AXP(SM)
Innovations
Fund
2000 SEMIANNUAL REPORT
(icon of) ruler
American Express (R) Fund
AXP Innovations Fund seeks to provide shareholders with long-term capital
growth.
<PAGE>
Focusing on the Future
It's been said that the only constant in the world is change. Consider, for
example, developments in technology, which have transformed how we communicate,
learn, conduct business ... in short, how the world works. AXP Innovations Fund
taps into change by investing in companies that are on the cutting edge of
providing products and services that, before long, may become fundamental in our
lives.
CONTENTS
From the Chairman 3
From the Portfolio Manager 4
Fund Facts 6
The 10 Largest Holdings 7
Financial Statements (Fund) 8
Notes to Financial Statements (Fund) 11
Financial Statements (Portfolio) 17
Notes to Financial Statements (Portfolio) 20
Investments in Securities 24
<PAGE>
(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
The financial markets have always had their ups and downs, but in recent months
volatility has become more frequent and intense. While no one can say with
certainty what the markets will do, American Express Financial Corporation, the
Fund's investment manager, expects economic growth to continue this year,
accompanied by a modest rise in long-term interest rates. But no matter what
transpires, this is a great time to take a close look at your goals and
investments. We encourage you to:
o Consult a professional investment advisor who can help you cut through
mountains of data.
o Set financial goals that extend beyond those achievable through retirement
plans of your employer.
o Learn as much as you can about your current investments.
The portfolio manager's letter that follows provides a review of the Fund's
investment strategies and performance. The semiannual report contains other
valuable information as well. The Fund's prospectus describes its investment
objectives and how it intends to achieve those objectives. As experienced
investors know, information is vital to making good investment decisions.
So, take a moment and decide again whether the Fund's investment objectives and
management style fit with your other investments to help you reach your
financial goals. And make it a practice on a regular basis to assess your
investment options.
On behalf of the Board,
Arne H. Carlson
(picture of) Louis Giglio
Louis Giglio
Portfolio manager
From the Portfolio Manager
Despite a steep sell-off in technology-related stocks last spring, AXP
Innovations Fund enjoyed an uncommonly strong gain during the past six months.
For the first half of the fiscal year -- November 1999 through April 2000 -- the
Fund's Class A shares returned 71.33% (excluding the sales charge).
It was feast or famine for the stock market and the Fund during the period, as
investors went through mood swings induced by changing perceptions regarding the
outlook for corporate profits, inflation and interest rates. Monthly gains
reached as high as last February's 35%, which was followed in April by a loss of
more than 16%. Overall, though, the ups clearly outweighed the downs.
Much of the volatility resulted from the Fund's heavy emphasis on technology and
telecommunications services/equipment stocks. But when they were good, they were
very good. Several holdings, some of which are Internet-related, doubled and
even tripled in value during the six months.
IPOS ENHANCE RESULTS
There was considerable initial public offering (IPO) activity during the six
months, and the Fund took part in a number of them. In some cases, I sold the
stocks quickly for a profit; other times, I held the shares based on a positive
longer-term outlook for the company. In still other cases, I didn't take part in
the IPO but bought the stocks later via secondary offerings. On the whole,
participation in new stock issues clearly benefited performance. This was also
true of the small amount of derivatives -- specifically, put and call options --
I employed to establish or eliminate positions in relatively illiquid stocks.
Although the overall results for the period were gratifying, I think last
spring's slump merits some discussion. Already concerned about potentially
higher inflation and higher interest rates, many investors were questioning
whether the stunning run-ups many stocks had experienced could be justified on a
sustained basis. Things came to a head in mid-March and culminated in a
several-week market slide, with technology-related stocks leading the descent
and, in the process, eroding a substantial portion of the Fund's return. It was
a classic case of the swift and steep downturns that can accompany the
spectacular gains such stocks can produce.
That said, I remain very optimistic about the potential for the technology
sector and the Fund. Late in the period, I pared back the portfolio by about
10%, eliminating stocks of companies that appeared most vulnerable to possible
sell-offs. While that won't eliminate volatility in the Fund, I think it has put
it in a more solid position to participate in the exceptional growth potential
that I believe we'll see realized in the years ahead.
