American Express Financial Direct
Strategist World Fund, Inc.
1997 Semiannual Report
Strategist Emerging Markets Fund
Strategist World Growth Fund
Strategist World Income Fund
<PAGE>
Table of contents
Financial statements (Strategist World Fund, Inc.) 1
Notes to financial statements (Strategist World Fund, Inc.) 6
Financial statements (Emerging Markets Portfolio) 12
Notes to financial statements (Emerging Markets Portfolio) 15
Investments in securities (Emerging Markets Portfolio) 19
Financial statements (World Growth Portfolio) 26
Notes to financial statements (World Growth Portfolio) 29
Investments in securities (World Growth Portfolio) 35
Financial statements (World Income Portfolio) 52
Notes to financial statements (World Income Portfolio) 55
Investments in securities (World Income Portfolio) 60
<PAGE>
<TABLE>
Financial statements
Statements of assets and liabilities
Strategist World Fund, Inc.
April 30, 1997 (Unaudited)
<CAPTION>
Strategist Strategist World Strategist
Emerging Markets Growth World Income
Fund Fund Fund
Assets
Investment in corresponding Portfolio
<S> <C> <C> <C>
(Note 1) $634,242 $588,802 $586,518
Organizational costs (Note 1) 47 2,101 2,101
Other receivables 16,270 54 34
------ -- --
Total assets 650,559 590,957 588,653
======= ======= =======
Liabilities
Dividends payable to shareholders -- -- 1,699
Other accrued expenses 11,972 22,054 33,774
------ ------ ------
Total liabilities 11,972 22,054 35,473
------ ------ ------
Net assets applicable to outstanding
capital stock $638,587 $568,903 $553,180
======== ======== ========
Represented by
Capital stock -- authorized 3,000,000,000
shares per Fund of $.01 par value;
outstanding 113,415,79,113 and
90,984 shares $ 1,134 $ 791 $ 910
Additional paid-in capital 571,750 573,954 548,746
Undistributed (excess of distributions
over) net investment income (1,068) 1,396 7,209
Accumulated net realized gain (loss)
(Notes 1 and 4) (816) (22,065) 4,700
Unrealized appreciation (depreciation) of
investments and on translation of assets and
liabilities in foreign currencies 67,587 14,827 (8,385)
------ ------ ------
Total -- representing net assets applicable to
outstanding capital stock $638,587 $568,903 $553,180
-------- -------- --------
Net asset value per share of
outstanding capital stock $ 5.63 $ 7.19 $ 6.08
=========== =========== ============
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
Strategist World Fund, Inc.
Statements of operations
Strategist World Fund, Inc.
Six months ended April 30, 1997 (Unaudited)
<CAPTION>
Strategist Strategist World Strategist
Emerging Markets Growth World Income
Fund* Fund Fund
Investment income
Income:
<S> <C> <C> <C>
Interest $4,685 $3,475 $19,782
Dividends 1,464 2,340 8
----- ----- -
Total income 6,149 5,815 19,790
----- ----- ------
Expenses (Note 2):
Distribution fee 654 686 674
Transfer agency fee 62 114 60
Administrative services fees and expenses 262 165 162
Custodian fees -- 120 --
Postage 4,353 2,455 2,473
Registration fees 12,028 9,064 10,762
Reports to shareholders 2,343 979 990
Audit fees 803 3,250 1,500
Other 3,760 796 2,942
----- --- -----
Total feeder expenses 24,265 17,629 19,563
Expenses allocated from corresponding Portfolio 3,086 2,404 2,201
----- ----- -----
Total expenses 27,351 20,033 21,764
Less expenses reimbursed by AEFC (21,596) (15,592) (20,172)
------- ------- -------
Total net expenses 5,755 4,441 1,592
----- ----- -----
Investment income-- net 394 1,374 18,198
--- ----- ------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security and foreign
currency transactions (816) (7,336) 4,930
Net realized loss on financial futures contracts -- (102) (437)
Net realized gain on option contracts written -- 534 103
--- --- ---
Net realized gain (loss) on investments and
foreign currencies (816) (6,904) 4,596
Net change in unrealized appreciation or depreciation
of investments and on translation of assets
and liabilities in foreign currencies 67,587 11,876 (27,013)
------ ------ -------
Net gain (loss) on investments and foreign currencies 66,771 4,972 (22,417)
------ ----- -------
Net increase (decrease) in net assets resulting
from operations $67,165 $ 6,346 $ (4,219)
======= ======== ========
* For the period from Nov. 13, 1996 (commmencement of operations) to April 30,
1997.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Statement of changes in net assets
Strategist World Fund, Inc.
Strategist Emerging
Markets Fund
For the period from
Nov. 13, 1996* to
April 30, 1997
Operations and distributions (Unaudited)
Investment income-- net $ 394
Net loss on investments and foreign currencies (816)
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and liabilities
in foreign currencies 67,587
------
Net increase in net assets resulting
from operations 67,165
------
Distributions to shareholders from:
Net investment income (1,462)
------
Capital share transactions (Note 3)
Proceeds from sales 570,422
Reinvestment of distributions at net asset value 1,462
Increase in net assets from capital share transactions 571,884
-------
Total increase in net assets 637,587
Net assets at beginning of period (Note 1) 1,000
-----
Net assets at end of period
(including excess of distributions
over net investment income of $(1,068)) $638,587
========
*Commencement of operations.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Statements of changes in net assets
Strategist World Fund, Inc.
Strategist World Growth Fund
<CAPTION>
April 30, 1997 For the period
Six months ended from May 13, 1996*
(Unaudited) to Oct. 31, 1996
Operations and distributions
<S> <C> <C>
Investment income-- net $ 1,374 $ 2,612
Net loss on investments and foreign currencies (6,904) (19,140)
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies 11,876 2,951
------ -----
Net increase (decrease) in net assets resulting
from operations 6,346 (13,577)
----- -------
Distributions to shareholders from:
Net investment income (957) --
==== ===
Capital share transactions (Note 3)
Proceeds from sales 90,453 454,736
Reinvestment of distributions at net asset value 957 --
Payments for redemptions (17,055) (2,000)
------- ------
Increase in net assets from capital share transactions 74,355 452,736
------ -------
Total increase in net assets 79,744 439,159
Net assets at beginning of period (Note 1) 489,159 50,000
------- ------
Net assets at end of period
(including undistributed net investment
income of $1,396 and $979) $568,903 $489,159
======== ========
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statements of changes in net assets
Strategist World Fund, Inc.
<CAPTION>
April 30, 1997 For the period
Six months ended from May 13, 1996*
(Unaudited) to Oct. 31, 1996
Operations and distributions
<S> <C> <C>
Investment income-- net $ 18,198 $ 9,919
Net gain on investments and foreign currency 4,596 4,553
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies (27,013) 18,628
------- ------
Net increase (decrease) in net assets resulting
from operations (4,219) 33,100
------ ------
Distributions to shareholders from:
Net investment income (8,905) (9,919)
Excess distributions of net investment income -- (4,831)
Net realized gain (1,848) --
------
Total distributions (10,753) (14,750)
======= =======
Capital share transactions (Note 3)
Proceeds from sales 25,999 450,000
Reinvestment of distributions at net asset value 18,646 5,157
------ -----
Increase in net assets from
capital share transactions 44,645 455,157
------ -------
Total increase in net assets 29,673 473,507
Net assets at beginning of period (Note 1) 523,507 50,000
------- ------
Net assets at end of period
(including undistributed net investment
income of $7,209 and $(2,084)) $553,180 $523,507
======== ========
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Strategist World Fund, Inc.
(Unaudited as to April 30, 1997)
1. Summary of significant accounting policies
Strategist Emerging Markets Fund (Emerging Markets Fund), Strategist World
Growth Fund (World Growth Fund) and Strategist World Income Fund (World Income
Fund) are series of capital stock within Strategist World Fund, Inc. Each Fund
is registered under the Investment Company Act of 1940 (as amended) as a
diversified, (non-diversified for World Income Fund) open-end management
investment company. On April 15, 1996, American Express Financial Corporation
(AEFC) invested $50,000 in World Growth Fund and World Income Fund which
represented 6,831 shares and 8,264 shares for each Fund, respectively.
Operations did not formally commence until May 13, 1996. On Nov. 12, 1996, AEFC
invested $1,000 in the Emerging Markets Fund which represented 200 shares.
Operations commenced on Nov. 13, 1996.
Investment in Portfolios
Each of the Funds seeks to achieve its investment objectives by investing all of
its net investable assets in a corresponding series of World Trust (the Trust).
Emerging Markets Fund invests all of its assets in the Emerging Markets
Portfolio, an open-end investment company that has the same objectives as the
Fund. Emerging Markets Portfolio seeks to provide shareholders with a long-term
growth of capital by investing primarily in equity securities of issuers in
countries with developing or emerging markets.
World Growth Fund invests all of its assets in the World Growth Portfolio, an
open-end investment company that has the same objectives as the Fund. World
Growth Portfolio seeks to provide a long-term growth of capital by investing
primarily in common stocks and securities convertible into common stocks of
companies throughout the world.
