AMERICAN
EXPRESS
Financial
Direct
Strategist World Fund, Inc.
2000 Semiannual Report
Strategist Emerging Markets Fund
Strategist World Growth Fund
Strategist World Income Fund
<PAGE>
Table of Contents
From the Portfolio Managers 2
Financial Statements (Strategist World Fund, Inc.) 8
Notes to Financial Statements (Strategist World Fund, Inc.) 13
Financial Statements (Emerging Markets Portfolio) 20
Notes to Financial Statements (Emerging Markets Portfolio) 23
Investments in Securities (Emerging Markets Portfolio) 27
Financial Statements (World Growth Portfolio) 35
Notes to Financial Statements (World Growth Portfolio) 38
Investments in Securities (World Growth Portfolio) 43
Financial Statements (World Income Portfolio) 51
Notes to Financial Statements (World Income Portfolio) 54
Investments in Securities (World Income Portfolio) 59
<PAGE>
From the Portfolio Managers
Strategist Emerging Markets Fund
In a volatile but overall positive period for stocks in emerging markets,
Strategist Emerging Markets Fund enjoyed a very successful six months. For the
first half of the fiscal year -- November 1999 through April 2000 -- the Fund
generated a return of 21.11%
The period got off to an extremely strong start, as an Internet-led buying
frenzy in technology and telecommunications stocks in the U.S. spilled over into
many emerging markets. Illustrating the strength of the rally, by the end of
December, the Fund was up approximately 30%.
NEW YEAR, NEW MARKET MOOD
But by the time the new year rolled around, concerns about potentially higher
inflation and higher interest rates had surfaced in the U.S. and were spreading
overseas. In addition, the stunning run-ups many stocks had experienced were
causing investors to question whether their sometimes-stratospheric price levels
could be justified on a sustained basis. Things finally came to a head in
mid-March, when most markets went into a month-long decline. The Fund held up
relatively well during that time, but still saw a good portion of its gain
eroded during the sell-off.
Despite their ups and downs, technology and telecommunications clearly
contributed the most to the Fund's return over the six months. They comprised
about 30% of assets. The next-biggest area of investment was utility stocks,
which made up about 25% of the portfolio and proved to be modestly positive
performers. Financial services stocks accounted for about 15%, and generated
weak results.
Looking at the geographic allocation, we kept about 40% of assets in Southeast
Asia, followed by about 25% in Latin America and about 20% in Eastern Europe. On
a country basis, the largest investment exposures were to Brazil, Taiwan, Korea
and Mexico -- each in the 10%-15% range during the six months. All told, we held
investments in approximately 20 countries.
Although the past period ended on a down note, we remain enthusiastic about
the potential for emerging markets, especially those that are rapidly becoming
more integrated with the global economic and political environment. Over the
near term, sustained progress probably will be difficult to come by, as
investors are likely to take a wait-and-see approach while the Federal Reserve
tries to cool off the U.S. economy and thereby head off a run-up in inflation.
But once that matter is resolved, we think the emerging markets will be in a
good position to advance.
Julian Thompson
Ian King
<PAGE>
(picture of) Richard Leadem
Richard Leadem
Portfolio Manager
From the Portfolio Manager
Strategist World Growth
Sharp stock selection and generally strong markets in the U.S. and Europe set
the stage for a healthy gain by Strategist World Growth Fund during the first
half of the fiscal year. For the November 1999 through April 2000 period, the
Fund generated a total return of 17.57%.
Against a positive backdrop of expanding economic growth (especially in the
U.S.), healthy corporate profits and low inflation, stocks in the major markets
were already on the move when the period began. With Y2K computer-bug fears
rapidly subsiding and excitement about the potential for the Internet growing
almost daily, the markets kept gathering momentum through the end of 1999.
Illustrating the strength of the surge, the Fund was ahead by more than 20% in
the first two months of the period.
The new year, however, brought with it a new mood in the markets. Concerns about
potentially higher inflation and higher interest rates now dominated the
psychology, and investors were questioning whether the sky-high price levels on
some stocks, particularly technology-related issues, could be sustained much
longer. The result over the final four months of the period was that the markets
struggled against increasing selling pressure, capped by a steep decline in
technology-related stocks from mid-March to mid-April. While the Fund held up
relatively well during those months, it nevertheless saw some erosion in its net
asset value. A period-long decline in the euro, Europe's new common currency,
also detracted from performance.
On the whole, though, it was a very productive six months, thanks chiefly to the
Fund's substantial holdings in the technology, telecommunications and media
sectors. Although the stocks were volatile, their ups overwhelmed their downs. A
few prominent performers included: Mannesmann AG, a German provider of wireless
telecommunication services; Kyocera, a Japanese manufacturer of
telecommunications equipment and semiconductors; News Corporation Limited, an
Australia-based global media company; and Atmel, a U.S. provider of
semiconductors to the wireless communication industry.
On a regional basis, the biggest investment -- about 40% of the portfolio
-- was in Europe, including the United Kingdom, France, Germany and Italy. The
next-largest exposure was to North America (the U.S. and Canada), which
comprised about a third of the portfolio, followed by Japan, which made up
between 13% and 17%. Encouraged by government policy changes and corporate
restructuring, I added to the Japanese exposure as the period progressed. Still,
as the second half of the fiscal year begins, I am maintaining the investment
emphasis on Europe, where economic growth appears to have a long time to run.
Overall, I continue to be optimistic about global equity markets. While the
potential for higher interest rates in the U.S. may be a near-term restraint,
the global economy is accelerating and inflation is not a problem in most major
markets. Once the interest-rate question in the U.S. is resolved, I think stocks
will have a good opportunity to advance.
Richard Leadem
<PAGE>
(picture of) Ray Goodner
Ray Goodner
Portfolio Manager
From the Portfolio Manager
Strategist World Income
Weak bond markets and falling foreign currencies made for a difficult six months
for Strategist World Income Fund. As a result, the Fund lost 4.44% during the
first half of the fiscal year -- November 1999 through April 2000.
Concerned about the possibility of higher inflation, central banks in North
America and Europe raised interest rates during the period, putting pressure on
bond prices. (Rising interest rates depress bond prices, while declining rates
inflate them.) In light of the trend, I kept a shorter-than-average duration in
the portfolio, which mitigated the effect on the Fund's net asset value.
(Duration, a function of the average maturity of the bonds in the portfolio,
affects the Fund's sensitivity to changes in interest rates. Generally, the
longer the duration, the greater the sensitivity.)
CURRENCY COMPLICATIONS
Compounding the situation were sharp declines in virtually all major foreign
currencies against the dollar during the final four months of the period,
particularly the euro in Europe and the yen in Japan. (Falling local currencies
reduce returns to U.S. investors.) To combat the effect, I maintained relatively
small exposures to those markets and currencies, preferring to emphasize the
U.S. market and dollar. As with the shorter duration, this strategy shielded the
Fund from some of the negative effect.
Looking at the Fund's allocation, about 40%-50% of assets were in the U.S.,
chiefly Treasury and corporate bonds. Overall, these investments provided the
best performance, largely because of a strong rally by Treasury bonds in 2000.
The next biggest exposure, about 35%, was to Europe, mostly the United Kingdom,
Scandinavia and Germany. Japan comprised between 5% and 10% of the investments,
a reflection of the low yields available in that country. I also kept a very
small exposure to emerging market bonds denominated in dollars. While their
performance was mixed, Mexico, the largest holding, benefited from a credit
rating upgrade.
As we head into the second half of the fiscal year, inflation is trending
moderately higher around the world. And while central banks are likely to
continue to raise interest rates, the bulk of their work, at least in the U.S.,
may be over. If so, major bond markets eventually will take comfort in that,
which would be good for bond prices. Beyond that, more consistent economic
growth in Europe and Japan, combined with a potentially weak U.S. stock market,
could further benefit foreign bonds.