Louis Giglio
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 2000 $ 5.41
Oct. 31, 1999 $11.27
Decrease $ 5.86
Distributions -- Nov. 1, 1999 - April 30, 2000
From income $ 6.39
From capital gains $ 6.66
Total distributions $13.05
Total return* +71.33%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 2000 $ 4.93
Oct. 31, 1999 $11.02
Decrease $ 6.09
Distributions -- Nov. 1, 1999 - April 30, 2000
From income $ 6.39
From capital gains $ 6.66
Total distributions $13.05
Total return* +70.79%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 2000 $ 5.39
Oct. 31, 1999 $11.27
Decrease $ 5.88
Distributions -- Nov. 1, 1999 - April 30, 2000
From income $ 6.39
From capital gains $ 6.66
Total distributions $13.05
Total return* +70.70%**
*Returns do not include sales load. 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 10 Largest Holdings
Percent Value
(of net assets) (as of April 30, 2000)
PMC-Sierra 5.31% $5,756,249
SDL 3.60 3,899,999
Veritas Software 3.47 3,754,296
VeriSign 3.09 3,345,000
Network Appliance 3.04 3,290,219
Cisco Systems 3.01 3,258,422
Solectron 2.55 2,761,938
Theradyne 2.34 2,530,000
CIENA 2.23 2,410,687
JDS Uniphase 2.20 2,386,250
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(picture of) pie chart
The 10 holdings listed here
make up 30.84% of net assets
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<CAPTION>
Financial Statements
Statement of assets and liabilities
AXP Innovations Fund
April 30, 2000 (Unaudited)
Assets
<S> <C>
Investments in World Technologies Portfolio (Note 1) $106,390,974
Expense receivable from AEFC 600
Other prepaid assets 78,804
------
Total assets 106,470,378
-----------
Liabilities
Accrued distribution fee 935
Accrued transfer agency fee 450
Accrued administrative services fee 148
Other accrued expenses 12,244
------
Total liabilities 13,777
------
Net assets applicable to outstanding capital stock $106,456,601
============
Represented by
Capital stock-- $.01 par value (Note 1) $ 200,145
Additional paid-in capital 98,583,658
Net operating loss (3,067)
Accumulated net realized gain (loss) (441,663)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 8,117,528
---------
Total -- representing net assets applicable to outstanding capital stock $106,456,601
============
Net assets applicable to outstanding shares: Class A $ 87,197,744
Class B $ 19,257,780
Class Y $ 1,077
Net asset value per share of outstanding capital stock: Class A shares 16,106,712 $ 5.41
Class B shares 3,907,559 $ 4.93
Class Y shares 200 $ 5.39
--- ------------
See accompanying notes to financial statements.
</TABLE>
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<CAPTION>
Statement of operations
AXP Innovations Fund
Six months ended April 30, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 1,033
Interest 76,412
------
Total income 77,445
------
Expenses (Note 2):
Expenses allocated from World Technologies Portfolio 59,720
Distribution fee
Class A 2,242
Class B 2,675
Transfer agency fee 3,537
Incremental transfer agency fee
Class A 325
Class B 135
Service fee-- Class Y 5
Administrative services fees and expenses 4,354
Printing and postage 275
Registration fees 4,351
Audit fees 2,125
Other 1,598
-----
Total expenses 81,342
Less expenses voluntarily reimbursed by AEFC (Note 2) (600)
----
80,742
Earnings credits on cash balances (Note 2) (230)
----
Total net expenses 80,512
------
Investment income (loss) -- net (3,067)
------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 8,354,624
Options contracts written 58,676
------
Net realized gain (loss) on investments 8,413,300
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 4,613,775
---------
Net gain (loss) on investments and foreign currencies 13,027,075
----------
Net increase (decrease) in net assets resulting from operations $13,024,008
===========
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
Statements of changes in net assets
AXP Innovations Fund
April 30, 2000 Oct. 31, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ (3,067) $ (60,544)
Net realized gain (loss) on investments 8,413,300 1,375,001
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 4,613,775 2,778,956
--------- ---------
Net increase (decrease) in net assets resulting from operations 13,024,008 4,093,413
---------- ---------
Distributions to shareholders from:
Net realized gain
Class A (9,262,193) --
Class B (282,787) --
Class Y (280,705) --
-------- -----
Total distributions (9,825,685) --
---------- -----
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 80,531,444 --
Class B shares 17,687,986 --
Class Y shares 1,349 --
Reinvestment of distributions at net asset value
Class A shares 9,262,193 --
Class B shares 282,787 --
Class Y shares 280,705 --
Payments for redemptions
Class A shares (11,961,386) --
Class B shares (Note 2) (349,884) --
Class Y shares (357,630) --
-------- -----
Increase (decrease) in net assets from capital share transactions 95,377,564 --
---------- -----
Total increase (decrease) in net assets 98,575,887 4,093,413
Net assets at beginning of period 7,880,714 3,787,301
--------- ---------
Net assets at end of period $106,456,601 $7,880,714
============ ==========
See accompanying notes to financial statements.
