AXPSM New
Dimensions
Fund(R)
2000 ANNUAL REPORT
(PROSPECTUS ENCLOSED)
American
Express(R)
Funds
(icon of) ruler
AXP New Dimensions Fund seeks to provide shareholders with long-term growth of
capital.
(This annual report includes a prospectus that describes in detail the Fund's
objective, investment strategy, risks, sales charges, fees and other matters of
interest. Please read the prospectus carefully before you invest or send money.)
<PAGE>
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 AXP 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.
AXP NEW DIMENSIONS FUND
<PAGE>
Table of Contents
2000 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the Chairman 4
From the Portfolio Managers 4
Fund Facts 6
The 10 Largest Holdings 8
Making the Most of the Fund 9
The Fund's Long-term Performance 10
Independent Auditors' Report (Fund) 12
Financial Statements (Fund) 13
Notes to Financial Statements (Fund) 16
Independent Auditors' Report (Portfolio) 25
Financial Statements (Portfolio) 26
Notes to Financial Statements (Portfolio) 29
Investments in Securities 34
Federal Income Tax Information 45
ANNUAL REPORT - 2000
<PAGE>
(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
The financial markets have always had their ups and downs, but in recent months
volatility has become more frequent and intense. While no one can say with
certainty what the markets will do, American Express Financial Corporation, the
Fund's investment manager, expects economic growth to continue this year,
accompanied by a modest rise in long-term interest rates. But no matter what
transpires, this is a great time to take a close look at your goals and
investments. We encourage you to:
o Consult a professional investment advisor who can help you cut through
mountains of data.
o Set financial goals that extend beyond those achievable through retirement
plans of your employer.
o Learn as much as you can about your current investments.
The portfolio managers' letter that follows provides a review of the Fund's
investment strategies and performance. The annual report contains other valuable
information as well. The Fund's prospectus describes its investment objectives
and how it intends to achieve those objectives. As experienced investors know,
information is vital to making good investment decisions.
So, take a moment and decide again whether the Fund's investment objectives and
management style fit with your other investments to help you reach your
financial goals. And make it a practice on a regular basis to assess your
investment options.
On behalf of the Board,
Arne H. Carlson
(picture of) Gordon M. Fines
Gordon M. Fines
Portfolio manager
From the Portfolio Managers
The past 12 months was a volatile but ultimately productive period for growth
stocks and AXP New Dimensions Fund. For the fiscal year -- August 1999 through
July 2000 -- the Fund's Class A shares generated a total return (excluding the
sales charge) of 23.16%. (A portion of the Fund's return came in the form of a
capital gain, which was distributed to shareholders in December 1999 and reduced
the Fund's net asset value by the same amount at that time.)
The stock market labored without success early in the period, as concerns about
higher interest rates, potentially higher inflation and the possible impact of
the Y2K computer bug weighed on investors' minds. But by mid-October, buoyed by
fresh reports of
AXP NEW DIMENSIONS FUND
<PAGE>
still-low inflation, generally healthy corporate profits and growing excitement
regarding the Internet, stocks were gaining ground. Within weeks, the advance
turned into a remarkable rally that gathered momentum through the end of 1999
and ultimately reached a peak in early March.
(picture of) Douglas Guffy
Douglas Guffy
Portfolio manager
(picture of) Anne Obermeyer
Anne Obermeyer
Portfolio manager
PSYCHOLOGY SHIFT
At that point, the psychology of the market underwent an abrupt change from
optimism to pessimism regarding inflation, interest rates and corporate profits.
Compounding the situation was increasing concern that sky-high prices for many
technology-related stocks had reached unjustifiable levels. The result for the
market, especially the technology sector, was a sharp spring downturn, from
which it struggled to recover over the summer months.
While the pattern of the Fund's performance generally tracked that of the market
as a whole for the 12 months, good stock selection allowed it to generate a
far-better return.