Ray Goodner
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<TABLE>
<CAPTION>
Financial Statements
Statements of assets and liabilities
Strategist World Fund, Inc.
Strategist Strategist Strategist
Emerging World World
April 30, 2000 (Unaudited) Markets Fund Growth Fund Income Fund
Assets
<S> <C> <C> <C> <C>
Investment in corresponding Portfolio (Note 1) $769,603 $1,034,471 $601,380
Expense receivable from AEFC 26 94 177
-- -- ---
Total assets 769,629 1,034,565 601,557
------- --------- -------
Liabilities
Dividends payable to shareholders -- -- 2,848
Accrued transfer agency fee 2 1 1
Accrued administrative services fee 2 2 1
Other accrued expenses 10,141 1,618 3,461
------ ----- -----
Total liabilities 10,145 1,621 6,311
------ ----- -----
Net assets applicable to outstanding
capital stock $759,484 $1,032,944 $595,246
======== ========== ========
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,502 $ 945 $ 1,099
Additional paid-in capital 739,371 721,969 662,063
Undistributed (excess of distributions over)
net investment income (1,385) (4,716) 1,476
Accumulated net realized gain (loss) (35,119) 155,533 (5,150)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in
foreign currencies 55,115 159,213 (64,242)
------ ------- -------
Total -- representing net assets applicable to
outstanding capital stock $759,484 $1,032,944 $595,246
======== ========== ========
Shares outstanding 150,176 94,532 109,882
------- ------ -------
Net asset value per share of outstanding capital stock $ 5.06 $ 10.93 $ 5.42
-------- ---------- --------
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of operations
Strategist World Fund, Inc.
Strategist Strategist Strategist
Emerging World World
Six months ended April 30, 2000 (Unaudited) Markets Fund Growth Fund Income Fund
Investment income
Income:
<S> <C> <C> <C>
Dividends $ 5,734 $ 3,978 $ 157
Interest 1,732 795 21,182
Less foreign taxes withheld (486) (425) --
---- ----
Total income 6,980 4,348 21,339
----- ----- ------
Expenses (Note 2):
Expenses allocated from corresponding Portfolio 4,648 3,859 2,427
Transfer agency fee 314 201 87
Administrative services fees and expenses 395 313 183
Compensation of board members 433 392 430
Printing and postage 105 44 2,194
Registration fees 9,075 12,143 9,604
Audit fees 1,800 1,800 1,800
Other 1,924 1,186 1,689
----- ----- -----
Total expenses 18,694 19,938 18,414
Less expenses reimbursed by AEFC (10,329) (10,890) (14,324)
------- ------- -------
Total net expenses 8,365 9,048 4,090
----- ----- -----
Investment income (loss)-- net (1,385) (4,700) 17,249
------ ------ ------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (includes foreign transaction
tax of $400 for Emerging Markets Fund) 165,019 156,239 (6,070)
Financial futures contracts -- -- 85
Foreign currency transactions (1,399) (705) 739
Options contracts written -- -- 746
Net realized gain (loss) on investments 163,620 155,534 (4,500)
------- ------- ------
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies (29,591) 8,686 (40,868)
------- ----- -------
Net gain (loss) on investments and foreign
currencies 134,029 164,220 (45,368)
------- ------- -------
Net increase (decrease) in net assets resulting
from operations $132,644 $159,520 $(28,119)
======== ======== ========
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist World Fund, Inc.
Strategist Emerging Markets Fund
April 30, 2000 Oct. 31, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ (1,385) $ 45
Net realized gain (loss) on investments 163,620 21,753
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and liabilities
in foreign currencies (29,591) 174,486
------- -------
Net increase (decrease) in net assets resulting from
operations 132,644 196,284
------- -------
Distributions to shareholders from:
Net investment income (2,243) --
Net realized gain -- --
Total distributions (2,243) --
------ -------
Capital share transactions (Note 3)
Proceeds from sales 4,000 18,693
Reinvestment of distributions at net asset value 2,236 --
Payments for redemptions (5,947) (7,756)
------ ------
Increase (decrease) in net assets from capital share transactions 289 10,937
--- ------
Total increase (decrease) in net assets 130,690 207,221
Net assets at beginning of period 628,794 421,573
------- -------
Net assets at end of period $759,484 $628,794
======== ========
Undistributed (excess of distributions over)
net investment income $ (1,385) $ 2,243
-------- ---------
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist World Fund, Inc.
Strategist World Growth Fund
April 30, 2000 Oct. 31, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ (4,700) $ (2,645)
Net realized gain (loss) on investments 155,534 108,041
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign crrencies 8,686 64,736
----- ------
Net increase (decrease) in net assets resulting from operations 159,520 170,132
------- -------
Distributions to shareholders
From and in excess of net investment income (3,286) (1,770)
From net realized gain (107,311) (29,010)
-------- -------
Total distributions (110,597) (30,780)
-------- -------
Capital share transactions (Note 3)
Proceeds from sales 4,150 14,116
Reinvestment of distributions at net asset value 110,597 30,780
Payments for redemptions (32,629) (4,480)
------- ------
Increase (decrease) in net assets from capital share transactions 82,118 40,416
------ ------
Total increase (decrease) in net assets 131,041 179,768
Net assets at beginning of period 901,903 722,135
------- -------
Net assets at end of period $1,032,944 $901,903
========== ========
Undistributed (excess of distributions over)
net investment income $ (4,716) $ 3,270
---------- --------
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist World Fund, Inc.
Strategist World Income Fund
April 30, 2000 Oct. 31, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 17,249 $ 34,803
Net realized gain (loss) on investments (4,500) (2,845)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (40,868) (35,331)
------- -------
Net increase (decrease) in net assets resulting from operations (28,119) (3,373)
------- ------
Distributions to shareholders from:
Net investment income (20,916) (31,133)
Net realized gain -- (2,062)
------- ------
Total distributions (20,916) (33,195)
------- -------
Capital share transactions (Note 3)
Proceeds from sales -- 3,200
Reinvestment of distributions at net asset value 20,824 32,867
Payments for redemptions -- (18,923)
------ -------
Increase (decrease) in net assets from capital share transactions 20,824 17,144
------ ------
Total increase (decrease) in net assets (28,211) (19,424)
Net assets at beginning of period 623,457 642,881
------- -------
Net assets at end of period $595,246 $623,457
======== ========
Undistributed net investment income $ 1,476 $ 5,143
-------- --------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Strategist World Fund, Inc.
(Unaudited as to April 30, 2000)
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.
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 Portfolios 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 the value that is equal
to the Fund's proportionate ownership interest in the Portfolio's net assets. As
of April 30, 2000, the percentages of the corresponding Portfolio owned by
Emerging Markets Fund, World Growth Fund and World Income Fund were 0.16%, 0.05%
and 0.09%, respectively. Valuation of securities held by the Portfolios is
discussed in Note 1 of the Portfolios' "Notes to financial statements" (included
elsewhere in this report).
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets and liabilities) that could differ from actual results.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the 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
As of April 30, 2000, American Express Financial Corporation (AEFC) owned
120,595 shares for Emerging Markets Fund, 80,173 shares for World Growth Fund
and 103,545 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 has an agreement with AEFC to provide administrative services. Under
an 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 services. As of
Oct.
1, 1999, public sales were discontinued.
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 Oct. 31, 2000. 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, 2000, AEFC further voluntarily
agreed to waive certain fees and expenses to 2.11% for Emerging Markets Fund and
1.73% for World Growth Fund and 1.34% for World Income Fund.
