AXP(SM) Global
Bond Fund
2000 SEMIANNUAL REPORT
AMERICAN
EXPRESS(R)
FUNDS
(icon of) compass
AXP Global Bond Fund seeks to provide
shareholders with high total return
through income and growth of capital.
AMERICAN
EXPRESS
(R)
<PAGE>
A Bounty of Bonds
In today's global economy, investment opportunities don't stop at the water's
edge. While bonds issued by the U.S. government and corporations once made up
almost all of the bond market, today more than half of the world's debt
securities are issued from outside the United States. This means expanded
opportunity for investors. AXP Global Bond Fund's aim is to take advantage of
opportunities in bond markets at any time and in any place, providing investors
with greater portfolio diversification.
CONTENTS
From the 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) 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
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
<PAGE>
(picture of) Ray Goodner
Ray Goodner
Portfolio Manager
From the Portfolio Manager
Weak bond markets and falling foreign currencies made for a difficult six months
for AXP Global Bond Fund. As a result, the Fund's Class A shares lost 4.50%
(excluding the sales charge) during the first half of the fiscal year --
November 1999 through April 2000.
Concerned about the possibility of higher inflation, central banks in North
America and Europe raised interest rates during the period, putting pressure on
bond prices. (Rising interest rates depress bond prices, while declining rates
inflate them.) In light of the trend, I kept a shorter-than-average duration in
the portfolio, which mitigated the effect on the Fund's net asset value.
(Duration, a function of the average maturity of the bonds in the portfolio,
affects the Fund's sensitivity to changes in interest rates. Generally, the
longer the duration, the greater the sensitivity.)
CURRENCY COMPLICATIONS
Compounding the situation were sharp declines in virtually all major foreign
currencies against the dollar during the final four months of the period,
particularly the euro in Europe and the yen in Japan. (Falling local currencies
reduce returns to U.S. investors.) To combat the effect, I maintained relatively
small exposures to those markets and currencies, preferring to emphasize the
U.S. market and dollar. As with the shorter duration, this strategy shielded the
Fund from some of the negative effect.
Looking at the Fund's allocation, about 40%-50% of assets were in the U.S.,
chiefly Treasury and corporate bonds. Overall, these investments provided the
best performance, largely because of a strong rally by Treasury bonds in 2000.
The next biggest exposure, about 35%, was to Europe, mostly the United Kingdom,
Scandinavia and Germany. Japan comprised between 5% and 10% of the investments,
a reflection of the low yields available in that country. I also kept a very
small exposure to emerging market bonds denominated in dollars. While their
performance was mixed, Mexico, the largest holding, benefited from a credit
rating upgrade.
As we head into the second half of the fiscal year, inflation is trending
moderately higher around the world. And while central banks are likely to
continue to raise interest rates, the bulk of their work, at least in the U.S.,
may be over. If so, major bond markets eventually will take comfort in that,
which would be good for bond prices. Beyond that, more consistent economic
growth in Europe and Japan, combined with a potentially weak U.S. stock market,
could further benefit foreign bonds.
Ray Goodner
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 2000 $5.44
Oct. 31, 1999 $5.87
Decrease $0.43
Distributions -- Nov. 1, 1999 - April 30, 2000
From income $0.17
From capital gains $ --
Total distributions $0.17
Total return* -4.50%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 2000 $5.44
Oct. 31, 1999 $5.87
Decrease $0.43
Distributions -- Nov. 1, 1999 - April 30, 2000
From income $0.15
From capital gains $ --
Total distributions $0.15
Total return* -4.86%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 2000 $5.44
Oct. 31, 1999 $5.87
Decrease $0.43
Distributions -- Nov. 1, 1999 - April 30, 2000
From income $0.17
From capital gains $ --
Total distributions $0.17
Total return* -4.41%**
*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)
U.S. Treasury 12.44% $80,738,729
7.50% 2016
Govt of Italy 5.03 32,652,303
8.50% 2004
Federal Republic of Germany 4.54 29,480,872
7.50% 2004
United Kingdom Treasury 4.30 27,880,519
8.00% 2003
U.S. Treasury 4.21 27,313,565
7.50% 2001
Hellenic Republic 3.27 21,216,882
8.90% 2003
Federal Republic of Germany 2.95 19,125,680
6.50% 2027
Federal Republic of Germany 2.76 17,924,120
8.00% 2002
Banco Nacional de Comercio Exterior 1.79 11,603,250
7.25% 2004
Govt of Canada 1.70 11,016,932
7.00% 2006
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."
