December 14, 2004
VIA EDGAR (Correspondence Filing)
Ms. Patsy Mengiste
Securities and Exchange Commission
450 Fifth Street, N.W. (Mail Stop 05-05)
Washington, D.C. 20549-5005
ATTN: Document Control - EDGAR
RE: AXP Global Series, inc. (File Nos. 811-5696/33-25824, PEA# 42)
AXP Global Bond Fund
AXP Global Technology Fund
AXP Threadneedle Emerging Markets Fund
AXP Threadneedle Global Balanced Fund
AXP Threadneedle Global Equity Fund
AXP International Series, Inc. (File Nos. 811-4075/2-92309, PEA# 40)
AXP Threadneedle European Equity Fund
AXP Threadneedle International Fund
AXP Partners International Series, Inc. (File Nos. 811-10427/333-64010,
PEA# 10)
AXP Partners International Aggressive Growth Fund
AXP Partners International Core Fund
AXP Partners International Select Value Fund
AXP Partners International Small Cap Fund
Dear Ms. Mengiste:
This letter is in response to Staff's oral comments that you communicated to us
by telephone on or about December 9, 2004. The language also reflects comments
from counsel for the funds referenced above.
PROSPECTUS
APPLICABLE TO ALL FUNDS
COMMENT 1: Under the "Exchanging/Selling Shares" section, with respect to your
market timing disclosure, you need to state that "to the extent the fund invests
in certain securities" (i.e. a global/international fund has significant foreign
holdings) and in addition based on the level of holdings in a certain type of
security, add a statement to address the fact that the risk would be greater.
RESPONSE: For each of the funds listed below, we have amended the second
paragraph under "Exchanges/Selling Shares" to read as follows (changes are
underlined): [Please see attachment A for the full disclosure, including
language that was removed].
APPLICABLE TO AXP GLOBAL BOND, AXP GLOBAL TECHNOLOGY, AXP THREADNEEDLE GLOBAL
BALANCED, AXP THREADNEEDLE GLOBAL EQUITY, AXP THREADNEEDLE EUROPEAN EQUITY, AXP
THREADNEEDLE INTERNATIONAL, AXP PARTNERS INTERNATIONAL AGGRESSIVE GROWTH, AXP
PARTNERS INTERNATIONAL CORE, AND AXP PARTNERS INTERNATIONAL SELECT VALUE ONLY:
Funds that INVEST IN SECURITIES WHICH trade on overseas securities markets may
be vulnerable to market timers who seek to take advantage of changes in the
values of securities between the close of overseas markets and the close of U.S.
markets, which is generally the time at which a fund's NAV is calculated. TO THE
EXTENT THAT THE FUND HAS SIGNIFICANT HOLDINGS OF FOREIGN SECURITIES, the risks
of market timing may be greater THAN FOR FUNDS THAT DO NOT HAVE SIGNIFICANT
FOREIGN HOLDINGS. See "Principal Investment Strategies" for a discussion of THE
KINDS OF SECURITIES IN WHICH THE FUND INVESTS. See also "Valuing Fund Shares"
for a discussion of the Fund's policy on fair value pricing, which is intended,
in part, to reduce the frequency and effect of market timing.
APPLICABLE TO AXP THREADNEEDLE EMERGING MARKETS AND AXP PARTNERS INTERNATIONAL
SMALL CAP ONLY:
Funds that INVEST IN SECURITIES WHICH trade on overseas securities markets may
be vulnerable to market timers who seek to take advantage of changes in the
values of securities between the close of overseas markets and the close of U.S.
markets, which is generally the time at which a fund's NAV is calculated. TO THE
EXTENT THAT THE FUND HAS SIGNIFICANT HOLDINGS OF FOREIGN SECURITIES OR
SECURITIES THAT TRADE INFREQUENTLY, OR BOTH the risks of market timing may be
greater THAN FOR FUNDS THAT DO NOT HAVE SUCH HOLDINGS. See "Principal Investment
Strategies" for a discussion of the investment strategies that may result in the
Fund's investing in one or more of these asset classes. See also "Valuing Fund
Shares" for a discussion of the Fund's policy on fair value pricing, which is
intended, in part, to reduce the frequency and effect of market timing.