<TABLE>
<CAPTION>
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 2000
Emerging World World
Markets Fund Growth Fund Income Fund
<S> <C> <C>
Sold 787 369 --
Issued for reinvested distributions 424 9,946 3,669
Redeemed (1,099) (2,875) --
------ ------ ------
Net increase (decrease) 112 7,440 3,669
--- ----- -----
Year ended Oct. 31, 1999
Emerging World World
Markets Fund Growth Fund Income Fund
Sold 5,156 1,452 516
Issued for reinvested distributions -- 3,278 5,417
Redeemed (2,094) (466) (3,207)
------ ---- ------
Net increase (decrease) 3,062 4,264 2,726
----- ----- -----
</TABLE>
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<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating
each Fund's results.
Emerging Markets Fund
Fiscal period ended Oct. 31,
Per share income and capital changesa
2000b 1999 1998 1997c
<S> <C> <C> <C> <C>
Net asset value, beginning of period $4.19 $2.87 $5.27 $5.00
Income from investment operations:
Net investment income (loss) (.01) -- .02 .01
Net gains (losses) (both realized and unrealized) .89 1.32 (1.55) .27
Total from investment operations .88 1.32 (1.53) .28
Less distributions:
Dividends from net investment income (.01) -- (.01) (.01)
Distributions from realized gains -- -- (.86) --
Total distributions (.01) -- (.87) (.01)
Net asset value, end of period $5.06 $4.19 $2.87 $5.27
Ratios/supplemental data
Net assets, end of period (in thousands) $759 $629 $422 $651
Ratio of expenses to average daily net assetsd 2.11%e 2.20% 2.19% 2.20%e
Ratio of net investment income (loss)
to average daily net assets (.35%)e .01% .58% .12%e
Portfolio turnover rate
(excluding short-term securities) 79% 143% 108% 87%
Total return 21.11% 45.99% (34.82%) 5.90%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended April 30, 2000 (Unaudited).
c Inception date was Nov. 13, 1996.
d The Advisor and Distributor voluntarily limited total operating expenses.
Without this agreement, the ratio of expenses to average daily net assets
would have been 4.73%, 6.17%, 4.66% and 9.61% for the periods ended 2000,
1999, 1998 and 1997, respectively.
e Adjusted to an annual basis.
</TABLE>
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<TABLE>
<CAPTION>
World Growth Fund
Fiscal period ended Oct. 31,
Per share income and capital changesa
2000b 1999 1998 1997 1996c
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.36 $8.72 $7.49 $7.08 $7.32
Income from investment operations:
Net investment income (loss) (.05) (.03) (.01) .02 .04
Net gains (losses) (both realized and unrealized) 1.89 2.04 1.28 .40 (.28)
Total from investment operations 1.84 2.01 1.27 .42 (.24)
Less distributions:
Dividends from and in excess of
net investment income (.04) (.02) (.04) (.01) --
Distributions from realized gains (1.23) (.35) -- -- --
Total distributions (1.27) (.37) (.04) (.01) --
Net asset value, end of period $10.93 $10.36 $8.72 $7.49 $7.08
Ratios/supplemental data
Net assets, end of period (in thousands) $1,033 $902 $722 $604 $489
Ratio of expenses to average daily net assetsd 1.73%e 1.71% 1.69% 1.65% 1.75%e
Ratio of net investment income (loss)
to average daily net assets (.90%)e (.31%) (.08%) .26% 1.61%e
Portfolio turnover rate
(excluding short-term securities) 61% 83% 80% 199% 58%
Total return 17.57% 23.09% 17.02% 5.98% (3.28%)
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended April 30, 2000 (Unaudited).
c Inception date was May 13, 1996.
d The Advisor and Distributor limited total operating expenses. Without this
agreement, the ratio of expenses to average daily net assets would have
been 3.81%, 2.85%, 2.80%, 5.13% and 17.33% for the periods ended
2000, 1999, 1998, 1997 and 1996, respectively.
e Adjusted to an annual basis.
</TABLE>
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<TABLE>
<CAPTION>
World Income Fund
Fiscal period ended Oct. 31,
Per share income and capital changesa
2000b 1999 1998 1997 1996c
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.87 $6.21 $6.32 $6.24 $6.05
Income from investment operations:
Net investment income (loss) .16 .33 .40 .36 .15
Net gains (losses) (both realized and unrealized)(.42) (.36) (.05) (.03) .25
Total from investment operations (.26) (.03) .35 .33 .40
Less distributions:
Dividends from net investment income (.19) (.29) (.30) (.23) (.15)
Excess distributions of net investment income -- -- -- -- (.06)
Distributions from realized gains -- (.02) (.16) (.02) --
Total distributions (.19) (.31) (.46) (.25) (.21)
Net asset value, end of period $5.42 $5.87 $6.21 $6.32 $6.24
Ratios/supplemental data
Net assets, end of period (in thousands) $595 $623 $643 $627 $524
Ratio of expenses to average daily net assetsd 1.34%e 1.35% 1.12% 1.35% 1.35%e
Ratio of net investment income (loss)
to average daily net assets 5.66%e 5.45% 6.50% 6.28% 5.87%e
Portfolio turnover rate
(excluding short-term securities) 21% 48% 27% 55% 24%
Total return (4.44%) (.33%) 5.38% 6.61% 5.16%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended April 30, 2000 (Unaudited).
c Inception date was May 13, 1996.
d The Advisor and Distributor limited total operating expenses. Without this
agreement, the ratio of expenses to average daily net assets would have
been 6.05%, 3.46%, 2.29%, 5.36% and 19.23% for the periods ended 2000,
1999, 1998, 1997 and 1996, respectively.
e Adjusted to an annual basis.
</TABLE>
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<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
Emerging Markets Portfolio
April 30, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost $433,810,207) $465,088,677
Cash in bank on demand deposit (including foreign
currency holdings of $17,302,075) 17,650,978
Dividends and accrued interest receivable 1,038,187
Receivable for investment securities sold 991,321
U.S. government securities held as collateral (Note 4) 27,375
------
Total assets 484,796,538
===========
Liabilities
Payable for investment securities purchased 237,706
Payable upon return of securities loaned (Note 4) 4,148,475
Accrued investment management services fee 14,090
Other accrued expenses 154,004
-------
Total liabilities 4,554,275
---------
Net assets $480,242,263
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Emerging Markets Portfolio
Six months ended April 30, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 3,508,740
Interest 1,054,296
Less foreign taxes withheld (300,033)
--------
Total income 4,263,003
---------
Expenses (Note 2):
Investment management services fee 2,659,635
Compensation of board members 3,554
Custodian fees 160,731
Audit fees 9,000
Other 9,487
-----
Total expenses 2,842,407
Earnings credits on cash balances (Note 2) (4,091)
------
Total net expenses 2,838,316
---------
Investment income (loss) -- net 1,424,687
---------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) (includes foreign transaction
tax of $247,760) 98,386,038
Foreign currency transactions (937,844)
--------
Net realized gain (loss) on investments 97,448,194
Net change in unrealized appreciation (depreciation) on investments and
on translation of assets and liabilities in foreign currencies (19,689,074)
-----------
Net gain (loss) on investments and foreign currencies 77,759,120
----------
Net increase (decrease) in net assets resulting from operations $79,183,807
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Emerging Markets Portfolio
April 30, 2000 Oct. 31, 1999
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 1,424,687 $ 2,959,449
Net realized gain (loss) on investments 97,448,194 8,888,733
Net change in unrealized appreciation (depreciation) on investments and
on translation of assets and liabilities in foreign currencies (19,689,074) 110,553,123
----------- -----------
Net increase (decrease) in net assets resulting from operations 79,183,807 122,401,305
Net contributions (withdrawals) from partners 19,104,097 (25,443,819)
---------- -----------
Total increase (decrease) in net assets 98,287,904 96,957,486
Net assets at beginning of period 381,954,359 284,996,873
----------- -----------
Net assets at end of period $480,242,263 $381,954,359
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
Emerging Markets Portfolio
(Unaudited as to April 30, 2000)
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. The 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.
