AMERICAN EXPRESS Financial Direct
Strategist World Fund, Inc.
1998 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) 11
Notes to financial statements (Emerging Markets Portfolio) 14
Investment in securities (Emerging Markets Portfolio) 19
Financial statements (World Growth Portfolio) 29
Notes to financial statements (World Growth Portfolio) 32
Investments in securities (World Growth Portfolio) 37
Financial statements (World Income Portfolio) 47
Notes to financial statements (World Income Portfolio) 50
Investments in securities (World Income Portfolio) 55
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<CAPTION>
Financial statements
Statements of assets and liabilities
Strategist World Fund, Inc.
April 30, 1998 (Unaudited)
Strategist Strategist World Strategist
Emerging Markets Growth World Income
Fund Fund Fund
Assets
<S> <C> <C> <C>
Investment in corresponding Portfolio (Note 1) $688,566 $782,096 $658,714
Organizational costs (Note 1) 36 1,579 1,578
Other receivables 19 29 2
-- -- -
Total assets 688,621 783,704 660,294
------- ------- -------
Liabilities
Dividends payable to shareholders -- -- 2,484
Accrued distribution fee 5 5 4
Accrued transfer agency fee 2 1 1
Accrued administrative services fee 2 1 1
Other accrued expenses 19,133 17,056 24,722
------ ------ ------
Total liabilities 19,142 17,063 27,212
------ ------ ------
Net assets applicable to outstanding capital stock $669,479 $766,641 $633,082
-------- -------- --------
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,462 $ 813 $ 1,013
Additional paid-in capital 731,055 589,799 612,408
Undistributed (excess of distributions over)
net investment income (2,098) (2,805) 9,177
Accumulated net realized gain (loss) (72,492) 25,421 (3,682)
Unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies 11,552 153,413 14,166
------ ------- ------
Total -- representing net assets applicable to
outstanding capital stock $669,479 $766,641 $633,082
-------- -------- --------
Shares outstanding 146,226 81,347 101,282
------- ------ -------
Net asset value per share of
outstanding capital stock $ 4.58 $ 9.42 $ 6.25
-------- -------- --------
See accompanying notes to financial statements.
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<CAPTION>
Statements of operations
Strategist World Fund, Inc.
Six months ended April 30, 1998 (Unaudited)
Strategist Strategist World Strategist
Emerging Markets Growth World Income
Fund Fund Fund
Investment income
Income:
<S> <C> <C> <C>
Dividends $ 1,946 $ 3,294 $ 129
Interest 3,187 861 23,148
Less foreign taxes withheld (161) (199) (626)
---- ---- ----
Total income 4,972 3,956 22,651
----- ----- ------
Expenses (Note 2):
Expenses allocated from corresponding Portfolio 4,068 2,756 2,474
Distribution fee 806 821 768
Transfer agency fee 322 195 124
Administrative services fees and expenses 322 197 184
Postage -- -- 357
Registration fees 10,727 6,043 188
Reports to shareholders -- -- 143
Audit fees 1,600 1,600 1,600
Other 1,662 -- 550
----- ----- ---
Total expenses 19,507 11,612 6,388
Less expenses reimbursed by AEFC (12,432) (5,955) (4,514)
------- ------ ------
Total net expenses 7,075 5,657 1,874
----- ----- -----
Investment income (loss)-- net (2,103) (1,701) 20,777
------ ------ ------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (63,467) 24,709 1,907
Financial futures -- -- (2,650)
Foreign currency transactions (5,315) 4,095 --
------ ----- -----
Net realized gain (loss) on investments (68,782) 28,804 (743)
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies 98,511 132,311 4,766
------ ------- -----
Net gain (loss) on investments and foreign currencies 29,729 161,115 4,023
Net increase (decrease) in net assets resulting
from operations $27,626 $159,414 $24,800
------- -------- -------
See accompanying notes to financial statements.
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<CAPTION>
Statement of changes in net assets
Strategist World Fund, Inc.
Strategist Emerging Markets Fund
April 30, 1998 For the period
Six months ended from Nov. 13, 1996*
(Unaudited) to Oct. 31, 1997
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ (2,103) $ 774
Net realized gain (loss) on investments (68,782) 104,401
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies 98,511 (86,959)
------ -------
Net increase (decrease) in net assets
resulting from operations 27,626 18,216
------ ------
Distributions to shareholders from:
Net investment income (1,190) (1,462)
Net realized gains (106,562) --
-------- ------
Total distributions (107,752) (1,462)
-------- ------
Capital share transactions (Note 3)
Proceeds from sales 30,383 634,388
Reinvestment of distributions at net asset value 107,748 1,462
Payments for redemptions (39,272) (2,858)
------- ------
Increase (decrease) in net assets from capital
share transactions 98,859 632,992
------ -------
Total increase (decrease) in net assets 18,733 649,746
Net assets at beginning of period (Note 1) 650,746 1,000
------- -----
Net assets at end of period $669,479 $650,746
-------- --------
Undistributed (excess of distributions over)
net investment income $ (2,098) $ 1,195
-------- --------
*Commencement of operations.
See accompanying notes to financial statements.
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<CAPTION>
Statements of changes in net assets
Strategist World Fund, Inc.
Strategist World Growth Fund
April 30, 1998 Oct. 31, 1997
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ (1,701) $ 1,551
Net realized gain (loss) on investments 28,804 9,866
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies 132,311 18,151
------- ------
Net increase (decrease) in net assets
resulting from operations 159,414 29,568
Distributions to shareholders from:
Net investment income (3,155) (957)
------ ----
Capital share transactions (Note 3)
Proceeds from sales 14,700 105,025
Reinvestment of distributions at net asset value 3,155 957
Payments for redemptions (11,703) (19,522)
------- -------
Increase (decrease) in net assets from capital
share transactions 6,152 86,460
----- ------
Total increase (decrease) in net assets 162,411 115,071
Net assets at beginning of period 604,230 489,159
------- -------
Net assets at end of period $766,641 $604,230
-------- --------
Undistributed (excess of distributions over)
net investment income $ (2,805) $ 2,051
-------- --------
See accompanying notes to financial statements.
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<CAPTION>
Statements of changes in net assets
Strategist World Fund, Inc.
Strategist World Income Fund
April 30, 1998 Oct. 31, 1997
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 20,777 $ 33,966
Net realized gain (loss) on investments (743) 4,989
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies 4,766 (9,228)
----- ------
Net increase (decrease) in net assets
resulting from operations 24,800 29,727
------ ------
Distributions to shareholders from:
Net investment income (15,573) (20,717)
Net realized gain (15,746) (1,848)
------- ------
Total distributions (31,319) (22,565)
------- -------
Capital share transactions (Note 3)
Proceeds from sales 2,000 80,679
Reinvestment of distributions at net asset value 31,378 29,488
Payments for redemptions (18,637) (15,976)
------- -------
Increase (decrease) in net assets from capital
share transactions 14,741 94,191
------ ------
Total increase (decrease) in net assets 8,222 101,353
Net assets at beginning of period 624,860 523,507
------- -------
Net assets at end of period $633,082 $624,860
-------- --------
Undistributed net investment income $ 9,177 $ 3,973
-------- --------
See accompanying notes to financial statements.
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Notes to financial statements
Strategist World Fund, Inc.
(Unaudited as to April 30, 1998)
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, open-end management investment company. Each Fund has 3 billion
authorized shares of capital stock. On Nov. 12, 1996, American Express Financial
Corporation (AEFC) invested $1,000 in the Emerging Markets Fund, which
represented 200 shares. Operations commenced on Nov. 13, 1996.