COMMENT 2: Under the "Valuing Fund Shares" section, your fund valuation
disclosure has no distinction in terms of holdings of the fund. Specifically, it
does not address "small-cap", "thinly-traded" or "illiquid" securities, please
include language that discloses information about these types of securities. In
addition, based on the level of holdings in a certain type of security, please
add a statement to address the fact that the risk would be greater.
RESPONSE: For each of the funds listed below, we have amended the "Valuing Fund
Shares" section to read as follows (changes are underlined): [Please see
attachment B for the full disclosure, including language that was removed].
APPLICABLE TO AXP GLOBAL BOND, AXP GLOBAL TECHNOLOGY, AXP THREADNEEDLE GLOBAL
BALANCED, AXP THREADNEEDLE GLOBAL EQUITY, AXP THREADNEEDLE EUROPEAN EQUITY, AXP
THREADNEEDLE INTERNATIONAL, AXP PARTNERS INTERNATIONAL AGGRESSIVE GROWTH, AXP
PARTNERS INTERNATIONAL CORE, AND AXP PARTNERS INTERNATIONAL SELECT VALUE ONLY:
VALUING FUND SHARES
The NAV is the value of a single share of the Fund. The NAV is determined by
dividing the value of the Fund's assets, minus any liabilities, by the number of
shares outstanding. AEFC calculates the NAV as of the close of business on the
New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day
that the NYSE is open. THE FUND'S SECURITIES ARE VALUED PRIMARILY ON THE BASIS
OF MARKET QUOTATIONS OBTAINED FROM OUTSIDE PRICING SERVICES APPROVED BY THE
BOARD.
WHEN reliable MARKET quotations are not readily available, SECURITIES ARE PRICED
AT FAIR VALUE BASED ON PROCEDURES ADOPTED BY THE BOARD. These procedures are
ALSO used when THE VALUE OF A SECURITY HELD BY THE FUND IS MATERIALLY AFFECTED
BY EVENTS THAT OCCUR AFTER THE CLOSE OF THE PRIMARY MARKET ON WHICH THE SECURITY
IS TRADED BUT PRIOR TO THE TIME AS OF WHICH THE FUND'S NAV IS DETERMINED.
VALUING SECURITIES AT FAIR VALUE INVOLVES RELIANCE ON JUDGMENT. The fair value
of a security is likely to differ from ANY AVAILABLE quoted or published price.
TO THE EXTENT THAT THE FUND HAS SIGNIFICANT HOLDINGS OF FOREIGN SECURITIES, FAIR
VALUATION MAY BE USED MORE FREQUENTLY THAN FOR OTHER FUNDS. THE FUND USES AN
UNAFFILIATED SERVICE PROVIDER TO ASSIST IN DETERMINING FAIR VALUES FOR FOREIGN
SECURITIES.
Foreign investments are valued in U.S. dollars. Some of the Fund's securities
may be listed on foreign exchanges that trade on weekends or other days when the
Fund does not price its shares. In that event, the net asset value of the Fund's
shares may change on days when shareholders will not be able to purchase or
redeem the Fund's shares.
APPLICABLE TO AXP THREADNEEDLE EMERGING MARKETS AND AXP PARTNERS INTERNATIONAL
SMALL CAP ONLY:
VALUING FUND SHARES
The NAV is the value of a single share of the Fund. The NAV is determined by
dividing the value of the Fund's assets, minus any liabilities, by the number of
shares outstanding. AEFC calculates the NAV as of the close of business on the
New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day
that the NYSE is open. THE FUND'S SECURITIES ARE VALUED PRIMARILY ON THE BASIS
OF MARKET QUOTATIONS OBTAINED FROM OUTSIDE PRICING SERVICES APPROVED BY THE
BOARD.
WHEN reliable MARKET quotations are not readily available, SECURITIES ARE PRICED
AT FAIR VALUE BASED ON PROCEDURES ADOPTED BY THE BOARD. These procedures are
ALSO used when THE VALUE OF A SECURITY HELD BY THE FUND IS MATERIALLY AFFECTED
BY EVENTS THAT OCCUR AFTER THE CLOSE OF THE PRIMARY MARKET ON WHICH THE SECURITY
IS TRADED BUT PRIOR TO THE TIME AS OF WHICH THE FUND'S NAV IS DETERMINED.