The Portfolio's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets and liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete its contract obligations.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including level-yield amortization of premium and discount, is accrued
daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with AEFC to manage its portfolio. Under this agreement, AEFC
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Portfolio's average daily net assets in reducing
percentages from 1.10% to 1.00% annually. The fee may be adjusted upward or
downward by a performance incentive adjustment based on a comparison of the
performance of Class A shares of AXP Emerging Markets Fund to the Lipper
Emerging Markets Funds Index. The maximum adjustment is 0.12% of the Portfolio's
average daily net assets after deducting 1% from the performance difference. If
the performance difference is less than 1%, the adjustment will be zero. The
adjustment increased the fee by $2,869 for the six months ended April 30, 2000.
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 theTrust or Portfolio and approved by the board.
AEFC has a Sub-investment Advisory Agreement with American Express Asset
Management International Inc. (International), a wholly-owned subsidiary of
AEFC.
During the six months ended April 30, 2000, the Portfolio's custodian fees were
reduced by $4,091 as a result of earnings credits from overnight cash balances.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
According to a Placement Agency Agreement, American Express Financial
Advisors Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $362,724,083 and $355,766,609, respectively, for the six
months ended April 30, 2000. For the same period, the portfolio turnover rate
was 79%. Realized gains and losses are determined on an identified cost basis.
4. LENDING OF PORTFOLIO SECURITIES
As of April 30, 2000, securities valued at $5,257,050 were on loan to brokers.
For collateral, the Portfolio received $4,121,100 in cash and U.S. government
securities valued at $27,375. As of April 30, 2000, due to fluctuating market
conditions, the Portfolio requested additional collateral which was received on
May 1, 2000. Income from securities lending amounted to $321,922 for the six
months ended April 30, 2000. The risks to the Portfolio of securities lending
are that the borrower may not provide additional collateral when required or
return the securities when due.
<TABLE>
<CAPTION>
<PAGE>
Investments in Securities
Emerging Markets Portfolio
April 30, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (92.3%)(c)
Issuer Shares Value(a)
Argentina (0.9%)
Banks and savings & loans
<S> <C> <C>
Banco de Galicia - Buenos Aires ADR 261,239 $4,522,700
Brazil (12.0%)
Banks and savings & loans (0.9%)
Uniao de Bancos Brasileiros GDR 166,909 4,162,293
Energy (1.5%)
Petroleo Brasileiro ADR 32,602,000 7,222,819
Metals (1.3%)
Gerdau 260,492,736 6,348,202
Miscellaneous (0.6%)
Tele Centro Oeste Celular Participacoes ADR 238,500 2,742,750
Multi-industry conglomerates (0.9%)
Itausa - Investimentos Itau 5,284,269 4,507,214
Utilities -- electric (1.3%)
Companhia Paranaense de Energia 850,400 6,271,700
Utilities -- telephone (5.5%)
Embratel Participacoes ADR 622,644 14,009,489
Tele Norte Leste Participacoes ADR 350,767 6,248,029
Telesp Celular Particpacoes ADR 143,700 6,340,763
Total 26,598,281
Chile (1.1%)
Retail
Distribucion y Servicio D&S ADR 301,649 5,128,033
Czech Federal Republic (1.4%)
Utilities -- telephone
Cesky Telecom 365,137(b) 6,793,756
Greece (2.8%)
Banks and savings & loans (1.6%)
Alpha Credit Bank 87,416 4,847,520
Commercial Bank of Greece 54,300 2,950,959
Total 7,798,479
Utilities -- telephone (1.2%)
Hellenic Telecommunications Organization 247,460 5,553,873
Hong Kong (3.7%)
Communications equipment & services (2.4%)
China Telecom 1,536,000(b) 11,092,281
Multi-industry conglomerates (1.3%)
Citic Pacific 1,407,000(b) 6,448,660
Hungary (1.1%)
Banks and savings & loans
OTP Bank GDR 120,526 5,360,394
India (6.3%)
Automotive & related (0.7%)
Tata Engineering & Locomotive GDR 1,051,000 3,284,375
Banks and savings & loans (0.9%)
State Bank of India GDR 467,000 4,436,500
Building materials & construction (0.7%)
Gujarat Ambuja Cements GDR 772,000 3,535,459
Miscellaneous (1.2%)
Videsh Sanchar Nigam GDR 314,600 5,977,400
Textiles & apparel (1.9%)
Reliance Inds GDR 328,104(d,f) 8,538,907
Utilities -- telephone (0.9%)
Global TeleSystems Group 71,600 1,951,982
Himachal Futuristic Communications 129,700 2,478,563
Total 4,430,545
Israel (4.7%)
Banks and savings & loans (1.2%)
Bank Hapoalim 1,890,000 5,805,165
Communications equipment & services (1.0%)
NICE-Systems ADR 76,347(b) 4,995,957
Electronics (1.5%)
Orbotech 83,371(b) 7,107,378
Miscellaneous (1.0%)
Partner Communications ADR 428,150(b) 4,575,853
Malaysia (2.5%)
Electronics (1.1%)
Malaysian Pacific Inds Berhad 479,000 5,357,166
Utilities -- electric (1.4%)
Tenaga Nasional 2,010,000 6,664,649
Mexico (12.8%)
Beverages & tobacco (2.0%)
Fomento Economico Mexicano ADR 117,500 4,846,875
Grupo Modelo Series C 2,229,700 4,739,001
Total 9,585,876
Building materials & construction (1.0%)
Cemex ADR 216,500(b) 4,735,938
Energy equipment & services (1.6%)
Tubos de Acero de Mexico ADR 508,000 7,588,250
Media (0.9%)
Grupo Televisa 70,852(b) 4,494,674
Multi-industry conglomerates (1.3%)
Alfa Cl A 1,995,000 6,169,447
Paper & packaging (1.1%)
Kimberly-Clark de Mexico 1,634,400 5,262,733
Retail (2.0%)
Organizacion Soriana Cl B 2,452,500(b) 9,734,418
Utilities -- telephone (2.9%)
Nuevo Grupo Iusacell ADR 172,311(b) 2,746,207
Telefonos de Mexico ADR Cl L 196,100 11,533,131
Total 14,279,338
Russia (3.2%)
Energy (2.6%)
Lukoil Holding ADR 210,296 12,676,643
Miscellaneous (0.6%)
Surgutneftegaz ADR 190,619 2,811,630
South Africa (6.0%)
Banks and savings & loans (0.9%)
Nedcor 225,951 4,285,421
Metals (0.9%)
AngloGold ADR 216,200 4,202,388
Multi-industry conglomerates (3.1%)
Barlow 1,131,900 7,136,454
Johnnies Industrial ADR 628,000 7,965,194
Total 15,101,648
Paper & packaging (1.1%)
Sappi 722,600 5,062,090
South Korea (9.9%)
Communications equipment & services (2.3%)
LG Information & Communication 80,400 6,194,368
SK Telecom ADR 17,000 4,519,036
Total 10,713,404
Computers & office equipment (0.5%)
Trigem Computer 42,770 2,470,428
Electronics (5.0%)
LG Cable & Machinery 394,700 6,295,283
Samsung Electronics 64,550 17,449,876
Total 23,745,159
Utilities -- electric (1.2%)
Korea Electric Power 199,700 5,848,389
Utilities -- telephone (0.9%)
Korea Telecom 64,000 4,371,435
Taiwan (12.9%)
Computers & office equipment (1.9%)
Synnex Technology Intl 1,351,000 9,140,611
Electronics (9.6%)
Acer Peripherals 1,467,216 6,066,443
Hon Hai Precision Inds 1,034,600(b) 9,975,715
Taiwan Semiconductor Mfg 2,809,240(b) 18,088,587
United Microelectronics 3,552,000(b) 12,016,081
Total 46,146,826
Miscellaneous (1.4%)
Winbond Electronics GDR 2,243,000(b) 6,928,044
Thailand (3.5%)
Banks and savings & loans (1.3%)
Thai Farmers Bank 6,095,000(b) 6,403,152
Media (1.0%)
BEC World Public 741,000 4,865,397
Utilities -- telephone (1.2%)
Advanced Info Service Public ADR 481,700(b) 5,642,500
Turkey (7.5%)
Banks and savings & loans (4.6%)
Garanti Banking 413,045,696(b) 6,957,953
Yapi Kredit Finance 468,502,200 14,941,439
Total 21,899,392
Furniture & appliances (1.5%)
Arcelik 87,154,000 7,412,024
Media (1.4%)
Hurriyet Gazetecilik ve Matbaacilik 259,211,000 6,570,997
Total common stocks
(Cost: $412,124,522) $443,409,041
Short-term securities (4.5%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (2.9%)
Federal Home Loan Bank Disc Nts
05-19-00 5.89% $1,300,000 $1,295,552
05-24-00 5.92 1,300,000 1,294,244
05-26-00 5.85 1,800,000 1,791,136
05-31-00 5.91 1,500,000 1,491,915
06-09-00 5.96 1,700,000 1,687,874
Federal Home Loan Mtge Corp Disc Nts
05-09-00 5.87 2,600,000 2,595,345
05-23-00 5.99 600,000 597,512
06-06-00 6.00 600,000 596,123
Federal Natl Mtge Assn Disc Nt
05-25-00 5.87 2,700,000 2,687,384
Total 14,037,085
Annualized Amount Value(a)
yield on date payable at
of purchase maturity
Commercial paper (1.6%)
Alcoa
06-06-00 6.06% $3,300,000 $3,278,478
Barton Capital
06-27-00 6.19 1,600,000(e) 1,583,333
Ciesco LP
05-08-00 5.89 900,000 898,507
Delaware Funding
06-15-00 6.13 1,400,000(e) 1,388,651
Goldman Sachs Group
07-10-00 6.41 500,000 493,582
Total 7,642,551
Total short-term securities
(Cost: $21,685,685) $21,679,636
Total investments in securities
(Cost: $433,810,207)(g) $465,088,677
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(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) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(f) Security is partially or fully on loan. See Note 4 to the financial
statements.