The 10 holdings listed here
make up 42.99% of net assets
(icon of) pie chart
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
AXP Global Bond Fund
April 30, 2000 (Unaudited)
Assets
<S> <C> <C>
Investment in World Income Portfolio (Note 1) $648,340,920
------------
Liabilities
Dividends payable to shareholders 1,584,831
Capital shares payable 220
Accrued distribution fee 8,329
Accrued transfer agency fee 3,478
Accrued administrative services fee 997
Other accrued expenses 49,986
Total liabilities 1,647,841
---------
Net assets applicable to outstanding capital stock $646,693,079
============
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,189,108
Additional paid-in capital 730,450,048
Undistributed net investment income 2,281,389
Accumulated net realized gain (loss) (Note 5) (8,260,614)
Unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies (78,966,852)
-----------
Total -- representing net assets applicable to outstanding capital stock $ 646,693,079
============
Net assets applicable to outstanding shares: Class A $460,914,548
Class B $185,773,514
Class Y $ 5,017
Net asset value per share of outstanding capital stock:
Class A shares 84,750,495 $ 5.44
Class B shares 34,159,382 $ 5.44
Class Y shares 923 $ 5.44
---------- ------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
AXP Global Bond Fund
Six months ended April 30, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 194,093
Interest 25,574,855
----------
Total income 25,768,948
----------
Expenses (Note 2):
Expenses allocated from World Income Portfolio 2,935,723
Distribution fee
Class A 664,183
Class B 1,059,823
Transfer agency fee 618,644
Incremental transfer agency fee
Class A 48,830
Class B 32,804
Service fee-- Class Y 2
Administrative services fees and expenses 205,057
Compensation of board members 3,554
Printing and postage 38,964
Registration fees 33,391
Audit fees 3,875
Other 4,837
Total expenses 5,649,687
Earnings credits on cash balances (Note 2) (27,376)
-------
Total net expenses 5,622,311
---------
Investment income (loss) -- net 20,146,637
----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (7,212,711)
Financial futures contracts 91,827
Foreign currency transactions (987,713)
Options contracts written 804,679
-------
Net realized gain (loss) on investments (7,303,918)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (46,278,854)
-----------
Net gain (loss) on investments and foreign currencies (53,582,772)
-----------
Net increase (decrease) in net assets resulting from operations $ (33,436,135)
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
AXP Global Bond Fund
April 30, 2000 Oct. 31, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 20,146,637 $ 48,951,869
Net realized gain (loss) on investments (7,303,918) (4,139,082)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (46,278,854) (50,584,752)
----------- -----------
Net increase (decrease) in net assets resulting from operations (33,436,135) (5,771,965)
----------- ----------
Distributions to shareholders from:
Net investment income
Class A (16,249,256) (29,946,339)
Class B (5,678,250) (9,380,167)
Class Y (159) (238)
Net realized gain
Class A -- (1,512,779)
Class B -- (559,859)
Class Y -- (11)
---
Total distributions (21,927,665) (41,399,393)
----------- -----------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 37,894,843 102,506,438
Class B shares 18,163,737 58,324,003
Class Y shares -- 2
Reinvestment of distributions at net asset value
Class A shares 12,605,688 24,745,015
Class B shares 5,201,547 9,214,165
Class Y shares 152 249
Payments for redemptions
Class A shares (148,012,507) (218,742,945)
Class B shares (Note 2) (56,897,025) (82,378,224)
----------- -----------
Increase (decrease) in net assets from capital share transactions (131,043,565) (106,331,297)
------------ ------------
Total increase (decrease) in net assets (186,407,365) (153,502,655)
Net assets at beginning of period 833,100,444 986,603,099
----------- -----------
Net assets at end of period $646,693,079 $833,100,444
============ ============
Undistributed (excess of distributions over) net investment income $ 2,281,389 $ 4,062,417
------------ ------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
AXP Global Bond Fund
(Unaudited as to April 30, 2000)
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 non-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 Income Portfolio
The Fund invests all of its assets in the World Income Portfolio (the
Portfolio), a series of World Trust, an open-end investment company that has the
same objectives as the Fund. The Portfolio seeks to provide shareholders with
high total return through income and growth of capital by investing primarily in
debt securities of U.S. and foreign issuers.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at the value that is equal to
the Fund's proportionate ownership interest in the Portfolio's net assets. The
percentage of the Portfolio owned by the Fund as of April 30, 2000 was 99.91%.
