,801 48,682,280 184,707 --
Japanese Yen U.S. Dollar
May 28, 1999 2,319,713 2,471,654 20,645 --
European Monetary Unit U.S. Dollar
Total $224,928 $--
5. LENDING OF PORTFOLIO SECURITIES
As of April 30, 1999, securities valued at $240,382,468 were on loan to brokers.
For collateral, the Portfolio received $239,750,750 in cash and U.S. government
securities valued at $10,399,988. Income from securities lending amounted to
$309,508 for the six months ended April 30, 1999. The risks to the Portfolio of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
World Growth Portfolio
April 30, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (91.9%)
Issuer Shares Value(a)
Argentina (0.8%)
Multi-industry conglomerates (0.4%)
<S> <C> <C>
Perez Companc ADR 550,000(c) $6,844,806
Utilities -- telephone (0.4%)
Telefonica de Argentina ADR 170,000 6,353,750
Australia (1.6%)
Insurance (0.8%)
AMP 1,096,000 12,801,170
Transportation (0.8%)
Brambles Inds 465,000 13,664,025
Canada (2.0%)
Communications equipment & services (0.8%)
Nortel Networks 200,000(b,c) 13,637,500
Multi-industry conglomerates (0.5%)
Bombardier Cl B 570,100(c) 8,841,793
Utilities -- telephone (0.7%)
BCE 231,800 10,590,363
France (9.4%)
Banks and savings & loans (2.2%)
Banque Natl de Paris 429,496(c) 35,601,052
Electronics (5.8%)
Elf Aquitaine 105,000 16,308,621
SGS-Thomson Microelectronics 304,000 31,670,962
Total Petroleum Cl B 340,423(b) 46,615,960
Total 94,595,543
Food (1.1%)
Sodexho Alliance 112,548(b) 18,468,001
Utilities -- electric (0.3%)
Suez Lyonnaise des Eaux 27,231 4,632,336
Germany (4.9%)
Automotive & related (1.5%)
Volkswagen 337,648 23,938,534
Industrial equipment & services (3.4%)
Mannesmann 415,148 54,655,230
Italy (6.2%)
Banks and savings & loans (5.9%)
Banca Intesa 6,003,766(c) 31,971,855
Instituto Bancario San Paolo di Torino 1,891,494(c) 28,379,409
Unicredito Italiano 6,854,148(c) 34,762,182
Total 95,113,446
Utilities -- telephone (0.3%)
Telecom Italia 482,653 5,135,428
Japan (0.1%)
Electronics
Fujikura 281,000(c) 1,463,898
Mexico (1.2%)
Banks and savings & loans (0.1%)
Grupo Financiero Banamex Accival 752,950(b) 1,919,044
Multi-industry conglomerate (0.5%)
Grupo Financiero Banorte Cl B 6,000,000(b) 7,779,222
Paper & packaging (0.6%)
Kimberly-Clark de Mexico 2,400,000 9,350,650
Netherlands (5.2%)
Industrial equipment & services (2.8%)
Philips Electronics 524,676 45,181,372
Utilities -- telephone (2.4%)
Equant 433,900
39,381,588
Singapore (0.6%)
Financial services
DBS Land 5,296,000 9,803,426
Spain (3.4%)
Building materials & construction (1.0%)
Fomento de Construcciones y Contractas 273,596 16,708,918
Utilities -- telephone (2.4%)
Telefonica de Espana 845,600 39,624,985
Sweden (3.3%)
Banks and savings & loans (0.7%)
Nordbanken Holding 1,785,832(c) 11,216,989
Communications equipment & services (2.6%)
Ericsson (LM) Cl B 1,631,854 42,836,657
Switzerland (3.5%)
Banks and savings & loans
UBS 165,863(c) 56,327,954
United Kingdom (15.0%)
Media (0.8%)
British Sky Broadcasting Group 1,550,309 13,705,352
Multi-industry conglomerates (5.2%)
General Electric 5,579,197 58,881,171
Williams 3,696,116 25,197,532
Total 84,078,703
Retail (1.6%)
Great Universal Stores 2,350,454 26,791,415
Transportation (0.4%)
Stagecoach Holdings 2,054,688 7,123,603
Utilities -- telephone (7.0%)
Cable & Wireless Communications 2,856,859(c) 32,609,331
Orange 2,684,808
36,411,903
Vodafone 2,458,089 45,003,186
Total 114,024,420
United States (34.4%)
Banks and savings & loans (1.5%)
Bank of America 343,720 24,683,393
Chemicals (2.8%)
Du Pont (EI) de Nemours 398,700 28,158,188
