1997 ANNUAL REPORT
IDS
New
Dimensions
Fund
(prospectus enclosed)
(icon of) dimension
The goal of IDS New Dimensions Fund, Inc. is long-term growth of capital.
(This annual report includes a prospectus that describes in detail the Fund's
objective, investment policies, risks, sales charges, fees and other matters of
interest. Please read the prospectus carefully before you invest or send money.)
American Express Financial Advisors
Distributed by American Express Financial Advisors Inc.
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(icon of) dimension
Fast-track stocks
What type of stock has been the driving force behind the dramatic increases
posted by U.S. and foreign stock markets in recent years? The answer is growth
stocks -- that is, stocks of companies that have a track record of increasing
their business and profits at a rapid pace. These companies, some large and
well-known, others smaller and newly discovered, form the foundation of IDS New
Dimensions Fund. The Fund looks for companies from around the world that not
only have a history of continuous growth, but are believed to be poised to
continue growing over the long term due to their management, marketing
innovation and/or technological advances.
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Contents
(Icon of) One open book inside of another.
The purpose of this annual report is to tell investors how the Fund performed.
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
1997 annual report
From the president 4
From the portfolio manager 4
The Portfolio's ten largest holdings 6
Making the most of the Fund 7
The Fund's long-term performance 8
Independent auditors' report (Fund) 9
Financial statements (Fund) 10
Notes to financial statements (Fund) 13
Independent auditors' report (Portfolio) 17
Financial statements (Portfolio) 18
Notes to financial statements (Portfolio) 21
Investments in securities 28
IDS mutual funds 33
Federal income tax information 37
1997 prospectus
The Fund in brief 3p
Goal 3p
Investment policies and risks 3p
Structure of the Fund 4p
Manager and distributor 4p
Portfolio manager 5p
Alternative purchase arrangements 5p
Sales charge and Fund expenses 6p
Performance 8p
Financial highlights 8p
Total returns 10p
Investment policies and risks 13p
Facts about investments and their risks 13p
Valuing Fund shares 16p
How to purchase, exchange or redeem shares 17p
Alternative purchase arrangements 17p
How to purchase shares 20p
How to exchange shares 23p
How to redeem shares 23p
Reductions and waivers of the sales charge 28p
Special shareholder services 33p
Services 33p
Quick telephone reference 33p
Distributions and taxes 34p
Dividend and capital gain distributions 34p
Reinvestments 35p
Taxes 35p
How to determine the correct TIN 37p
How the Fund and Portfolio are organized 38p
Shares 38p
Voting rights 38p
Shareholder meetings 38p
Special considerations regarding
master/feeder structure 39p
Board members and officers 41p
Investment manager 43p
Administrator and transfer agent 43p
Distributor 44p
About American Express Financial Corporation 45p
General information 45p
Appendix 46p
Descriptions of derivative instruments 46p
(This annual report is not part of the prospectus.)
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To our shareholders
(picture of) William R. Pearce
William R. Pearce
President of the Fund
(picture of) Gordon M. Fines
Gordon M. Fines
Portfolio manager
From the president
If you're an experienced investor, you know that the past two years have
been unusually strong ones in many financial markets. Perhaps just as
important, you also know that history shows that bull markets don't last
forever. Though they're often unpredictable, declines -- whether they're
brief or long-lasting, moderate or substantial -- are always a
possibility.
That fact reinforces the need for an investor to periodically review their
long-term goals and examine whether their investment program remains on
track to achieving them. Your quarterly investment statements are one part
of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes even more important if there's a
major change in your financial situation or in the financial markets.
/s/ W.R. Pearce
William R. Pearce
From the portfolio manager
A soaring stock market and good securities selection made for a highly
rewarding fiscal year for IDS New Dimensions Fund. During the period --
August 1996 through July 1997 -- investors in Class A shares realized a
total return (net asset value change and distributions) of 43.8%
Although nothing more than a pleasant accident, the market's surge began
almost in concert with the start of the Fund's fiscal year. A virtually
ideal environment for stocks prevailed for most of the period, highlighted
by low inflation, healthy corporate earnings, solid economic growth and
generally low long-term interest rates. Not surprisingly, the stock market
flourished, experiencing only one notable setback. That came last spring,
when fear of a potential increase in inflation drove up long-term interest
rates and sent stocks tumbling. Within weeks, though, the market had
gotten back on its feet and began marching to new highs through the
(This annual report is not part of the prospectus.)