Investments 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, 1998, the percentages of the corresponding Portfolio owned by Emerging
Markets Fund, World Growth Fund and World Income Fund were 0.15%, 0.06% 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 at the end of each
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 Funds 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, 1998, AEFC owned 120,255 shares for Emerging Markets Fund, 69,210
shares for World Growth Fund and 93,005 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 an agreement with AEFC for providing administrative
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 a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. Each Fund pays
AECSC 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 Fund expenses through Dec. 31, 1998. Under this agreement each Fund's
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. In addition, for the six months
ended April 30, 1998, AEFC further voluntarily agreed to waive certain fees and
expenses to 1.72% for World Growth Fund and .61% for World Income Fund.
3. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 1998
Emerging World World
Markets Growth Income
Fund Fund Fund
Sold 6,529 1,817 320
Issued for reinvested
distributions 24,544 412 5,061
Redeemed (8,292) (1,528) (2,966)
------ ------ ------
Net increase (decrease) 22,781 701 2,415
Year ended Oct. 31, 1997
Emerging World World
Markets Growth Income
Fund* Fund Fund
Sold 123,439 14,316 12,880
Issued for reinvested 287 132 4,682
distributions
Redeemed (481) (2,913) (2,536)
---- ------ ------
Net increase (decrease) 123,245 11,535 15,026
*Inception date was Nov. 13, 1996.
4. Capital loss carryover
For federal income tax purposes, World Growth Fund had a capital loss carryover
at Oct. 31, 1997 of $3,309 that, if not offset by subsequent capital gains, will
expire in 2005. 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.
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5. Financial highlights
The table below shows certain important financial information for evaluating
each Fund's results.
Fiscal period ended Oct. 31,
Per share income and capital changesa
Emerging World World
Markets Fund Growth Fund Income Fund
1998d 1997c 1998d 1997 1996b 1998d 1997 1996b
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.27 $5.00 $7.49 $7.08 $7.32 $6.32 $6.24 $6.05
Income from investment operations:
Net investment income (loss) (.01) .01 (.02) .02 .04 .21 .36 .15
Net gains (losses)
(both realized and unrealized) .19 .27 1.99 .40 (.28) .02 (.03) .25
Total from investment operations .18 .28 1.97 .42 (.24) .23 .33 .40
Less distributions:
Dividends from net investment income (.01) (.01) (.04) (.01) -- (.16) (.23) (.15)
Excess distributions of net
investment income -- -- -- -- -- -- -- (.06)
Distributions from realized gains (.86) -- -- -- -- (.14) (.02) --
Total distributions (.87) (.01) (.04) (.01) -- (.30) (.25) (.21)
Net asset value, end of period 4.58 5.27 9.42 7.49 7.08 6.25 6.32 6.24
Ratios/supplemental data:
Net assets, end of period (in thousands) $669 $651 $767 $604 $489 $633 $627 $524
Ratio of expenses to average daily
net assetse 2.20%f 2.20%f 1.72%f 1.65% 1.75%f .61%f 1.35% 1.35%f
Ratio of net income (loss) to
average daily net assets (.65%)f .12%f (.52%)f .26% 1.61%f 6.76%f 6.28% 5.87%f
Total return 4.0% 5.9% 26.4% 6.0% (3.3%) 3.5% 6.6% 6.6%
Portfolio turnover rate (excluding
short-term securities) 69% 87% 40% 199% 58% 15% 55% 24%
Average brokerage commission rateg $.0015 $.0034 $.0335 $.0113 $.0086 -- -- --
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was May 13, 1996.
c Inception date was Nov. 13, 1996.
d Six months ended April 30, 1998 (Unaudited).
e The Advisor and Distributor voluntarily limited total operating expenses.
Without this agreement, the ratio of expenses to average daily net assets would
have been 6.05% and 9.61% for Emerging Markets Fund for periods ended 1998 and
1997, respectively, 3.54%, 5.13% and 17.33% for World Growth Fund for periods
ended 1998, 1997 and 1996, respectively, and 2.08%, 5.36% and 19.23% for World
Income Fund for periods ended 1998, 1997 and 1996, respectively.
f Adjusted to an annual basis.
g Effective fiscal year 1996, 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.
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Financial statements
Statement of assets and liabilities
Emerging Markets Portfolio
April 30, 1998
Assets (Unaudited)
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $488,584,583) $496,296,281
Cash in bank on demand deposit 750,992
Dividends and accrued interest receivable 178,170
Receivable for investment securities sold 6,809,528
Unrealized appreciation on foreign currency
contracts held, at value (Notes 1 & 5) 1,994
U.S. government securities held as collateral (Note 4) 10,323,518
----------
Total assets 514,360,483
-----------
Liabilities
Payable for investment securities purchased 6,655,767
Unrealized depreciation on foreign currency
contracts held, at value (Notes 1 & 5) 14,526
Payable upon return of securities loaned (Note 4) 53,910,168
Accrued investment management services fee 13,338
Other accrued expenses 37,833
------
Total liabilities 60,631,632
----------
Net assets $453,728,851
------------
See accompanying notes to financial statements.
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<CAPTION>
Statement of operations
Emerging Markets Portfolio
Six months ended April 30, 1998
Investment income (Unaudited)
Income:
<S> <C>
Dividends $ 1,167,429
Interest 1,881,883
Less foreign taxes withheld (95,566)
-------
Total income 2,953,746
---------
Expenses (Note 2):
Investment management services fee 2,154,672
Compensation of board members 4,594
Custodian fees 256,828
Audit fees 6,750
Other 11,992
------
Total expenses 2,434,836
Earnings credits on cash balances (Note 2) (10,058)
-------
Total net expenses 2,424,778
---------
Investment income (loss) -- net 528,968
-------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) (35,322,147)
Foreign currency transactions (2,126,113)
----------
Net realized gain (loss) on investments (37,448,260)
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 57,104,332
----------
Net gain (loss) on investments and foreign currencies 19,656,072
----------
Net increase (decrease) in net assets resulting from operations $20,185,040
-----------
See accompanying notes to financial statements.
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<CAPTION>
Statements of changes in net assets
Emerging Markets Portfolio
April 30, 1998 For the period
Six months ended from Nov. 13, 1996*
(Unaudited) to Oct. 31, 1997
Operations
<S> <C> <C>
Investment income (loss)-- net $ 528,968 $ 1,745,263
Net realized gain (loss) on investments (37,448,260) 8,130,275
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities in
foreign currencies 57,104,332 (49,497,497)
---------- -----------
Net increase (decrease) in net assets
resulting from operations 20,185,040 (39,621,959)
Net contributions (withdrawals)
from partners 75,085,539 398,076,231
---------- -----------
Total increase (decrease) in net assets 95,270,579 358,454,272
Net assets at beginning of period 358,458,272 4,000
----------- -----
Net assets at end of period $453,728,851 $358,458,272
------------ ------------
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
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Notes to financial statements
Emerging Markets Portfolio
(Unaudited as to April 30, 1998)
1. Summary of significant accounting policies
Emerging Markets Portfolio (the Portfolio) is a series of World Trust (the
Trust) and is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. Emerging Markets
Portfolio invests primarily in equity securities of issuers in countries with
developing or emerging markets. The Declaration of Trust permits the Trustees to
issue non-transferable interests in the Portfolio. On Nov. 12, 1996, two funds
affiliated with American Express Financial Corporation (AEFC) invested $4,000 in
the Portfolio. Operations did not formally commence until Nov. 13, 1996.
