-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qfbq1YOBAcp5RMXrecztpwXKyZFfI0PjY2Y/17jkqCEnXj6yd/tnjdtQVTbpKChv 5RLSKlNtK0uZi43P1FJPuw== 0000820027-96-000553.txt : 19961003 0000820027-96-000553.hdr.sgml : 19961003 ACCESSION NUMBER: 0000820027-96-000553 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19961002 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDS NEW DIMENSIONS FUND INC CENTRAL INDEX KEY: 0000049717 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 410940846 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01629 FILM NUMBER: 96638556 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6123722772 N-30D 1 IDS NEW DIMENSIONS FUND, INC. PAGE 1 1996 ANNUAL REPORT IDS New Dimensions Fund (prospectus enclosed) (Icon of) A 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. PAGE 2 (Icon of) A 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. PAGE 3 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. 1996 annual report From the president 4 From the portfolio manager 4 Ten largest holdings 6 Making the most of the Fund 7 Long-term performance 8 Independent auditors' report (Fund) 9 Financial statements (Fund) 10 Notes to financial statements (Fund) 13 Independent auditors' report (Portfolio) 18 Financial statements (Portfolio) 19 Notes to financial statements (Portfolio) 22 Investments in securities 30 IDS mutual funds 35 Federal income tax information 38 1996 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 PAGE 4 Distributions and taxes 34p Dividend and capital gain distributions 34p Reinvestments 35p Taxes 35p How to determine the correct TIN 37p How the Fund is 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 PAGE 5 To our shareholders (Photo of) William R. Pearce, President of the Fund (Photo of) Gordon M. Fines, Portfolio manager From the president The volatility in the stock market in recent months has put some investors, even experienced ones, on edge. Although no one can know exactly what will happen next, history tells us that ups and downs are intrinsic to stock investing. But history also shows that changing strategies with every twist and turn of the market is an impractical and, worse yet, typically unproductive way to invest. What matters more, therefore, is how we react to market volatility. If we take a long-term view and accept the downs with the ups, we improve our chances of success. For in the investment world, the race most often goes not to the swift, but to the persistent. Along the way, of course, you'll still want to review your investment program to make sure it's on track to achieving your financial goals. Your American Express financial advisor will help you do just that, and I suggest you take advantage of his or her services on a regular basis. On May 13, 1996, the Fund began investing its assets in Growth Portfolio instead of directly in securities of individual companies. Following the portfolio manager's letter are the financial statements of both the Fund and Portfolio. The notes to the financials and the prospectus go into more detail of how the new structure works. William R. Pearce From the portfolio manager IDS New Dimensions Fund recorded a double-digit gain during the past 10 months (October 1995 through July 1996), as the stock market advanced for most of the period. For Class A shareholders of the Fund, the result was a 12.2% total return. (A substantial portion of the return came in the form of a capital gain, which was paid to shareholders last December and reduced the Fund's net asset value by a like amount at that time.) This report also marks a change in the Fund's fiscal year, which now ends on July 31. Thanks to a low inflation rate, low interest rates and moderate economic growth, stocks found the environment largely to their liking for the first several months of the period. The relatively few setbacks proved to be both modest and fleeting, as the market quickly righted itself in the wake of occasional negative news. Growth is good Although a variety of stocks performed positively, those of growth companies were most often at the forefront, as their generally strong earnings attracted an increasing amount of investors' PAGE 6 capital. To the particular benefit of this Fund, growth stocks in the amount of investors' capital. To the particular benefit of this Fund, growth stocks in the technology/telecommunications, health care and financial services sectors -- which have formed the foundation of the portfolio for some time -- recorded many of the most impressive gains. Although I continue to be optimistic about the long-term prospects of technology-related companies, I did reduce the exposure to personal computer manufacturers, whose near- term potential appears questionable. The portfolio also enjoyed good results from stocks of agri- business companies, including seed, fertilizer and chemical producers. This is a relatively new investment theme in the portfolio that I began to develop late last year. Monsanto, an agri-chemical supplier that we added to the portfolio, is a good example of the type of company that appears likely to benefit from less-developed countries' desire to improve their diets. Summer slump The news wasn't all good, though, during the past fiscal period. By summer, stocks had begun to stall out under the weight of higher long-term interest rates, and by July, they were in rapid retreat. Growth stocks, especially those of technology-related companies, found themselves under particular pressure. Although the cash reserves in the portfolio (about 11% of assets) provided some cushion against the downturn, the portfolio was forced to give back a substantial portion of its gain for the period. At this point (mid-August), questions about the direction of long- term interest rates and corporate earnings have yet to be answered. I expect this uncertainty will continue for a time yet, which could well present a hurdle for the stock market. Looking longer-term, I think the fundamentals remain favorable, but I suspect investors will have to be content with less robust returns than they've enjoyed in recent years. Gordon Fines Class A 10-month performance (All figures per share) Net asset value (NAV) ____________________________ July 31, 1996 $18.54 ____________________________ Sept. 30, 1995 $17.24 ____________________________ Increase $ 1.30 ____________________________ PAGE 7 Distributions Oct. 1, 1995 - July 31, 1996 ____________________________ From income $ 0.15 ____________________________ From capital gains $ 0.60 ____________________________ Total distributions $ 0.75 ____________________________ Total return* +12.2%** ____________________________ Class B 10-month performance (All figures per share) Net asset value (NAV) ____________________________ July 31, 1996 $18.38 ____________________________ Sept. 30, 1995 $17.18 ____________________________ Increase $ 1.20 ____________________________ Distributions Oct. 1, 1995 - July 31, 1996 ____________________________ From income $ 0.11 ____________________________ From capital gains $ 0.60 ____________________________ Total distributions $ 0.71 ____________________________ Total return* +11.5%** ____________________________ Class Y 10-month performance (All figures per share) Net asset value (NAV) ____________________________ July 31, 1996 $18.56 ____________________________ Sept. 30, 1995 $17.26 ____________________________ Increase $ 1.30 ____________________________ PAGE 8 Distributions Oct. 1, 1995 - July 31, 1996 ____________________________ From income $ 0.17 ____________________________ From capital gains $ 0.60 ____________________________ Total distributions $ 0.77 ____________________________ Total return* +12.3%** ____________________________ *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. PAGE 9