World Income Fund invests all of its assets in the World Income Portfolio, an
open-end investment company that has the same objectives as the Fund. World
Income Portfolio invests primarily in debt securities of U.S. and foreign
issuers.
Each Fund records daily its share of the corresponding 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. Each Fund records its
investment in the corresponding Portfolio at value that is equal to the Fund's
proportionate ownership interest in the net assets of the Portfolio. As of April
30, 1997, the percentages of the corresponding Portfolio owned by Emerging
Markets Fund, World Growth Fund and World Income Fund were 0.40%, 0.05% and
0.07%, respectively. Valuation of securities held by the Portfolios is discussed
in Note 1 of the Portfolios' "Notes to financial statements," which are included
elsewhere in this report.
Organizational costs
Each Fund incurred organizational expenses in connection with the start-up and
initial registration of the Fund. These costs will be amortized over 60 months
on a straight-line basis beginning with the commencement of operations. If any
or all of the shares held by AEFC representing initial capital of the Fund are
redeemed during the amortization period, the redemption proceeds will be reduced
by the pro rata portion of the unamortized organizational cost balance.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Federal taxes
Since each Fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to the shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) allocated from the
Portfolios may differ for financial statement and tax purposes primarily because
of the deferral of losses on certain futures contracts, the recognition of
certain foreign currency gains (losses) as ordinary income (loss) for tax
purposes, and losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Funds.
Dividends to shareholders
Dividends from net investment income, declared and paid by the end of the
calendar year for Emerging Markets Fund and World Growth Fund and declared daily
and paid each calendar quarter for World Income Fund 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.
Other
At April 30, 1997, AEFC owned 201 shares for Emerging Markets Fund, 6,843 shares
for World Growth Fund and 8,680 shares for World Income Fund. At April 30, 1997,
American Express Company (the parent company of AEFC) owned 100,087 shares for
Emerging Markets Fund, 62,012 shares for World Growth Fund and 78,097 shares for
World Income Fund.
2. Expenses and sales charges
In addition to the expenses allocated from the Portfolio, each Fund accrues its
own expenses as follows:
Each Fund entered into agreements with AEFC for providing administrative
services and transfer agent services.
Under its Administrative Services Agreement, each Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.10% to 0.05% for Emerging
Markets Fund, from 0.06% to 0.035% for World Growth Fund and from 0.06% to 0.04%
for World Income Fund annually. Under this agreement, each Fund also pays taxes,
audit and certain legal fees, registration fees for shares, compensation of
board members, corporate filing fees, organizational expenses, and any other
expenses properly payable by the Funds approved by the board.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts
and records. Each Fund pays AEFC an annual fee per shareholder account of $20
($25 for World Income Fund).
Under a Plan and Agreement of Distribution, each Fund pays American Express
Service Corporation (the Distributor) a distribution fee at an annual rate of
0.25% of the Fund's average daily net assets for distribution related services.
A redemption fee of 0.50% is applied and retained by the Fund, if shares are
redeemed or exchanged within 180 days of purchase.
AEFC and the Distributor have agreed to waive certain fees and to absorb certain
other of Fund expenses until Oct. 31, 1997. Under this agreement, total expenses
will not exceed 2.20% of Emerging Markets Fund's average daily net assets, 1.75%
of World Growth Fund's average daily net assets and 1.35% of World Income Fund's
average daily net assets.
3. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 1997
Emerging World World
Markets Growth Income
Fund* Fund Fund
Sold 112,928 12,473 4,174
Issued for reinvested
distributions 287 132 2,969
Redeemed -- (2,603) --
--- ------ ---
Net increase 113,215 10,002 7,143
*Inception date was Nov. 13, 1996.
Period ended Oct. 31, 1996*
World World
Growth Income
Fund Fund
Sold 62,555 74,751
Issued for reinvested
distributions -- 826
Redeemed (275) --
---- ----
Net increase 62,280 75,577
*Inception date was May 13, 1996.
4. Capital loss carryover
For federal income tax purposes, World Growth Fund had a capital loss carryover
at Oct. 31, 1996 of $14,481 that, if not offset by subsequent capital gains,
will expire in 2004. It is unlikely the board will authorize a distribution of
any net realized gain for a Fund until its capital loss carryover has been
offset or expires.
<PAGE>
<TABLE>
5. Financial highlights
The table below shows certain important information for evaluating each Fund's
results.
Fiscal period ended Oct. 31,
Per share income and capital changesb
<CAPTION>
Emerging World World
Markets Growth Income
Fund Fund Fund
1997f 1997e 1996a 1997e 1996a
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.00 $7.08 $7.32 $6.24 $6.05
Income from investment operations:
Net investment income .01 .02 .04 .33 .15
Net gains (losses) (both realized
and unrealized) .63 .10 (.28) (.27) .25
Total from investment operations .64 .12 (.24) .06 .40
Less distributions:
Dividends from net investment income (.01) (.01) -- (.20) (.15)
Excess distributions of net investment
income -- -- -- -- (.06)
Distributions from realized gains -- -- -- (.02) --
Total distributions (.01) (.01) -- (.22) (.21)
Net asset value, end of period 5.63 7.19 7.08 6.08 6.24
Ratios/supplemental data:
Net assets, end of period (in thousands) $639 $569 $489 $553 $524
Ratio of expenses to average daily
net assetsd 2.20%c 1.62%c 1.75%c .59%c 1.35%c
Ratio of net income to average
daily net assets .15%c .50%c 1.61%c 6.70%c 5.87%c
Total returng 12.9% 1.7% (3.3%) (.4%) 6.6%
Portfolio turnover rate (excluding
short-term securities) for the
underlying Portfolio 13% 91% 58% 33% 24%
Average brokerage commission rate
for the underlying Portfolioh $.0030 $.0146 $.0086 $ -- $ --
a Inception date was May 13, 1996.
b For a share outstanding throughout the period. Rounded to the nearest cent. c
Adjusted to an annual basis. d The Advisor and Distributor voluntarily limited
total operating expenses for Emerging Markets Fund, World Growth Fund and World
Income Fund. Without this agreement, the ratio of expenses to average daily net
assets would have been 10.45% for Emerging Markets Fund for the period ended
1997, 7.30% and 17.33% for World Growth Fund for periods ended 1997 and 1996,
respectively, and 8.02% and 19.23% for World Income Fund for periods ended 1997
and 1996, respectively.
e Six months ended April 30, 1997 (Unaudited).
f Inception date was Nov. 13, 1996 (Unaudited).
g Total return does not reflect payment of a sales charge.
h The Fund is required to disclose an average brokerage commission rate per
share for security trades on which commissions are charged. The comparability of
this information may be affected by the fact that commission rates per share
vary significantly among foreign countries.
</TABLE>
<PAGE>
Financial statements
Statement of assets and liabilities
Emerging Markets Portfolio
April 30, 1997 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $156,405,542) $161,232,759
Cash in bank on demand deposit 1,274,238
Dividends and accrued interest receivable 11,928
Receivable for investment securities sold 1,406,233
Unrealized appreciation on foreign currency contracts held,
at value (Notes 1 and 4) 63
--
Total assets 163,925,221
===========
Liabilities
Payable for investment securities purchased 3,026,880
Unrealized depreciation on foreign currency contracts held,
at value (Notes 1 and 4) 84
Accrued investment management services fee 4,741
Other accrued expenses 13,124
------
Total liabilities 3,044,829
---------
Net assets $160,880,392
============
See accompanying notes to financial statements.
<PAGE>
Statement of operations
Emerging Markets Portfolio
For the period from Nov. 13, 1996
(commencement of operations) to April 30, 1997 (Unaudited)
Investment income
Income:
Interest (net of foreign taxes withheld of $2,946) $374,710
Dividends (net of foreign taxes withheld of $8,380) 148,148
-------
Total income 522,858
-------
Expenses (Note 2):
Investment management services fee 326,973
Compensation of board members 1,706
Custodian fees 26,140
Audit fees 6,246
Administrative services fees and expenses 95
Other 1,094
-----
Total expenses 362,254
Earnings credits on cash balances (Note 2) (989)
----
Total net expenses 361,265
-------
Investment income -- net 161,593
-------
Realized and unrealized gain (loss) -- net
Netrealized loss on security and foreign currency
transactions (including loss of $55,682 from
foreign currency transactions) (Note 3) (1,121,703)
Net change in unrealized appreciation or depreciation of
investments and on translation of assets and
liabilities in foreign currencies 4,826,619
---------
Net gain on investments and foreign currencies 3,704,916
---------
Net increase in net assets resulting from operations $3,866,509
==========
See accompanying notes to financial statements.
<PAGE>
Statement of changes in net assets
Emerging Markets Portfolio
For the period from Nov. 13, 1996
(commencement of operations) to April 30, 1997 (Unaudited)
Operations
Investment income-- net $ 161,593
Net realized loss on investments and foreign
currencies (1,121,703)
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies 4,826,619
---------
Net increase in net assets resulting from operations 3,866,509
---------
Net contributions 157,009,883
-----------
Total increase in net assets 160,876,392
-----------
Net assets at beginning of period (Note 1) 4,000
-----
Net assets at end of period $160,880,392
============
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
Emerging Markets Portfolio
(Unaudited as to April 30, 1997)
1. Summary of significant accounting policies
Emerging Markets Portfolio (the Portfolio) is a series of World Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. Emerging Markets
Portfolio seeks to provide a long-term growth of capital by investing primarily
in common stocks and securities convertible into common stocks of companies
throughout the world. The Declaration of Trust permits the Trustees to issue
non-transferable interests in the Portfolio. On Nov. 12, 1996, AEFC contributed
$4,000 to the Portfolio. Operations commenced on Nov. 13, 1996.