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end of the fiscal year. The Fund's performance basically tracked that
of the broad market over the entire period.
Characteristic of the market in recent years, stocks of large companies,
commonly called "large-caps," fared considerably better than their smaller
counterparts during the 12 months. Moreover, those with above-average
profit increases -- growth companies -- were in particular favor with
investors. For a large-cap growth fund such as this one, that proved to be
a fruitful combination.
Strongest sectors
Consistent with my strategy of recent years, I kept most of the Fund's
assets invested in stocks in the technology/ telecommunications, health
care and financial/business services sectors, which continued to offer
much of corporate America's greatest earnings growth. As for individual
standout stocks, General Electric, Cisco Systems, Microsoft, Intel,
Citicorp and Pfizer were among the Fund's biggest winners over the period.
The great majority of the stock investments were domestic; only about 10%
went into those of foreign firms, though I think that category is
beginning to show more promise. Apart from some minor shifts, the
structure of the portfolio was essentially unchanged during the period.
You may recall that in my last report to shareholders I thought it
unlikely that the stock market would continue to enjoy such a positive
environment throughout 1997. While I still feel that way, at this point
(mid-August) no major stumbling blocks have surfaced. I think the keys for
the market continue to be the strength of corporate earnings and the
direction of long-term interest rates. As we wait to see how these and
other factors unfold in the months ahead, I plan to keep the Fund invested
based on the themes -- technology/ telecommunications, health care and
financial/business services -- that have worked to its advantage in recent
years.
/s/ Gordon M. Fines
Gordon Fines
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
July 31, 1997 $25.69
July 31, 1996 $18.54
Increase $ 7.15
Distributions
Aug. 1, 1996 - July 31, 1997
From income $ 0.13
From capital gains $ 0.67
Total distributions $ 0.80
Total return* +43.8%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
July 31, 1997 $25.38
July 31, 1996 $18.38
Increase $ 7.00
Distributions
Aug. 1, 1996 - July 31, 1997
From income $ 0.04
From capital gains $ 0.67
Total distributions $ 0.71
Total return* +42.7%**
Class Y
12-month performance
(All figures per share)
Net asset value (NAV)
July 31, 1997 $25.72
July 31, 1996 $18.56
Increase $ 7.16
Distributions
Aug. 1, 1996 - July 31, 1997
From income $ 0.16
From capital gains $ 0.67
Total distributions $ 0.83
Total return* +44.0%**
*The prospectus discusses the effect of sales charges, if any, on the various
classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
(This annual report is not part of the prospectus.)
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The Portfolio's ten largest holdings
Percent Value
(of Portfolio's net assets) (as of July 31, 1997)
General Electric 3.82% $533,425,000
Intel 3.15 440,700,000
Citicorp 2.91 407,250,000
Pfizer 2.69 375,637,500
Norwest 2.25 315,312,500
Compaq Computer 2.25 314,187,500
Microsoft 2.23 311,300,000
Cisco Systems 2.16 302,337,500
Monsanto 2.14 298,875,000
Deere & Co 2.11 295,750,000
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The ten holdings listed here make up 25.71% of the Portfolio's net assets
(This annual report is not part of the prospectus.)
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Making the most of the Fund
Build your assets systematically
One of the best ways to invest in the Fund is by
dollar-cost averaging -- a time-tested strategy that can make market
fluctuations work for you. To dollar-cost average, simply invest a fixed
amount of money regularly. You'll automatically buy more shares when the
Fund's share price is low, fewer shares when it is high.
Using this strategy does not ensure a profit or avoid a loss if the market
declines, and requires that you be able to keep on investing on a regular
basis, even when the price of your shares falls or the market declines.