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<PAGE>
Notes to Financial Statements
AXP Innovations Fund
(Unaudited as to April 30, 2000)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AXP Innovations Fund (a series of AXP Global Series, Inc.) 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, incremental transfer agency fee and service fee (class
specific expenses) differ 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 Technologies Portfolio
The Fund invests all of its assets in World Technologies Portfolio (the
Portfolio), a series of World Trust (the Trust), an open-end investment company
that has the same objectives as the Fund. World Technologies Portfolio invests
in technology common stocks.
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, 2000 was 98.23%.
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 accounting principles generally
accepted in the United States of America 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 substantially 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.
Other
As of April 30, 2000, AEFC owned 200 shares of Class Y.
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. A minor portion of additional administrative service expenses
paid by the Fund are consultants' fees and fund office expenses. 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
The Fund has agreements with American Express Financial Advisors Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution, the Fund pays a distribution fee at an annual rate up
to 0.25% of the Fund's average daily net assets attributable to Class A shares
and up to 1.00% for Class B shares.
Under a Shareholder Service Agreement, the Fund's Class Y shares pay a fee for
service provided to shareholders by financial advisors and other servicing
agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net
assets attributable to Class Y shares.
AEFC has agreed to waive certain fees and to absorb certain other of the Fund's
expenses until Oct. 31, 2000. Under this agreement, the Fund's total expenses
will not exceed 1.35% for Class A, 2.10% for Class B, and 1.35% for Class Y of
the Fund's average daily net assets. In addition, for the six months ended April
30, 2000, AEFC further voluntarily agreed to waive certain fees and expenses to
1.07% for Class A and .93% for Class Y.
Sales charges received by the Distributor for distributing Fund shares were
$643,566 for Class A and $3 for Class B for the six months ended April 30, 2000.
During the six months ended April 30, 2000, the Fund's transfer agency fees were
reduced by $230 as a result of earnings credits from overnight cash balances.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the period indicated is as follows:
Six months ended April 30, 2000
Class A Class B Class Y
Sold 16,138,793 3,907,593 200
Issued for reinvested distributions 1,695,431 56,694 51,383
Redeemed (2,387,512) (76,728) (71,383)
---------- ------- -------
Net increase (decrease) 15,446,712 3,887,559 (19,800)
Prior to March 27, 2000, shares of the Fund were not publicly available (AEFC
owned 100% of the outstanding shares).
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 Express mutual funds, 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, 2000.
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<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
2000c 1999 1998 1997b
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.27 $5.41 $5.27 $5.00
Income from investment operations:
Net investment income (loss) -- (.08) (.07) (.06)
Net gains (losses) (both realized and unrealized) 7.19 5.94 .21 .33
Total from investment operations 7.19 5.86 .14 .27
Less distributions:
Distributions from realized gains (13.05) -- -- --
Net asset value, end of period $5.41 $11.27 $5.41 $5.27
Ratios/supplemental data:
Net assets, end of period (in thousands) $87,198 $7,435 $3,572 $3,476
Ratio of expenses to average daily net assetsd,e 1.07%f 1.11% 1.33% 1.35%f
Ratio of net investment income (loss)
to average daily net assets (.11%)f (1.01%) (1.29%) (1.26%)f
Portfolio turnover rate
(excluding short-term securities) 75% 113% 200% 164%
Total returng 71.33% 108.32% 2.68% 5.38%
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, 2000 (Unaudited).
d AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the
annual ratios of expenses would have been 1.22%, 1.63% and 2.36% for the periods
ending 1999, 1998 and 1997, respectively.
e For the period ended April 30, 2000, expense ratio is based on total expenses
of the Fund before reduction of earnings credits on cash balances.
f Adjusted to an annual basis. g Total return does not reflect payment of a
sales charge.