Clearly driving the Fund's gains were technology and telecommunications stocks,
which made up nearly half of the portfolio at times. The main areas of emphasis
were semiconductors, software, networking and wireless communications, with IBM,
Cisco Systems and JDS Uniphase among the largest and more productive holdings.
Given the overall lofty prices of such stocks, we reduced holdings in the
technology/telecommunications area in the spring and summer, while we increased
investments in energy, health-care and financial stocks. That strategy had the
desired effect of lessening the volatility in the Fund's net asset value, as
well as allowing the Fund to reap some gains resulting from improved performance
by those three sectors.
Looking toward the new fiscal year, while the economy remains on the growth
track, the stock market may, at least over the near term, continue to be
buffeted by concerns about inflation, interest rates and corporate profits. But
as the year progresses, we expect to see a gradually improving investment
environment that will reward stocks with solid growth credentials.
Gordon M. Fines
Douglas Guffy
Anne Obermeyer
ANNUAL REPORT - 2000
<PAGE>
Fund Facts
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
July 31, 2000 $36.26
July 31, 1999 $31.21
Increase $ 5.05
Distributions -- Aug. 1, 1999 - July 31, 2000
From income $ 0.05
From capital gains $ 2.06
Total distributions $ 2.11
Total return** +23.16%***
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
July 31, 2000 $35.22
July 31, 1999 $30.54
Increase $ 4.68
Distributions -- Aug. 1, 1999 - July 31, 2000
From income $ --
From capital gains $ 2.06
Total distributions $ 2.06
Total return** +22.20%***
AXP NEW DIMENSIONS FUND
<PAGE>
Class C -- June 26, 2000* - July 31, 2000
(All figures per share)
Net asset value (NAV)
July 31, 2000 $35.23
June 26, 2000* $35.52
Decrease 0.29
Distributions -- June 26, 2000* - July 31, 2000
From income $ --
From capital gains $ --
Total distributions $ --
Total return** - -0.82%***
Class Y -- 12-month performance
(All figures per share)
Net asset value (NAV)
July 31, 2000 $36.33
July 31, 1999 $31.24
Increase $ 5.09
Distributions -- Aug. 1, 1999 - July 31, 2000
From income $ 0.09
From capital gains $ 2.06
Total distributions $ 2.15
Total return** +23.35%***
* Inception date
** Returns do not include sales load. 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.
ANNUAL REPORT - 2000
<PAGE>
The 10 Largest Holdings
Percent Value
(of net assets) (as of July 31, 2000)
Cisco Systems 4.05% $1,230,224,999
General Electric 3.39 1,028,750,000
Citigroup 3.32 1,009,135,347
Exxon Mobil 3.29 999,986,050
Wal-Mart Stores 3.22 977,887,500
JDS Uniphase 3.11 945,000,000
Intel 3.08 934,500,000
EMC 2.80 851,250,000
Viacom Cl B 2.62 795,750,000
Morgan Stanley, Dean Witter, Discover & Co 2.40 730,000,000
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 31.28% of net assets
AXP NEW DIMENSIONS FUND
<PAGE>
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. The chart below shows how dollar-cost averaging works. In these
three hypothetical scenarios, you will see six months of share price
fluctuations.
This strategy does not ensure a profit or avoid a loss if the market declines.
But, if you can continue to invest regularly through changing market conditions
even when the price of your shares falls or the market declines, it can be an
effective way to accumulate shares to meet your long-term goals.
How dollar-cost averaging works
Jan Feb Mar Apr May Jun
$15 $16 $18 $20
$10 $10 $12 $14
$ 5
Accumulated shares* Average market Your average
price per share cost per share
42.25 $15 $14.20
_______________________________________________________________________________
Jan Feb Mar Apr May Jun
$15
$10 $10 $10
$ 5 $8 $5 $5 $8
Accumulated shares* Average market Your average
price per share cost per share
85.0 $7.66 $7.05
_______________________________________________________________________________
Jan Feb Mar Apr May Jun
$15
$10 $10 $8 $6 $7
$ 5 $4 $4
Accumulated shares* Average market Your average
price per share cost per share
103.5 $6.50 $5.80
_______________________________________________________________________________
$100 invested per month. Total invested: $600.