Significant accounting polices followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price; securities for which market quotations
are not readily available are valued at fair value according to methods selected
in good faith by the board. Determination of fair value involves, among other
things, reference to market indexes, matrixes and data from independent brokers.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy or
write options traded on any U.S. or foreign exchange where the completion of the
obligation is dependent upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities and may write cash-secured put options. The risk
in writing a call option is that the Portfolio gives up the opportunity of
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of not being able to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete the obligations of the contract.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including level-yield amortization of premium and discount, is accrued
daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with American Express Financial Corporation (AEFC) for
managing its portfolio. Under this agreement, AEFC determines which securities
will be purchased, held or sold. The management fee is a percentage of the
Portfolio's average daily net assets in reducing percentages from 1.10% to 1.00%
annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees to be paid to an affiliate of
AEFC, audit and certain legal fees, fidelity bond premiums, registration fees
for units, office expenses, consultants' fees, compensation of trustees,
corporate filing fees, and any other expenses properly payable by the Trust or
Portfolio, approved by the board.
During the period from Nov. 13, 1996 to April 30, 1997, the Portfolio's
custodian fees were reduced by $989 as a result of earnings credits from
overnight cash balances.
Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $135,013,929 and $7,589,748, respectively, for the
period from Nov. 13, 1996 to April 30, 1997. For the same period, the portfolio
turnover rate was 13%. Realized gains and losses are determined on an identified
cost basis.
4. Foreign currency contracts
At April 30, 1997, the Portfolio had entered into two foreign currency exchange
contracts that obligate the Portfolio to deliver currencies at specified future
dates. The unrealized appreciation and/or depreciation (see Summary of
significant accounting policies) on these contracts is included in the
accompanying financial statements. The terms of the open contracts are as
follows:
Currency to Currency to Unrealized Unrealized
Exchange date be delivered be received appreciation depreciation
May 1, 1997 2,164,578 16,767,253 $-- $84
U.S. Dollar Hong Kong Dollar
May 2, 1997 4,213,404 543,931 63 --
Hong Kong Dollar U.S. Dollar
$63 $84
<PAGE>
Investments in securities
Emerging Markets Portfolio
April 30, 1997 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (81.5%)
Issuer Shares Value (a)
Argentina (8.3%)
Banks and savings & loans (3.5%)
Banco de Galicia-- Buenos Aires 230,000 $5,595,469
Metals (1.5%)
Siderar 600,000(b) 2,358,336
Utilities -- telephone (3.3%)
Telefonica de Argentina 160,000 5,320,000
Brazil (11.9%)
Energy (3.1%)
Petroleo Brasileiro ADR 240,000(b) 5,037,598
Utilities -- electric (4.8%)
CEMIG ADR 100,000 4,515,000
Companhia Energetica de Sao Paulo 24,400,000(b) 1,296,128
Eletropaula 9,000,000(b) 1,806,840
-----------
Total 7,617,968
Utilities -- telephone (4.0%)
Telecomunicacoes Brasileiras --
Telebras ADR 55,900 6,414,525
Chile (1.6%)
Utilities -- telephone
Cia de Telecomunicaciones de Chile ADR 80,000 2,590,000
China (5.4%)
Airlines (0.6%)
China Eastern Airlines 3,160,000(b) 989,219
Multi-industry conglomerates (1.9%)
China Merchants 2,900,000 3,107,208
Utilities -- electric (2.9%)
Beijing Datang Power Generation 8,950,000(b) 4,650,321
Croatia (3.0%)
Banks and savings & loans (1.4%)
Zagrebacka Banka GDR 65,000(b) 2,307,500
Health care (1.6%)
Pliva GDR 160,000(b) 2,571,998
Czech Republic (0.4%)
Utilities -- telephone
SPT Telekom 6,000(b) 633,987
Egypt (2.9%)
Building materials & construction
Suez Cement GDR 260,000(b) 4,706,000
Hong Kong (10.5%)
Building materials & construction (0.5%)
New World Infrastructure 370,000(b) 1,046,021
Financial services (1.3%)
Guangzhou Investment Co 4,300,000 2,039,950
Food (2.4%)
Guangnan Holdings 2,660,000 3,828,695
Health care (0.9%)
Shandong Xinhau Pharmaceutical 3,900,000 1,397,081
Household products (0.7%)
Guangdong Kelon Elec Holdings 1,100,000 1,064,997
Industrial equipment & services (1.3%)
GZI Transportation 3,450,000(b) 2,070,935
Multi-industry conglomerates (3.4%)
China Travel Intl Investment 4,000,000 2,104,176
Shanghai Industrial Holdings 592,000 3,331,982
-----------
Total 5,436,158
Indonesia (1.9%)
Banks and savings & loans (0.4%)
Bank Negara 1,218,000 676,667
Building materials & construction (0.4%)
PT Semen Gresik 261,000 636,396
Retail (0.3%)
PT Matahari Putra Prima 381,500 533,795
Utilities -- telephone (0.8%)
PT Telekomunikasi 846,000 1,227,222
Malaysia (6.3%)
Automotive & related (0.9%)
Perusahaan Otomobil 250,000(b) 1,493,726
Banks and savings & loans (2.0%)
Malayan Banking 205,000(b) 2,041,426
Public Bank Malaysia 680,000(b) 1,126,787
-----------
Total 3,168,213
Building materials & construction (0.6%)
IJM 400,000 876,319
Leisure time & entertainment (1.0%)
Tanjong 439,000 1,591,276
Media (0.6%)
New Straits Times Press 174,000 970,325
Utilities -- electric (1.2%)
Tenaga Nasional 425,000 1,963,752
Mexico (7.3%)
Beverages & tobacco (2.3%)
FEMSA 785,000 3,705,388
Building materials & construction (1.8%)
Cemex 800,000 2,930,328
Media (0.9%)
Grupo Televisa 60,000(b) 1,387,500
Paper & packaging (2.3%)
Kimberly-Clark de Mexico ADR 200,000 3,746,000
Peru (1.9%)
Metals
Compania de Minas Buenaventura ADR 137,300 2,986,275
Philippines (4.4%)
Banks and savings & loans (0.6%)
Bank of the Philippine Islands 180,000(b) 972,695
Building materials & construction (1.1%)
HI Cement 5,220,000(b) 1,741,977
Utilities -- electric (1.0%)
Manila Electric 260,000 1,616,989
Utilities -- telephone (1.7%)
Philippine Long Distance Telephone ADR 48,000 2,676,000
Russia (8.8%)
Energy equipment & services (5.0%)
Chernogorneft ADR 500,000(b) 4,781,250
Surgutneftegaz ADR 90,000(b) 3,307,500
-----------
Total 8,088,750
Utilities -- electric (3.8%)
Mosenergo ADR 30,000(b,c) 1,187,004
Mosenergo ADR 125,000(b) 4,945,848
-----------
Total 6,132,852
South Africa (5.1%)
Energy equipment & services (3.7%)
Ingwe Coal 200,000 1,259,418
Sasol 360,000 4,614,866
-----------
Total 5,874,284
Retail (1.4%)
Meikles Africa ADR 1,000,000(b) 2,330,000
Turkey (1.8%)
Metals
Eregli Demir Ve Celik Fabrikalari 30,000,000 2,931,840
Total common stocks
(Cost: $126,344,310) $131,042,535
Other (0.1%)
Issuer Shares Value (a)
Hong Kong
Guangnan Holdings
Warrants 300,857 $141,758
GZI Transportation
Warrants 50,000 968
Total other
(Cost: $13,734) $142,726
Short-term securities (18.7%)
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agency (1.7%)
Federal Home Loan Mtge Corp Disc Nts
05-06-97 5.46% $1,100,000 $1,099,169
05-06-97 5.37 1,400,000 1,398,958
05-08-97 5.43 300,000 299,684
-----------
Total 2,797,811
Commercial paper (14.8%)
AT&T
05-02-97 5.43 5,800,000 5,799,127
Dean Witter, Discover & Co
05-19-97 5.52 4,000,000 3,989,000
Fleet Funding
05-20-97 5.53 3,113,000(d) 3,103,947
MCI Communications
05-30-97 5.53 1,100,000(d) 1,095,126
Novartis Finance
05-02-97 5.57 3,000,000 2,999,538
Paccar Financial
05-05-97 5.57 1,900,000 1,898,828
05-23-97 5.52 2,400,000 2,391,933
USAA Capital
05-23-97 5.51 2,500,000 2,491,613
-----------
Total 23,769,112
Letter of credit (2.2%)
Bank of New York - River Fuel Co
06-06-97 5.58 3,500,000(d) 3,480,575
Total short-term securities
(Cost: $30,047,498) $ 30,047,498
Total investment in securities
(Cost: $156,405,542)(e) $161,232,759
<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) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(d) Commercial paper sold within terms of a private placement memorandum, exempt
under Section 4(2) of the Securities Act of 1933, as amended, and may be sold
only to dealers in that program or other "accredited investors." This security
has been determined to be liquid under guidelines established by the board.