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
Dividends from net investment income, declared daily and paid each calendar
quarter, are reinvested in additional shares of the Fund at net asset value or
payable in cash. Capital gains, when available, are distributed along with the
last income dividend of the calendar year.
2. EXPENSES AND SALES CHARGES
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
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
0.04% annually. A minor portion of additional administrative service expenses
paid by the Fund are consultants' fees and 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 $19.50
o Class B $20.50
o Class Y $17.50
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 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.
Sales charges received by the Distributor for distributing Fund shares were
$384,710 for Class A and $141,710 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 $27,376 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, 2000
Class A Class B Class Y
Sold 6,670,340 3,191,805 --
Issued for reinvested distributions 2,218,864 916,377 27
Redeemed (26,067,325) (10,027,289) --
----------- ----------- ---------
Net increase (decrease) (17,178,121) (5,919,107) 27
Year ended Oct. 31, 1999
Class A Class B Class Y
Sold 16,985,673 9,664,557 1
Issued for reinvested distributions 4,106,641 1,529,837 41
Redeemed (36,480,185) (13,764,830) --
----------- ----------- ---------
Net increase (decrease) (15,387,871) (2,570,436) 42
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.
5. CAPITAL LOSS CARRYOVER
For federal income tax purposes, the Fund had a capital loss carryover of
$831,811 as of Oct. 31, 1999, that will expire in 2007 if not offset by capital
gains. It is unlikely the board will authorize a distribution of any net
realized gains until the available capital loss carryover has been offset or
expires.
<PAGE>
<TABLE>
<CAPTION>
6. 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
2000b 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.87 $6.17 $6.26 $6.28 $6.11
Income from investment operations:
Net investment income (loss) .16 .33 .39 .35 .38
Net gains (losses) (both realized and unrealized) (.42) (.36) (.05) (.05) .18
Total from investment operations (.26) (.03) .34 .30 .56
Less distributions:
Dividends from net investment income (.17) (.26) (.29) (.28) (.39)
Distributions from realized gains -- (.01) (.14) (.04) --
Total distributions (.17) (.27) (.43) (.32) (.39)
Net asset value, end of period $5.44 $5.87 $6.17 $6.26 $6.28
Ratios/supplemental data
Net assets, end of period (in millions) $461 $598 $724 $748 $689
Ratio of expenses to average daily net assetsc 1.30%d 1.22% 1.16% 1.16% 1.20%
Ratio of net investment income (loss)
to average daily net assets 5.63%d 5.49% 5.86% 5.74% 5.72%
Portfolio turnover rate
(excluding short-term securities) 21% 48% 27% 55% 49%
Total returne (4.50%) (.35%) 5.52% 4.91% 8.96%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended April 30, 2000 (Unaudited).