Significant accounting policies 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. Debt securities are generally traded in
the over-the-counter market and are valued at a price deemed best to reflect
fair value as quoted by dealers who make markets 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
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy and
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 and 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 1.10% to 1.00% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions
and nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
During the six months ended April 30, 1998, the Portfolio's custodian fees were
reduced by $10,058 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 $243,180,295 and $128,631,796, respectively, for the six
months ended April 30, 1998. For the same period, the portfolio turnover rate
was 69%. Realized gains and losses are determined on an identified cost basis.
4. Lending of portfolio securities
At April 30, 1998, securities valued at $50,721,737 were on loan to brokers. For
collateral, the Portfolio received $43,586,650 in cash and U.S. government
securities valued at $10,323,518. Income from securities lending amounted to
$233,065 for the six months ended April 30, 1998. 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.
<PAGE>
<TABLE>
<CAPTION>
5. Foreign currency contracts
At April 30, 1998, the Portfolio had entered into foreign currency exchange
contracts that obligate the Portfolio to deliver currency at a specified future
date. The unrealized appreciation and/or depreciation on these contracts is
included in the accompanying financial statements. See "Summary of significant
accounting policies." The terms of the open contracts are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
<S> <C> <C> <C> <C>
May 1, 1998 31,162,223 4,024,567 $1,559 $ --
Hong Kong Dollar U.S. Dollar
May 1, 1998 1,294,498,163 160,230 -- 1,582
Indonesian Rupiah U.S. Dollar
May 4, 1998 6,668,699 257,411,771 -- 12,932
U.S. Dollar Thailand Baht
May 4, 1998 15,360,382 1,982,803 435 --
Hong Kong Dollar U.S. Dollar
May 4, 1998 15,923 13,912 -- 12
Brazilian Real U.S. Dollar
Total $1,994 $14,526
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
Emerging Markets Portfolio
April 30, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (87.4%)
Issuer Shares Value (a)
Argentina (3.2%)
Energy (1.4%)
<S> <C> <C>
Perez Companc 1,060,000 $6,360,636
Utilities -- telephone (1.8%)
Telefonica de Argentina ADR 210,000(c) 8,098,125
Brazil (16.3%)
Banks and savings & loans (1.5%)
Garanti Banking 130,000,000(b) 6,890,000
Beverages & tobacco (1.4%)
Companhia Cervejaria Brahma ADR 10,000,000 6,514,230
Chemicals (0.9%)
Companhia de Saneamento Basico do
Estado de Sao Paulo 17,000,000 3,864,814
Energy (3.1%)
Petroleo Brasileiro ADR 548,000(c) 13,867,414
Utilities -- electric (4.4%)
Centrais Eletricas Brasileiras ADR 481,000 9,985,608
Companhia Energetica de Brasilia 60,000,000(b) 2,691,360
Light Servicos de Eletricidade 17,995,000 7,237,967
-----------
Total 19,914,935
Utilities -- telephone (5.0%)
Telecomunicacoes Brasileiras --
Telebras ADR 145,000 17,662,812
Telecomunicacoes de Minas
Gerais Cl B 32,900,000(b) 5,077,457
-----------
Total 22,740,269
Chile (1.7%)
Multi-industry conglomerates (--%)
Quinenco ADR 12,370 $127,566
Utilities -- telephone (1.7%)
Compania de Telecomunicaciones
de Chile ADR 315,000(c) 7,894,687
China (1.1%)
Utilities -- electric
Beijing Datang Power Generation Cl H 12,390,000(b) 5,039,013
Egypt (1.4%)
Building materials & construction
Suez Cement GDR 320,000 6,528,000
Greece (5.3%)
Banks and savings & loans (3.9%)
National Bank of Greece 100,000(b) 17,594,100
Building materials & construction (1.4%)
Titan Cement 73,000(b) 6,247,654
Hong Kong (7.0%)
Communications equipment & services (1.9%)
China Telecom 4,500,000(b,c) 8,540,100
Computers & office equipment (0.6%)
Legend Holdings 6,072,000(b) 2,606,710
Industrial equipment & services (0.5%)
First Tractor 3,800,000(b) 2,121,920
Multi-industry conglomerates (4.0%)
China Merchants Holdings Intl 4,314,000(b,c) 3,425,316
China Resources Enterprises 2,948,000(b) 5,061,716
Shanghai Industrial Holdings 2,762,000(b,c) 9,467,031
-----------
Total 17,954,063
Hungary (3.6%)
Chemicals (0.8%)
Borsod Chemical 100,000(d) 3,740,000
Health care (1.9%)
EGIS 63,000(b) 3,286,622
Gedeon Richter 48,000 5,112,000
-----------
Total 8,398,622
Utilities -- telephone (0.9%)
Matav ADR 135,000(b) 3,982,500
India (1.6%)
Automotive & related (0.9%)
Tata Engineering & Locomotive GDR 551,000 4,008,525
Utilities -- telephone (0.7%)
Mahanagar Telephone Nigam GDR 218,000(b) 3,389,900
Indonesia (0.3%)
Utilities -- telephone
Indosat 886,000 1,295,775
Israel (4.9%)
Banks and savings & loans (1.9%)
Bank Hapoalim 3,200,000(b) 8,573,120
Chemicals (1.6%)
Israel Chemical 2,550,000 3,068,415
Makhteshim Chemical Works 520,000(b) 4,405,284
-----------
Total 7,473,699
Communications equipment & services (0.9%)
Tadiran Telecommunications 100,000 3,885,120
Computers & office equipment (0.5%)
Formula Systems 64,711(b) 2,494,894
Malaysia (1.2%)
Energy
Petronas Gas Berhad 2,208,000(b) 5,342,035
Mexico (13.1%)
Beverages & tobacco (4.2%)
Coca-Cola Femsa ADR 343,200 5,834,400
Fomento Economico Mexicano Cl B 959,000 7,097,843
Panamerican Beverages Cl A 149,400 5,957,325
-----------
Total 18,889,568
Financial services (1.7%)
Grupo Financiero Bancomer Cl B 11,500,000(b) 7,942,257
Media (1.0%)
Grupo Televisa 115,000(b) 4,715,000
Multi-industry conglomerates (1.9%)
Grupo Carso 1,350,000(b) 8,496,170
Paper & packaging (1.9%)
Kimberly-Clark de Mexico ADR 345,000 8,401,957
Utilities -- telephone (2.4%)
Telefonos de Mexico ADR Cl L 190,000 10,758,750
Peru (1.4%)
Metals
Compania de Minas Buenaventura ADR 400,000(c) 6,200,000
Russia (7.3%)
Communications equipment & services (1.3%)
Vimpel-Communications ADR 113,000(b,c) 6,102,000
Energy (2.4%)
AO Tatneft ADR 300,000(b,c) 5,812,500
Lukoil Holding ADR 80,000(c) 5,272,560
-----------
Total 11,085,060
Utilities -- electric (2.0%)
Mosenergo ADR 155,000(b,c) 5,502,500
Unified Energy Systems GDR 11,500,000(b) 3,785,800
-----------
Total 9,288,300
Utilities -- telephone (1.6%)
Rostelecom ADR 337,000(b) 7,224,438
South Africa (1.6%)
Energy equipment & services (1.1%)
Sasol 500,000 5,045,500
Metals (0.5%)
Anglogold ADR 456,870 2,312,904
South Korea (1.9%)
Electronics
Samsung Electronics 157,900(b) 8,742,686
Taiwan (6.3%)
Computers & office equipment (2.7%)
D-Link 2,378,000(b) 6,093,863
Synnex Technology Intl 1,120,000(b) 6,385,568
-----------
Total 12,479,431
Electronics (3.0%)
Acer Peripherals 1,200,000(b) 2,183,520
Compal Electronics 1,419,000(b) 6,175,204
Taiwan Secom 700,000(b) 2,282,070
Yageo 1,285,000(b) 3,059,071
-----------
Total 13,699,865
Textiles & apparel (0.6%)
Far Eastern Textile 3,100,000(b) 2,820,380
Thailand (1.7%)
Banks and savings & loans
Bangkok Bank 1,613,000(b) 4,045,565
Thai Farmers Bank 1,506,000(b) 3,446,180
-----------
Total 7,491,745
Turkey (5.2%)
Automotive & related (1.2%)