VALUING SECURITIES AT FAIR VALUE INVOLVES RELIANCE ON JUDGMENT. The fair value
of a security is likely to differ from ANY AVAILABLE quoted or published price.
TO THE EXTENT THAT THE FUND HAS SIGNIFICANT HOLDINGS OF FOREIGN SECURITIES OR
SECURITIES THAT TRADE INFREQUENTLY, OR BOTH, FAIR VALUATION MAY BE USED MORE
FREQUENTLY THAN FOR OTHER FUNDS. THE FUND USES A THIRD-PARTY SERVICE PROVIDER TO
ASSIST IN DETERMINING FAIR VALUES FOR FOREIGN SECURITIES.
Foreign investments are valued in U.S. dollars. Some of the Fund's securities
may be listed on foreign exchanges that trade on weekends or other days when the
Fund does not price its shares. In that event, the net asset value of the Fund's
shares may change on days when shareholders will not be able to purchase or
redeem the Fund's shares.
STATEMENT OF ADDITIONAL INFORMATION
APPLICABLE TO ALL FUNDS
COMMENT 3: Under the "Portfolio Holdings Disclosure" section, please disclose
"to whom, how frequently, and what information" you provide when disclosing the
Fund's selective disclosure of holdings information for ratings and rankings
agencies and for other third parties.
RESPONSE: We have amended the fifth paragraph under "Portfolio Holdings
Disclosure" to read as follows (changes are underlined): [Please see attachment
C for the full policy disclosure, including language that was removed].
FROM TIME TO TIME, AEFC may make PARTIAL OR COMPLETE Fund holdings information
that is not publicly available on the website or otherwise available IN ADVANCE
OF THE TIME RESTRICTIONS NOTED ABOVE (1) to its directors, officers, and
employees, and those of its affiliated and unaffiliated service providers that
require the information IN THE NORMAL COURSE OF BUSINESS IN order to provide
services to the Fund (including, without limitation, custodians, auditors,
subadvisers, financial printers, pricing services, proxy voting services, AND
PARTIES THAT DELIVER ANALYTICAL, STATISTICAL, TRADING OR OTHER INVESTMENT
RELATED SERVICES), AND (2) TO FACILITATE THE REVIEW AND/OR RATING OF THE FUND BY
RATINGS AND RANKINGS AGENCIES (INCLUDING, FOR EXAMPLE, MORNINGSTAR, INC.,
THOMSON FINANCIAL AND LIPPER INC.). IN SUCH SITUATIONS, THE INFORMATION IS
RELEASED SUBJECT TO CONFIDENTIALITY AGREEMENTS, DUTIES IMPOSED UNDER APPLICABLE
POLICIES AND PROCEDURES (E.G., APPLICABLE CODES OF ETHICS) DESIGNED TO PREVENT
THE MISUSE OF CONFIDENTIAL INFORMATION, GENERAL DUTIES UNDER APPLICABLE LAWS AND
REGULATIONS, OR OTHER SUCH DUTIES OF CONFIDENTIALITY. In addition, the Fund
discloses holdings information as required by federal or state securities laws,
and may disclose holdings information in response to requests by governmental
authorities.
Staff had no additional comments except the requirement to make the following
representation on behalf of the Registrants:
In connection with the Amendments listed above, the Registrants, hereby
acknowledge the following:
The disclosures in the filings are the responsibility of the Registrants
and the Registrants are fully responsible for the adequacy or accuracy of
the disclosures in these filings. The Registrants represent to the
Commission that comments made by the Commission, or the staff acting
pursuant to delegated authority, or changes to disclosure in response to
staff comments in the filing reviewed by the staff, do not foreclose the
Commission from taking any action with respect to the filing, and the
Registrants represent that they will not assert this action as a defense in
any proceeding initiated by the Commission or any person, under the federal
securities laws of the United States.
If you have any questions, please contact Christopher O. Petersen at (612) 671-
4321 or Simone Pepper at (612) 671-2847.