c 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
2000b 1999 1998 1997 1996 2000b 1999 1998 1997 1996c
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.87 $6.17 $6.26 $6.28 $6.11 $5.87 $6.17 $6.26 $6.30 $6.11
Income from investment operations:
Net investment income (loss) .14 .28 .33 .31 .33 .16 .34 .40 .35 .29
Net gains (losses)
(both realized and unrealized) (.42) (.35) (.04) (.05) .18 (.42) (.36) (.06) (.06) .20
Total from investment operations (.28) (.07) .29 .26 .51 (.26) (.02) .34 .29 .49
Less distributions:
Dividends from net investment income (.15) (.22) (.24) (.24) (.34) (.17) (.27) (.29) (.29) (.30)
Distributions from realized gain -- (.01) (.14) -- -- -- (.01) (.14) -- --
Excess distributions of realized gains -- -- -- (.04) -- -- -- -- (.04) --
Total distributions (.15) (.23) (.38) (.28) (.34) (.17) (.28) (.43) (.33) (.30)
Net asset value, end of period $5.44 $5.87 $6.17 $6.26 $6.28 $5.44 $5.87 $6.17 $6.26 $6.30
Ratios/supplemental data
Net assets, end of period (in millions) $186 $235 $263 $231 $141 $-- $-- $-- $-- $--
Ratio of expenses to average
daily net assetsd 2.06%e 1.98% 1.92% 1.92% 1.96% 1.10%e 1.07% .99% 1.01% 1.01%
Ratio of net investment
income (loss) to average
daily net assets 4.86%e 4.72% 5.11% 5.00% 4.96% 5.72%e 5.63% 6.10% 5.89% 6.06%
Portfolio turnover rate
(excluding short-term securities) 21% 48% 27% 55% 49% 21% 48% 27% 55% 49%
Total returnf (4.86%)(1.10%) 4.73% 4.12% 8.15% (4.41%) (.19%) 5.62% 5.06% 7.35%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended April 30, 2000 (Unaudited).
c Periods from Nov. 1, 1995 to Nov. 20, 1995 and from Dec. 4, 1995 to
Oct. 31, 1996. From Nov. 20, 1995 to Dec. 4, 1995 there were no Class Y shares
outstanding.
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 Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
World Income Portfolio
April 30, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost $717,349,402) $638,747,478
Dividends and accrued interest receivable 17,604,144
Receivable for investment securities sold 3,542,250
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 5) 405,466
-------
Total assets 660,299,338
Liabilities
Disbursement in excess of cash on demand deposit
(including foreign currency holdings of $121,861) 354,624
Payable for investment securities purchased 10,123,229
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 5) 615,319
Accrued investment management services fee 13,447
Other accrued expenses 104,169
Option contracts written, at value (premium received $119,600) (Note 6) 146,250
Total liabilities 11,357,038
----------
Net assets $648,942,300
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
World Income Portfolio
Six months ended April 30, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 194,250
Interest 25,597,391
----------
Total income 25,791,641
----------
Expenses (Note 2):
Investment management services fee 2,792,431
Compensation of board members 4,204
Custodian fees 127,604
Audit fees 11,625
Other 5,498
-----
Total expenses 2,941,362
Earnings credits on cash balances (Note 2) (3,212)
------
Total net expenses 2,938,150
---------
Investment income (loss) -- net 22,853,491
----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) (7,218,781)
Financial futures contracts 91,912
Foreign currency transactions (986,974)
Options contracts written (Note 6) 805,425
-------
Net realized gain (loss) on investments (7,308,418)
Net change in unrealized appreciation (depreciation) on investments and
on translation of assets and liabilities in foreign currencies (46,319,722)
-----------
Net gain (loss) on investments and foreign currencies (53,628,140)
-----------
Net increase (decrease) in net assets resulting from operations $(30,774,649)
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
World Income Portfolio
April 30, 2000 Oct. 31, 1999
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss) -- net $ 22,853,491 $ 55,042,279
Net realized gain (loss) on investments (7,308,418) (4,141,927)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities
in foreign currencies (46,319,722) (50,620,083)
----------- -----------
Net increase (decrease) in net assets resulting from operations (30,774,649) 280,269
Net contributions (withdrawals) from partners (155,587,203) (153,354,231)
------------ ------------
Total increase (decrease) in net assets (186,361,852) (153,073,962)
Net assets at beginning of period 835,304,152 988,378,114
----------- -----------
Net assets at end of period $ 648,942,300 $ 835,304,152
============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
World Income Portfolio
(Unaudited as to April 30, 2000)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
World Income Portfolio (the Portfolio) is a series of World Trust (the Trust)
and is registered under the Investment Company Act of 1940 (as amended) as a
non-diversified, open-end management investment company. The Portfolio invests
primarily in debt securities of U.S. and foreign issuers. The Declaration of
Trust permits the Trustees to issue non-transferable interests in the Portfolio.
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.
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 0.77% to 0.67% 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 $3,212 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 $145,740,989 and $241,911,735, respectively, for the six
months ended April 30, 2000. For the same period, the portfolio turnover rate
was 21%. Realized gains and losses are determined on an identified cost basis.