(e) At April 30, 1997, the cost of securities for federal income tax purposes
was approximately $156,406,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $11,446,000
Unrealized depreciation (6,619,000)
----------
Net unrealized appreciation $ 4,827,000
<PAGE>
Financial statements
Statement of assets and liabilities
World Growth Portfolio
April 30, 1997 (Unaudited)
Assets
Investments in securities, at value (Note 1)
Investments in securities of unaffiliated issuers
(identified cost $1,257,835,586) $1,285,501,619
Investments in securities of affiliated issuers
(identified cost $7,007,517) 9,026,250
Dividends and accrued interest receivable 2,253,184
Receivable for investment securities sold 15,526,546
Unrealized appreciation on foreign currency contracts
held, at value (Notes 1 and 4) 20,614
U.S. government securities held as collateral (Note 5) 23,655,790
----------
Total assets 1,335,984,003
=============
Liabilities
Disbursements in excess of cash on demand deposit 9,106,667
Payable for investment securities purchased 24,135,290
Unrealized depreciation on foreign currency contracts held,
at value (Notes 1 and 4) 35,303
Payable upon return of securities loaned (Note 5) 146,543,265
Accrued investment management services fee 23,725
Other accrued expenses 126,568
-------
Total liabilities 179,970,818
-----------
Net assets $1,156,013,185
==============
See accompanying notes to financial statements.
<PAGE>
Statement of operations
World Growth Portfolio
Six months ended April 30, 1997 (Unaudited)
Investment income
Income:
Interest $ 4,756,799
Dividends (net of foreign taxes withheld of $418,317) 6,914,550
Dividends earned on affiliated issuers 48,661
------
Total income 11,720,010
----------
Expenses (Note 2):
Investment management services fee 4,299,585
Compensation of board members 11,759
Custodian fees 503,378
Audit fees 9,750
Administrative services fees and expenses 5,931
Other 9,698
-----
Total expenses 4,840,101
Earnings credits on cash balances (Note 2) (9,667)
------
Total net expenses 4,830,434
---------
Investment income -- net 6,889,576
---------
Realized and unrealized gain (loss) -- net
Netrealized loss on security and foreign currency
transactions (including loss of $880,752 from
foreign currency transactions and a realized gain
of $12,720 from sale of affiliated issuer) (Note 3) (10,549,951)
Net realized loss on financial futures contracts (226,454)
Net realized gain on option contracts written (Note 1) 1,128,600
---------
Net realized loss on investments and foreign currencies (9,647,805)
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies 24,035,766
----------
Net gain on investments and foreign currencies 14,387,961
----------
Net increase in net assets resulting from operations $21,277,537
===========
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Statements of changes in net assets
World Growth Portfolio
<CAPTION>
Six months ended For the period from
April 30, 1997 May 13, 1996* to
(Unaudited) Oct. 31, 1996
Operations
<S> <C> <C>
Investment income -- net $ 6,889,576 $ 12,183,646
Net realized gain (loss) on investments and
foreign currencies (9,647,805) 27,471,267
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies 24,035,766 (63,955,989)
---------- -----------
Net increase (decrease) in net assets resulting
from operations 21,277,537 (24,301,076)
Net contributions 61,331,758 1,097,654,966
---------- -------------
Total increase in net assets 82,609,295 1,073,353,890
Net assets at beginning of period (Note 1) 1,073,403,890 50,000
------------- ------
Net assets at end of period $1,156,013,185 $1,073,403,890
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
World Growth Portfolio
(Unaudited as to April 30, 1997)
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 a long-term growth of capital by investing primarily in common
stocks and securities convertible into common stocks of companies throughout the
world. The Declaration of Trust permits the Trustees to issue non-transferable
interests in the Portfolio. On April 15, 1996, American Express Financial
Corporation (AEFC) contibuted $50,000 to the Portfolio. Operations did not
formally commence until May 13, 1996, at which time an existing fund transferred
its assets to the Portfolio in return for an ownership percentage of the
Portfolio.
Significant accounting polices followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price; securities for which market quotations
are not readily available are valued at fair value according to methods selected
in good faith by the board. Determination of fair value involves, among other
things, reference to market indexes, matrixes and data from independent brokers.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy or
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The Portfolio also may buy and sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Portfolio may incur a
loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolio pays a premium whether or not
the option is exercised. The Portfolio also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete the obligations of the contract.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including level-yield amortization of premium and discount, is accrued
daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.8% to 0.675% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees to be paid to an affiliate of
AEFC, audit and certain legal fees, fidelity bond premiums, registration fees
for units, office expenses, consultants' fees, compensation of trustees,
corporate filing fees, expenses incurred in connection with lending securities
of the Portfolio, and any other expenses properly payable by the Trust or
Portfolio, approved by the board.
During the six months ended April 30, 1997, the Portfolio's custodian fees were
reduced by $9,667 as a result of earnings credits from overnight cash balances.
Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $1,053,751,750 and $952,721,999, respectively, for the
six months ended April 30, 1997. For the same period, the portfolio turnover
rate was 91%. Realized gains and losses are determined on an identified cost
basis.
Brokerage commissions paid to brokers affiliated with AEFC were $32,357 for this
period.
4. Foreign currency contracts
At April 30, 1997, the Portfolio had entered into 21 foreign currency exchange
contracts that obligate the Portfolio to deliver currencies at specified future
dates. The unrealized appreciation and/or depreciation (see Summary of
significant accounting policies) on these contracts is included in the
accompanying financial statements. The terms of the open contracts are as
follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 1, 1997 794,246 100,189,374 $-- $5,012
U.S. Dollar Japanese Yen
May 1, 1997 638,147 495,139 -- 2,648
Australian DollarU.S. Dollar
May 1, 1997 33,391,689 265,241 2,200 --
Japanese Yen U.S. Dollar
May 2, 1997 594,531 15,523,200 -- 285
U.S. Dollar Thailand Baht
May 2, 1997 1,739,719 1,348,909 -- 8,159
Australian DollarU.S. Dollar
May 2, 1997 5,645,044 213,811 -- 260
Philippine Peso U.S. Dollar
May 2, 1997 326,637,300 134,535 116 --
Indonesian RupiahU.S. Dollar
May 2, 1997 14,609,687 1,834,927 -- 4,042
Mexican Peso U.S. Dollar
May 5, 1997 3,870,139 3,017,354 -- 1,548
Australian DollarU.S. Dollar
May 5, 1997 5,214,987 197,575 -- 187
Philippine Peso U.S. Dollar
May 5, 1997 118,777,200 48,900 20 --
Indonesian RupiahU.S. Dollar
May 5, 1997 411,238,035 169,074 -- 160
Indonesian RupiahU.S. Dollar
May 6, 1997 854,466 525,793 -- 2,366
U.S. Dollar British Pound
May 6, 1997 145,309 3,792,855 -- 114
U.S. Dollar Thailand Baht
May 6, 1997 3,641,959 16,193,608 -- 81
U.S. DollarSouth African Rand
May 6, 1997 9,845,671 372,857 -- 509
Philippine Peso U.S. Dollar
May 6, 1997 13,121,528 103,376 12 --
Japanese Yen U.S. Dollar
May 6, 1997 194,868,844 80,104 -- 89
Indonesian RupiahU.S. Dollar
May 7, 1997 1,605,075 2,619,451 18,266 --
British Pound U.S. Dollar
May 7, 1997 95,911 2,505,283 -- 6
U.S. Dollar Thailand Baht
May 30, 1997 2,670,473 15,528,800 -- 9,837
U.S. Dollar French Franc ------- -------
$20,614 $35,303
5. Lending of portfolio securities
At April 30, 1997, securities valued at $133,366,952 were on loan to brokers.
For collateral, the Portfolio received $122,887,475 in cash and U.S. government
securities valued at $23,655,790. Income from securities lending amounted to
$582,319 for the period ending April 30, 1997. 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.