Growth Trends Portfolio The Portfolio's ten largest holdings (Pie chart) The ten holdings listed here make up 25.91% of the Portfolio's net assets. ________________________________________________________________________________________________________ Percent Value (of Portfolio's net assets) (as of July 31, 1996) ________________________________________________________________________________________________________ Cisco Systems 3.62% $310,500,000 A leading designer and builder of devices that link personal computers for application in the fast-growing business network market. General Electric 3.07 263,600,000 A diversified company with interests in manufacturing, broadcasting (NBC), financial services and technology. Citicorp 3.05 262,000,000 The parent of Citibank, the largest bank in the U.S., it has a substantial worldwide corporate and retail banking presence. Pfizer 2.77 237,575,000 A leading producer of pharmaceuticals, hospital products, animal health items, non-prescription medications and specialty chemicals. Intel 2.63 225,375,000 The world's number one semiconductor manufacturer, Intel produces microcomputer components, modules and systems. Monsanto 2.55 218,750,000 This company and its subsidiaries manufacture and sell a diverse line of agricultural products; chemical products, including plastics and manufactured fibers; pharmaceuticals; and food products, including low-calorie sweeteners. Boeing 2.16 185,850,000 The largest producer of commercial aircraft in the free world with over 50% of the market. First Data 2.08 178,537,500 Operates in one business segment providing high-quality, high-volume information processing and related services to specific client groups: the transaction card, payment instruments, teleservices, mutual funds, health care, receivables and information management industries. Johnson & Johnson 2.00 171,900,000 A major producer of health-care products, including consumer products, medical and dental devices and products and a wide variety of ethical and over-the-counter drugs. ConAgra 1.98 170,000,000 Engaged in a variety of basic food businesses, including feed and fertilizer, grain processing and merchandising, agricultural chemicals, worldwide trading, fresh and processed red meats, poultry products, and frozen prepared foods and seafood.
PAGE 10 Making the most of the Fund Average annual total return (as of July 31, 1996) 1 year Since inception* 5 years 10 years Class A +10.67% --% +14.02% +15.07% Class B +10.65% +21.70% --% --% Class Y +16.68% +25.54% --% --% *Inception date was March 20, 1995. The performance of Class B and Class Y will vary from the performance of Class A based on differences in sales charges and fees. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Figures for Class A and Class B reflect the effect of the maximum 5% sales charge. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. 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. This 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, it 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... PAGE 11 (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. PAGE 12 The Fund's long-term performance 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. 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 $40,767 $40,000 New Dimensions Fund Class A $30,000 S&P 500 Stock Index Lipper Growth Fund Index $20,000 $9,500 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 Average annual total return (as of July 31, 1996) 1 year Since inception* 5 years 10 years Class A +10.67% --% +14.02% +15.07% Class B +10.65% +21.70% --% --% Class Y +16.68% +25.54% --% --% *Inception date was March 20, 1995. Assumes: Holding period from 8/1/86 to 7/31/96. Returns do not reflect taxes payable on distributions. Reinvestment of all income and capital gain distributions for the Fund, with a value of $25,185. 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 Fund invests. PAGE 13 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. 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 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. If you were actually to buy individual stocks or growth mutual funds, any sales charges that you pay would reduce your total return as well. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 14 Independent auditors' report The board and shareholders IDS New Dimensions Fund, Inc.: We have audited the accompanying statement of assets and liabilities of IDS New Dimensions Fund, Inc. as of July 31, 1996, and the related statement of operations for the ten-month period then ended and the statements of changes in net assets for the ten- month period ended July 31, 1996 and the year ended September 30, 1995, and the financial highlights for the ten-month period ended July 31, 1996 and for each of the years in the ten-year period ended September 30, 1995. These financial statements and the financial highlights are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of IDS New Dimensions Fund, Inc. at July 31, 1996, and the results of its operations, changes in its net assets and the financial highlights for the periods stated in the first paragraph above, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Minneapolis, Minnesota September 6, 1996 PAGE 15
Statement of assets and liabilities IDS New Dimensions Fund, Inc. July 31, 1996 Assets Investment in Growth Trends Portfolio (Note 1) $8,560,236,452 Total assets 8,560,236,452 Liabilities Disbursements in excess of cash on demand deposit 4,432 Accrued distribution fee 11,906 Accrued service fee 29,193 Accrued transfer agency fee 28,509 Accrued administrative services fee 8,539 Other accrued expenses 977,669 Total liabilities 1,060,248 Net assets applicable to outstanding capital stock $8,559,176,204 Represented by Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 4,618,125 Additional paid-in-capital 6,073,895,611 Undistributed net investment income 36,187,086 Accumulated net realized gain (Note 1) 266,762,530 Unrealized appreciation of investments 2,177,712,852 Total - representing net assets applicable to outstanding capital stock 8,559,176,204 Net assets applicable to outstanding shares: Class A $5,625,868,997 Class B $ 593,497,390 Class Y $2,339,809,817 Net asset value per share of outstanding capital stock:Class A shares 303,463,317 $ 18.54 Class B shares 32,283,002 $ 18.38 Class Y shares 126,066,164 $ 18.56 See accompanying notes to financial statements.