Investing in this manner can be an effective way to accumulate shares to
meet your long-term goals.
How dollar-cost averaging works
Month Amount Per-share Number of shares purchased
invested market price
Jan $100 $20 5.00 XXXXX
Feb 100 18 5.56 XXXXXx
March 100 17 5.88 XXXXXx
April 100 15 6.67 XXXXXXx
May 100 16 6.25 XXXXXXx
June 100 18 5.56 XXXXXx
July 100 17 5.88 XXXXXx
Aug 100 19 5.26 XXXXXx
Sept 100 21 4.76 XXXXx
Oct 100 20 5.00 XXXXX
(footnotes to table) By investing an equal number of dollars each
month...
(arrow in table pointing to April) you automatically buy more
shares when the per share market price is low...
(arrow in table pointing to September) and fewer shares when the
per share market price is high.
You have paid an average price of only $17.91 per share over the 10
months, while the average market price actually was $18.10.
(This annual report is not part of the prospectus.)
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The Fund's long-term performance
Three ways to benefit from a mutual fund:
oyour shares increase in value when the Fund's
investments do well
oyou receive capital gains when the gains on
investments sold by the Fund exceed losses
oyou receive income when the Fund's stock dividends, interest and
short-term gains exceed its expenses.
All three make up your total return. And you potentially can increase your
investment if, like most investors, you reinvest your dividends and
capital gain distributions to buy additional shares of the Fund or another
fund.
How your $10,000 has grown in IDS New Dimensions Fund
$44,758
$40,000 New Dimensions Fund
Class A
$30,000
Lipper Growth
Fund Index
$20,000
S&P 500
Stock Index
$10,000
$9,500
'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97
Assumes: oHolding period from 8/1/87 to 7/31/97. oReturns do not reflect
taxes payable on distributions. oReinvestment of all income and capital
gain distributions for the Fund, with a value of $23,509. Also see
"Performance" in the Fund's current prospectus.
Standard & Poor's 500 Stock Index (S&P 500), an unmanaged list of common
stocks, is frequently used as a general measure of market performance.
However, the S&P companies are generally larger than those in which the
Portfolio invests.
Lipper Growth Fund Index, published by Lipper Analytical Services, Inc.,
includes 30 funds that are generally similar to this Fund, although some
funds in the index may have somewhat different investment policies or
objectives.
Average annual total return
(as of July 31, 1997)
1 year Since 5 years 10 years
inception*
Class A +36.62% --% +19.45% +16.15%
Class B +38.72% +30.66% --% --%
Class Y +44.02% +33.04% --% --%
*Inception date was March 20, 1995.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the S&P 500 and the Lipper Growth Fund
Index. In comparing New Dimensions Fund (Class A) to the two indexes, you
should take into account the fact that the Fund's performance reflects the
maximum sales charge of 5%, while such charges are not reflected in the
performance of the indexes.
Your investment and return values fluctuate so that your shares, when
redeemed, may be worth more or less than the original cost. Average annual
total return figures reflect the impact of the applicable sales charge up
to a maximum of 5%. This was a period of widely fluctuating security
prices. Past performance is no guarantee of future results.
(This annual report is not part of the prospectus.)
<PAGE>
The financial statements contained in Post-Effective Amendment #57 to
Registration Statement No. 2-28529 filed on or about September 26, 1997, are
incorporated herein by reference.
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world globe
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies throughout the
world that are positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
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IDS International Fund
Invests primarily in common stocks of foreign companies that offer potential for
superior growth. The Fund may invest up to 20% of its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
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IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies that
explore for, mine and process or distribute gold and other precious metals. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies emphasizing
technological innovation and productivity enhancement. Buys and holds larger
growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected for their
potential for above-average growth. Above-average means that their growth
potential is better, in the opinion of the portfolio's investment manager, than
the Standard & Poor's Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
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(This annual report is not part of the prospectus.)
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IDS mutual funds
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
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IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of companies with
significant growth potential due to superiority in
technology, marketing or management. The Fund frequently
changes its industry mix.