Investments in securities
World Growth Portfolio
April 30, 1997 (Unaudited)
(Percentages represent value of investments compared to net assets)
Investments in securities of unaffiliated issuers
Common stocks (85.5%)
Issuer Shares Value (a)
Argentina (3.9%)
Banks and savings & loans (0.6%)
Banco de Galicia 300,000(d) $7,298,438
Financial services (0.5%)
IRSA 150,000 5,250,000
Metals (0.5%)
Siderar ADR 200,000 6,300,000
Multi-industry conglomerates (1.1%)
Perez Companc 625,000 10,050,000
Cresud ADR 138,700(c) 2,548,613
-----------
Total 12,598,613
Utilities -- telephone (1.2%)
Telecom Argentina ADR 165,000(d) 8,250,000
Telefonica De Argentina 160,000 5,320,000
-----------
Total 13,570,000
Australia (3.2%)
Banks and savings & loans (0.8%)
Commonwealth Bank of Australia 1,250,000(d) 9,360,593
Energy (0.5%)
Woodside Petroleum 720,000 5,728,683
Insurance (0.5%)
Natl Mutual Holdings 4,067,271(c,d) 6,028,074
Metals (0.5%)
Pasminco 3,000,000(c) 5,709,960
Multi-industry conglomerates (0.9%)
Pacific Dunlop 4,000,000(d) 10,795,884
Austria (0.6%)
Utilities -- electric
EVN Energie-Versorgung Niederoesterreich 60,000 7,420,904
Bahamas (0.7%)
Restaurants & lodging
Sun Intl Hotels 275,000(c) 8,353,125
Brazil (1.6%)
Utilities -- telephone
Telecomunicacoes Brasileiras - Telebras ADR162,500 18,646,875
Canada (4.1%)
Banks and savings & loans (0.7%)
Royal Bank of Canada 200,000 7,997,134
Communications equipment & services (0.6%)
Northern Telecom 100,000 7,262,500
Health care (0.6%)
Biovail Intl 300,000(c,d) 7,500,000
Industrial equipment & services (1.0%)
Bombardier Cl B 550,000 11,104,346
Metals (0.3%)
Euro-Nevada Mining 93,500 2,684,338
Euro-Nevada Mining 18,900(b) 542,610
-----------
Total 3,226,948
Real estate (0.1%)
Intrawest 115,000(c) 1,581,250
Utilities -- telephone (0.8%)
BCE 200,000(d) 9,325,000
Chile (0.7%)
Beverages & tobacco
Embotelladora Andina ADR
Series A 260,000 5,200,000
Series B 140,000 2,747,500
-----------
Total 7,947,500
Finland (1.8%)
Industrial equipment & services (0.9%)
Valmet 600,000 10,142,405
Multi-industry conglomerates (0.9%)
Amer Group 600,000(d) 10,269,329
France (4.8%)
Automotive & related (2.2%)
Michelin 295,000 16,482,395
Valeo 150,000 9,252,120
-----------
Total 25,734,515
Chemicals (0.7%)
Cie Generale Des Eaux 60,000 8,357,749
Electronics (0.8%)
SGS-THOMSON Microelectronics 115,000(c) 9,013,125
Energy (1.1%)
Elf Aquitaine 135,000 13,091,750
Germany (4.3%)
Automotive & related (2.9%)
BMW 12,000(d) 9,828,736
Daimler-Benz ADR 75,000(d) 5,578,125
Volkswagen 28,000(d) 17,806,787
-----------
Total 33,213,648
Electronics (0.9%)
Siemens 200,000 10,836,101
Textiles & apparel (0.5%)
Adidas 50,000 5,212,996
Ghana (0.2%)
Metals
Ashanti Goldfields 199,075 2,174,037
Greece (0.2%)
Financial services
Natl Investment 45,530 1,979,252
Hong Kong (2.7%)
Financial services (1.3%)
Cheung Kong 575,000 5,047,440
New World Development 1,000,000 5,770,347
Sun Hung Kai Properties 400,000 4,337,442
-----------
Total 15,155,229
Insurance (0.8%)
Natl Mutual Asia 8,566,000 8,846,314
Multi-industry conglomerates (0.6%)
Wharf Holdings 2,000,000 7,564,706
Hungary (0.1%)
Banks and savings & loans
Euronet Services 113,000(c) 1,419,563
India (0.2%)
Automotive & related
Tata Engineering & Locomotive GDR 200,000 2,430,000
Indonesia (0.5%)
Banks and savings & loans (0.2%)
PT Bank Bali 929,000 2,236,481
Real estate (0.3%)
PT Jaya Real Properties 2,502,500(c) 3,243,981
Ireland (0.2%)
Food
Greencore Group 500,000 2,552,426
Japan (7.6%)
Communications equipment & services (1.2%)
DDI 875 5,810,587
Hitachi 600,000 5,435,425
Oki Electric 500,000(d) 2,453,819
-----------
Total 13,699,831
Computers & office equipment (0.4%)
Meitec 250,000 5,002,166
Electronics (2.7%)
Matsushita Electric 375,000 5,996,691
Mitsumi Electric 400,000(d) 8,413,092
NEC 725,000 8,852,259
Shinko Electric 220,000(c,d) 7,538,698
-----------
Total 30,800,740
Financial services (0.8%)
Nomura Securities 700,000 7,830,162
TOC 103,000 965,536
-----------
Total 8,795,698
Health care (0.4%)
Sankyo 180,000 4,820,985
Media (0.7%)
Sony 40,000 2,911,497
Sony ADR 70,700 5,187,613
-----------
Total 8,099,110
Multi-industry conglomerates (0.5%)
Secom 100,000 5,947,458
Utilities -- electric (0.9%)
Hirose Electric 80,000 4,373,548
Sumitomo Electic 475,000(c) 6,435,858
-----------
Total 10,809,406
Malaysia (2.5%)
Automotive & related (0.8%)
Diversified Resources 4,000,000(c) 9,559,848
Leisure time & entertainment (0.8%)
Multi-Purpose Holdings 6,000,000 9,798,840
Multi-industry conglomerates (0.6%)
China North Inds Investment 4,980,000(c) 2,016,900
Leader Universal Holdings 2,400,000(c) 4,779,924
-----------
Total 6,796,824
Utilities -- electric (0.3%)
Tenaga Nasional 618,000(c) 2,855,526
Mexico (2.7%)
Beverages and tobacco (0.7%)
Femsa 1,800,000 8,496,432
Building materials & construction (0.7%)
Cemex 448,000(c) 1,488,728
Empresas ICA Sociedad Controladora 400,000(d) 5,950,000
-----------
Total 7,438,728
Multi-industry conglomerates (0.4%)
Grupo Financiero Banorte 5,000,000(c) 4,883,850
Utilities-- telephone (0.9%)
Telefonos de Mexico 250,000 10,312,500
Netherlands (2.0%)
Industrial equipment & services (1.2%)
Stork 307,894 13,263,321
Transportation (0.8%)
Nedlloyd 400,000(d) 9,180,294
Peru (1.1%)
Banks and savings & loans (0.7%)
Credicorp 360,000 7,560,000
Utilities -- telephone (0.4%)
CPT Telefonica 500,000(c) 1,200,750
Telefonica del Peru ADR 153,500(c) 3,684,000
-----------
Total 4,884,750
Philippines (1.2%)
Electronics (0.1%)
Solid Group 7,500,000(c) 1,592,715
Multi-industry conglomerates (0.6%)
Belle 29,046,400(c) 6,939,388
Paper & packaging (0.5%)
Intl Container Service 10,000,000(c) 5,877,890
South Africa (0.3%)
Energy equipment & services
Sasol 285,200 3,655,999
Spain (1.8%)
Energy (0.5%)
Repsol ADR 125,000(d) 5,234,375
Utilities -- telephone (1.3%)
Telefonica de Espana ADR 200,000(d) 15,400,000
Sweden (0.9%)
Communications equipment & services (0.5%)
Ericsson (LM) ADR 160,000 5,380,000
Health care services (0.4%)
Getinge Industrier Cl B 270,000(d) 4,749,703
Switzerland (1.1%)
Banks and savings & loans (0.6%)
Credit Suisse Group 60,000(d) 6,754,832
Health care (0.5%)
Novartis 4,200 5,531,638
Thailand (0.7%)
Building materials & construction (0.7%)
Italian-Thai Development 2,211,800 7,450,907
Miscellaneous (--%)
Southeast Asia Frontier 170,000(c) 382,500
United Kingdom (9.5%)
Airlines (0.7%)
British Airways 728,736 8,337,724
Building materials & construction (0.5%)
TI Group 650,000 5,556,591
Computers & office equipment (0.8%)
JBA Holdings 700,000 9,245,454
Electronics (0.7%)
Johnson Matthey 1,000,000 8,111,042
Energy (0.9%)
Lasmo 2,725,000 9,892,069
Furniture & appliances (0.6%)
Dixons Group 900,000 7,380,158
Health care (1.5%)
Biocompatibles Intl 525,000(c) 12,060,212
British Biotech 1,300,000(c) 5,087,835
-----------
Total 17,148,047
Leisure time & entertainment (1.1%)
Ladbroke Group 3,523,485 13,218,920
Multi-industry conglomerates (0.9%)
Inchcape 2,250,000 9,990,923
Paper & packaging (1.8%)
Freepages Group 17,333,000(c) 11,376,306
Pearson 800,000 9,185,492
-----------
Total 20,561,798
United States (24.3%)
Aerospace & defense (1.7%)
Boeing 100,000 9,862,500
Hexcel 575,000(d) 10,278,125
-----------
Total 20,140,625
Automotive & related (0.7%)
General Motors 150,000 8,681,250
Computers & office equipment (4.3%)
Compaq 105,000(c) 8,964,375
First Data 275,000 9,487,500
Ikon Office Solutions 140,000 3,762,500
Ingram Micro 275,000(c) 6,256,250
Oracle 250,000(c) 9,937,500
Xerox 180,000 11,070,000
-----------
Total 49,478,125
Electronics (0.6%)