Income from securities lending amounted to $38,293 for the six months ended
April 30, 2000. 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.
4. INTEREST RATE FUTURES CONTRACTS
As of April 30, 2000, investments in securities included securities valued at
$4,797,193 that were pledged as collateral to cover initial margin deposits on
341 open sales contracts. The market value of the open sales contracts as of
April 30, 2000 was $32,966,876 with a net unrealized loss of $513,692. See
"Summary of significant accounting policies."
5. FOREIGN CURRENCY CONTRACTS
As of April 30, 2000, 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 8, 2000 9,710,300 10,000,000 $ -- 615,319
U.S. Dollar European Monetary Unit
May 15, 2000 40,000,000 4,607,976 141,608 --
Swedish Krona U.S. Dollar
May 25, 2000 5,000,000 7,898,350 113,741 --
British Pound U.S. Dollar
July 3, 2000 3,800,000 6,068,695 150,117 $ --
British Pound U.S. Dollar
Total $ 405,466 $615,319
6. OPTIONS CONTRACTS WRITTEN
Contracts and premium amounts associated with options contracts written are as
follows:
Six months ended April 30, 2000
Puts Calls
Contracts Premium Contracts Premium
Balance Oct. 31 1999 -- $-- -- $--
Opened 750 1,070,750 100 114,600
Closed (550) (776,550) -- --
Exercised (100) (174,600) (100) (114,600)
Balance April 30, 2000 100 $119,600 -- $--
See "Summary of significant accounting policies."
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
World Income Portfolio
April 30, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Bonds (97.0%)(c)
Issuer Coupon Principal Value(a)
rate amount
Australia (2.6%)
New South Wales Treasury
(Australian Dollar)
<S> <C> <C> <C> <C> <C>
03-01-08 8.00% 12,300,000(d) $7,689,052
Queensland Treasury
(Australian Dollar) Local Govt Guaranty
05-14-03 8.00 14,730,000 8,924,558
Total 16,613,610
Bermuda (0.1%)
Central Euro Media
(European Monetary Unit) Sr Nts Series RG
08-15-04 8.13 3,925,000 693,272
Brazil (0.8%)
Federal Republic of Brazil
(U.S. Dollar)
10-15-09 14.50 5,000,000 5,287,500
Canada (4.7%)
Abitibi-Consolidated Finance
(U.S. Dollar) Company
08-01-09 7.88 7,900,000 7,598,173
Govt of Canada
(Canadian Dollar)
02-01-06 7.00 15,700,000 11,016,932
(Japanese Yen)
03-23-09 1.90 980,000,000 9,044,276
Province of Manitoba
(U.S. Dollar) Series CK
12-15-00 9.00 2,800,000 2,833,650
Total 30,493,031
Cayman Islands (1.9%)
PDVSA Finance
(U.S. Dollar) Sr Nts
02-15-10 9.75 10,000,000 9,649,999
Roil
(U.S. Dollar)
12-05-02 12.78 3,150,000(d) 2,835,000
Total 12,484,999
China (1.8%)
Greater Beijing First Expressways
(U.S. Dollar) Sr Nts
06-15-04 9.25 3,500,000 1,120,000
06-15-07 9.50 8,750,000 2,625,000
People's Republic of China
(U.S. Dollar)
07-03-01 7.38 4,450,000 4,473,678
Zhuhai Highway
(U.S. Dollar) Sub Nts
07-01-08 11.50 11,350,000(d) 3,490,125
Total 11,708,803
Colombia (0.7%)
Republic of Colombia
(U.S. Dollar)
04-23-09 9.75 6,000,000 4,755,000
Denmark (2.1%)
Govt of Denmark
(Danish Krone)
11-15-00 9.00 40,000,000 4,977,987
03-15-06 8.00 65,000,000 8,852,285
Total 13,830,272
France (1.8%)
France Telecom
(European Monetary Unit) Cv
11-29-04 4.13 2,950,000 2,889,688
Govt of France
(European Monetary Unit)
04-25-05 7.50 8,710,000 8,746,511
Total 11,636,199
Germany (11.7%)