Sincerely,
/s/ Leslie L. Ogg
- ----------------
Leslie L. Ogg
Vice President, General Counsel and Secretary
ATTACHMENT A - MARKET TIMING DISCLOSURE
REVISED MARKET TIMING DISCLOSURE
AXP GLOBAL BOND, AXP GLOBAL TECHNOLOGY, AXP THREADNEEDLE GLOBAL BALANCED, AXP
THREADNEEDLE GLOBAL EQUITY, AXP THREADNEEDLE EUROPEAN EQUITY, AXP THREADNEEDLE
INTERNATIONAL, AXP PARTNERS INTERNATIONAL AGGRESSIVE GROWTH, AXP PARTNERS
INTERNATIONAL CORE, AXP PARTNERS INTERNATIONAL SELECT VALUE
Market timing is frequent or short-term trading by certain shareholders intended
to profit at the expense of other shareholders by selling shares of a fund
shortly after purchase. Market timing may adversely impact a fund's performance
by preventing the portfolio manager from fully investing the assets of the fund,
diluting the value of shares held by long-term shareholders, or increasing the
fund's transaction costs.
Funds INVEST IN SECURITIES WHICH that trade on overseas securities markets may
be vulnerable to market timers who seek to take advantage of changes in the
values of securities between the close of overseas markets and the close of U.S.
markets, which is generally the time at which a fund's NAV is calculated.
[Further] TO THE EXTENT THAT THE FUND HAS SIGNIFICANT HOLDINGS OF FOREIGN
SECURITIES, the risks of market timing may be greater [for the funds] THAN FOR
[other] funds THAT DO NOT HAVE SIGNIFICANT FOREIGN HOLDINGS. See "Principal
Investment Strategies" for a discussion of the KINDS OF SECURITIES IN WHICH THE
FUND INVESTS. [investment strategies that may result in the Fund's investing in
one or more of these asset classes.] See also "Valuing Fund Shares" for a
discussion of the Fund's policy on fair value pricing, which is intended, in
part, to reduce the frequency and effect of market timing.
The Fund's Board of Directors has adopted a policy that is designed to detect
and deter market timing. The Fund seeks to enforce this policy through the
Distributor and its transfer agent as follows:
o The Fund tries to distinguish market timing from trading that it believes
is not harmful, such as periodic rebalancing for purposes of asset
allocation or dollar cost averaging. Under the Fund's procedures, there is
no set number of transactions in the Fund that constitutes market timing.
Even one purchase and subsequent sale by related accounts may be market
timing. Generally, the Fund seeks to restrict the exchange privilege of an
investor who makes more than three exchanges into or out of the Fund in any
90-day period. Accounts held by a retirement plan or financial intermediary
for the benefit of its participants or clients, which typically engage in
daily transactions, are not subject to this limit. The Distributor does
seek the assistance of retirement plans and financial intermediaries in
applying similar restrictions on the sub-accounts of their participants or
clients.
o If an investor's trading activity is determined to be market timing or
otherwise harmful to existing shareholders, the Fund reserves the right to
modify or discontinue the investor's exchange privilege or reject the
investor's purchases or exchanges, including purchases or exchanges
accepted by a retirement plan or other financial intermediary. The Fund may
treat accounts it believes to be under common control as a single account
for these purposes, although it may not be able to identify all such
accounts.
o Although the Fund does not knowingly permit market timing, it cannot
guarantee that it will be able to identify and restrict all short-term
trading activity. The Fund receives purchase and sale orders through
retirement plans and financial intermediaries where market-timing activity
may not always be successfully detected.
AXP THREADNEEDLE EMERGING MARKETS; AXP PARTNERS INTERNATIONAL SMALL CAP
The language above is the same for these funds except for the second sentence in
the second paragraph, which should read as follows:
[Further] TO THE EXTENT THAT THE FUND HAS SIGNIFICANT HOLDINGS OF FOREIGN
SECURITIES OR SECURITIES THAT TRADE INFREQUENTLY, OR BOTH, the risks of market
timing may be greater [for the funds]THAN FOR [other] funds THAT DO NOT HAVE
SUCH HOLDINGS.