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<TABLE>
<CAPTION>
Fiscal period ended Oct. 31,
Per share income and capital changesa
Class B Class Y
2000c 1999 1998 1997b 2000c 1999 1998 1997b
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.02 $5.33 $5.23 $5.00 $11.27 $5.41 $5.27 $5.00
Income from investment operations:
Net investment income (loss) -- (.14) (.11) (.09) -- (.08) (.07) (.06)
Net gains (losses) (both realized
and unrealized) 6.96 5.83 .21 .32 7.17 5.94 .21 .33
Total from investment operations 6.96 5.69 .10 .23 7.17 5.86 .14 .27
Less distributions:
Distributions from realized gains (13.05) -- -- -- (13.05) -- -- --
Net asset value, end of period $4.93 $11.02 $5.33 $5.23 $5.39 $11.27 $5.41 $5.27
Ratios/supplemental data:
Net assets, end of period
(in thousands) $19,258 $220 $107 $105 $1 $225 $108 $105
Ratio of expenses to average
daily net assetsd,e 2.10% f1.86% 2.08% 2.10%f .93%f 1.11% 1.33% 1.35%f
Ratio of net investment income (loss)
to average daily net assets 1.98%f (1.76%) (2.04%) (2.00%)f (.85%)f (1.01%) (1.29%) (1.25%)f
Portfolio turnover rate
(excluding short-term securities) 75% 113% 200% 164% 75% 113% 200% 164%
Total returng 70.79% 106.72% 1.91% 4.62% 70.70% 108.32% 2.68% 5.38%
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, 2000 (Unaudited).
d AEFC reimbursed the Fund for certain expenses. Had AEFC not done so, the
annual ratios of expenses would have been 2.30%, 1.97%, 2.38% and 3.11% for
Class B for the periods ending 2000, 1999, 1998 and 1997, respectively and
1.12%, 1.63% and 2.36% for Class Y for the periods ending 1999, 1998 and 1997,
respectively.
e For the period ended April 30, 2000, expense ratio is basd on total expenses
of the Fund before reduction of earnings credits on cash balances.
f Adjusted to an annual basis.
g Total return does not reflect payment of a sales charge.
Prior to March 27, 2000, the Fund had not engaged in a broad public offering of
its shares, or been subject to redemption requests. It had sold shares only to a
single investor. One factor impacting the Fund's 1999 performance was the high
concentration in technology investments, particularly in securities of internet
and communication companies. These investments performed well and had a greater
effect on the Fund's performance than similar investments made by other funds
because of the high concentration, the lack of cash flows and the smaller size
of the Fund. There is no assurance that the Fund's future investments will
result in the same level of performance.
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Financial Statements
Statement of assets and liabilities
World Technologies Portfolio
April 30, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $108,332,930) $116,568,463
Cash in bank on demand deposit 74,115
Receivable for investment securities sold 245,659
-------
Total assets 116,888,237
-----------
Liabilities
Payable for investment securities purchased 8,568,222
Accrued investment management services fee 1,814
Other accrued expenses 7,542
-----
Total liabilities 8,577,578
---------
Net assets $108,310,659
============
See accompanying notes to financial statements.
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<CAPTION>
Statement of operations
World Technologies Portfolio
Six months ended April 30, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 1,180
Interest 78,025
------
Total income 79,205
------
Expenses (Note 2):
Investment management services fee 59,171
Custodian fees 4,164
Audit fees 6,375
Other 5
-
Total expenses 69,715
Earnings credits on cash balances (Note 2) (2,522)
------
Total net expenses 67,193
------
Investment income (loss) -- net 12,012
------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 9,540,764
Options contracts written (Note 4) 59,735
------
Net realized gain (loss) on investments 9,600,499
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 4,232,126
---------
Net gain (loss) on investments and foreign currencies 13,832,625
----------
Net increase (decrease) in net assets resulting from operations $13,844,637
===========
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
World Technologies Portfolio
April 30, 2000 Oct. 31, 1999
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 12,012 $ (66,173)
Net realized gain (loss) on investments 9,600,499 1,571,242
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 4,232,126 3,175,172
--------- ---------
Net increase (decrease) in net assets resulting from operations 13,844,637 4,680,241
Net contributions (withdrawals) from partners 85,442,848 (14,965)
---------- -------
Total increase (decrease) in net assets 99,287,485 4,665,276
Net assets at beginning of period 9,023,174 4,357,898
--------- ---------
Net assets at end of period $108,310,659 $9,023,174
============ ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
World Technologies Portfolio
(Unaudited as to April 30, 2000)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
World Technologies 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 Technologies
Portfolio invests in common stocks of companies within the information
technology sector. 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 accounting principles generally
accepted in the United States of America 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. 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.