Lattice Semiconductor 125,000(c) 6,984,375
Energy (2.2%)
Nabors Inds 265,000(c) 4,968,750
Noble Affiliates 50,000 1,787,500
OMV 60,000 6,549,304
United Meridian 190,000(c) 5,391,250
Unocal 175,000 6,671,874
-----------
Total 25,368,678
Energy equipment & services (2.8%)
Camco Intl 125,000(d) 5,546,875
Dresser Inds 400,000 11,950,000
ENSCO Intl 75,000(c) 3,562,500
Noble Drilling 200,000(c) 3,475,000
Schlumberger 75,000 8,306,250
-----------
Total 32,840,625
Health care (2.7%)
Amgen 100,000(c) 5,887,500
Biogen 175,000(c) 5,600,000
Boston Scientific 185,000(c) 8,926,250
Lilly (Eli) 65,000 5,711,875
Merck 50,000 4,525,000
-----------
Total 30,650,625
Health care services (0.7%)
HBO & Co 150,000 8,025,000
Insurance (1.1%)
Prudential 1,250,000(c) 12,164,537
Metals (3.7%)
Aluminum Co of America 140,000 9,782,500
Getchell Gold 150,000(c) 5,756,250
Stillwater Mining 700,000(c) 14,087,500
UCAR Intl 325,000(c) 13,650,000
-----------
Total 43,276,250
Multi-industry conglomerates (0.6%)
Westinghouse 405,000 6,885,000
Paper & packaging (1.0%)
Crown Cork & Seal 130,000 7,117,500
Unisource 300,000 4,425,000
-----------
Total 11,542,500
Retail (1.2%)
American Stores 150,000 6,825,000
Circuit City 165,000 6,538,125
-----------
Total 13,363,125
Transportation (0.4%)
Hvide Marine Cl A 250,000(c) 4,312,500
Utilities -- telephone (0.6%)
Airtouch Communications 280,000(c) 7,140,000
Total common stocks of unaffiliated issuers
(Cost: $961,019,087) $988,731,629
Bonds (1.5%)
Issuer and Principal Value (a)
coupon rate amount
Argentina (0.5%)
Banco de Galicia
(U.S. Dollar)
7.00% Cv 2002 $5,000,000 $5,725,000
Hong Kong (0.3%)
China Resources Beijing Land
(U.S. Dollar)
2.00% Cv 2004 3,000,000(b) 3,000,000
India (0.4%)
Mahindra & Mahindra
(U.S. Dollar)
5.00% 2001 4,000,000(b) 4,160,000
Luxembourg (0.3%)
Scandinavian Broadcast
(U.S. Dollar)
7.25% Cv 2005 4,500,000 4,038,750
Total bonds
(Cost: $14,351,995) $16,923,750
Other (--%)
Issuer Shares Value (a)
Germany (--%)
Daimler-Benz AG
Rights 75,000 $4,688
Hong Kong (--%)
Lai Sun Hotels Intl
Warrants 602,110(e) --
Malaysia (--%)
Multi-Purpose Holdings
Warrants 6,600,000 7
Total other
(Cost: $2,619,048) $4,695
Short-term securities (24.2%)
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agency (0.1%)
Federal Home Loan Mtge Corp Disc Nt
05-08-97 5.43% $1,669,000 $1,667,244
Commercial paper (19.9%)
Abbott Laboratories
05-12-97 5.49 2,500,000 2,495,821
Albertson's
05-06-97 5.58 1,900,000 1,898,535
ABN Amro
05-23-97 5.52 9,440,000 9,408,271
07-30-97 5.67 6,000,000 5,911,275
American General Finance
06-09-97 5.58 5,000,000(f) 4,970,046
AT&T Capital
06-02-97 5.54 6,500,000 6,468,222
06-06-97 5.49 5,400,000 5,370,516
Ameritech Capital Funding
05-27-97 5.47 3,300,000 3,287,011
06-10-97 5.53 6,000,000 5,963,333
Associates Corp North America
05-01-97 5.55 12,400,000 12,400,000
BOC Group
05-02-97 5.57 6,100,000(f) 6,099,060
BHP Finance
05-13-97 5.58 8,000,000 7,985,200
CAFCO
05-07-97 5.58 5,900,000(f) 5,894,542
05-29-97 5.54 4,100,000 4,082,397
Cargill
06-24-97 5.57 1,700,000 1,685,689
Ciesco LP
05-05-97 5.37 4,100,000(f) 4,097,572
05-12-97 5.54 800,000(f) 798,651
05-27-97 5.53 6,000,000 5,976,167
06-04-97 5.57 2,200,000 2,188,510
06-18-97 5.62 7,700,000 7,642,712
Clorox
06-16-97 5.60 6,500,000 6,453,821
Commercial Credit
06-05-97 5.56 3,900,000 3,879,032
Dean Witter, Discover & Co
06-13-97 5.61 6,100,000 6,059,489
06-20-97 5.60 5,600,000 5,556,755
Fleet Funding
05-14-97 5.57 4,900,000(f) 4,890,197
Ford Motor Credit
06-10-97 5.59 4,900,000 4,869,783
Gannett
06-02-97 5.53 9,000,000(f) 8,956,000
General Electric Capital
06-17-97 5.60 6,000,000 5,956,447
Goldman Sachs Group
05-21-97 5.55 6,600,000 6,579,760
Merrill Lynch
05-30-97 5.58 6,500,000 6,470,940
Metlife Funding
06-19-97 5.62 8,800,000 8,733,164
Morgan Stanley Group
05-20-97 5.53 3,300,000 3,290,403
05-23-97 5.54 8,500,000 8,471,327
06-10-97 5.59 700,000 695,676
Novartis
05-22-97 5.51 7,000,000(f) 6,977,583
Paccar Financial
05-22-97 5.50 6,000,000 5,980,820
05-28-97 5.52 3,200,000 3,186,800
Proctor & Gamble
06-06-97 5.54 5,000,000 4,972,500
SBC Communications Capital
05-29-97 5.54 6,200,000(f) 6,173,430
06-03-97 5.53 8,500,000(f) 8,457,146
SAFECO Credit
05-02-97 5.35 6,500,000 6,499,041
Unilever Capital
06-02-97 5.56 2,200,000(f) 2,189,205
- -----------
Total 229,922,849
Letters of credit (4.2%)
ABN Amro -
Formosa Plastics
05-30-97 5.53 10,000,000 9,955,453
Bank of America -
AES Barbers Point
05-15-97 5.52 5,500,000 5,488,236
Bank of America -
Formosa Plastics
05-15-97 5.54 7,000,000 6,985,001
Credit Agricole -
Louis Dreyfus Corp
05-27-97 5.52 4,900,000 4,880,448
First Bank Natl Association -
Midwest Commercial Paper
05-09-97 5.58 5,000,000(f) 4,993,833
Student Loan Marketing Assn -
USA Group
05-02-97 5.53 2,800,000 2,799,572
Toronto Dominion Bank -
Franciscan Services
05-16-97 5.52 2,800,000 2,793,560
WestDeutsche Landesbank --
Comision Federal De Electricidad
05-29-97 5.52 10,400,000 10,355,349
-------------
Total 48,251,452
Total short-term securities
(Cost: $279,845,456) $ 279,841,545
Total investments in securities of unaffiliated issuers
(Cost: $1,257,835,586) $1,285,501,619
Investments in securities of affiliated issuer (g)
Common stock (0.8%)
Issuer Shares Value (a)
Peru
Metals
Buenaventura ADR 415,000 $ 9,026,250
Total investments in securities of affiliated issuers
(Cost: $7,007,517) $ 9,026,250
Total investments in securities
(Cost: $1,264,843,103)(h) $1,294,527,869
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. For debt
securities, principal amounts are denominated in the currency indicated.
(b) 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.
(c) Non-income producing.
(d) Security is partially or fully on loan. See Note 5 to the financial
statements.
(e) Negligible market value.
(f) 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.
(g) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
six months ended April 30, 1997 are as follows:
Issuer Beginning Purchase Sales Ending Dividend
cost cost cost cost income
Buenaventura ADR $2,990,000 $4,017,517 $ -- $7,007,517 $48,661
Oliver Gold 1,415,994 -- 1,415,994 -- --
--------- ---- --------- ---- ----
Total $4,405,994 $4,017,517 $1,415,994 $7,007,517 $48,661
(h) At April 30, 1997, the cost of securities for federal income tax purposes
was approximately $1,264,843,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $86,344,000
Unrealized depreciation (56,659,000)
-----------
Net unrealized appreciation $29,685,000
See accompanying notes to investments in securities.
<PAGE>
Financial statements
Statement of assets and liabilities
World Income Portfolio
April 30, 1997 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $926,157,277) $913,299,964
Dividends and accrued interest receivable 21,131,312
Receivable for investment securities sold 14,297,336
Unrealized appreciation on foreign currency contracts held,
at value (Notes 1 and 4) 30,115
U.S. government securities held as collateral (Note 5) 2,249,747
---------
Total assets 951,008,474
-----------
Liabilities
Disbursements in excess of cash on demand deposit 39,840
Payable for investment securities purchased 24,257,022
Unrealized depreciation on foreign currency contracts held,
at value (Notes 1 and 4) 30,070
Payable upon return of securities loaned (Note 5) 33,092,247
Accrued investment management services fee 17,934
Other accrued expenses 31,452
------
Total liabilities 57,468,565
----------
Net assets $893,539,909
============
See accompanying notes to financial statements.