PAGE 16
Statement of operations IDS New Dimensions Fund, Inc. Ten months ended July 31, 1996 Oct. 1, 1995 to May 13, 1996 to May 12, 1996 July 31, 1996 Total (Notes 1 and 5) Investment income Income: Interest $ 30,498,568 $ 12,065,824 $ 42,564,392 Dividends 48,412,633 20,390,020 68,802,653* Total income 78,911,201 32,455,844 111,367,045 Expenses (Note 2): Investment management services fee 25,565,271 -- 25,565,271 Distribution fee -- Class B 1,287,734 898,655 2,186,389 Transfer agency fee 5,546,585 2,262,070 7,808,655 Incremental transfer agency fee -- Class B 29,093 17,407 46,500 Service fee Class A 5,253,546 2,206,914 7,460,460 Class B 299,676 209,485 509,161 Administrative services fee 1,721,130 717,228 2,438,358 Compensation of board members 84,873 25,346 110,219 Compensation of officers 48,007 3,524 51,531 Custodian fees 263,008 -- 263,008 Postage 217,165 72,389 289,554 Registration fees 695,687 171,917 867,604 Reports to shareholders 232,470 64,955 297,425 Audit fees 28,798 1,528 30,326 Administrative 26,962 8,988 35,950 Other 41,431 6,162 47,593 Total expenses 41,341,436 6,666,568 48,008,004 Earnings credits on cash balances (Note 5) (16,175) -- (16,175) 41,325,261 6,666,568 47,991,829 Expenses, including investment management services fee allocated from Growth Trends Portfolio -- 11,791,327 11,791,327 Total net expenses 41,325,261 18,457,895 59,783,156 Investment income -- net 37,585,940 13,997,949 51,583,889 Realized and unrealized gain (loss) -- net Net realized gain on security transactions 280,525,097 45,442,725 325,967,822 Net change in unrealized appreciation or depreciation 611,005,528 (147,891,553) 463,113,975 Net gain (loss) on investments 891,530,625 (102,448,828) 789,081,797 Net increase (decrease) in net assets resulting from operations $929,116,565 $ (88,450,879) $840,665,686 *Includes net of foreign taxes withheld of $476,797. See accompanying notes to financial statements.
PAGE 17
Statement of changes in net assets IDS New Dimensions Fund, Inc. Operations and distributions July 31, 1996 Sept. 30, 1995 Ten-month Year ended period ended Investment income - net $ 51,583,889 $ 56,020,175 Net realized gain on investments 325,967,822 188,034,728 Net change in unrealized appreciation or depreciation 463,113,975 1,122,806,020 Net increase in net assets resulting from operations 840,665,686 1,366,860,923 Distributions to shareholders from: Net investment income Class A (39,448,269) (37,824,704) Class B (1,492,148) -- Class Y (19,131,175) -- Net realized gain Class A (162,150,758) (161,781,539) Class B (8,111,389) -- Class Y (68,560,165) -- Excess distributions of realized gain Class A -- (10,005) Total distributions (298,893,904) (199,616,248) Capital share transactions (Note 3) Proceeds from sales Class A shares (Note 2) 1,078,880,570 1,277,766,445 Class B shares 442,410,073 139,503,525 Class Y shares 862,302,096 1,678,216,434 Reinvestment of distributions at net asset value Class A shares 198,597,094 197,521,609 Class B shares 9,572,264 -- Class Y shares 87,691,340 -- Payments for redemptions Class A shares (593,204,599) (2,058,310,273) Class B shares (Note 2) (24,532,266) (2,112,953) Class Y shares (560,414,845) (180,172,610) Increase in net assets from capital share transactions 1,501,301,727 1,052,412,177 Total increase in net assets 2,043,073,509 2,219,656,852 Net assets at beginning of period 6,516,102,695 4,296,445,843 Net assets at end of period (including undistributed net investment income of $36,187,086 and $44,674,789) $8,559,176,204 $6,516,102,695 See accompanying notes to financial statements.
PAGE 18 Notes to financial statements IDS New Dimensions Fund, Inc. ___________________________________________________________________ 1. Summary of significant accounting policies The Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The Fund offers Class A, Class B and Class Y shares. Class A shares are sold with a front-end sales charge. Class B shares may be subject to a contingent deferred sales charge and such shares automatically convert to Class A after eight years. Class Y shares have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend, liquidation and other rights, and the same terms and conditions, except that the level of distribution fee, transfer agency fee and service fee (class specific expenses) differs among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. Investment in Growth Trends Portfolio Effective May 13, 1996, the Fund began investing all of its assets in the Growth Trends Portfolio (Portfolio), a series of Growth Trust, an open-end investment company that has the same objectives as the Fund. This was accomplished by transferring the Fund's assets to the Portfolio in return for a proportionate ownership interest in the Portfolio. Growth Trends Portfolio invests primarily in common stocks of companies showing potential for significant growth and operating in areas where economic or technological changes are occuring. The Fund records daily its share of the Portfolio's income, expenses and realized and unrealized gains and losses. The financial statements of the Portfolio are included elsewhere in this report and should be read in conjunction with the Fund's financial statements. The Fund records its investment in the Portfolio at value which is equal to the Fund's proportionate owership interest in the net assets of the Portfolio. The percentage of the Portfolio owned by the Fund at July 31, 1996 was 99.71%. Valuation of securities held by the Portfolio is discussed in Note 1 of the Portfolio's Notes to Financial Statements, which are included elsewhere in this report. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decrease in net assets from operations during the period. Actual results could differ from those estimates. PAGE 19 Federal taxes Since the Fund's policy is to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to the shareholders, no provision for income or excise taxes is required. Net investment income (loss) and net realized gains (losses) allocated from the Portfolio may differ for financial statement and tax purposes primarily because of the deferral of 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 Fund. Dividends to shareholders An annual dividend declared and paid at the end of the calendar year from net investment income is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. ___________________________________________________________________ 2. Expenses and sales charges In addition to the expenses allocated from the Portfolio, the Fund accrues its own expenses as follows: Effective March 20, 1995, the Fund entered into agreements with American Express Financial Corporation (AEFC) for providing administrative services and serving as transfer agent. Under its Administrative Services Agreement, the Fund pays AEFC for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.05% to 0.03% annually. Under this agreement, the Fund also pays taxes; audit and certain legal fees; registration fees for shares; office expenses; consultant's fees; compensation of board members, officers and employees; corporate filing fees; organizational expenses; and any other expenses properly payable by the Fund approved by the board. Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts and records. The Fund pays AEFC an annual fee per shareholder account for this service as follows: o Class A $15 o Class B $16 o Class Y $15 PAGE 20 Also effective March 20, 1995, the Fund entered into agreements with American Express Financial Advisors Inc. for distribution and shareholder servicing-related services. Under a Plan and Agreement of Distribution, the Fund pays a distribution fee at an annual rate of 0.75% of the Fund's average daily net assets attributable to Class B shares for distribution-related services. Under a Shareholder Service Agreement, the Fund pays a fee for service provided to shareholders by financial advisors and other servicing agents. The fee is calculated at a rate of 0.175% of the Fund's average daily net assets attributable to Class A and Class B shares. AEFC will assume and pay any expenses (except taxes and brokerage commissions) that exceed the most restrictive applicable state expense limitation. Sales charges received by American Express Financial Advisors for distributing Fund shares were $19,094,029 for Class A and $210,811 for Class B for the period ended July 31, 1996. Prior to April 30, 1996, the Fund had a retirement plan for its independent board members. The plan was terminated April 30, 1996. The retirement plan expense amounted to $61,688 for the period. The total liability for the plan is $179,512 which will be paid out at some future date. ___________________________________________________________________ 3. Capital share transactions Transactions in shares of capital stock for the periods indicated are as follows:
Period ended July 31, 1996 Class A Class B Class Y _______________________________________________________________________ Sold 59,377,568 24,364,763 47,643,756 Issued for reinvested 11,500,909 556,495 5,077,375 distributions Redeemed (32,745,436) (1,354,343) (30,480,217) _______________________________________________________________________ Net increase 38,133,041 23,566,915 22,240,914 _______________________________________________________________________ Year ended Sept. 30, 1995 Class A Class B* Class Y* _______________________________________________________________________ Sold 87,791,383 8,845,958 115,253,413 Issued for reinvested 14,863,540 ___ ___ distributions Redeemed (142,988,018) (129,871) (11,428,163) _______________________________________________________________________ Net increase (decrease) (40,333,095) 8,716,087 103,825,250 _______________________________________________________________________ *Inception date was March 20, 1995.
___________________________________________________________________ 4. Change of Fund's fiscal year The By-Laws of the Fund were amended on Jan. 11, 1996, changing it's fiscal year end from Sept. 30 to July 31, effective 1996. PAGE 21 ___________________________________________________________________ 5. Pre-conversion to Master Prior to transferring its securities to Growth Trends Portfolio on May 13, 1996, various transactions took place as stated below. Expenses and sales charges Prior to the conversion on May 13, 1996, the Fund paid an investment management fee to AEFC. Subsequent to the conversion, the investment management fee is assessed at the Portfolio level. (See the footnotes to the Portfolio financial statements for the terms of the investment management agreement which remain unchanged.) Prior to conversion, the investment management fee was adjusted by a performance incentive adjustment based on the Funds's average daily net assets over a rolling 12-month period as measured against the change in the Lipper Growth Fund Index. The adjustment increased the fee by $1,168,789 for the period from Oct. 1, 1995 to May 12, 1996. During the period from Oct. 1, 1995 to May 12, 1996, the Fund's custodian fees were reduced by $16,175 as a result of earnings credits from overnight cash balances. Securities transactions Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $2,918,666,737 and $2,267,032,914, respectively, for the period from Oct. 1, 1995 to May 12, 1996. Brokerage commissions paid to brokers affiliated with AEFC were $272,605 during this period. Lending of portfolio securities Income from securities lending amounted to $38,570 for the period from Oct. 1, 1995 to May 12, 1996. ___________________________________________________________________ 6. Financial highlights "Financial highlights" showing per share data and selected information is presented on pages 8 and 9 of the prospectus. PAGE 22 Independent auditors' report The board of trustees and unitholders Growth Trust: We have audited the accompanying statement of assets and liabilities, including the schedule of investments in securities, of Growth Trends Portfolio (a series of Growth Trust) as of July 31, 1996, and the related statements of operations and changes in net assets for the period from May 13, 1996 (commencement of operations) to July 31, 1996. These financial statements are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Investment securities held in custody are confirmed to us by the custodian. As to securities purchased and sold but not received or delivered, and securities on loan, we request confirmations from brokers, and where replies are not received, we carry out other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Growth Trends Portfolio at July 31, 1996, and the results of its operations and the changes in its net assets for the period from May 13, 1996 (commencement of operations) to July 31, 1996, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Minneapolis, Minnesota September 6, 1996 PAGE 23
Statement of assets and liabilities Growth Trends Portfolio July 31, 1996 Assets Investments in securities, at value (Note 1) Investments in securities of unaffiliated issuers (identified cost $6,336,887,547) $8,454,639,876 Investments in securities of affiliated issuers (identified cost $72,334,647) 133,031,250 Cash in bank on demand deposit 3,393,915 Dividends and accrued interest receivable 7,099,993 Receivable for investment securities sold 37,289,090 U.S. government securities held as collateral (Note 4) 640,540 Total assets 8,636,094,664 Liabilities Payable for investment securities purchased 45,520,458 Payable upon return of securities loaned (Note 4) 5,018,140 Accrued investment management services fee 561,398 Other accrued expenses 155,470 Total liabilities 51,255,466 Net assets $8,584,839,198 See accompany notes to financial statements. PAGE 24 Statement of Operations Growth Trends Portfolio For the period from May 13, 1996 (commencement of operations) to July 31, 1996 Investment income Income: Interest $ 12,099,456 Dividends (net of foreign taxes withheld of $73,091) 20,448,561 Total income 32,548,017 Expenses (Note 2): Investment management services fee 11,544,754 Compensation of board members 10,250 Custodian fees 256,677 Audit fees 4,582 Administrative 2,892 Other 11,403 Total expenses 11,830,558 Earnings credits on cash balances (Note 2) (6,141) Total net expenses 11,824,417 Investment income -- net 20,723,600 Realized and unrealized gain (loss) -- net Net realized gain on security transactions (Note 3) 44,047,563 Net change in unrealized appreciation or depreciation (147,155,473) Net loss on investments (103,107,910) Net decrease in net assets resulting from operations $ (82,384,310) See accompanying notes to financial statements. PAGE 25 Statement of changes in net assets Growth Trends Portfolio For the period from May 13, 1996 (commencement of operations) to July 31, 1996 Operations and distributions Investment income -- net $ 20,723,600 Net realized gain on investments 44,047,563 Net change in unrealized appreciation or depreciation (147,155,473) Net decrease in net assets resulting from operations (82,384,310) Net contributions 8,667,223,508 Total increase in net assets 8,584,839,198 Net assets at beginning of period (Note 1) -- Net assets at end of period $8,584,839,198 See accompanying notes to financial statements.