ATTACHMENT B - FUND VALUATION DISCLOSURE
AXP GLOBAL BOND, AXP GLOBAL TECHNOLOGY, AXP THREADNEEDLE GLOBAL BALANCED, AXP
THREADNEEDLE GLOBAL EQUITY, AXP THREADNEEDLE EUROPEAN EQUITY, AXP THREADNEEDLE
INTERNATIONAL, AXP PARTNERS INTERNATIONAL AGGRESSIVE GROWTH, AXP PARTNERS
INTERNATIONAL CORE, AXP PARTNERS INTERNATIONAL SELECT VALUE
VALUING FUND SHARES
The NAV is the value of a single share of the Fund. The NAV is determined by
dividing the value of the Fund's assets, minus any liabilities, by the number of
shares outstanding. AEFC calculates the NAV as of the close of business on the
New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day
that the NYSE is open. The Fund's securities are valued primarily on the basis
of market quotations OBTAINED FROM OUTSIDE PRICING SERVICES APPROVED BY THE
BOARD. Certain short-term securities are valued at amortized cost.
[The Fund uses outside pricing services approved by the Board to provide closing
market prices.]When reliable market quotations are not readily available,
securities are [generally] priced at fair value based on procedures adopted by
the Board. These procedures are also used when the value of a security held by
the Fund is materially affected by events that occur after the close of the
primary market on which the security is traded but prior to the time as of which
the Fund's NAV is determined. Valuing securities at fair value involves
[greater] reliance on judgment.[than valuing securities with readily available
market quotations.] The fair value of a security is likely to differ from [the]
ANY AVAILABLE quoted or published price. [, where available. There can be no
assurance that the Fund could obtain the fair value assigned to a security if it
were to sell the security at approximately the time at which the Fund's NAV is
determined.]To the extent that the Fund has significant holdings of foreign
securities, fair valuation may be used more frequently than for other funds. The
Fund uses an unaffiliated service provider to assist in determining fair values
for foreign securities.
Foreign investments are valued in U.S. dollars. Some of the Fund's securities
may be listed on foreign exchanges that trade on weekends or other days when the
Fund does not price its shares. In that event, the net asset value of the Fund's
shares may change on days when shareholders will not be able to purchase or
redeem the Fund's shares.
AXP THREADNEEDLE EMERGING MARKETS; AXP PARTNERS INTERNATIONAL SMALL CAP
The language above is the same for these funds except for the second to the last
sentence of the second paragraph, which should read as follows:
To the extent that the Fund has significant holdings of foreign securities or
securities that trade infrequently, or both, fair valuation may be used more
frequently than for other funds.
ATTACHMENT C - POLICY HOLDINGS DISCLOSURE
Portfolio Holdings Disclosure
The Fund's board of directors and AEFC believe that the investment ideas of AEFC
and any Fund Subadviser with respect to management of a Fund should benefit the
Fund and its shareholders, and do not want to afford speculators an opportunity
to profit by anticipating Fund trading strategies or by using Fund portfolio
holdings information for stock picking. However, the Fund's board also believes
that knowledge of the Fund's portfolio holdings can assist shareholders in
monitoring their investments, making asset allocation decisions, and evaluating
portfolio management techniques.
The Fund's board has therefore adopted AEFC's policies and approved AEFC's
procedures, including AEFC's oversight of Subadviser practices relating to
disclosure of the Funds' portfolio securities. These policies and procedures are
intended to protect the confidentiality of Fund portfolio holdings information
and generally prohibit the release of such information until such information is
made public, unless such persons have been authorized to receive such
information on a selective basis, as described below. It is the policy of the
Fund not to provide or permit others to provide holdings information on a
selective basis, and AEFC does not intend to selectively disclose holdings
information or expect that such holdings information will be selectively
disclosed, except where necessary for the Fund's operation or where there are
legitimate business purposes for doing so and, in any case, where conditions are
met that are designed to protect the interests of the Fund and its shareholders.
Although AEFC seeks to limit the selective disclosure of portfolio holdings
information and generally monitors recipients' usage of that information, there
can be no assurance that these policies will protect the Fund from the potential
misuse of holdings information by individuals or firms in possession of that
information. Under no circumstances may AEFC, its affiliates or any employee
thereof receive any consideration or compensation for disclosing such holdings
information.
A complete schedule of the Fund's portfolio holdings is available semi-annually
and annually in shareholder reports filed on Form N-CSR and, after the first and
third fiscal quarters, in regulatory filings on Form N-Q. These shareholder
reports and regulatory filings are filed with the SEC in accordance with federal
securities laws and are generally available within sixty (60) days of the end of
the Fund's fiscal quarter, on the Securities and Exchange Commission's Website.