Otosan Otomobil Sanayii 7,288,000 5,248,089
Banks and savings & loans (2.4%)
Akbank T.A.S. 61,600,000(b) 5,236,000
Yapi Kredit Finance 115,000,000(b) 5,635,000
-----------
Total 10,871,000
Multi-industry conglomerates (1.6%)
Dogan Sirketler Grubu Holdings 125,000,000(b) 7,125,000
Venezuela (1.3%)
Utilities -- telephone
Compania Anonima Nacional
Telefonos de Venezuela ADR 180,000 6,030,000
Total common stocks
(Cost: $391,059,752) $396,458,526
Preferred stocks & other (4.1%)
Issuer Shares Value (a)
Brazil (3.0%)
Companhia Vale do Rio Doce 350,000(b) $8,263,010
Telecomunicacoes do Rio de Janeiro 35,000,000(b) 5,324,900
-----------
Total 13,587,910
Philippines (1.0%)
Jollibee Foods 10,142,000 4,609,539
Warrants
South Korea (0.1%)
Samsung Electronics 12,562 242,499
Rights
Taiwan (--%)
Yageo 99,471(e) --
Rights
Total preferred stocks & other
(Cost: $16,127,024) $18,439,948
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (17.9%)
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agencies (4.6%)
Federal Home Loan Mtge Corp Disc Nts
<S> <C> <C> <C>
05-20-98 5.43% $700,000 $697,998
05-29-98 5.45 4,500,000 4,481,048
Federal Natl Mtge Assn Disc Nts
05-11-98 5.43 1,700,000 1,697,445
05-13-98 5.41 10,000,000 9,982,000
05-15-98 5.44 4,300,000 4,290,945
-----------
Total 21,149,436
Commercial paper (12.0%)
Ciesco LP
05-15-98 5.53 1,800,000 1,796,150
Delaware Funding
05-22-98 5.54 3,400,000(f) 3,389,052
Dresdner US Finance
05-21-98 5.53 4,200,000 4,187,143
Fleet Funding
05-29-98 5.54 8,500,000(f) 8,463,573
Glaxo Wellcome
05-05-98 5.52 8,100,000(f) 8,095,050
Goldman Sachs Group
05-15-98 5.54 12,500,000 12,473,215
GTE Funding
06-02-98 5.54 1,100,000 1,094,612
Reed Elsevier
05-11-98 5.54 7,600,000(f) 7,588,389
Toyota Motor Credit
05-19-98 5.55 4,700,000 4,687,028
Xerox
05-01-98 5.55 2,600,000 2,600,000
-----------
Total 54,374,212
Letters of credit (1.3%)
Bank of America-
AES Hawaii
05-14-98 5.53% $1,700,000 $1,696,617
06-05-98 5.53 4,200,000 4,177,542
-----------
Total 5,874,159
Total short-term securities
(Cost: $81,397,807) $81,397,807
Total investments in securities
(Cost: $488,584,583)(g) $496,296,281
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements. Foreign security values are stated in U.S. dollars.
(b) Non-income producing.
(c) Security is partially or fully on loan. See Note 4 to the financial
statements.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(e) 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) At April 30, 1998, the cost of securities for federal income tax purposes
was approximately $488,585,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $43,318,000
Unrealized depreciation (35,607,000)
-----------
Net unrealized appreciation $7,711,000
See accompanying notes to investments in securities.
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
World Growth Portfolio
April 30, 1998
Assets (Unaudited)
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $1,155,369,019) $1,422,296,063
Dividends and accrued interest receivable 2,101,495
Receivable for investment securities sold 19,253,499
Unrealized appreciation on foreign currency
contracts held, at value (Notes 1 and 4) 784
U.S. government securities held as collateral (Note 5) 17,241,197
----------
Total assets 1,460,893,038
-------------
Liabilities
Disbursements in excess of cash on demand deposit 9,061,880
Payable for investment securities purchased 1,743,218
Payable upon return of securities loaned (Note 5) 126,714,597
Unrealized depreciation on foreign currency
contracts held, at value (Notes 1 and 4) 45,462
Accrued investment management services fee 26,540
Other accrued expenses 175,700
-------
Total liabilities 137,767,397
-----------
Net assets $1,323,125,641
--------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
World Growth Portfolio
Six months ended April 30, 1998
Investment income (Unaudited)
Income:
<S> <C>
Dividend $ 5,678,081
Interest 1,488,657
Less foreign taxes withheld (339,352)
--------
Total income 6,827,386
Expenses (Note 2):
Investment management services fee 4,409,612
Compensation of board members 6,138
Custodian fees 359,381
Audit fees 11,000
Other 12,995
------
Total expenses 4,799,126
Earnings credits on cash balances (Note 2) (10,997)
-------
Total net expenses 4,788,129
---------
Investment income (loss) -- net 2,039,257
---------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) 46,641,666
Financial futures contracts 8,092,635
---------
Net realized gain (loss) on investments 54,734,301
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 223,344,105
-----------
Net gain (loss) on investments 278,078,406
Net increase (decrease) in net assets resulting
from operations $280,117,663
------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
World Growth Portfolio
April 30, 1998 Oct. 31, 1997
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 2,039,257 $ 12,285,162
Net realized gain (loss) on investments 54,734,301 28,608,288
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities in
foreign currencies 223,344,105 37,976,694
----------- ----------
Net increase (decrease) in net assets
resulting from operations 280,117,663 78,870,144
Net contributions (withdrawals)
from partners (90,107,926) (19,158,130)
----------- -----------
Total increase (decrease) in net assets 190,009,737 59,712,014
Net assets at beginning of period 1,133,115,904 1,073,403,890
------------- -------------
Net assets at end of period $1,323,125,641 $1,133,115,904
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
World Growth Portfolio
(Unaudited as to April 30, 1998)
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.
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. Debt securities are generally traded in
the over-the counter market and are valued at a price deemed best to reflect
fair value as quoted by dealers who make markets 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
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy and
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 and 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. 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 0.8% to 0.675% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
During the six months ended April 30, 1998, the Portfolio's custodian
fees were reduced by $10,997 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 $460,933,633 and $641,656,675 respectively, for the six
months ended April 30, 1998. For the same period, the portfolio turnover rate
was 40%. Realized gains and losses are determined on an identified cost basis.
4. Foreign currency contracts
At April 30, 1998, the Portfolio had entered into foreign currency
exchange contracts that obligate the Portfolio 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 1, 1998 11,905,324 8,280,813 $-- $45,462
Canadian Dollar U.S. Dollar
May 4, 1998 1,742,538 3,127,856 680 --
U.S. Dollar Deutsche Mark
May 6, 1998 977,712 162,758 104 --
French Franc U.S. Dollar
Total $784 $45,462
5. Lending of portfolio securities
At April 30, 1998, securities valued at $121,487,555 were on loan to brokers.