PAGE 26 Notes to financial statements Growth Trends Portfolio ___________________________________________________________________ 1. Summary of significant accounting policies The Growth Trends Portfolio (Portfolio) is a series of Growth Trust (Trust) and is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. Growth Trends Portfolio invests primarily in common stocks of companies showing potential for significant growth and operating in areas where economic or technological changes are occurring. The Declaration of Trust permits the Trustees to issue non-transferable interests in the Portfolio. The Portfolio commenced operations on May 13, 1996. At this time, an existing fund transferred its assets to the Portfolio in return for an ownership percentage of the Portfolio. Significant accounting polices followed by the Portfolio are summarized below: Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decrease in net assets from operations during the period. Actual results could differ from those estimates. 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; securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board. Determination of fair value involves, among other things, reference to market indexes, matrixes and data from independent brokers. 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 In order to produce incremental earnings, protect gains and facilitate buying and selling of securities for investment purposes, the Portfolio may buy or write options traded on any U.S. or foreign exchange or in the over-the-counter market where the completion of the obligation is dependent 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 and may write cash-secured put options. The risk in writing a call option is that the Portfolio gives up the opportunity of 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 PAGE 27 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 not being able 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 upon expiration or closing of the option transaction. 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 In order to gain exposure to or protect itself from changes in the market, the Portfolio may buy and sell stock index futures contracts traded on any U.S. or foreign exchange. The Portfolio also may buy or write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility that there may be 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 at the closing rate of exchange. 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 may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement dates 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 PAGE 28 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 the obligations of the contract. 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. Accordingly, as a "pass-through" entity, the Portfolio 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 and 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 entered into an Investment Management Services Agreement with American Express Financial Corporation (AEFC) for managing 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 0.6% to 0.5% annually. The fees may be increased or decreased by a performance adjustment based on a comparison of the performance of Class A shares of IDS New Dimensions Fund to the Lipper Growth Fund Index. The maximum adjustment is 0.12% of the Portfolio's average daily net assets on an annual basis. The adjustment increased the fee by $1,130,056 for the period from May 13, 1996 to July 31, 1996. Under the agreement, the Trust also pays taxes, brokerage commissions and nonadvisory expenses, which include custodian fees to be paid to an affiliate of AEFC; audit and certain legal fees; fidelity bond premiums; registration fees for units; Portfolio 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, approved by the board. For the period from May 13, 1996 to July 31, 1996, the Portfolio's custodian fees were reduced by $6,141 as a result of earnings credits from overnight cash balances. Pursuant to a Placement Agency Agreement, American Express Financial Advisors Inc. acts as placement agent of the units of the Trust. PAGE 29 ___________________________________________________________________ 3. Securities transactions Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $883,856,643 and $586,814,919, respectively, for the period from May 13, 1996 to July 31, 1996. For the same period, the portfolio turnover rate was 7%. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with AEFC were $66,667 for this period. ___________________________________________________________________ 4. Lending of portfolio securities At July 31, 1996, securities valued at $4,997,200 were on loan to brokers. For collateral, the Portfolio received $4,377,600 in cash and U.S. government securities valued at $640,540. Income from securities lending amounted to $86,952 for the period ended July 31, 1996. 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 30