Illiquid securities
As of April 30, 2000, investments in securities included issues that are
illiquid which the Portfolio currently limits to 10% of net assets, at market
value, at the time of purchase. The aggregate value of such securities as of
April 30, 2000 was $499,998 representing 0.46% of net assets. According to board
guidelines, certain unregistered securities are determined to be liquid and are
not included within the 10% limitation specified above.
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 and 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 0.72% to 0.595% 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.
During the six months ended April 30, 2000, the Portfolio's custodian fees were
reduced by $2,522 as a result of earnings credits from overnight cash balances.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
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 $85,150,909 and $18,612,240, respectively, for the six
months ended April 30, 2000. For the same period, the portfolio turnover rate
was 75%. Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $2,775 for the
six months ended April 30, 2000.
4. OPTIONS CONTRACTS WRITTEN
Contracts and premium amounts associated with options contracts written is as
follows:
Six months ended April 30, 2000
Calls
Contracts Premium
Balance Oct. 31, 1999 -- $--
Opened 90 62,728
Exercised -- --
Closed (90) (62,728)
--- -------
Balance April 30, 2000 -- $--
See "Summary of significant accounting policies.
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
World Technologies Portfolio
April 30, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (81.4%)
Issuer Shares Value(a)
Aerospace & defense (1.0%)
<S> <C> <C>
Aeroflex 28,000(b) $1,043,000
Communications equipment & services (18.0%)
Advanced Fibre Communications 16,000(b) 731,000
Carrier Access 10,000(b) 436,250
CIENA 19,500(b) 2,410,687
Com21 16,000(b) 448,000
Copper Mountain Networks 15,000(b) 1,250,625
Corning 5,000 987,500
Digital Microwave 17,000(b) 627,938
Fairchild Semiconductor Intl Cl A 20,500(b) 973,750
JDS Uniphase 23,000(b) 2,386,250
Motorola 4,900 583,406
Netro 13,500(b) 582,188
Nokia ADR Cl A 23,000(c) 1,308,125
Powerwave Technologies 5,000(b) 1,040,313
RF Micro Devices 10,000(b) 1,040,625
SDL 20,000(b) 3,899,999
Turnstone Systems 7,500(b) 825,000
Total 19,531,656
Computer software & services (10.7%)
Ariba 23,000(b) 1,706,312
Citrix Systems 12,000(b) 732,750
Commtouch Software 10,000(b,c) 211,250
Computer Associates Intl 17,000 948,813
Digital Island 7,400(b) 258,075
Edwards (JD) & Co 40,000(b) 730,000
Internet Capital Group 20,000(b) 847,500
Microsoft 13,400(b) 934,650
MicroStrategy 10,000(b) 258,750
Mission Critical Software 17,000(b) 612,000
ONYX Software 16,000(b) 341,000
Phone.com 15,000(b) 1,260,000
S1 28,000(b) 1,520,750
Siebel Systems 5,000(b) 614,375
Vignette 12,000(b) 578,250
Total 11,554,475
Computers & office equipment (21.4%)
Aware 23,000(b) 897,000
Cisco Systems 47,000(b) 3,258,422
EMC 10,000(b) 1,389,375
EQUANT 5,000(b,c) 390,000
Extreme Networks 11,200(b) 645,400
Futurelink 34,000(b) 471,750
Miami Computer Supply 30,000(b) 627,656
Network Appliance 44,500 3,290,219
Redback Networks 15,000(b) 1,190,625
S3 29,000(b) 407,813
SmartDisk 10,000(b) 253,750
Solectron 59,000(b) 2,761,938
VeriSign 24,000(b) 3,345,000
Veritas Software 35,000(b) 3,754,296
Visual Networks 12,000(b) 468,000