For collateral, the Portfolio received $109,473,400 in cash and U.S. government
securities valued at $17,241,197. Income from securities lending amounted to
$224,631 for the six months ended April 30, 1998. 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.
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
World Growth Portfolio
April 30, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (91.5%)
Issuer Shares Value (a)
Argentina (1.1%)
Financial services (0.1%)
<S> <C> <C>
IRSA Inversiones-Representaciones GDR 34,500 $1,341,187
Multi-industry conglomerates (0.5%)
Perez Companc ADR 550,000 6,611,000
Utilities -- telephone (0.5%)
Telefonica de Argentina ADR 170,000(c) 6,555,625
Australia (0.7%)
Transportation
Brambles Inds 465,000 9,587,184
Brazil (0.4%)
Energy
Petroleo Brasileiro ADR 237,500(b,c) 6,010,055
Canada (3.4%)
Communications equipment & services (0.9%)
Northern Telecom 200,000 12,175,000
Multi-industry conglomerates (1.0%)
Bombardier Cl B 502,700(c) 13,570,807
Utilities -- telephone (1.5%)
BCE 468,200 19,927,763
Chile (0.4%)
Multi-industry conglomerates
Quinenco ADR 458,690(b,c) 4,730,241
France (11.5%)
Automotive & related (1.4%)
Michelin Cl B 285,000(b) 17,964,804
Banks and savings & loans (2.0%)
Banque Natl de Paris 306,000(b) 25,809,692
Computers & office equipment (2.3%)
Dassault Systems 790,000 31,016,506
Energy (1.9%)
TOTAL Cl B 207,723(b) 24,708,360
Food (0.1%)
Sodexho Alliance 6,432 1,178,112
Household products (2.8%)
Rhone-Poulenc Cl A 761,953(b) 37,280,074
Leisure time & entertainment (1.0%)
Accor 49,748(b) 13,564,628
Germany (5.7%)
Automotive & related (0.1%)
Volkswagen AG 2,268 1,806,260
Banks and savings & loans (2.0%)
Bayerische Vereinsbank 354,128(b,c) 26,940,004
Industrial equipment & services (2.8%)
Mannesmann 46,153(b) 36,628,142
Textiles & apparel (0.8%)
Adidas 62,768(b) 10,407,110
Hong Kong (0.4%)
Financial services
Cheung Kong Holdings 884,000(b) 5,877,362
Italy (9.4%)
Banks and savings & loans (7.9%)
Banca Intesa 6,003,766(c) 33,893,661
Credito Italiano 8,149,004(b,c) 42,830,350
Instituto Bancario San Paolo di Torino 1,891,494(b,c) 27,336,439
-----------
Total 104,060,450
Utilities -- telephone (1.5%)
Telecom Italia 3,900,000(b) 20,563,920
Japan (3.0%)
Automotive & related (0.7%)
Honda Motor 255,000 9,251,706
Computers & office equipment (0.7%)
Fujitsu 800,000 9,342,400
Electronics (1.0%)
Fujikura 1,250,000 6,443,750
Ibiden 413,000(c) 6,524,326
-----------
Total 12,968,076
Media (0.6%)
Sony 98,000 8,155,560
Mexico (1.7%)
Financial services (0.1%)
Grupo Financiero Bancomer Cl B 1,271,900 878,414
Paper & packaging (0.9%)
Kimberly-Clark de Mexico 2,400,000 11,780,791
Multi-industry conglomerates (0.7%)
Banco Nacional do Norte 6,000,000 9,899,826
Netherlands (7.1%)
Computers & office equipment (1.1%)
Baan 341,499(b,c) 14,960,969
Industrial equipment & services (2.1%)
Philips Electronics 315,000(b) 27,756,036
Insurance (3.9%)
ING Groep 783,580(b) 50,930,193
Singapore (0.4%)
Financial services
DBS Land 3,100,000 4,680,380
Sweden (1.0%)
Banks and savings & loans
Nordbanken Holding 1,785,832(c) 13,148,010
Switzerland (4.2%)
Banks and savings & loans (2.7%)
Credit Suisse Group 76,500(b) 16,822,151
Schweizer Bankgesellschaft 11,557(b) 18,605,792
-----------
Total 35,427,943
Health care (1.5%)
Novartis 12,268 20,273,632
United Kingdom (12.8%)
Health care (1.5%)
SmithKline Beecham 1,622,000 19,439,508
Media (1.3%)
Pearson 1,130,000 17,729,587
Multi-industry conglomerates (4.2%)
General Electric 4,642,660 37,955,138
Williams ADR 2,246,826 17,212,934
-----------
Total 55,168,072
Retail (2.7%)
Great Universal Stores 2,350,454(b) 35,875,920
Utilities -- telephone (3.1%)
Orange 3,460,894 25,153,432
Vodafone 1,440,657 15,868,405
-----------
Total 41,021,837
United States (28.3%)
Banks and savings & loans (3.6%)
BankAmerica 200,000 17,000,000
BankBoston 230,000 24,825,625
NationsBank 85,200 6,453,900
-----------
Total 48,279,525
Beverages & tobacco (0.9%)
Philip Morris 330,000 12,313,125
Communications equipment & services (0.6%)
Motorola 150,000 8,343,750
Computers & office equipment (2.2%)
Cisco Systems 225,000(b) 16,481,250
Compaq Computer 450,000 12,628,125
-----------
Total 29,109,375
Electronics (1.5%)
Intel 242,000 19,556,625
Energy equipment & services (0.9%)
Baker Hughes 300,000 12,150,000
Financial services (2.1%)
CIT Group Cl A 54,800 1,941,975
Fannie Mae 210,000 12,573,750
Travelers Group 225,000 13,767,187
-----------
Total 28,282,912
Health care (1.7%)
Pfizer 199,000 22,648,687
Health care services (1.4%)
HBO & Co 300,000 17,943,750
Household products (2.5%)
Colgate-Palmolive 145,000 13,004,688
Gillette 172,100 19,866,794
-----------
Total 32,871,482
Industrial equipment & services (1.8%)
Illinois Tool Works 340,000 23,970,000
Insurance (0.6%)
American Intl Group 56,000 7,367,500
Leisure time & entertainment (1.1%)
Disney (Walt) 117,000 14,544,562
Media (0.6%)
Interpublic Group of Cos 114,000 7,281,750
Multi-industry conglomerates (1.2%)
General Electric 180,000 15,322,500
Retail (4.2%)
Rite Aid 460,000 14,777,500
Safeway 476,000(b) 18,207,000
Wal-Mart Stores 296,000 14,966,500
Walgreen 215,000 7,417,500
-----------
Total 55,368,500
Utilities -- telephone (1.4%)
AirTouch Communications 350,000(b) 18,593,750
Total common stocks
(Cost: $951,369,429) $1,210,950,939
Other (0.7%)
Issuer Shares Value (a)
Argentina (--%)
Inversiones y Representaciones GDR
Rights 34,500(e) $--
France (0.1%)
Rhone-Poulenc
Warrants 187,676 905,443
Italy (0.6%)
Banca Intesa
Warrants 6,003,766 7,761,669
Total other
(Cost: $1,321,578) $8,667,112
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (15.3%)
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agencies (3.5%)
Federal Home Loan Mtge Corp Disc Nts
<S> <C> <C> <C>
05-18-98 5.42% $10,000,000 $9,974,500
05-29-98 5.44 10,000,000 9,957,844
Federal Natl Mtge Assn Disc Nts
05-11-98 5.43 15,000,000 14,977,458
05-11-98 5.44 1,500,000 1,497,742
05-18-98 5.44 10,000,000 9,974,358
-----------
Total 46,381,902
Commercial paper (11.6%)
ABB Treasury Center USA
05-04-98 5.54 4,126,000(d) 4,124,102
Albertson's
05-21-98 5.54 10,800,000 10,766,820
Bell Atlantic Finance
05-21-98 5.52 5,300,000 5,283,806
05-27-98 5.55 4,800,000 4,780,829
Ciesco LP
05-18-98 5.52 11,200,000 11,170,911
Commerzbank U.S. Finance
06-01-98 5.55 10,300,000 10,250,952
Consolidated Natural Gas
05-05-98 5.51 1,600,000 1,599,022
Daimler-Benz
06-04-98 5.55 11,000,000 10,942,550
Delaware Funding
05-18-98 5.53 6,500,000(d) 6,483,087
Deutsche Bank Financial
05-01-98 5.53 4,200,000 4,200,000
05-08-98 5.57 5,700,000 5,693,860
Dresdner US Finance
05-21-98 5.52 3,300,000 3,289,917
Gannett
05-14-98 5.51 6,000,000(d) 5,988,127
Glaxo Wellcome
05-20-98 5.53 5,000,000(d) 4,985,434
GTE Funding
05-18-98 5.53 5,000,000 4,986,990
Paccar Financial
05-04-98 5.54 5,000,000 4,997,700
05-05-98 5.52 2,000,000 1,998,778
05-13-98 5.54 2,400,000 2,395,584
05-26-98 5.54 13,000,000 12,950,167
Pfizer
06-03-98 5.54 3,200,000(d) 3,183,808
Toyota Motor Credit
05-01-98 5.58 7,100,000 7,100,000