Monsanto 396,740 17,952,485
Total 46,110,673
Communications equipment & services (1.0%)
Lucent Technologies 280,200 16,847,025
Computers & office equipment (7.4%)
America Online 167,000 23,839,250
Cisco Systems 282,100(b) 32,177,030
Electronic Data Systems 343,000(c) 18,436,250
Hewlett-Packard 293,900 23,181,363
Intl Business Machines 109,000 22,801,438
Total 120,435,331
Electronics (1.5%)
Intel 386,600 23,655,088
Energy (2.0%)
Texaco 530,900 33,313,975
Financial services (3.4%)
Citigroup 424,100 31,913,525
Fannie Mae 338,090 23,983,259
Total 55,896,784
Health care (2.7%)
Boston Scientific 573,100(b) 24,392,569
Pfizer 168,000 19,330,500
Total 43,723,069
Household products (0.9%)
Colgate-Palmolive 145,000 14,853,438
Insurance (1.3%)
American Intl Group 182,100 21,385,369
Leisure time & entertainment (0.7%)
Disney (Walt) 351,000 11,144,250
Multi-industry conglomerates (1.3%)
General Electric 196,600 20,741,300
Retail (3.8%)
Rite Aid 460,000 10,723,750
Safeway 272,000(b) 14,671,000
Wal-Mart Stores 543,800 25,014,800
Walgreen 430,000 11,556,250
Total 61,965,800
Utilities -- telephone (4.1%)
MCI WorldCom 211,600(b) 17,390,875
AT&T 347,100 17,528,550
Frontier 308,300 17,014,306
SBC Communications 269,400 15,086,400
Total 67,020,131
Total common stocks
(Cost: $1,162,691,566) $1,493,966,799
Other (0.5%)
Issuer Shares Value(a)
Italy
Banca Intesa
Warrants 6,003,766 $6,850,897
Spain
Telefonica
Rights 845,600 786,239
Total other
(Cost: $1,321,579) $7,637,136
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (18.5%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (15.7%)
Federal Home Loan Bank Disc Nts
<S> <C> <C> <C>
05-21-99 4.77% $4,700,000 $4,687,623
05-26-99 4.70 16,400,000 16,346,586
Federal Home Loan Mtge Corp Disc Nts
05-04-99 4.76 8,600,000 8,596,603
05-14-99 4.69 4,600,000 4,592,226
05-17-99 4.80 7,500,000 7,482,050
05-18-99 4.79 13,400,000 13,366,096
05-20-99 4.76 17,700,000 17,655,767
05-25-99 4.74 9,100,000 9,071,365
06-07-99 4.78 13,400,000 13,327,815
06-11-99 4.74 34,700,000 34,513,863
06-15-99 4.77 22,300,000 22,156,026
06-16-99 4.75 43,500,000 43,213,196
06-18-99 4.75 16,300,000 16,188,192
06-21-99 4.72 9,400,000 9,335,349
Federal Natl Mtge Assn Disc Nts
05-18-99 4.70 13,800,000 13,769,437
05-18-99 4.77 19,400,000 19,356,485
Total 253,658,679
Commercial paper (2.9%)
Ameritech Capital Funding
05-11-99 4.84 10,300,000(d) 10,286,209
BMW US Capital
05-05-99 4.86 4,400,000 4,397,639
Delaware Funding
06-17-99 4.83 3,700,000(d) 3,676,813
Fleet Funding
06-11-99 4.85 6,900,000(d) 6,862,123
Goldman Sachs Group
05-20-99 4.84 1,800,000 1,795,421
Natl Australia Funding (Delaware)
05-03-99 4.82 20,000,000 19,994,667
Total 47,012,872
Total short-term securities
(Cost: $300,732,385) $300,671,551
Total investments in securities
(Cost: $1,464,745,530)(e) $1,802,275,486
See accompanying notes to investments in securities.
</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 5 to the financial
statements.
(d) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(e) At April 30, 1999, the cost of securities for federal income tax purposes
was approximately $1,464,746,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $362,548,000
Unrealized depreciation (25,019,000)
-----------
Net unrealized appreciation $337,529,000
<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: IGLGX Class B: IDGBX Class Y: IDGYX
S-6451 K (6/99)
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 85
SPENCER, IA
AXP Global Growth Fund
IDS Tower 10
Minneapolis, MN 55440-0010
AMERICAN EXPRESS Financial Advisors