Total 23,151,244
Electronics (21.8%)
Altera 10,000(b) 1,022,500
Arrow Electronics 40,000 1,752,500
ASM Intl 23,000(b,c) 793,500
Atmel 12,000(b) 587,250
Celestica 10,000(b,c) 545,625
Exar 16,000(b) 1,282,750
Flextronics Intl 30,000(b,c) 2,107,500
Integrated Device Technology 23,000(b) 1,105,438
KLA-Tencor 10,000(b) 748,750
Natl Semiconductor 8,500(b) 516,375
PMC-Sierra 30,000(b,c) 5,756,249
Power-One 10,000(b) 682,500
Quantum Effect Devices 8,500(b) 495,125
Siliconix 5,200(b) 431,275
Taiwan Semiconductor Mfg ADR 30,150(b,c) 1,577,222
Teradyne 23,000(b) 2,530,000
Vitesse Semiconductor 25,000(b) 1,701,563
Total 23,636,122
Industrial equipment & services (1.3%)
Semitool 70,000(b) 1,403,281
Media (0.5%)
Univision Communications Cl A 5,000(b) 546,250
Miscellaneous (1.1%)
Akamai Technologies 10,000(b) 988,750
FirePond 16,000(b) 255,000
Total 1,243,750
Utilities -- telephone (5.6%)
Allegiance Telecom 8,500(b) 601,375
Cable & Wireless Communications ADR 10,000(b,c) 756,875
COLT Telecom Group ADR 7,500(b,c) 1,280,625
Level 3 Communications 24,000(b) 2,136,000
RCN 10,000(b) 286,250
WinStar Communications 25,000(b) 996,875
Total 6,058,000
Total common stocks
(Cost: $80,135,959) $88,167,778
Preferred stock (0.5%)
Issuer Shares Value(a)
Gorp.com
5.15% Series B 97,087(d) $499,998
Total preferred stock
(Cost: $499,998) $499,998
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
Options purchased (1.3%)
Issuer Shares Exercise Expiration Value(a)
price date
Calls
CIENA 10,000 $120 July 2000 $258,750
Cisco Systems 10,000 70 July 2000 78,750
Microsoft 10,000 70 Jan. 2002 184,375
Network Appliance 10,000 75 June 2000 103,750
SDL 10,000 195 June 2000 288,750
Solectron 10,000 50 July 2000 49,375
VeriSign 10,000 170 Sept. 2000 284,375
Veritas Software 10,000 120 Aug. 2000 177,500
Total options purchased
(Cost: $1,216,900) $1,425,625
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (24.4%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agency (1.2%)
Federal Home Loan Bank Disc Nt
<S> <C> <C> <C>
06-21-00 6.04% $1,300,000 $1,287,771
Commercial paper (23.2%)
Bayer
05-01-00 6.06 5,000,000(e) 4,997,475
Household Finance
05-01-00 6.04 5,200,000 5,197,383
Morgan Stanley, Dean Witter, Discover & Co
05-01-00 6.06 10,000,000 9,994,950
Sysco
05-01-00 6.04 5,000,000(e) 4,997,483
Total 25,187,291
Total short-term securities
(Cost: $26,480,073) $26,475,062
Total investments in securities
(Cost: $108,332,930)(f) $116,568,463
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.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. As of April 30, 2000,
the value of foreign securities represented 13.60% of net assets.
(d) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings as April 30, 2000, is as follows:
Security Acquisition date Cost
Gorp.com
5.15% Series B 02-22-00 $499,998
(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) At April 30, 2000, the cost of securities for federal income tax purposes
was approximately $108,333,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $9,775,000
Unrealized depreciation (1,540,000)
----------
Net unrealized appreciation $8,235,000
<PAGE>
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN
EXPRESS
S-6396 A (6/00)
Ticker Symbol
Class A: AXIAX Class B: INVBX Class Y: N/A
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and is
not a broker-dealer.
AXP Innovations Fund
200 AXPFinancial Center
Minneapolis, MN 55474