05-21-98 5.54 13,179,000 13,138,511
Xerox
05-06-98 5.51 6,000,000 5,995,425
Xerox Credit
05-08-98 5.54 7,000,000 6,992,500
-----------
Total 153,298,880
Letter of credit (0.2%)
Credit Agricol --
Louis Dreyfus
05-07-98 5.54 3,000,000 2,997,230
Total short-term securities
(Cost: $202,678,012) $202,678,012
Total investments in securities
(Cost: $1,155,369,019)(f) $1,422,296,063
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements. Foreign security values are stated in U.S. dollars.
(b) Non-income producing.
(c) Security is partially or fully on loan. See Note 5 to the financial
statements.
(d) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(e) Negligible market value.
(f) At April 30, 1998 the cost of securities for federal income tax purposes was
approximately $1,155,368,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $291,428,000
Unrealized depreciation (24,500,000)
-----------
Net unrealized appreciation $266,928,000
See accompanying notes to investments in securities.
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
World Income Portfolio
April 30, 1998
Assets (Unaudited)
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $977,677,075) $1,000,615,252
Cash in bank on demand deposit 387,918
Dividends and accrued interest receivable 27,561,149
Receivable for investment securities sold 18,240,034
Unrealized appreciation on foreign currency
contracts held, at value (Notes 1 and 4) 122,565
U.S. government securities held as collateral
for securities loaned (Note 5) 2,886,546
---------
Total assets 1,049,813,464
-------------
Liabilities
Payable for investment securities purchased 5,330,188
Unrealized depreciation on foreign currency
contracts held, at value (Notes 1 and 4) 1,766,063
Payable upon return of securities loaned (Note 5) 46,916,546
Accrued investment management services fee 19,883
Other accrued expenses 31,505
Open option contracts written, at value
(premuim received $152,000) (Note 6) 105,000
-------
Total liabilities 54,169,185
----------
Net assets $ 995,644,279
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
World Income Portfolio
Six months ended April 30, 1998
Investment income (Unaudited)
Income:
<S> <C>
Dividends $ 196,400
Interest 35,039,016
Less foreign taxes withheld (943,788)
--------
Total income 34,291,628
----------
Expenses (Note 2):
Investment management services fee 3,584,101
Compensation of board members 5,852
Custodian fees 138,472
Audit fees 11,250
Other 9,620
-----
Total expenses 3,749,295
Earnings credits on cash balances (Note 2) (6,757)
------
Total net expenses 3,742,538
---------
Investment income (loss) -- net 30,549,090
----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) 2,908,242
Foreign currency transactions (4,024,733)
----------
Net realized gain (loss) on investments (1,116,491)
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets
and liabilities in foreign currencies 7,152,328
---------
Net gain (loss) on investments and foreign currencies 6,035,837
---------
Net increase (decrease) in net assets
resulting from operations $36,584,927
-----------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
World Income Portfolio
April 30, 1998 Oct. 31, 1997
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 30,549,090 $ 55,752,766
Net realized gain (loss) on investments (1,116,491) 5,413,929
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities in
foreign currencies 7,152,328 (12,533,266)
--------- -----------
Net increase (decrease) in net assets
resulting from operations 36,584,927 48,633,429
Net contributions (withdrawals) from partners (26,194,448) 101,894,400
----------- -----------
Total increase (decrease) in net assets 10,390,479 150,527,829
Net assets at beginning of period 985,253,800 834,725,971
----------- -----------
Net assets at end of period $995,644,279 $985,253,800
------------ ------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
World Income Portfolio
(Unaudited as to April 30, 1998)
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. 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.
Significant accounting policies 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. Debt securities are generally traded in
the over-the-counter market and are valued at a price deemed best to reflect
fair value as quoted by dealers who make markets 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
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy and
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 and 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.
Illiquid securities
At April 30, 1998, investments in securities included issues that are illiquid.
The Portfolio currently limits investments in illiquid securities to 10% of net
assets, at market value, at the time of purchase. The aggregate value of such
securities at April 30, 1998 was $9,975,000 representing 1.0% of net assets.
Pursuant to guidelines adopted by the board, certain unregistered securities are
determined to be liquid and are not included within the 10% limitation specified
above.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. 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. For U.S.
dollar denominated bonds, interest income includes level-yield amortization of
premium and discount. For foreign bonds the Fund amoritizes premium and original
issue discount daily and market discount is recognized at the time of sale.
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, 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, 1998, the Portfolio's custodian fees were
reduced by $6,757 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 $158,092,088 and $143,846,271, respectively, for the six
months ended April 30, 1998. For the same period, the portfolio turnover rate
was 15%. Realized gains and losses are determined on an identified cost basis.
4. Foreign currency contracts
At April 30, 1998, the Portfolio had entered into foreign currency exchange
contracts that obligate the Portfolio 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
June 8, 1998 18,700,000 10,436,782 $ -- $ 4,954
Deutsche Mark U.S. Dollar
June 22, 1998 1,000,000,000 7,660,047 51,209 --
Japanese Yen U.S. Dollar
Nov. 15, 1998 3,010,033 4,500,000,000 71,356 --
U.S. Dollar Korean Won
Nov. 19,1998 3,000,000 11,655,000,000 -- 1,761,109
U.S. Dollar Indonesian Rupiah
Total $122,565 $1,766,063
5. Lending of portfolio securities
At April 30, 1998, securities valued at $45,359,113 were on loan to brokers. For
collateral, the Portfolio received $44,030,000 in cash and U.S. government
securities valued at 2,886,546. Income from securities lending amounted to
$127,170 for the six months ended April 30, 1998. 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, 1998
Puts Calls
Contracts Premium Contracts Premium
Balance Oct. 31, 1997 -- $ -- -- $ --
Opened 100 152,000 100 134,500
Closed -- -- (100) (134,500)
Balance April 30, 1998 100 $152,000 -- $ --
See "Summary of significant accounting policies."