Once holdings information is filed with the SEC, it will also be posted on the
website (www.americanexpress.com), and it may be mailed, e-mailed or otherwise
transmitted to any person.
In addition, AEFC makes publicly available, on a monthly basis, information
regarding the Fund's top ten holdings (including name and percentage of a Fund's
assets invested in each such holding) and the percentage breakdown of a Fund's
investments by country, sector and industry, as applicable. This holdings
information is generally made available through the website, marketing
communications (including printed advertisements and sales literature), and/or
telephone customer service centers that support the Fund. This holdings
information is generally not released until it is at least 30 days old.
[AEFC may make ] [From time to time, subject to confidentiality agreements
duties imposed under applicable policies and procedures (e.g., applicable codes
of ethics) designed to prevent the misuse of confidential information, general
duties under applicable laws and regulations, or other such duties of
confidentiality.] From time to time, AEFC MAY MAKE PARTIAL OR COMPLETE Fund's
holdings information that is not publicly available, on the website or
otherwise, available IN ADVANCE OF THE TIME RESTRICTIONS NOTED ABOVE (1) to its
directors, officers, and employees, and those of its affiliated and unaffiliated
service providers that require the information in THE NORMAL COURSE OF BUSINESS
IN order to provide services to the Fund (including, without limitation,
custodians, auditors, subadvisers, financial printers, pricing services, and
proxy voting services), AND PARTIES THAT DELIVER ANALYTICAL, STATISTICAL,
TRADING OR OTHER INVESTMENT RELATED SERVICES), AND (2) to facilitate the review
AND/OR RATING of the Fund by ratings and rankings agencies, and to investment
professionals and research analysts who provide analysis, data, trading and
other investment-related services to the Fund's portfolio manaGERS (INCLUDING,
FOR EXAMPLE, MORNINGSTAR, INC., THOMS[e]ON FINANCIAL AND LIPPER Inc. In such
situations, the information is released subject to confidentiality agreements,
duties imposed under applicable policies and procedures (e.g., applicable codes
of ethics) designed to prevent the misuse of confidential information, general
duties under applicable laws and regulations, or other such duties of
confidentiality. [, A REUTERS COMPANY). In addition, the Fund discloses holdings
information as required by federal or state securities laws, and may disclose
holdings information in response to requests by governmental authorities.
The Fund's board has adopted the policies of AEFC and approved the procedures
AEFC has established to ensure that the Fund's holdings information is only
disclosed in accordance with these policies. Before any selective
disclosure of holdings information is permitted, the person seeking to disclose
such holdings information must submit a written request to the Portfolio
Holdings Committee ("PHC"). The PHC is comprised of members from AEFC's General
Counsel's Office, Compliance, and Communications. The PHC has been authorized by
the Funds' board to perform an initial review of requests for disclosure of
holdings information to evaluate whether there is a legitimate business purpose
for selective disclosure, whether selective disclosure is in the best interests
of the Fund and its shareholders, and to safeguard against improper use of
holdings information. Factors considered in this analysis are whether the
recipient has agreed to or has a duty to keep the holdings information
confidential and whether risks have been mitigated such that the recipient has
agreed or has a duty to use the holdings information only as necessary to
effectuate the purpose for which selective disclosure was authorized. Before
portfolio holdings may be selectively disclosed, requests approved by the PHC
must also be authorized by the Fund's Chief Compliance Officer or the Fund's
General Counsel. On at least an annual basis the PHC reviews the approved
recipients of selective disclosure and, where appropriate, requires a
resubmission of the request, in order to re-authorize any ongoing arrangements.
These procedures are intended to be reasonably designed to protect the
confidentiality of Fund holdings information and to prohibit their release to
individual investors, institutional investors, intermediaries that distribute
the Funds' shares, and other parties, until such holdings information is made
public or unless such persons have been authorized to receive such holdings
information on a selective basis, as set forth above. Although AEFC has set up
these procedures to monitor and control selective disclosure of holdings
information, there can be no assurance that these procedures will protect the
Fund from the potential misuse of holdings information by individuals or firms
in possession of that information.