(g) At April 30, 2000, the cost of securities for federal income tax purposes
was approximately $433,810,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $72,559,000
Unrealized depreciation (41,280,000)
-----------
Net unrealized appreciation $31,279,000
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities World Growth Portfolio
April 30, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost $1,964,680,967) $2,263,149,296
Cash in bank on demand deposit 112,022
Dividends and accrued interest receivable 3,271,765
Receivable for investment securities sold 835,091
-------
Total assets 2,267,368,174
=============
Liabilities
Payable for investment securities purchased 34,555,998
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 4 2,829
Payable upon return of securities loaned (Note 5) 64,821,600
Accrued investment management services fee 42,767
Other accrued expenses 98,070
------
Total liabilities 99,521,264
----------
Net assets $2,167,846,910
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
World Growth Portfolio
Six months ended April 30, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 8,048,910
Interest 1,588,501
Less foreign taxes withheld (867,820)
--------
Total income 8,769,591
---------
Expenses (Note 2):
Investment management services fee 7,614,372
Compensation of board members 4,970
Custodian fees 81,434
Audit fees 12,000
Other 26,273
------
Total expenses 7,739,049
Earnings credits on cash balances (Note 2) (7,835)
------
Total net expenses 7,731,214
---------
Investment income (loss) -- net 1,038,377
---------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) 290,695,110
Foreign currency transactions (2,218,330)
----------
Net realized gain (loss) on investments 288,476,780
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 24,726,528
----------
Net gain (loss) on investments and foreign currencies 313,203,308
-----------
Net increase (decrease) in net assets resulting from operations $314,241,685
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
World Growth Portfolio
April 30, 2000 Oct. 31,1999
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 1,038,377 $ 9,492,822
Net realized gain (loss) on investments 288,476,780 184,483,395
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 24,726,528 125,692,141
---------- -----------
Net increase (decrease) in net assets resulting from operations 314,241,685 319,668,358
Net contributions (withdrawals) from partners 102,459,761 151,432,468
----------- -----------
Total increase (decrease) in net assets 416,701,446 471,100,826
Net assets at beginning of period 1,751,145,464 1,280,044,638
------------- -------------
Net assets at end of period $2,167,846,910 $1,751,145,464
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
World Growth Portfolio
(Unaudited as to April 30, 2000)
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. The Portfolio seeks to
provide long-term capital growth by investing primarily in equity securities of
companies throughout the world. The Declaration of Trust permits the Trustees to
issue non-transferable interests in the Portfolio.
The Portfolio's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets and liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete its contract obligations.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including level-yield amortization of premium and discount, is accrued
daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with AEFC to manage its portfolio. Under this agreement, AEFC
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.8% to 0.675% annually. The fee may be adjusted upward or
downward by a performance incentive adjustment based on a comparison of the
performance of Class A shares of AXP Global Growth Fund to the Lipper Global
Fund Index. The maximum adjustment is 0.12% of the Portfolio's average daily net
assets after deducting 1% from the performance difference. If the performance
difference is less than 1%, the adjustment will be zero.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
AEFC has a Sub-investment Advisory Agreement with American Express Asset
Management International Inc. (International), a wholly-owned subsidiary of
AEFC.
During the six months ended April 30, 2000, the Portfolio's custodian fees were
reduced by $7,835 as a result of earnings credits from overnight cash balances.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
According to a Placement Agency Agreement, American Express Financial
Advisors Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $1,302,216,409 and $1,249,128,273, respectively, for the
six months ended April 30, 2000. For the same period, the portfolio turnover
rate was 61%. Realized gains and losses are determined on an identified cost
basis.
4. FOREIGN CURRENCY CONTRACTS
As of April 30, 2000, the Portfolio has a foreign currency exchange contract
that obligates it to deliver currency at a specified future date. The unrealized
appreciation and/or depreciation on this contract is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contract are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 2, 2000 1,840,093 2,020,970 $-- $2,829
U.S. Dollar European Monetary Unit
Total $-- $2,829
5. LENDING OF PORTFOLIO SECURITIES
As of April 30, 2000, securities valued at $64,301,650 were on loan to brokers.
For collateral, the Portfolio received $64,821,600 in cash. Income from
securities lending amounted to $189,437 for the six months ended April 30, 2000.
The risks to the Portfolio of securities lending are that the borrower may not
provide additional collateral when required or return the securities when due.