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
World Income Portfolio
April 30, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Bonds (96.6%)(b)
Issuer Coupon Principal Value(a)
rate amount
Argentina (3.1%)
Comp Nav Perez Companc
(U.S. Dollar)
<S> <C> <C> <C>
01-30-04 9.00% $1,975,000(d) $1,994,750
Province of Mendoza
(U.S. Dollar)
09-04-07 10.00 4,000,000(d) 3,873,640
Republic of Argentina
(Japanese Yen)
03-27-01 5.50 880,000,000 6,805,832
(U.S. Dollar)
03-31-05 6.69 10,450,000(j) 9,598,325
01-30-17 11.375 7,300,000 8,084,750
-----------
Total 30,357,297
Austria (0.3%)
Autobahn Schnell
(Japanese Yen)
03-11-00 6.00 397,000,000 3,292,718
Bermuda (0.2%)
Central Euro Media
(Deutsche Mark) Sr Nts Series RG
08-15-04 4.45 3,925,000 2,154,670
Brazil (0.7%)
Comp Paranaense De Energ
(U.S. Dollar)
05-02-05 9.75 5,000,000(d) 5,027,400
Espirito Santo Centrais
(U.S. Dollar) Sr Nts
07-15-07 10.00 1,850,000(d) 1,784,584
-----------
Total 6,811,984
Canada (4.8%)
Govt of Canada
(Canadian Dollar)
06-01-23 5.78 50,810,000 46,062,498
Rogers Cablesystems
(Canadian Dollar)
01-15-14 9.65 2,000,000 1,528,722
-----------
Total 47,591,220
Cayman Islands (0.5%)
Roil
(U.S. Dollar)
12-05-02 12.78 5,000,000(c) 4,975,000
China (2.5%)
Bank of China
(U.S. Dollar)
03-15-14 8.25 5,000,000 4,807,450
Greater Beijing
(U.S. Dollar) Sr Nts
06-15-04 9.25 3,500,000(d) 2,955,680
06-15-07 9.50 5,000,000(d) 3,982,700
People's Republic of China
(U.S. Dollar)
07-03-01 7.375 4,450,000 4,505,856
Zhuhai Highway
(U.S. Dollar) Sub Nts
07-01-08 11.50 9,550,000(d) 8,942,811
-----------
Total 25,194,497
Denmark (4.9%)
Govt of Denmark
(Danish Krone)
11-15-00 9.00 40,000,000 6,525,160
05-15-03 8.00 113,200,000 18,738,222
03-15-06 8.00 65,000,000 11,202,230
11-10-24 7.00 70,000,000 12,002,550
-----------
Total 48,468,162
France (1.1%)
Govt of France
(European Currency Unit)
04-25-05 7.50 8,710,000 11,084,799
Germany (6.8%)
Federal Republic of Germany
(Deutsche Mark)
07-22-02 8.00 15,265,000 9,624,628
11-11-04 7.50 31,870,000 20,365,695
06-20-16 6.00 34,650,000 20,923,957
07-04-27 6.50 26,400,000 16,755,446
-----------
Total 67,669,726
Greece (0.8%)
Hellenic Republic
(Greek Drachma)
03-21-00 9.80 2,550,000,000 8,098,545
Hong Kong (1.0%)
Dao Heng Bank
(U.S. Dollar) Sub Nts
01-24-07 7.75 5,500,000(d) 4,986,410
Hutchison Whampo Finance
(U.S. Dollar) Company Guaranty
08-01-27 7.50 5,000,000(d) 4,501,200
-----------
Total 9,487,610
Indonesia (1.1%)
Indah Kiat Finance Mauritius
(U.S. Dollar) Company Guaranty
07-01-07 10.00 4,350,000 3,621,375
Indah Kiat Pulp & Paper
(U.S. Dollar)
11-01-00 8.875 2,500,000 2,206,250
Polysindo Intl Finance
(U.S. Dollar) Company Guaranty
06-15-06 11.375 2,300,000 1,368,500
Tjiwi Kimia Finance Mauritius
(U.S. Dollar) Company Guaranty
08-01-04 10.00 2,450,000 2,009,000
Tjiwi Kimia Intl
(U.S. Dollar) Company Guaranty
08-01-01 13.25 2,000,000 1,875,000
-----------
Total 11,080,125
Italy (4.1%)
Govt of Italy
(Italian Lira)
01-01-04 8.50 46,125,000,000 30,534,750
11-01-26 7.25 15,270,000,000 10,521,030
-----------
Total 41,055,780
Japan (0.3%)
Matsushita Electric Ind
(Japanese Yen) Cv Series 4
03-31-99 1.30 325,000,000 2,535,000
Nippon Express
(Japanese Yen) Cv Series 4
03-31-04 1.00 120,000,000 896,160
-----------
Total 3,431,160
Malaysia (0.4%)
Petronas
(U.S. Dollar)
08-15-15 7.75 4,550,000 4,182,224
Mexico (5.3%)
Banco Nacional de Comercio Exterior
(U.S. Dollar)
02-02-04 7.25 8,000,000(e) 7,540,000
Grupo Televisa
(U.S. Dollar) Sr Nts Series A
05-15-03 11.375 2,500,000 2,745,900
Imexsa Export Trust
(U.S. Dollar)
05-31-03 10.125 3,000,000(d) 3,120,000
United Mexican States
(British Pound) Medium-term Nts Series E
05-30-02 14.48 5,000,000 8,205,785
(Japanese Yen)
08-17-98 5.00 580,000,000 4,421,224
(U.S. Dollar)
09-15-16 11.375 5,000,000(e) 5,862,500
05-15-26 11.50 16,951,000(e) 20,425,955
-----------
Total 52,321,364
New Zealand (1.0%)
Govt of New Zealand
(New Zealand Dollar)
02-15-00 6.50 10,000,000 5,439,580
Telecom Corp of New Zealand
(New Zealand Dollar)
02-10-03 6.25 5,000,000(d) 4,946,855
-----------
Total 10,386,435
Norway (0.9%)
Govt of Norway
01-31-99 9.00 65,000,000 8,995,285
Philippines (0.6%)
Philippine Long Distance Telephone
(U.S. Dollar) Medium-term Nts Series E
03-06-07 7.85 1,500,000(d) 1,378,845
03-06-17 8.35 4,700,000(d) 4,251,808
-----------
Total 5,630,653
Russia (1.1%)
Alfa-Russia Finance
(U.S. Dollar) Medium-term Nts Bank Guaranty
07-28-00 10.375 3,000,000 2,685,000
Rostelecom
(U.S. Dollar)
02-15-00 9.375 5,000,000(c) 5,000,000
Tatneft Finance
(U.S. Dollar) Company Guaranty
10-29-02 9.00 4,000,000(d) 3,637,720
-----------
Total 11,322,720
South Africa (1.4%)
Escom
(South African Rand)
09-01-01 8.00 81,000,000 14,048,640
South Korea (0.5%)
Korea Electric Power
(U.S. Dollar)
12-01-03 6.375 4,000,000 3,507,520
Republic of Korea
(U.S. Dollar)
04-15-08 8.875 1,625,000 1,598,756
-----------
Total 5,106,276
Spain (3.4%)
Govt of Spain
(Spanish Peseta)
04-30-99 9.40 1,500,000,000 10,338,000
04-30-06 8.80 2,902,000,000 23,703,536
-----------
Total 34,041,536
Sweden (4.3%)
Govt of Sweden
(Japanese Yen) Medium-term Nts
06-21-99 3.875 600,000,000 4,710,000
(Swedish Krona)
02-09-05 6.00 44,500,000 6,011,283
08-15-07 8.00 160,200,000 24,780,056
Paulson Enteprenad
(Swedish Krona)
12-15-00 7.00 56,560,000 6,811,125
-----------
Total 42,312,464
United Kingdom (10.8%)
Abbey Natl First Capital
(U.S. Dollar)
10-15-04 8.20 5,000,000 5,499,050
IPC Magazines Group