<PAGE>
Statement of operations
World Income Portfolio
Six months ended April 30, 1997 (Unaudited)
Investment income
Income:
Dividends (net of foreign taxes withheld of $2,114) $ 11,977
Interest (net of foreign taxes withheld of $123,150) 29,927,821
----------
Total income 29,939,798
==========
Expenses (Note 2):
Investment management services fee 3,199,239
Compensation of board members 10,114
Custodian fees 113,795
Audit fees 10,250
Administrative services fees and expenses 2,857
Other 13,711
------
Total expenses 3,349,966
Earnings credits on cash balances (Note 2) (4,968)
------
Total net expenses 3,344,998
---------
Investment income -- net 26,594,800
==========
Realized and unrealized gain (loss) -- net
Net realized gain on security and foreign currency
transactions (including gain
of $728,367 from foreign currency
transactions) (Note 3) 6,334,237
Net realized loss on financial futures contracts (673,275)
Net realized gain on option contracts writtten (Note 6) 149,000
-------
Net realized gain on investments and foreign currencies 5,809,962
Net change in unrealized appreciation or depreciation of
investments and on translation of assets and liabilities
in foreign currencies (40,436,713)
-----------
Net loss on investments and foreign currencies (34,626,751)
-----------
Net decrease in net assets resulting from operations $ (8,031,951)
============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Statements of changes in net assets
World Income Portfolio
<CAPTION>
Six months ended For the period from
April 30, 1997 May 13, 1996* to
(Unaudited) Oct. 31, 1996
Operations
<S> <C> <C>
Investment income-- net $ 26,594,800 $ 22,643,163
Net realized gain on investments and
foreign currencies 5,809,962 3,494,043
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies (40,436,713) 26,719,774
----------- ----------
Net increase (decrease) in net assets resulting
from operations (8,031,951) 52,856,980
Net contributions 66,845,889 781,818,991
---------- -----------
Total increase in net assets 58,813,938 834,675,971
Net assets at beginning of period (Note 1) 834,725,971 50,000
----------- ------
Net assets at end of period $893,539,909 $834,725,971
============ ============
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
World Income Portfolio
(Unaudited as to April 30, 1997)
1. Summary of significant accounting policies
The 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. World Income
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. On April 15, 1996, American Express Financial Corporation (AEFA)
contributed $50,000 to the Portfolio. Operations did not formally commence until
May 13, 1996, at which time, an existing fund transferred its assets to the
Portfolio in return for an ownership percentage of the Portfolio.
Significant accounting polices followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price; securities for which market quotations
are not readily available are valued at fair value according to methods selected
in good faith by the board. Determination of fair value involves, among other
things, reference to market indexes, matrixes and data from independent brokers.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy or
write options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The Portfolio also may buy and sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Portfolio may incur a
loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolio pays a premium whether or not
the option is exercised. The Portfolio also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Portfolio also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions
may arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement dates on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete the obligations of the contract.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend notification or upon
receipt of ex-dividend notification in the case of certain foreign securities.
For U.S. dollar denominated bonds, interest income includes level-yield
amortization of premium and discount. 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 entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.77% to 0.67% annually.
Under the agreement, the Trust also pays taxes and nonadvisory expenses, which
include custodian fees to be paid to an affiliate of AEFC, audit and certain
legal fees, fidelity bond premiums, registration fees for units, office
expenses, consultants' fees, compensation of trustees, corporate filing fees,
expenses incurred in connection with lending secruties of the Portfolio, and any
other expenses properly payable by the Trust or Portfolio, approved by the
board.
During the six months ended April 30, 1997, the Portfolio's custodian fees were
reduced by $4,968 as a result of earnings credits from overnight cash balances.
Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $257,468,026 and $270,534,927 respectively, for the six
months ended April 30, 1997. For the same period, the portfolio turnover rate
was 33%. Realized gains and losses are determined on an identified cost basis.
4. Foreign currency contracts
At April 30, 1997, the Portfolio had entered into two foreign currency exchange
contracts that obligate the Portfolio to deliver currencies at specified future
dates. The unrealized appreciation and/or depreciation (see Summary of
significant accounting policies) on these contracts is included in the
accompanying financial statements. The terms of the open contracts are as
follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 2, 1997 14,246,007 18,224,391 $ -- $30,070
U.S. DollarAustralian Dollar
May 2, 1997 18,251,590 14,267,268 30,115 --
Australian DollarU.S. Dollar -------- --------
$30,115 $30,070
5. Lending of portfolio securities
At April 30, 1997, securities valued at $31,927,804 were on loan to brokers. For
collateral, the Portfolio received $30,842,500 in cash and U.S. government
securities valued at $2,249,747. Income from securities lending amounted to
$65,267 for the six months ended April 30, 1997. 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.
6. Option contracts written
The number of contracts and premium amounts associated with option contracts
written is as follows:
Six months ended April 30, 1997
Calls
Contracts Premium
Balance Oct. 31, 1996 -- $ --
Opened 100 154,188
Closed (100) (154,188)
---- --------
Balance April 30, 1997 -- $ --
<PAGE>
Investments in securities
World Income Portfolio
April 30, 1997 (Unaudited)
(Percentages represent value of investments compared to net assets)
Bonds (81.5%)(b)
Issuer Coupon Maturity Principal Value(a)
rate year amount
Argentina (3.5%)
Perez Companc
(U.S. Dollar) 9.00% 2004 $ 1,975,000(d) $ 1,999,688
Republic of Argentina Euro
(Japanese Yen) 5.50 2001 880,000,000 7,292,648
(U.S. Dollar) 5.50 2023 12,250,000 7,985,530
(U.S. Dollar) 6.75 2005 10,670,000(c) 9,783,110
(U.S. Dollar) 11.375 2017 4,300,000 4,560,709
-----------
Total 31,621,685
Austria (2.9%)
Asian Development Bank
(Japanese Yen) 5.00 2003 213,000,000 1,955,791
Autobahn Schnell
(Japanese Yen) 6.00 2000 397,000,000 3,545,619
IADB
(Japanese Yen) 6.00 2001 59,000,000 552,493
Intl Bank Reconstruction & Development
(Japanese Yen) 4.50 1997 1,940,000,000 15,664,258
Republic of Austria Euro
(Japanese Yen) 5.25 1998 540,000,000 4,410,666
-----------
Total 26,128,827
Australia (3.5%)
Australian Govt
(Australian Dollar)9.75 2002 20,000,000 17,104,144
(Australian Dollar)10.00 2007 15,760,000 13,961,784
-----------
Total 31,065,928
Brazil (0.6%)
CIA Paranaense de Energia
Copel
(U.S. Dollar) 9.75 2005 5,000,000(d) 5,062,500
Canada (2.6%)
Govt of Canada
(Canadian Dollar) 8.00 2023 27,310,000 21,483,148
Rogers Cable System
(Canadian Dollar) 9.65 2014 2,000,000 1,403,258
-----------
Total 22,886,406
China (2.3%)
Bank of China
(U.S. Dollar) 8.25 2014 5,000,000 4,967,250
People's Republic of China