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IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
(icon of) shooting star
Growth and income funds
These funds focus on securities of medium to large,
well-established companies that offer long-term growth of capital and reasonable
income from dividends and interest. Foreign investments may be subject to
currency fluctuations and political and economic risks of the countries in
which the investments are made.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks, higher-yielding
equities and bonds. Seeks growth of capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities purchased are
those recommended by our research analysts as the best from each industry
represented on the index. Offers potential for long-term growth as well as
dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) spinning toy
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stocks of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek high current
income and growth of income and capital with reduced volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily in high-yielding common stocks to
seek high current income and, secondarily, to benefit from the growth potential
offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks and senior
securities (preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice
(This annual report is not part of the prospectus.)
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Income funds
The funds in this group invest their assets primarily in corporate bonds or
government securities to seek interest income. Secondary objective is capital
growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly in long-term, high-yielding corporate
fixed-income securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) two coins
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk
bond categories, or the equivalent, and in government bonds.
(icon of) Greek column
IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality corporate bonds and
other highly rated debt instruments including government securities and
short-term investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or guaranteed as
to the timely payment of principal and interest by the U.S. government, its
agencies and instrumentalities. Seeks a high level of current income and safety
of principal consistent with its type of investments.
(icon of) shield with eagle head
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government units, with at
least 75% in the four highest rated, lowest risk bond categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
(icon of) shield with star
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to provide
income to residents of each respective state that is exempt from federal, state
and local income taxes. (New York is the only state that is exempt at the local
level.)
(icon of) shield with U.S. enclosed
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve greater
risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
(This annual report is not part of the prospectus.
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IDS mutual funds
Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (CDs) and other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and local
governments to seek high current income exempt from federal income taxes.
(icon of) shield with piggy bank enclosed
For more complete information about any of these funds, including charges and
expenses, you can obtain a prospectus by contacting your financial advisor or
writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534. Read it carefully before you invest or send money.
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS New Dimensions Fund, Inc.
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its
fiscal year. The dividends listed below were reported to you on a Form
1099-DIV, Dividends and Distributions, last January. Shareholders should
consult a tax advisor on how to report distributions for state and local
purposes.
IDS New Dimensions Fund, Inc.
Fiscal year ended July 31, 1997
Class A
Income distribution
taxable as dividend income, 100% qualifying for deduction by corporations.
Payable date Per share
Dec. 31, 1996 $0.12532
Capital gain distribution
taxable as long-term capital gain.
Payable date Per share
Dec. 31, 1996 $0.66967
Total distributions $0.79499
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
Class B
Income distribution
taxable as dividend income, 100% qualifying for deduction by corporations.
Payable date Per share
Dec. 31, 1996 $0.03791
Capital gain distribution
taxable as long-term capital gain.
Payable date Per share
Dec. 31, 1996 $0.66967
Total distributions $0.70758
(This annual report is not part of the prospectus.)
<PAGE>
Class Y
Income distribution
taxable as dividend income, 100% qualifying for deduction by corporations.
Payable date Per share
Dec. 31, 1996 $0.15695
Capital gain distribution
taxable as long-term capital gain.
Payable date Per share
Dec. 31, 1996 $0.66967
Total distributions $0.82662
(This annual report is not part of the prospectus.)
<PAGE>
Quick telephone reference
American Express Redemptions and exchanges, National/Minnesota
Financial Advisors dividend payments or 800-437-3133
Telephone Transaction reinvestments and automatic
Service payment arrangements Mpls./St. Paul area:
671-3800
TTY Service For the hearing impaired 800-846-4852
American Express Automated account information 800-862-7919
Financial Advisors (TouchTone(R) phones only),
Easy Access Line including current fund prices
and performance, account values
and recent account transactions
AMERICAN EXPRESS FINANCIAL ADVISORS
IDS New Dimensions Fund
IDS Tower 10
Minneapolis, MN 55440-0010
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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) Headings. 2) The headings in the
annual report are
placed in a blue strip
at the top of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