(British Pound)
03-15-08 9.675 2,475,000(d) 4,036,433
Texon Intl
(Deutsche Mark) Sr Nts
02-01-08 3.12 4,000,000 2,285,012
United Kingdom Treasury
(British Pound)
03-03-00 9.00 21,700,000 37,809,624
06-10-03 8.00 22,000,000 40,020,552
12-07-05 8.50 9,200,000 17,786,121
-----------
Total 107,436,792
United States (32.7%)
Chesapeake
(U.S. Dollar)
05-01-03 9.875 1,000,000 1,141,340
Cleveland Electric Illuminating
(U.S. Dollar) 1st Mtge Series B
05-15-05 9.50 3,000,000 3,343,770
Dayton Hudson
(U.S. Dollar)
12-01-22 8.50 3,265,000 3,585,590
Executive Risk Capital
(U.S. Dollar) Company Guaranty Series B
02-01-27 8.675 3,500,000 3,870,020
Federal Natl Mtge Assn
(U.S. Dollar)
02-01-27 7.50 4,244,504 4,363,690
06-01-27 7.50 8,649,430 8,892,306
Federal Natl Mtge Assn Global
(Japanese Yen)
12-20-99 2.00 500,000,000 3,872,500
General Motors
(U.S. Dollar)
07-15-01 9.125 2,000,000 2,173,480
Govt Natl Mtge Assn
(U.S. Dollar)
10-15-26 8.00 7,965,241 8,272,221
GTE North
(U.S. Dollar) Series F
02-15-10 6.375 9,950,000(e) 9,912,091
MGM Grand
(U.S. Dollar)
02-01-05 6.95 7,600,000 7,590,804
Nationwide CSN Trust
(U.S. Dollar)
02-15-25 9.875 7,000,000(d) 8,366,890
New Jersey Economic Development
Authority State Pension Funding
Revenue Bond (MBIA Insured)
(U.S. Dollar)
02-15-29 7.43 5,100,000(f) 5,560,020
New York Life Insurance
(U.S. Dollar)
12-15-23 7.50 7,000,000(d) 7,079,030
Northwest Airlines
(U.S. Dollar) Company Guaranty 1st Series 1996
01-02-15 8.97 1,954,104 2,127,277
Overseas Private Investment
(U.S. Dollar) U.S. Govt Guaranty Series 1996A
01-15-09 6.99 7,500,000 7,767,450
PDV America
(U.S. Dollar) Sr Nts
08-01-03 7.875 3,500,000 3,621,905
Phillips Petroleum
(U.S. Dollar)
04-15-23 7.92 3,115,000 3,301,620
Questar Pipeline
(U.S. Dollar)
06-01-21 9.375 1,000,000 1,120,730
Salomon Smith Barney Holdings
(U.S. Dollar)
01-15-03 6.125 10,400,000 10,292,672
SBC Communications
(U.S. Dollar)
08-15-31 8.50 5,000,000 5,508,850
Southern California Gas
(U.S. Dollar) 1st Mtge Series BB
03-01-23 7.375 900,000 912,726
Swiss Bank
(U.S. Dollar) Sub Deb
07-15-25 7.50 4,700,000 5,061,618
TU Electric Capital
(U.S. Dollar) Company Guaranty
01-30-37 8.18 6,150,000 6,292,557
U.S. Treasury
(U.S. Dollar)
02-15-00 5.875 10,000,000 10,050,200
08-15-00 6.00 8,000,000 8,067,040
11-15-01 7.50 72,250,000 76,504,080
02-15-05 7.50 10,000,000(e) 10,982,700
11-15-16 7.50 60,200,000 70,068,586
(U.S. Dollar) TIPS
01-15-07 3.375 10,000,000(g) 9,897,091
U S WEST Communications
(U.S. Dollar)
11-10-26 7.20 6,000,000 6,014,340
USX
(U.S. Dollar)
03-01-08 6.85 4,775,000 4,791,235
Zurich Capital
(U.S. Dollar) Company Guaranty
06-01-37 8.38 4,550,000(d) 4,976,654
-----------
Total 325,383,083
Venezuela (2.0%)
Govt of Venezuela
(U.S. Dollar) Series A
03-31-07 6.625 11,357,143 10,178,839
(U.S. Dollar) Series B
03-31-07 6.75 11,142,857 9,986,786
-----------
Total 20,165,625
Total bonds
(Cost: $938,960,713) $962,086,390
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Preferred stock & other (0.5%)
Issuer Shares Value (a)
Mexico Value
<S> <C> <C>
Rights 1,000(h) $--
Pinto Totta Intl Finance
7.77% 50,000(b,d) 4,812,500
Total preferred stock & other
(Cost: $5,000,000) $4,812,500
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (3.4%)(k)
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agency (2.6%)
Federal Home Loan Mtge Corp Disc Nts
<S> <C> <C> <C>
05-07-98 5.46% $7,300,000 $7,293,382
05-15-98 5.47 3,200,000 3,193,230
05-20-98 5.42 11,400,000 11,367,510
05-29-98 5.45 4,100,000 4,082,732
-----------
Total 25,936,854
Commercial paper (0.7%)
ABB Treasury Center USA
05-04-98 5.54 1,800,000(i) 1,799,172
Bell Atlantic Finance
05-27-98 5.55 1,100,000 1,095,607
Delaware Funding
05-15-98 5.54 1,600,000(i) 1,596,565
Fleet Funding
05-27-98 5.54 2,000,000(i) 1,992,041
Paccar Financial
05-26-98 5.54 700,000 697,317
-----------
Total 7,180,702
Letter of credit (0.1%)
Bank of America-
AES Hawaii
05-14-98 5.53 600,000 598,806
Total short-term securities
(Cost: $33,716,362) $33,716,362
Total investments in securities
(Cost: $977,677,075)(l) $1,000,615,252
</TABLE>
<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) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at April 30, 1998, is as follows:
Security Acquisition dates Cost
Roil
12.78% 2002 04-30-98 $4,975,000
Rostelecom
9.375% 2000 04-28-97 5,000,000
(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) Security is partially or fully on loan. See Note 5 to the financial
statements.
(f) The following abbreviation is used in portfolio descriptions to identify the
insurer of the issue:
MBIA -- Municipal Bond Investors Assurance
(g) U.S. 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.
(h) Negligible market value.
(i) 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.
(j) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on April 30, 1998.
(k) At April 30, 1998, cash or short-term securities were designated to cover
open put options written as follows:
Issuer Shares Excercise Expiration Value (a)
price date
Japenese Yen 10,000 $75 June 1998 $105,000
(l) At April 30, 1998, the cost of securities for federal income tax purposes
was approximately $976,966,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $43,760,000
Unrealized depreciation (20,111,000)
-----------
Net unrealized appreciation $23,649,000
See accompanying notes to investments in securities.
<PAGE>
American Express Service Corporation, Distributor
S-6145 C (6/98)