* Shares purchased is determined by dividing the amount invested per month by
the current share price.
THREE WAYS TO BENEFIT FROM A MUTUAL FUND:
o your shares increase in value when the Fund's investments do well
o you receive capital gains when the gains on investments sold by the Fund
exceed losses
o you receive income when the Fund's stock dividends, interest and short-term
gains exceed its expenses.
All three make up your total return. 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.
ANNUAL REPORT - 2000
<PAGE>
The Fund's Long-term Performance
How your $10,000 has grown in AXP New Dimensions Fund
$60,000
X
S&P 500 X
$50,000 Index $57,176
AXP New
X Dimensions
$40,000 Russell 1000(R) Fund Class A
Growth Index
X
Lipper Large-Cap
Growth Index
$30,000
$20,000
$9,425
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00
Average Annual Total Returns (as of July 31, 2000)
1 year 5 years 10 years (A) Since inception (B&Y)
Class A +16.07% +22.09% +19.05% --%
Class B +18.20% +22.52% --% +24.35%*
Class Y +23.35% +23.70% --% +25.53%*
* Inception date was March 20, 1995.
Assumes: Holding period from 8/1/90 to 7/31/00. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund has a value of $27,181. Also see "Past Performance"
in the Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to three
widely cited performance indexes, Standard &Poor's 500 Index (S&P 500 Index),
Russell 1000(R) Growth Index and the Lipper Large-Cap Growth Index. In comparing
AXP New Dimensions Fund (Class A) to the three indexes, you should take into
account the fact that the Fund's performance reflects the maximum sales charge
of 5.75%, while such charges are not reflected in the performance of the
indexes. Class C went effective June 26, 2000 and therefore performance
information is not presented.
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
5.75%. This was a period of widely fluctuating security prices. Past performance
is no guarantee of future results.
AXP NEW DIMENSIONS FUND
<PAGE>
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 companies may be generally larger than those
in which the Portfolio invests.
Russell 1000(R) Growth Index, an unmanaged index, measures the performance of
those Russell 1000 companies in the Russell 3000 Index, which represents 92% of
the total market capitalization of the Russell 3000 Index. These companies have
higher price-to-book ratios and higher forecasted growth values.
Lipper Large-Cap Growth Index, an unmanaged index published by Lipper Inc.,
includes the 30 largest funds that are generally similar to this Fund, although
some funds in the index may have somewhat different investment policies or
objectives.
ANNUAL REPORT - 2000
<PAGE>
The financial statements contained in Post-Effective Amendment #64 to
Registration Statement No. 2-28529 filed on or about September 27, 2000, are
incorporated herein by reference.
<PAGE>
Federal Income Tax Information
(Unaudited)
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 are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
AXP New Dimensions Fund
Fiscal year ended July 31, 2000
Class A
Income distribution taxable as dividend income, 100% qualifying for deduction by
corporations.
Payable date Per share
Dec. 23, 1999 $0.05833
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1999 $2.05524
Total distributions $2.11357
ANNUAL REPORT - 2000
<PAGE>
Class B
Income distribution taxable as dividend income, 100% qualifying for deduction by
corporations.
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1999 $2.05524
Total distributions $2.05524
Class Y
Income distribution taxable as dividend income, 100% qualifying for deduction by
corporations.
Payable date Per share
Dec. 23, 1999 $0.09260
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1999 $2.05524
Total distributions $2.14784
AXP NEW DIMENSIONS FUND
<PAGE>
This page left blank intentionally
<PAGE>
American
Express(R)
Funds
AXP New Dimensions Fund
70100 AXP Financial Center
Minneapolis, MN 55474
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN
EXPRESS
This report must be accompanied or preceded by the Fund's current prospectus.
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-6440 T (9/00)
<PAGE>
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 2) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