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
World Growth Portfolio
April 30, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (95.0%)
Issuer Shares Value(a)
Australia (1.8%)(c)
Media (0.6%)
<S> <C> <C>
News 1,033,705 13,126,585
Metals (0.6%)
Broken Hill Proprietary 1,253,000 13,492,355
Transportation (0.6%)
Brambles Inds 465,000(f) 13,088,074
Brazil (1.1%)(c)
Banks and savings & loans (0.4%)
Uniao de Bancos Brasileiros GDR 323,227 8,060,473
Utilities -- telephone (0.7%)
Embratel Participacoes ADR 666,739 15,001,628
Canada (1.9%)(c)
Communications equipment & services (1.0%)
Nortel Networks 185,020 20,953,515
Utilities -- telephone (0.9%)
BCE 166,900(f) 19,151,775
Finland (4.5%)(c)
Communications equipment & services
Nokia 1,301,148 74,639,327
Sonera 397,671 21,872,124
Total 96,511,451
France (3.0%)(c)
Computers & office equipment (1.8%)
Cap Gemini 201,075 39,484,213
Energy (1.2%)
Total Petroleum Cl B 172,407 26,159,106
Germany (1.9%)(c)
Computers & office equipment (1.4%)
SAP 53,158(f) 31,266,882
Miscellaneous (0.5%)
Epcos 73,274(b) 10,311,753
Hong Kong (1.8%)(c)
Communications equipment & services (0.8%)
China Telecom 2,436,000(b) 17,591,665
Multi-industry conglomerates (1.0%)
Hutchison Whampoa 1,487,000 21,667,758
Italy (2.6%)(c)
Banks and savings & loans (1.4%)
Instituto Bancario San Paolo di Torino 2,237,191 31,320,988
Utilities -- telephone (1.2%)
Telecom Italia Mobile 2,667,479(f) 25,462,554
Japan (15.1%)(c)
Computers & office equipment (2.7%)
Canon 405,000(b) 18,525,858
Fujitsu 720,000 20,400,944
Hitachi Software Engineering 201,000 20,566,230
Total 59,493,032
Electronics (2.7%)
Hitachi 1,612,000 19,255,336
Nintendo 128,000 21,334,321
Rohm 52,800 17,698,597
Total 58,288,254
Financial services (0.9%)
Nikko Securities 1,600,000 18,889,763
Furniture & appliances (1.2%)
Matsushita Electric Industrial 958,000 25,370,434
Media (1.8%)
Sony 348,000 39,989,629
Multi-industry conglomerates (1.1%)
Secom 275,000 23,070,513
Utilities -- telephone (4.7%)
Nippon Telegraph & Telephone 3,990 49,507,847
Nippon Television Network 20,370 15,221,621
NTT Data 1,333 17,774,156
NTT Mobile Communication Network 620 20,725,034
Total 103,228,658
Korea (0.3%)(c)
Metals
Pohang Iron & Steel ADR 305,127 6,407,667
Mexico (1.1%)(c)
Beverages & tobacco (0.5%)
Fomento Economico Mexicano ADR 247,800 10,221,750
Utilities -- telephone (0.6%)
Telefonos de Mexico ADR Cl L 239,306 14,074,184
Netherlands (2.9%)(c)
Insurance (1.6%)
Fortis 1,363,546(d) 34,287,327
Miscellaneous (1.3%)
United Pan-Europe Communications 766,968(b) $27,910,942
Singapore (1.2%)(c)
Banks and savings & loans (0.9%)
Overseas Union Bank 3,920,528 17,919,788
Financial services (0.3%)
DBS Land 5,315,500 7,537,949
South Korea (1.3%)(c)
Electronics (0.6%)
Samsung Electronics 47,000 12,705,564
Utilities -- telephone (0.7%)
Korea Telecom ADR 468,539 16,164,596
Spain (0.5%)(c)
Building materials & construction
Fomento de Construcciones y Contractas 547,192 11,217,548
Sweden (4.2%)(c)
Communications equipment & services
Ericsson (LM) Cl B 1,033,902 91,925,468
United Kingdom (15.0%)(c)
Aerospace & defense (0.8%)
British Aerospace 2,685,858 16,473,424
Communications equipment & services (2.0%)
Marconi 3,450,983 43,057,713
Health care (3.3%)
Glaxo Wellcome ADR 1,094,415 33,749,794
SmithKline Beecham 2,838,364 38,816,329
Total 72,566,123
Insurance (1.3%)
Prudential 1,847,798 28,361,945
Leisure time & entertainment (1.9%)
EMI Group ADR 4,252,378 40,710,983
Retail (0.5%)
Next 1,455,842 11,388,196
Utilities -- gas (1.2%)
BG Group 4,227,462 25,204,791
Utilities -- telephone (4.0%)
COLT Telecom Group 455,212(b) 19,338,458
Vodafone AirTouch 14,759,346 67,663,899
Total 87,002,357
United States (34.8%)
Chemicals (0.5%)
Du Pont (EI) de Nemours 233,300 11,067,169
Communications equipment & services (0.5%)
Corning 57,400 11,336,500
Computer software & services (2.7%)
Microsoft 333,300(b) 23,247,675
Oracle 440,300(b) 35,196,481
Total 58,444,156
Computers & office equipment (8.7%)
America Online 371,500(b) 22,220,344
Cisco Systems 347,494(b) 24,091,107
Compaq Computer 550,000 16,087,500
Electronic Data Systems 660,100 45,381,875
EMC 366,400(b) 50,906,700
Sun Microsystems 328,000(b) 30,155,500
Total 188,843,026
Electronics (4.1%)
Atmel 476,128(b) 23,300,514
Intel 169,300 21,469,356
Micron Technology 212,600(b) 29,604,551
Natl Semiconductor 236,100(b) 14,343,075
Total 88,717,496
Energy (1.3%)
Texaco 572,700 28,348,650
Financial services (3.4%)
Citigroup 368,850 21,923,522
Fannie Mae 550,134 33,179,957
Goldman Sachs Group 188,159 17,545,827
Total 72,649,306
Health care (5.5%)
Pfizer 1,277,800 53,827,325
Pharmacia 431,400 21,543,038
Schering-Plough 1,072,462 43,233,624
Total 118,603,987
Household products (0.9%)
Colgate-Palmolive 339,200 19,376,800
Insurance (1.5%)
American Intl Group 302,125 33,139,336
Multi-industry conglomerates (1.1%)
General Electric 155,000 24,373,749
Retail (1.1%)
Wal-Mart Stores 412,100 22,820,037
Utilities -- telephone (3.5%)
AT&T 366,086 17,091,640
Crown Castle Intl 225,000 8,634,375
Infonet Services Cl B 548,526(b) 9,256,376
Level 3 Communications 252,300(b) 22,454,700
SBC Communications 407,900 17,871,119
Total 75,308,210
Total common stocks
(Cost: $1,760,618,694) $2,059,147,795
Short-term securities (9.4%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (4.0%)
Federal Home Loan Bank Disc Nts
05-24-00 5.85% $1,800,000 $1,792,031
05-26-00 5.85 200,000 199,015
06-21-00 6.04 20,500,000 20,307,161
Federal Natl Mtge Assn Disc Nts
05-04-00 5.83 300,000 299,709
05-25-00 5.92 32,000,000 31,858,639
06-27-00 6.06 30,000,000 29,687,500
06-29-00 6.07 3,200,000 3,165,500
Total 87,309,555
Commercial paper (5.4%)
Alabama Power
05-01-00 6.02 2,000,000 1,998,997
Bayer
06-20-00 6.10 4,000,000(e) 3,963,666
Bell Atlantic Finance Services
05-31-00 6.03 6,500,000 6,462,939
Cargill Global Funding
05-01-00 5.85 2,900,000 2,898,586
Colgate-Palmolive
05-17-00 6.07 30,000,000(e) 29,904,208
CXC
07-10-00 6.28 5,000,000(e) 4,936,530
Dresdner US Finance
05-05-00 5.99 500,000 499,419
Exxon Mobil Australia
05-19-00 6.02 27,300,000(e) 27,204,450
Fleet Funding
05-31-00 6.06 4,100,000(e) 4,076,623
Sysco
05-01-00 6.04 21,300,000(e) 21,289,279
Toyota Motor Credit
05-17-00 6.02 13,500,000(e) 13,457,249
Total 116,691,946
Total short-term securities
(Cost: $204,062,273) $204,001,501
Total investments in securities
(Cost: $1,964,680,967)(g) $2,263,149,296
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(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) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(f) Security is partially or fully on loan. See Note 5 to the financial
statements.
(g) At April 30, 2000, the cost of securities for federal income tax purposes
was approximately $1,964,681,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $430,971,000
Unrealized depreciation (132,503,000)
------------
Net unrealized appreciation $298,468,000
See accompanying notes to investments in securities.