Investments in securities Growth Trends Portfolio (Percentages represent value of July 31, 1996 investments compared to net assets) Investments in securities of unaffiliated issuers Common stocks (86.7%) Issuer Shares Value (a) Aerospace & defense (5.3%) Boeing 2,100,000 $ 185,850,000 Lockheed Martin 1,100,000 91,162,500 Raytheon 1,700,000 82,450,000 United Technologies 860,000 96,857,500 Total 456,320,000 Airlines (0.9%) AMR 1,000,000 (b) 78,875,000 Automotive & related (1.3%) Chrylser 4,000,000 113,500,000 Banks and savings & loans (5.4%) Citicorp 3,200,000 262,000,000 MBNA 1,700,000 47,387,500 Norwest 3,700,000 131,350,000 State Street Boston 500,000 25,125,000 Total 465,862,500 Beverages & tobacco (3.9%) Anheuser-Busch 1,150,000 85,962,500 Coca-Cola 3,200,000 150,000,000 PepsiCo 3,000,000 94,875,000 Total 330,837,500 Building materials & construction (0.6%) Tyco Intl 1,300,000 53,300,000 Chemicals (3.3%) IMC Global 1,100,000 43,450,000 Monsanto 7,000,000 218,750,000 Praxair 620,000 23,792,500 Total 285,992,500 Communications equipment & services (1.7%) ADC Telecommunications 1,100,000 (b) 46,475,000 Andrew 1,000,000 (b) 40,875,000 Tellabs 1,000,000 (b) 59,750,000 Total 147,100,000 PAGE 31 Computers & office equipment (16.2%) Ceridian 2,100,000 (b) 91,350,000 Cisco Systems 6,000,000 (b) 310,500,000 Computer Associates Intl 2,100,000 106,837,500 Computer Sciences 1,260,000 (b) 85,680,000 First Data 2,300,000 178,537,500 Hewlett-Packard 3,330,000 146,520,000 Microsoft 1,200,000 (b) 141,450,000 Oracle 4,000,000 (b) 156,500,000 Parametric Technology 2,500,000 (b) 104,062,500 3Com 1,850,000 (b) 72,843,750 Total 1,394,281,250 Electronics (2.6%) Intel 3,000,000 225,375,000 Energy (2.5%) Amoco 300,000 20,062,500 Exxon 1,000,000 82,250,000 Mobil 1,000,000 110,375,000 Total 212,687,500 Energy equipment & services (1.6%) Fluor 1,600,000 96,400,000 Sonat Offshore Drilling 800,000 39,200,000 Total 135,600,000 Financial services (1.6%) Dean Witter 800,000 40,700,000 Household Intl 600,000 44,700,000 Morgan Stanley 1,050,000 51,187,500 Total 136,587,500 Food (2.2%) ConAgra 4,000,000 170,000,000 Pioneer Hi-Bred Intl 400,000 21,500,000 Total 191,500,000 Health care (9.5%) Amgen 2,400,000 (b) 131,100,000 Boston Scientific 1,000,000 (b) 47,750,000 Guidant 800,000 40,600,000 Johnson & Johnson 3,600,000 171,900,000 Medtronic 1,700,000 80,537,500 Merck 1,600,000 102,800,000 Pfizer 3,400,000 237,575,000 Total 812,262,500 Health care services (1.3%) Cardinal Health 472,400 32,831,800 HBO & Co 1,200,000 73,500,000 Total 106,331,800 Household products (3.0%) Gillette 2,100,000 133,612,500 Procter & Gamble 1,400,000 125,125,000 Total 258,737,500 Industrial equipment & services (1.7%) Case 600,000 26,550,000 Deere 2,500,000 89,375,000 Illinois Tool Works 400,000 25,750,000 Total 141,675,000 Insurance (2.2%) ACE Limited 1,000,000 44,000,000 American Intl Group 1,000,000 94,125,000 UNUM 840,000 51,240,000 Total 189,365,000 PAGE 32 Leisure time & entertainment (1.8%) Marriott Intl 1,800,000 92,475,000 Mattel 800,000 19,800,000 Mirage Resorts 2,000,000 (b) 45,000,000 Total 157,275,000 Media (1.0%) A.H. Belo Series A 650,000 26,162,500 Infinity Broadcasting Cl A 900,000 (b) 24,750,000 Time Warner 1,000,000 34,875,000 Total 85,787,500 Metals (1.0%) Aluminum Co of America 1,400,000 81,200,000 Multi-industry conglomerates (5.4%) Alco Standard 1,650,000 72,187,500 Emerson Electric 1,477,200 124,638,750 General Electric 3,200,000 263,600,000 Total 460,426,250 Restaurants & lodging (2.6%) Hospitality Franchise System 1,700,000 (b) 102,000,000 McDonald's 2,000,000 92,750,000 Promus Hotel 1,000,000 (b) 27,250,000 Total 222,000,000 Retail (2.9%) Albertson's 1,300,000 53,300,000 Circuit City 700,000 22,050,000 Federated Department Stores 1,400,000 (b) 42,350,000 Home Depot 1,000,000 50,500,000 Kroger 500,000 (b) 18,875,000 Safeway 1,700,000 (b) 61,200,000 Total 248,275,000 Textiles & apparel (0.6%) NIKE Cl B 500,000 51,437,500 Utilities -- telephone (1.7%) AirTouch Communications 2,000,000 (b) 55,000,000 GTE 1,700,000 70,125,000 MFS Communications 700,000 (b) 22,050,000 Total 147,175,000 Foreign (2.9%) (c) British Airways ADR 400,000 (d) 32,600,000 Reuters Holdings ADR 700,000 43,837,500 Royal Dutch Petroleum 300,000 (d) 45,262,500 Schlumberger 700,000 56,000,000 SmithKline Beecham ADR 1,350,000 72,562,500 Total 250,262,500 Total common stocks (Cost: $5,322,021,805) $7,440,029,300
PAGE 33
Short-term securities (11.8%) Issuer Annualized Amount Value (a) yield on payable at date of maturity purchase U.S. government agencies (0.1%) Federal Home Loan Bank Disc Nt 08-05-96 5.32% $ 600,000 $ 599,647 Federal Home Loan Mtge Corp Disc Nt 08-16-96 5.25 7,900,000 7,882,784 Total 8,482,431 Commercial paper (11.5%) ABN Amro 08-27-96 5.06 15,000,000 14,937,992 10-11-96 5.52 9,000,000 8,900,100 A.I. Credit 08-20-96 5.41 10,000,000 9,970,327 09-18-96 5.37 10,235,000 10,162,263 Alabama Power 08-23-96 5.31 6,700,000 6,678,340 American General Finance 08-01-96 5.38 1,500,000 1,500,000 08-01-96 5.35 10,100,000 10,100,000 Ameritech Capital Funding 08-13-96 5.40 13,600,000 13,572,004 08-27-96 5.41 10,400,000 (f) 10,355,472 08-29-96 5.42 1,200,000 (f) 1,194,564 Associates North America 09-25-96 5.42 10,000,000 9,913,640 AVCO Financial Services 08-01-96 5.40 3,500,000 3,500,000 08-19-96 5.34 9,000,000 8,974,609 08-29-96 5.34 8,300,000 8,263,616 10-22-96 5.49 8,700,000 