Allgemeine Hypo Bank
(European Monetary Unit)
09-02-09 5.00 10,760,000 9,236,245
Federal Republic of Germany
(European Monetary Unit)
07-22-02 8.00 18,471,330 17,924,120
11-11-04 7.50 29,600,000 29,480,872
07-04-27 6.50 19,005,512 19,125,680
Total 75,766,917
Greece (3.3%)
Hellenic Republic
(Greek Drachma)
04-01-03 8.90 7,289,000,000 21,216,882
Indonesia (0.7%)
Indah Kiat Finance Mauritius
(U.S. Dollar) Company Guaranty
07-01-07 10.00 4,350,000 2,871,000
Tjiwi Kimia Finance Mauritius
(U.S. Dollar) Company Guaranty
08-01-04 10.00 2,450,000 1,641,500
Total 4,512,500
Italy (6.3%)
Govt of Italy
(European Monetary Unit)
01-01-04 8.50 32,321,533 32,652,303
11-01-26 7.25 7,886,283 8,457,765
Total 41,110,068
Japan (0.9%)
Development Bank of Japan
(Japanese Yen)
09-20-01 6.50 449,000,000 4,512,534
Nippon Express
(Japanese Yen) Cv Series 4
03-31-04 1.00 120,000,000 1,182,277
Total 5,694,811
Mexico (3.3%)
Banco Nacional de Comercio Exterior
(U.S. Dollar)
02-02-04 7.25 12,150,000 11,603,250
Imexsa Export Trust
(U.S. Dollar)
05-31-03 10.13 2,115,569(d) 2,062,680
United Mexican States
(British Pound) Medium-term Nts Series E
05-30-02 8.75 5,000,000 7,822,933
Total 21,488,863
Netherlands (0.5%)
KPNQwest
(European Monetary Unit) Sr Nts
06-01-09 7.13 3,800,000 3,410,202
Norway (1.9%)
Govt of Norway
(Norwegian Krone)
11-30-04 5.75 60,000,000 6,527,276
01-15-07 6.75 48,000,000 5,487,383
Total 12,014,659
Slovenia (1.3%)
Republic of Slovenia
(European Monetary Unit)
06-16-04 5.75 17,750,000 8,263,856
Supra-National (2.8%)
Inter-American Development Bank
(Japanese Yen)
07-08-09 1.90 1,035,000,000 9,641,931
World Bank
(Japanese Yen)
06-20-00 4.50 950,000,000 8,850,923
Total 18,492,854
Sweden (2.4%)
Govt of Sweden
(Swedish Krona)
02-09-05 6.00 44,500,000 5,090,301
08-15-07 8.00 35,200,000 4,519,509
Paulson Enterprenad
(Swedish Krona)
12-15-00 4.75 56,560,000 6,261,544
Total 15,871,354
United Kingdom (5.8%)
Abbey Natl First Capital
(U.S. Dollar) Sub Nts
10-15-04 8.20 5,000,000 5,005,136
COLT Telecom Group
(European Monetary Unit)
07-31-08 7.63 6,400,000 2,840,836
Texon Intl
(European Monetary Unit) Sr Nts
02-01-08 10.00 4,000,000 1,748,719
United Kingdom Treasury
(British Pound)
06-10-03 8.00 17,000,000 27,880,519
Total 37,475,210
United States (39.6%)
American Standard
(U.S. Dollar) Company Guaranty
06-01-06 7.13 7,450,000 6,697,624
Chesapeake
(U.S. Dollar)
05-01-03 9.88 1,000,000 1,012,460
CIT Holdings LLC
(U.S. Dollar) Company Guaranty Series B
02-16-05 6.88 8,000,000 7,655,480
Citicorp
(European Monetary Unit)
09-19-09 6.25 10,800,000 4,942,654
Cleveland Electric Illuminating
(U.S. Dollar) 1st Mtge Series B
05-15-05 9.50 3,000,000 3,055,884
Conseco
(U.S. Dollar) Medium-term Nts Series B
06-21-01 7.60 10,000,000 6,550,000
Executive Risk Capital
(U.S. Dollar) Company Guaranty Series B
02-01-27 8.68 3,500,000 3,417,222
Federal Natl Mtge Assn
(U.S. Dollar)
08-15-04 6.50 5,000,000 4,857,885
04-01-15 7.50 10,000,000 9,940,625
02-01-27 7.50 2,237,479 2,195,526
11-01-29 7.00 9,898,536 9,468,544
Ford Motor Credit
(Japanese Yen)
02-07-05 1.20 1,000,000,000 9,180,202
General Motors
(U.S. Dollar)
07-15-01 9.13 2,000,000 2,038,762
Intl Paper
(European Monetary Unit)
08-11-00 5.38 7,000,000 6,059,973