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities World Income Portfolio
April 30, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost $717,349,402) $638,747,478
Dividends and accrued interest receivable 17,604,144
Receivable for investment securities sold 3,542,250
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 5) 405,466
-------
Total assets 660,299,338
-----------
Liabilities
Disbursement in excess of cash on demand deposit
(including foreign currency holdings of $121,861) 354,624
Payable for investment securities purchased 10,123,229
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 5) 615,319
Accrued investment management services fee 13,447
Other accrued expenses 104,169
Option contracts written, at value (premium received $119,600) (Note 6) 146,250
-------
Total liabilities 11,357,038
----------
Net assets $648,942,300
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
World Income
Portfolio Six months ended April 30, 2000 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 194,250
Interest 25,597,391
----------
Total income 25,791,641
----------
Expenses (Note 2):
Investment management services fee 2,792,431
Compensation of board members 4,204
Custodian fees 127,604
Audit fees 11,625
Other 5,498
-----
Total expenses 2,941,362
Earnings credits on cash balances (Note 2) (3,212)
------
Total net expenses 2,938,150
---------
Investment income (loss) -- net 22,853,491
----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) (7,218,781)
Financial futures contracts 91,912
Foreign currency transactions (986,974)
Options contracts written (Note 6) 805,425
-------
Net realized gain (loss) on investments (7,308,418)
Net change in unrealized appreciation (depreciation) on investments and
on translation of assets and liabilities in foreign currencies (46,319,722)
-----------
Net gain (loss) on investments and foreign currencies (53,628,140)
-----------
Net increase (decrease) in net assets resulting from operations $(30,774,649)
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
World Income Portfolio
April 30, 2000 Oct. 31, 1999
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss) -- net $ 22,853,491 $ 55,042,279
Net realized gain (loss) on investments (7,308,418) (4,141,927)
Net change in unrealized appreciation (depreciation) on investments and
on translation of assets and liabilities in foreign currencies (46,319,722) (50,620,083)
----------- -----------
Net increase (decrease) in net assets resulting from operations (30,774,649) 280,269
Net contributions (withdrawals) from partners (155,587,203) (153,354,231)
------------ ------------
Total increase (decrease) in net assets (186,361,852) (153,073,962)
Net assets at beginning of period 835,304,152 988,378,114
----------- -----------
Net assets at end of period $ 648,942,300 $ 835,304,152
============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
World Income Portfolio
(Unaudited as to April 30, 2000)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
World Income Portfolio (the Portfolio) is a series of World Trust (the Trust)
and is registered under the Investment Company Act of 1940 (as amended) as a
non-diversified, open-end management investment company. The Portfolio invests
primarily in debt securities of U.S. and foreign issuers. The Declaration of
Trust permits the Trustees to issue non-transferable interests in the Portfolio.
The Portfolio's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets and liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option is
that the Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
an option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete its contract obligations.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including level-yield amortization of premium and discount is accrued
daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with AEFC to manage its portfolio. Under this agreement, AEFC
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.77% to 0.67% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
During the six months ended April 30, 2000, the Portfolio's custodian fees were
reduced by $3,212 as a result of earnings credits from overnight cash balances.
The Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
According to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the
Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $145,740,989 and $241,911,735, respectively, for the six
months ended April 30, 2000. For the same period, the portfolio turnover rate
was 21%. Realized gains and losses are determined on an identified cost basis.
Income from securities lending amounted to $38,293 for the six months ended
April 30, 2000. The risks to the Portfolio of securities lending are that the
borrower may not provide additional collateral when required or return the
securities when due.
4. INTEREST RATE FUTURES CONTRACTS
As of April 30, 2000, investments in securities included securities valued at
$4,797,193 that were pledged as collateral to cover initial margin deposits on
341 open sales contracts. The market value of the open sales contracts as of
April 30, 2000 was $32,966,876 with a net unrealized loss of $513,692. See
"Summary of significant accounting policies."
5. FOREIGN CURRENCY CONTRACTS
As of April 30, 2000, the Portfolio has foreign currency exchange contracts that
obligate it to deliver currencies at specified future dates. The unrealized
appreciation and/or depreciation on these contracts is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 8, 2000 9,710,300 10,000,000 $-- 615,319
U.S. Dollar European Monetary Unit
May 15, 2000 40,000,000 4,607,976 141,608 --
Swedish Krona U.S. Dollar
May 25, 2000 5,000,000 7,898,350 113,741 --
British Pound U.S. Dollar
July 3, 2000 3,800,000 6,068,695 150,117 $--
British Pound U.S. Dollar
Total $405,466 $615,319
6. OPTIONS CONTRACTS WRITTEN
Contracts and premium amounts associated with options contracts written are as
follows:
Six months ended April 30, 2000
Puts Calls
Contracts Premium Contracts Premium
Balance Oct. 31 1999 -- $-- -- $--
Opened 750 1,070,750 100 114,600
Closed (550) (776,550) -- --
Exercised (100) (174,600) (100) (114,600)
Balance April 30, 2000 100 $119,600 -- $--
See "Summary of significant accounting policies."
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
World Income Portfolio
April 30, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Bonds (97.0%)(c)
Issuer Coupon Principal Value(a)
rate amount
Australia (2.6%)
New South Wales Treasury
(Australian Dollar)
<S> <C> <C> <C> <C> <C>
03-01-08 8.00% 12,300,000(d) $7,689,052
Queensland Treasury
(Australian Dollar) Local Govt Guaranty
05-14-03 8.00 14,730,000 8,924,558
Total 16,613,610
Bermuda (0.1%)
Central Euro Media
(European Monetary Unit) Sr Nts Series RG
08-15-04 8.13 3,925,000 693,272
Brazil (0.8%)
Federal Republic of Brazil
(U.S. Dollar)
10-15-09 14.50 5,000,000 5,287,500
Canada (4.7%)
Abitibi-Consolidated Finance
(U.S. Dollar) Company
08-01-09 7.88 7,900,000 7,598,173
Govt of Canada
(Canadian Dollar)
02-01-06 7.00 15,700,000 11,016,932
(Japanese Yen)
03-23-09 1.90 980,000,000 9,044,276
Province of Manitoba
(U.S. Dollar) Series CK
12-15-00 9.00 2,800,000 2,833,650