8,588,676 10-30-96 5.49 5,400,000 5,321,952 10-31-96 5.50 18,000,000 17,741,480 BBV Finance (Delaware) 08-01-96 5.32 9,000,000 9,000,000 08-07-96 5.33 4,400,000 4,395,729 08-07-96 5.29 10,000,000 9,990,292 Becton Dickinson 08-28-96 5.44 7,000,000 6,971,650 BellSouth 08-28-96 5.42 6,958,000 6,928,555 09-17-96 5.38 9,800,000 9,731,678 Beneficial 09-12-96 5.39 10,000,000 9,937,583 CAFCO 09-11-96 5.44 15,000,000 14,901,870 Cargill 08-14-96 5.37 7,100,000 7,086,283 10-08-96 5.53 8,000,000 7,914,900 10-23-96 5.50 17,000,000 (f) 16,779,850 Chevron 08-21-96 5.43 13,000,000 12,966,995 Ciesco LP 08-21-96 5.40 6,100,000 (f) 6,079,364 08-23-96 5.34 7,000,000 6,974,122 09-13-96 5.45 10,000,000 9,928,793 10-01-96 5.43 10,000,000 9,904,417 CIT Group 08-16-96 5.41 15,000,000 14,966,375 Commercial Credit 08-08-96 5.39 5,400,000 5,394,361 Commerzbank U.S. Finance 08-13-96 5.35 8,000,000 7,982,181 08-14-96 5.39 16,700,000 16,661,560 PAGE 34 CPC Intl 09-04-96 5.44 8,300,000 (f) 8,254,972 09-16-96 5.47 11,000,000 (f) 10,919,977 09-24-96 5.37 12,000,000 (f) 11,899,533 09-26-96 5.45 20,000,000 (f) 19,824,338 10-22-96 5.49 10,300,000 (f) 10,168,203 Dean Witter 08-05-96 5.37 3,800,000 3,796,830 Ford Motor Credit 09-05-96 5.39 15,000,000 14,921,979 Gannett 10-11-96 5.54 12,400,000 (f) 12,262,360 10-15-96 5.52 5,400,000 (f) 5,376,337 10-16-96 5.54 10,700,000 (f) 10,572,982 General Electric Capital 08-14-96 5.37 12,000,000 11,971,840 08-22-96 5.43 15,000,000 14,946,404 08-28-96 5.44 10,000,000 9,954,418 08-29-96 5.32 6,500,000 6,473,206 Goldman Sachs 08-05-96 5.36 6,000,000 5,995,299 08-23-96 5.39 5,000,000 4,981,030 09-09-96 5.50 1,400,000 1,390,947 09-10-96 5.47 7,000,000 6,954,606 10-21-96 5.53 2,200,000 2,172,188 Harris Trust 08-09-96 5.37 10,400,000 10,399,592 Hewlett-Packard 08-29-96 5.42 4,500,000 4,479,153 09-17-96 5.42 2,430,000 2,411,536 Household Finance 08-26-96 5.42 10,000,000 9,958,074 09-19-96 5.44 20,000,000 19,841,873 Kredietbank North America Finance 09-03-96 5.16 10,000,000 9,945,270 Lilly (Eli) & Co. 08-09-96 5.40 11,200,000 11,186,610 Merrill Lynch 08-23-96 5.43 3,700,000 3,686,576 Metlife Funding 09-09-96 5.39 9,700,000 9,643,675 Mobil Australia Finance (Delaware) 08-15-96 5.40 8,000,000 (f) 7,980,371 08-30-96 5.41 10,000,000 (f) 9,951,305 09-18-96 5.48 8,000,000 (f) 7,937,946 09-18-96 5.45 9,908,000 (f) 9,831,146 10-02-96 5.49 7,000,000 (f) 6,932,012 Morgan Stanley Group 08-08-96 5.40 6,000,000 5,993,735 09-06-96 5.37 7,100,000 7,062,086 Motorola 08-28-96 5.35 13,523,000 13,469,043 Natl Australia Funding (Delaware) 08-13-96 5.39 6,700,000 6,686,316 NationsBank 08-06-96 5.37 15,000,000 14,999,931 09-04-96 5.40 8,000,000 7,999,173 Norfolk Southern 08-29-96 5.37 5,000,000 (f) 4,977,144 PACCAR 08-26-96 5.34 9,000,000 8,962,856 Penney (JC) Funding 09-17-96 5.43 9,000,000 8,932,984 Pfizer 08-02-96 5.40 20,000,000 (f) 19,997,017 Pitney Bowes Credit 08-29-96 5.42 9,000,000 8,958,859 10-09-96 5.49 3,500,000 3,452,048 10-16-96 5.51 8,800,000 8,695,537 Reed Elsevier 09-20-96 5.47 20,000,000 (f) 19,839,148 SAFECO Credit 08-05-96 5.35 8,100,000 8,093,845 08-23-96 5.41 7,500,000 7,475,387 09-23-96 5.40 1,000,000 991,768 PAGE 35 Sandoz 08-01-96 5.38 12,000,000 (f) 12,000,000 08-06-96 5.40 8,800,000 8,793,449 08-20-96 5.35 8,000,000 7,973,647 09-10-96 5.47 7,900,000 (f) 7,847,816 Siemens 08-20-96 5.41 9,100,000 9,070,024 09-18-96 5.44 1,300,000 1,289,701 SmithKline Beecham 08-13-96 5.40 15,600,000 15,572,024 Societe Generale North America 08-12-96 5.39 21,700,000 21,664,526 Southern California Gas 09-03-96 5.03 10,269,000 (f) 10,212,059 10-29-96 5.53 5,623,000 (f) 5,546,246 Southwestern Bell Telephone 09-10-96 5.37 8,500,000 8,449,567 Transamerica Financial 08-19-96 5.37 6,000,000 5,981,152 09-23-96 5.40 3,000,000 2,975,303 USAA Capital 08-07-96 5.40 9,100,000 9,091,856 08-12-96 5.37 14,000,000 13,972,579 08-19-96 5.34 10,000,000 9,968,587 08-23-96 5.41 6,700,000 6,678,013 09-06-96 5.33 5,100,000 5,072,970 U S WEST Communications 09-17-96 5.44 9,600,000 9,525,755 09-24-96 5.40 8,600,000 8,530,856 10-24-96 5.49 10,000,000 9,868,958 Total 987,866,146 Letters of credit (0.2%) First Chicago - Commed Fuel 08-15-96 5.42 9,134,000 9,112,039 09-09-96 5.35 9,203,000 9,149,960 Total 18,261,999 Total short-term securities (Cost: $1,014,865,742) $1,014,610,576 Total investments in securities of unaffiliated issuers (Cost: $6,336,887,547) $8,454,639,876 Investments in securities of affiliated issuer (e) Common Stock (1.5%) Issuer Shares Value (a) Reynolds & Reynolds Cl A 2,750,000 $ 133,031,250 Total investments in securities of affiliated issuer (Cost: $72,334,647) 133,031,250 Total investments in securities (Cost: $6,409,222,194) (g) $8,587,671,126 PAGE 36 Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Presently non-income producing. (c) Foreign security values are stated in U.S. dollars. (d) Security is partially or fully on loan. See Note 4 to the financial statements. (e) Investments representing 5% or more of the outstanding voting securities of the issuer. (f) 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. (g) At July 31, 1996, the cost of securities for federal income tax purposes was $6,409,235,783 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation 2,247,642,210 Unrealized depreciation (69,206,867) Net unrealized appreciation 2,178,435,343