Nationwide CSN Trust
(U.S. Dollar)
02-15-25 9.88 7,000,000(d) 7,452,115
New York Life Insurance
(U.S. Dollar)
12-15-23 7.50 7,000,000(d) 6,158,089
Overseas Private Investment
(U.S. Dollar) U.S. Govt Guaranty Series 1996A
01-15-09 6.99 7,083,308 6,916,566
PDV America
(U.S. Dollar) Sr Nts
08-01-03 7.88 3,500,000 3,277,425
Phillips Petroleum
(U.S. Dollar)
04-15-23 7.92 3,115,000 2,828,448
Questar Pipeline
(U.S. Dollar)
06-01-21 9.38 1,000,000 1,024,502
Salomon Smith Barney Holdings
(U.S Dollar)
01-15-03 6.13 10,400,000 10,062,206
Southern California Gas
(U.S. Dollar) 1st Mtge Series BB
03-01-23 7.38% $900,000 $818,793
Target
(U.S. Dollar)
12-01-22 8.50 3,265,000 3,273,750
TXU Electric Capital
(U.S. Dollar) Company Guaranty
01-30-37 8.18 6,150,000 5,601,026
U S WEST Communications
(U.S. Dollar)
11-10-26 7.20 6,000,000 5,262,170
U.S. Treasury
(U.S. Dollar)
11-15-01 7.50 27,000,000 27,313,565
11-15-16 7.50 71,950,000(e) 80,738,729
(U.S. Dollar) TIPS
01-15-07 3.38 10,000,000(b) 10,313,310
USX
(U.S. Dollar)
03-01-08 6.85 4,775,000 4,360,941
Zurich Capital
(U.S. Dollar) Company Guaranty
06-01-37 8.38 4,550,000(d) 4,289,381
Total 256,763,857
Total bonds
(Cost: $708,184,073) $629,584,719
Other (--%)
Issuer Shares Value(a)
Mexico
Mexico Value
Rights 1,000(f) $--
Total other
(Cost: $--) $--
Short-term securities (1.4%)(g)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies
Federal Home Loan Bank Disc Nts
05-12-00 5.81% $1,300,000 $1,296,972
05-19-00 5.89 1,100,000 1,096,110
06-02-00 6.01 600,000 596,512
06-16-00 6.02 1,300,000 1,289,090
Federal Home Loan Mtge Corp Disc Nts
05-09-00 5.87 4,000,000 3,992,837
06-22-00 6.07 900,000 891,238
Total short-term securities
(Cost: $9,165,329) $9,162,759
Total investments in securities
(Cost: $717,349,402)(h) $638,747,478
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) Treasury inflation-protection securities (TIPS) are securities in which the
principal amount is adjusted for inflation and the semiannual interest payments
equal a fixed percentage of the inflation-adjusted principal amount.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(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) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 4 to the financial statements):
Type of security Notional amount
Sale contracts
U.S. Treasury Bonds, June 2000 $24,100,000
U.S. Treasury Notes, June 2000, 10 year 10,000,000
(f) Negligible market value.
(g) At April 30, 2000, cash or short-term securities were designed to cover open
put options written as follows:
Issuer Contracts Exercise Expiration Value(a)
Price date
U.S. Treasury Notes Futures, June 2000 100 $94 May 2000 $146,250
(h) At April 30, 2000, the cost of securities for federal income tax purposes
was approximately $717,349,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $1,686,000
Unrealized depreciation (80,288,000)
-----------
Net unrealized depreciation $(78,602,000)
<PAGE>
American
Express(R)
Funds
AXP Global Bond Fund
200 AXP Financial Center
Minneapolis, MN 55474
Ticker Symbol
Class A: IGBFX Class B: IGLOX Class Y: N/A
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN
EXPRESS
AMERICAN
EXPRESS
S-6339 M (6/00)
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.
