American Express(R)
Variable Portfolio Funds
AXPSM Variable Portfolio --
New Dimensions Fund
(formerly known as IDS Life Growth Dimensions Fund)
1999 ANNUAL REPORT
AMERICAN EXPRESS Financial Advisors (logo)
(This annual report includes a prospectus that describes in detail the Funds'
objective, investment strategy, risk, sales charge, fees and other matters of
interest. Please read the prospectus carefully before you invest or send money.)
Managed by IDS Life Insurance Company
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The American Express Variable Portfolio (AXP VP) Funds provide several
alternatives to consider for investment through your annuity contracts.
AXP VARIABLE PORTFOLIO - NEW DIMENSIONS FUND
(This annual report is not part of the prospectus.)
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Table of Contents
1999 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the Chairman 4
From the Portfolio Manager 5
The 10 Largest Holdings 6
The Fund's Long-term Performance 7
Independent Auditors' Report 8
Financial Statements 9
Notes to Financial Statements 12
Investments in Securities 17
1999 PROSPECTUS
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
The Fund 3p
Goal 3p
Investment Strategy 3p
Risks 4p
Past Performance 5p
Management 6p
Fees and Expenses 6p
Shareholder Fees 6p
Annual Fund Operating Expenses 6p
Buying and Selling Shares 7p
Valuing Fund Shares 7p
Purchasing Shares 7p
Transferring/Selling Shares 7p
Distributions and Taxes 8p
About the Company 9p
Financial Highlights 11p
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
The past 12 months was a period of recovery for financial assets, especially
U.S. stocks. As a result, all of the American Express(R) Variable Portfolio
Funds generated positive performance during the fiscal year, which ran from
September 1998 through August 1999.
I also want to report the results of a shareholder meeting held by American
Express Funds this past June. Shareholders approved several proposals advanced
by management, including:
o The election of board members and the selection of KPMG LLP as independent
auditors.
o Change in the funds' names from "IDS" to "AXP" as well as changes in several
individual fund names.
o A new shareholder service and distribution plan.
o Changes with respect to fundamental investment policies.
No other business was presented at the meeting, which was concluded by a report
to shareholders from the Investment Department of American Express Financial
Corporation.
Thanks to all of you for your effort in reviewing the proxy material and voting
your proxies.
Arne H. Carlson
AXP VARIABLE PORTFOLIO - NEW DIMENSIONS FUND
(This annual report is not part of the prospectus.)
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(picture of) Gordon M. Fines
Gordon M. Fines
Portfolio manager
From the Portfolio Manager
AXP VP -- New Dimensions Fund (formerly known as IDS Life Growth
Dimensions Fund)
A powerful surge by the U.S. stock market paved the way for a substantial gain
by the Fund during the past fiscal year. For the 12 months -- September 1998
through August 1999 -- the Fund's value increased 42.61%. (This figure does not
reflect expenses that apply to the variable accounts, subaccounts, the variable
annuity or life insurance contracts.)
The U.S. stock market was still licking its wounds from a late-summer tumble
when the period began. But, with ongoing reports of solid economic growth and
low inflation, stocks eventually regained their footing and, supported by three
reductions in short-term interest rates by the Federal Reserve Board during the
fall, mounted a furious rally. The positive performance continued until
February, when concerns about a potential increase in the inflation rate and a
slowdown in corporate profits caused the market to retreat.
From that point, gains became more difficult to come by as a rise in long-term
interest rates kept stocks off balance much of the time.
Still, the market did manage to make a little progress during the final months
of the period.
For the Fund, whose performance generally tracked that of the market as a whole
over the 12 months, its emphasis on technology, health care, financial services
and retailing stocks paid off well. Looking at specific stocks, General
Electric, Cisco Systems, Microsoft, Wal-Mart, Pfizer, IBM and Safeway -- all
among the Fund's largest holdings -- made particularly strong contributions. For
the most part, large-capitalization growth stocks were at the forefront of the
market's advances. That worked to the Fund's advantage, as those issues form the
core of its investment portfolio.
Looking at changes to the portfolio, I added a modest amount of utility stocks
early in the period. Beyond that, I trimmed the exposure to technology-related
stocks with especially high valuations and added a bit to cyclical, or
economically sensitive, holdings.
As the new fiscal year begins, recent increases in short-term interest rates by
the Federal Reserve have created considerable uneasiness in the stock market. On
the positive side, though, the economy appears healthy, corporate profits appear
to be generally good and inflation has yet to show clear signs of heading
higher.
Gordon M. Fines
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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The 10 Largest Holdings AXP VP -- New Dimensions Fund
Percent Value
(of net assets) (as of Aug. 31, 1999)
Intl Business Machines 5.36% $189,820,793
Cisco Systems 4.67 165,333,655
Wal-Mart Stores 3.43 121,527,030
General Electric 3.39 119,814,975
Microsoft 2.87 101,531,806
Texas Instruments 2.54 90,038,974
Intel 2.48 87,644,750
Tyco Intl 2.18 77,166,895
Time Warner 2.15 75,937,794
MCI WorldCom 1.96 69,258,225
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here
make up 31.03% of net assets
AXP VARIABLE PORTFOLIO - NEW DIMENSIONS FUND
(This annual report is not part of the prospectus.)
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The Fund's Long-term Performance
AXP VP -- New Dimensions Fund
How $10,000 has grown in AXP VP - New Dimensions Fund
$30,000
$20,000
S&P 500 Index
$19,162
AXP VP-
New Dimensions Fund
Lipper Growth
Fund Index
$10,000
6/1/96 8/96 8/97 8/98 8/99
Average annual total return (as of Aug. 31, 1999)
Since
1 year inception*
+42.61% +21.27%
*Inception date was May 1, 1996.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the Standard & Poor's 500 Index (S&P 500
Index) and the Lipper Growth Fund Index.
Your investment and return values fluctuate so that your accumulation units,
when redeemed, may be worth more or less than their original cost. This was a
period of widely fluctuating security prices. Past performance is no guarantee
of future results. The above graph does not reflect expenses that apply to the
variable accounts or the annuity contracts.
The S&P 500 Index, an unmanaged list of common stocks, is frequently used as a
general measure of market performance. The index reflects reinvestment of all
distributions and changes in market prices, but excludes brokerage commissions
or other fees. However, the S&P 500 Index companies are generally larger than
those in which the Fund invests.
Lipper Growth Fund Index, an unmanaged index published by Lipper Analytical
Services, Inc., includes 30 funds that are generally similar to the Fund,
although some funds in the index may have somewhat different investment policies
or objectives.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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The financial statements contained in Post-Effective Amendment #40 to
Registration Statement No. 2-73115 filed on or about October 28, 1999, are
incorporated herein by reference.
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S-6412 A (10/99)
American Express Variable
Portfolio Funds
IDS Tower 10
Minneapolis, MN 55440-0010
AMERICAN EXPRESS Financial Advisors (logo)
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STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