Total 30,493,031
Cayman Islands (1.9%)
PDVSA Finance
(U.S. Dollar) Sr Nts
02-15-10 9.75 10,000,000 9,649,999
Roil
(U.S. Dollar)
12-05-02 12.78 3,150,000(d) 2,835,000
Total 12,484,999
China (1.8%)
Greater Beijing First Expressways
(U.S. Dollar) Sr Nts
06-15-04 9.25 3,500,000 1,120,000
06-15-07 9.50 8,750,000 2,625,000
People's Republic of China
(U.S. Dollar)
07-03-01 7.38 4,450,000 4,473,678
Zhuhai Highway
(U.S. Dollar) Sub Nts
07-01-08 11.50 11,350,000(d) 3,490,125
Total 11,708,803
Colombia (0.7%)
Republic of Colombia
(U.S. Dollar)
04-23-09 9.75 6,000,000 4,755,000
Denmark (2.1%)
Govt of Denmark
(Danish Krone)
11-15-00 9.00 40,000,000 4,977,987
03-15-06 8.00 65,000,000 8,852,285
Total 13,830,272
France (1.8%)
France Telecom
(European Monetary Unit) Cv
11-29-04 4.13 2,950,000 2,889,688
Govt of France
(European Monetary Unit)
04-25-05 7.50 8,710,000 8,746,511
Total 11,636,199
Germany (11.7%)
Allgemeine Hypo Bank
(European Monetary Unit)
09-02-09 5.00 10,760,000 9,236,245
Federal Republic of Germany
(European Monetary Unit)
07-22-02 8.00 18,471,330 17,924,120
11-11-04 7.50 29,600,000 29,480,872
07-04-27 6.50 19,005,512 19,125,680
Total 75,766,917
Greece (3.3%)
Hellenic Republic
(Greek Drachma)
04-01-03 8.90 7,289,000,000 21,216,882
Indonesia (0.7%)
Indah Kiat Finance Mauritius
(U.S. Dollar) Company Guaranty
07-01-07 10.00 4,350,000 2,871,000
Tjiwi Kimia Finance Mauritius
(U.S. Dollar) Company Guaranty
08-01-04 10.00 2,450,000 1,641,500
Total 4,512,500
Italy (6.3%)
Govt of Italy
(European Monetary Unit)
01-01-04 8.50 32,321,533 32,652,303
11-01-26 7.25 7,886,283 8,457,765
Total 41,110,068
Japan (0.9%)
Development Bank of Japan
(Japanese Yen)
09-20-01 6.50 449,000,000 4,512,534
Nippon Express
(Japanese Yen) Cv Series 4
03-31-04 1.00 120,000,000 1,182,277
Total 5,694,811
Mexico (3.3%)
Banco Nacional de Comercio Exterior
(U.S. Dollar)
02-02-04 7.25 12,150,000 11,603,250
Imexsa Export Trust
(U.S. Dollar)
05-31-03 10.13 2,115,569(d) 2,062,680
United Mexican States
(British Pound) Medium-term Nts Series E
05-30-02 8.75 5,000,000 7,822,933
Total 21,488,863
Netherlands (0.5%)
KPNQwest
(European Monetary Unit) Sr Nts
06-01-09 7.13 3,800,000 3,410,202
Norway (1.9%)
Govt of Norway
(Norwegian Krone)
11-30-04 5.75 60,000,000 6,527,276
01-15-07 6.75 48,000,000 5,487,383
Total 12,014,659
Slovenia (1.3%)
Republic of Slovenia
(European Monetary Unit)
06-16-04 5.75 17,750,000 8,263,856
Supra-National (2.8%)
Inter-American Development Bank
(Japanese Yen)
07-08-09 1.90 1,035,000,000 9,641,931
World Bank
(Japanese Yen)
06-20-00 4.50 950,000,000 8,850,923
Total 18,492,854
Sweden (2.4%)
Govt of Sweden
(Swedish Krona)
02-09-05 6.00 44,500,000 5,090,301
08-15-07 8.00 35,200,000 4,519,509
Paulson Enterprenad
(Swedish Krona)
12-15-00 4.75 56,560,000 6,261,544
Total 15,871,354
United Kingdom (5.8%)
Abbey Natl First Capital
(U.S. Dollar) Sub Nts
10-15-04 8.20 5,000,000 5,005,136
COLT Telecom Group
(European Monetary Unit)
07-31-08 7.63 6,400,000 2,840,836
Texon Intl
(European Monetary Unit) Sr Nts
02-01-08 10.00 4,000,000 1,748,719
United Kingdom Treasury
(British Pound)
06-10-03 8.00 17,000,000 27,880,519
Total 37,475,210
United States (39.6%)
American Standard
(U.S. Dollar) Company Guaranty
06-01-06 7.13 7,450,000 6,697,624
Chesapeake
(U.S. Dollar)
05-01-03 9.88 1,000,000 1,012,460
CIT Holdings LLC
(U.S. Dollar) Company Guaranty Series B
02-16-05 6.88 8,000,000 7,655,480
Citicorp
(European Monetary Unit)
09-19-09 6.25 10,800,000 4,942,654
Cleveland Electric Illuminating
(U.S. Dollar) 1st Mtge Series B
05-15-05 9.50 3,000,000 3,055,884
Conseco
(U.S. Dollar) Medium-term Nts Series B
06-21-01 7.60 10,000,000 6,550,000
Executive Risk Capital
(U.S. Dollar) Company Guaranty Series B
02-01-27 8.68 3,500,000 3,417,222
Federal Natl Mtge Assn
(U.S. Dollar)
08-15-04 6.50 5,000,000 4,857,885
04-01-15 7.50 10,000,000 9,940,625
02-01-27 7.50 2,237,479 2,195,526
11-01-29 7.00 9,898,536 9,468,544
Ford Motor Credit
(Japanese Yen)
02-07-05 1.20 1,000,000,000 9,180,202
General Motors
(U.S. Dollar)
07-15-01 9.13 2,000,000 2,038,762
Intl Paper
(European Monetary Unit)
08-11-00 5.38 7,000,000 6,059,973
Nationwide CSN Trust
(U.S. Dollar)
02-15-25 9.88 7,000,000(d) 7,452,115
New York Life Insurance
(U.S. Dollar)
12-15-23 7.50 7,000,000(d) 6,158,089
Overseas Private Investment
(U.S. Dollar) U.S. Govt Guaranty Series 1996A
01-15-09 6.99 7,083,308 6,916,566
PDV America
(U.S. Dollar) Sr Nts
08-01-03 7.88 3,500,000 3,277,425
Phillips Petroleum
(U.S. Dollar)
04-15-23 7.92 3,115,000 2,828,448
Questar Pipeline
(U.S. Dollar)
06-01-21 9.38 1,000,000 1,024,502
Salomon Smith Barney Holdings
(U.S Dollar)
01-15-03 6.13 10,400,000 10,062,206
Southern California Gas
(U.S. Dollar) 1st Mtge Series BB
03-01-23 7.38 900,000 818,793
Target
(U.S. Dollar)
12-01-22 8.50 3,265,000 3,273,750
TXU Electric Capital
(U.S. Dollar) Company Guaranty
01-30-37 8.18 6,150,000 5,601,026
U S WEST Communications
(U.S. Dollar)
11-10-26 7.20 6,000,000 5,262,170
U.S. Treasury
(U.S. Dollar)
11-15-01 7.50 27,000,000 27,313,565
11-15-16 7.50 71,950,000(e) 80,738,729
(U.S. Dollar) TIPS
01-15-07 3.38 10,000,000(b) 10,313,310
USX
(U.S. Dollar)
03-01-08 6.85 4,775,000 4,360,941
Zurich Capital
(U.S. Dollar) Company Guaranty
06-01-37 8.38 4,550,000(d) 4,289,381
Total 256,763,857
Total bonds
(Cost: $708,184,073) $629,584,719
Other (--%)
Issuer Shares Value(a)
Mexico
Mexico Value
Rights 1,000(f) $--
Total other
(Cost: $--) $--
Short-term securities (1.4%)(g)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies
Federal Home Loan Bank Disc Nts
05-12-00 5.81% $1,300,000 $1,296,972
05-19-00 5.89 1,100,000 1,096,110
06-02-00 6.01 600,000 596,512
06-16-00 6.02 1,300,000 1,289,090
Federal Home Loan Mtge Corp Disc Nts
05-09-00 5.87 4,000,000 3,992,837
06-22-00 6.07 900,000 891,238
Total short-term securities
(Cost: $9,165,329) $9,162,759
Total investments in securities
(Cost: $717,349,402)(h) $638,747,478
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Treasury inflation-protection securities (TIPS) are securities in which the
principal amount is adjusted for inflation and the semiannual interest payments
equal a fixed percentage of the inflation-adjusted principal amount.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(e) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 4 to the financial statements):
Type of security Notional amount
Sale contracts
U.S. Treasury Bonds, June 2000 $24,100,000
U.S. Treasury Notes, June 2000, 10 year 10,000,000
(f) Negligible market value.
(g) At April 30, 2000, cash or short-term securities were designed to cover open
put options written as follows:
Issuer Contracts Exercise Expiration Value(a)
Price date
U.S. Treasury Notes Futures, June 2000 100 $94 May 2000 $146,250
(h) At April 30, 2000, the cost of securities for federal income tax purposes
was approximately $717,349,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $1,686,000
Unrealized depreciation (80,288,000)
-----------
Net unrealized depreciation $(78,602,000)
<PAGE>
Distributed by American Express Financial Advisors Inc. Member
NASD. American Express Company is separate from American Express
Financial Advisors Inc. and is not a broker-dealer.
S-6145 E (6/00)