(U.S. Dollar) 7.375 2001 4,450,000 4,477,813
Zhuhai Highway
(U.S. Dollar) 11.50 2008 9,550,000(d) 10,696,000
-----------
Total 20,141,063
Denmark (2.9%)
Govt of Denmark
(Danish Krone) 8.00 2003 113,200,000 19,052,461
(Danish Krone) 9.00 2000 40,000,000 6,860,992
-----------
Total 25,913,453
Ecuador (0.6%)
Republic of Ecuador
(U.S. Dollar) 10.81 2004 5,000,000(c,d) 5,081,250
France (1.2%)
Govt of France
(European Currency
Unit) 7.75 2005 8,710,000 10,765,737
Germany (4.6%)
Federal Republic of Germany
(Deutsche Mark) 6.00 2016 36,700,000 20,225,542
(Deutsche Mark) 7.50 2004 31,870,000 20,610,340
-----------
Total 40,835,882
Indonesia (0.5%)
Pt Indah Kiat Euro
(U.S. Dollar) 8.875 2000 2,500,000 2,471,875
Tjiwi Kimia
(U.S. Dollar) 13.25 2001 2,000,000 2,242,500
-----------
Total 4,714,375
Italy (5.5%)
Govt of Italy
(Italian Lira) 8.50 1999-0471,125,000,000 43,419,029
Republic of Italy
(U.S. Dollar) 6.875 2023 6,000,000 5,519,580
-----------
Total 48,938,609
Japan (2.7%)
Euro Investment Bank
(Japanese Yen) 5.875 1999 880,000,000 7,755,326
Japan Development Bank
(Japanese Yen) 6.50 2001 1,370,000,000 13,038,167
Matsushita Electric
(Japanese Yen) Cv 1.30 1999 325,000,000 2,616,487
Nippon Express
(Japanese Yen) Cv 1.00 2004 120,000,000 923,549
-----------
Total 24,333,529
Mexico (4.2%)
United Mexican States
(Japanese Yen) 5.00 1998 580,000,000 4,733,380
(U.S. Dollar) 11.375 2016 5,000,000 5,268,750
(U.S. Dollar) 11.50 2026 26,376,000(g) 27,975,177
-----------
Total 37,977,307
Netherlands (0.2%)
Deutsche Bank Finance
(U.S. Dollar)
Zero Coupon 4.50 2017 3,410,000(d,e) 1,432,200
Philippines (0.6%)
Philippine Long Distance
(U.S. Dollar) 7.85 2007 1,500,000(d) 1,420,365
(U.S. Dollar) 8.35 2017 4,700,000(d) 4,336,079
-----------
Total 5,756,444
Russia (0.9%)
ALFA Bank
(U.S. Dollar) 11.10 1997 3,000,000(c) 3,000,000
Rostelecom (AO)
(U.S. Dollar) 9.56 2000 5,000,000 5,000,000
-----------
Total 8,000,000
Spain (3.1%)
Govt of Spain
(Spanish Peseta) 4.625 2004 575,000,000 5,240,084
(Spanish Peseta) 8.00 2004 2,365,000,000 17,542,766
(Spanish Peseta) 8.80 2006 652,000,000 5,057,062
-----------
Total 27,839,912
Sweden (4.5%)
Govt of Sweden
(Swedish Krona) 8.00 2007 260,200,000 34,958,684
Kingdom of Sweden
(Swedish Krona) 3.875 1999 600,000,000 5,010,042
-----------
Total 39,968,726
United Kingdom (9.4%)
Abbey Natl
(U.S. Dollar) 8.20 2004 5,000,000 5,292,450
United Kingdom Treasury
(British Pound) 8.00 2003 26,700,000 44,838,225
(British Pound) 8.50 2005 9,200,000 15,906,476
(British Pound) 9.00 2000 10,700,000 18,174,793
-----------
Total 84,211,944
United States (22.7%)
Chesapeake
(U.S. Dollar) 9.875 2003 1,000,000 1,122,040
Cleveland Electric Illuminating
(U.S. Dollar) 9.50 2005 3,000,000 3,198,750
Dayton Hudson
(U.S. Dollar) 8.50 2022 3,265,000 3,281,619
Executive Risk Capital Trust
(U.S. Dollar) 8.675 2027 3,500,000(d) 3,489,920
Federal Natl Mtge Assn
(U.S. Dollar) 7.50 2027 4,956,626 4,917,915
Federal Natl Mtge Assn Global
(Japanese Yen) 2.00 1999 500,000,000 4,024,870
General Motors
(U.S. Dollar) 9.125 2001 2,000,000 2,157,080
Georgia-Pacific
(U.S. Dollar) Credit
Sensitive Nts 9.85 1997 500,000 502,070
Govt Natl Mtge Assn
(U.S. Dollar) 8.00 2026 9,990,391 10,127,759
Imexsa Export Trust
(U.S. Dollar) 10.125 2003 3,000,000(d) 3,108,750
New York Life Insurance
(U.S. Dollar) Credit
Sensitive Nts 7.50 2023 7,000,000(d) 6,564,880
Northwest Airlines
(U.S. Dollar) 8.97 2015 1,973,418 2,042,231
Overseas Private Investment
(U.S. Dollar) 6.99 2009 7,500,000 7,359,375
Pacific Bell
(U.S. Dollar) 8.50 2031 5,000,000 5,094,750
PDV America
(U.S. Dollar) 7.875 2003 3,500,000 3,464,685
Phillips Petroleum
(U.S. Dollar) 7.92 2023 3,115,000 3,008,654
Polysindo Intl Finance
(U.S. Dollar) 11.375 2006 2,300,000 2,449,500
Questar Pipeline
(U.S. Dollar) 9.375 2021 1,000,000 1,088,530
Southern California Gas
(U.S. Dollar) 7.375 2023 900,000 849,069
Texas Utilities
(U.S. Dollar)
1st Mtge 9.75 2021 3,500,000 3,925,215
TU Electric Capital
(U.S. Dollar) 8.175 2037 6,150,000 6,059,287
U.S. Treasury
(U.S. Dollar) 4.75 1998 14,535,000 14,293,428
(U.S. Dollar) 5.875 2000 10,000,000(g) 9,866,700
(U.S. Dollar) 7.50 2001 72,250,000 74,904,465
(U.S. Dollar) 7.50 2016 19,800,000(g) 20,757,924
U S WEST Communications
(U.S. Dollar) 7.20 2026 6,000,000 5,515,860
-----------
Total 203,175,326
Venezuela (2.5%)
Govt of Venezuela
(Swiss Franc) 6.75 2007 25,000,000(c) 22,234,500
Total bonds
(Cost: $740,868,102) $728,085,603
Other (--%)(b)
Issuer Shares Value (a)
Mexico Value
Rights 1,000(h) $--
Total other
(Cost: $--) $--
Option purchased (--%)
Issuer Number Exercise Expiration Value(a)
of contracts price date
Call
Deutsche Mark 200 $63 June 1997 $2,500
Total option purchased
(Cost: $73,500) $2,500
Short-term securities (20.7%)
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agency (1.3%)
Federal Home Loan Mtge Corp Disc Nts
05-13-97 5.43% $3,100,000 $ 3,094,410
05-15-97 5.41 8,500,000 8,482,183
-----------
Total 11,576,593
Commercial paper (17.6%)
Abbott Laboratories
05-12-97 5.49 6,000,000 5,989,972
Ameritech Capital Funding
05-15-97 5.51 6,000,000(f) 5,987,190
06-11-97 5.56 5,000,000(f) 4,966,754
Associates Corp North America
05-07-97 5.53 2,900,000 2,897,342
CAFCO
05-09-97 5.54 6,300,000(f) 6,292,272
Cargill
05-09-97 5.43 3,200,000 3,196,146
05-12-97 5.52 2,500,000 2,495,798
Clorox
05-05-97 5.54 3,700,000 3,697,731
06-16-97 5.60 2,600,000 2,581,528
Coca-Cola
05-27-97 5.49 6,500,000 6,474,368
Commerzbank U.S. Finance
05-29-97 5.52 4,500,000 4,480,750
Dean Witter, Discover & Co
05-19-97 5.52 3,000,000 2,991,750
Exxon Asset Management
05-13-97 5.41 1,200,000(f) 1,197,840
Fleet Funding
05-14-97 5.57 6,000,000(f) 5,987,997
Gannett
05-23-97 5.53 6,500,000(f) 6,478,153
06-02-97 5.53 7,100,000(f) 7,065,289
General Electric Capital
05-28-97 5.57 6,000,000 5,975,025
Goldman Sachs Group
05-27-97 5.55 6,500,000 6,474,086
05-30-97 5.55 5,300,000 5,276,433
MCI Communications
05-30-97 5.53 6,500,000(f) 6,471,201
Morgan Stanley Group
05-19-97 5.54 6,500,000 6,482,060
Motorola
05-06-97 5.58 5,300,000 5,295,914
05-08-97 5.58 5,700,000 5,693,849
NBD Bank Canada
05-01-97 5.60 2,400,000 2,400,000
06-02-97 5.57 5,200,000 5,174,347
Paccar Financial
05-29-97 5.53 4,500,000 4,480,715
Reed Elsevier
05-05-97 5.55 5,300,000(f) 5,296,749
SAFECO Credit
05-02-97 5.35 4,000,000 3,999,410
SBC Communications Capital
05-13-97 5.52 1,800,000(f) 1,796,700
05-30-97 5.53 2,000,000(f) 1,991,139
Southern California Gas
05-22-97 5.33 3,400,000(f) 3,387,605
Southwestwern Bell Telephone
05-07-97 5.54 5,000,000 4,995,400
Unilever Capital
06-03-97 5.56 3,200,000(f) 3,183,808
USAA Capital
05-06-97 5.59 6,500,000 6,494,980
-----------
Total 157,650,301
Letters of credit (1.8%)
Bank of America-
AES Barbers Point
05-15-97 5.52% $4,600,000 $ 4,590,161
Bank of America-
Formosa
05-15-97 5.54 6,000,000 5,987,143
Bank of New York-
River Fuel
06-05-97 5.58 5,437,000(f) 5,407,663
-----------
Total 15,984,967
Total short-term securities
(Cost: $185,215,675) $185,211,861
Total investments in securities
(Cost: $926,157,277)(i) $913,299,964
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(c) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on April 30, 1997.
(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) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(f) 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.
(g) Security is partially or fully on loan. See Note 5 to the financial
statements.
(h) Negligible market value.
(i) At April 30, 1997, the cost of securities for federal income tax purposes
was approximately $925,445,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $ 17,848,000
Unrealized depreciation (29,993,000)
-----------
Net unrealized depreciation $(12,145,000)
See accompanying notes to investments in securities.
<PAGE>
American Express Service Corporation, Distributor
S-6145 A (6/97)
Strategist Growth Fund, Inc.