PAGE 37 IDS mutual funds Cash equivalent investments These money market funds have three main goals: conservation of capital, constant liquidity and the highest possible current income consistent with these objectives. Very limited risk. IDS Cash Management Fund Invests in such money market securities as high quality commercial paper, bankers' acceptances, certificates of deposits (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 Income investments 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 Global Bond Fund Invests primarily in debt securities of U.S. and foreign issuers to seek high total return through income and growth of capital. (icon of) globe IDS Extra Income Fund Invests 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) 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 PAGE 38 IDS Selective Fund Invests in 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 primarily in 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 enclosed Tax-exempt income investments These funds provide tax-free income by investing in municipal bonds. The income is generally free from federal income tax. Risk varies by bond quality. IDS High Yield Tax-Exempt Fund Invests primarily in 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 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 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 enclosed 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 enclosed PAGE 39 Growth and income investments 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. Moderate risk. 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 Managed Allocation Fund Invests in 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) bird in a nest 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 Stock Fund Invests in common stock 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 PAGE 40 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 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 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 Growth investments Funds in this group seek capital growth, primarily from common stocks. They are high risk mutual funds with a potential for high reward. 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) office building 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 PAGE 41 IDS Global Growth Fund Invests in 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. (icon of) world 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 primarily in 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. (icon of) magnifying glass IDS Growth Fund Invests primarily in companies that have above-average potential for long-term growth as a result of new management, marketing opportunities or technological superiority. (icon of) trees IDS New Dimensions Fund Invests primarily in companies with significant growth potential due to superiority in technology, marketing or management. The fund frequently changes its industry mix. (icon of) dimension Specialty growth investment This fund aggressively seeks capital growth as a hedge against inflation. 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. This is the most aggressive and most speculative IDS mutual fund. (icon of) cart of precious gems PAGE 42 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. PAGE 43 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, 1996 Class A Income distribution taxable as dividend income, 100% qualifying for deduction by corporations. Payable date Per share Dec. 29, 1995 $0.14600 Capital gain distribution taxable as long-term capital gain. Payable date Per share Dec. 29, 1995 $0.60100 Total distributions $0.74700 Class B Income distribution taxable as dividend income, 100% qualifying for deduction by corporations. Payable date Per share Dec. 29, 1995 $0.10942 Capital gain distribution taxable as long-term capital gain. Payable date Per share Dec. 29, 1995 $0.60100 Total distributions $0.71042 Class Y Income distribution taxable as dividend income, 100% qualifying for deduction by corporations. Payable date Per share Dec. 29, 1995 $0.16774 PAGE 44 Capital gain distribution taxable as long-term capital gain. Payable date Per share Dec. 29, 1995 $0.60100 Total distributions $0.76874 PAGE 45 Quick telephone reference American Express Telephone Transaction Service Redemptions and exchanges, dividend payments or reinvestments and automatic payment arrangements National/Minnesota: 800-437-3133 Mpls./St. Paul area: 671-3800 American Express Shareholder Service Fund performance, objectives and account inquiries 612-671-3733 TTY Service For the hearing impaired 800-846-4852 American Express Infoline Automated account information (TouchToneR phones only), including current fund prices and performance, account values and recent account transactions National/Minnesota: 800-272-4445 Mpls./St. Paul area: 671-1630 AMERICAN EXPRESS Financial Advisors IDS New Dimensions Fund IDS Tower 10 Minneapolis, MN 55440-0010 PAGE 46 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. -----END PRIVACY-ENHANCED MESSAGE-----