-----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, F8t1STezciNtf9D/3w1uQ0lBK5W8vXNIXYXqPcG9HNPJks3uyZXs0K72FLTRQnSb JOSJXIvI7Z1FUqki/9Jz7A== 0000820027-02-000643.txt : 20021001 0000820027-02-000643.hdr.sgml : 20021001 20021001120915 ACCESSION NUMBER: 0000820027-02-000643 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020731 FILED AS OF DATE: 20021001 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP NEW DIMENSIONS FUND INC /MN/ CENTRAL INDEX KEY: 0000049717 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: 02777890 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6123722772 FORMER COMPANY: FORMER CONFORMED NAME: IDS NEW DIMENSIONS FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AXP NEW DIMENSIONS FUND INC/ DATE OF NAME CHANGE: 20000404 N-30D 1 s6440v.txt AXP NEW DIMENSIONS FUND AXP(R) New Dimensions(R) Fund 2002 ANNUAL REPORT (Prospectus Enclosed) 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.) American Express(R) Funds AMERICAN EXPRESS(R) (photo of) Arne H. Carlson From the Chairman Arne H. Carlson Chairman of the board Dear Shareholders, It is a very difficult period for investors caused by corporate management misconduct and its impact on the market as well as the economy. The integrity of corporations at large is being questioned. However, there is optimism that the resulting reforms will give Americans the kind of integrity they deserve. Many corporate leaders are strongly supportive of these reforms. We all have a right to expect financial statements to be fully accurate and business leaders to place the interests of shareholders above personal desires. Your Board is truly independent, comprised of 12 members (nominated by independent members) and three recommended by American Express Financial Corporation. These individuals come from a variety of geographic areas with the diverse skill sets necessary to oversee the operations of the Fund. Investment performance is, and remains, our primary concern. The Fund's auditors, KPMG LLP, are truly independent of American Express Financial Corporation. KPMG serves the interest of shareholders by supporting the work of the Board and certifying unbiased financial reports. The Board has confidence in Ted Truscott, American Express Financial Corporation's new Chief Investment Officer, and shares his enthusiasm in the management changes he has effected to improve the investment performance of all American Express funds. These changes include the hiring of several new portfolio managers and investment leaders and the addition of eight sub-advised funds. The focus of the Board and American Express Financial Corporation is simple; we strive for consistent, competitive investment performance. If you were a shareholder of record on September 14, you will receive a proxy statement for a shareholder meeting to be held on November 13, 2002. Please take time to consider each proposal and vote promptly. On behalf of the Board, Arne H. Carlson CONTENTS From the Chairman 2 Economic and Market Update 3 Fund Snapshot 5 Questions & Answers with Portfolio Management 6 The Fund's Long-term Performance 9 Investments in Securities 10 Financial Statements (Portfolio) 14 Notes to Financial Statements (Portfolio) 17 Independent Auditors' Report (Portfolio) 21 Financial Statements (Fund) 22 Notes to Financial Statements (Fund) 25 Independent Auditors' Report (Fund) 33 Board Members and Officers 34 - -------------------------------------------------------------------------------- 2 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Economic and Market Update FROM CIO WILLIAM F. "TED" TRUSCOTT (photo of) William F. "Ted" Truscott William F. "Ted" Truscott Chief Investment Officer American Express Financial Corporation Dear Shareholders, Major U.S. financial markets lost ground for the three-month period ending July 31, 2002, although a late rally put them above earlier lows. The same factors that have driven markets down for most of the year so far were still in play during this period. These include concerns about the truthfulness of accounting practices and the perception that stocks remain too expensive relative to company earnings. I expect we'll need to see consistent improvement in earnings before stocks rebound significantly. If corporate revenue growth becomes apparent and widespread, it will effectively make stock valuations cheaper. Increased demand should then have a positive impact on prices. Economic fundamentals have continued to look positive despite volatility in the financial markets. Inflation and interest rates remain low, unemployment and job growth are at reasonable levels, and there are signs that business spending is beginning to pick up. In addition, a weaker dollar should help U.S. companies that export goods overseas, even though it crimps our wallets when we travel abroad. These and other factors make it highly unlikely that we will experience a so-called "double-dip" recession. I remain optimistic about the direction of the economy and believe that, eventually, markets will start paying attention to these very favorable conditions. Nevertheless, we should remember that risk still exists. For one, bonds have been experiencing their own bear market. This has created something of a credit crunch for businesses, as liquidity declines and spreads widen. Related to this has been a crisis of confidence -- the unfortunate legacy of recent corporate scandal. In some cases, investors who thought they were buying high-quality corporate bonds were actually getting riskier high-yield securities due to dishonest accounting. Everyone agrees that some type of reform is needed, but the challenge for regulators will be to discourage misleading practices without sacrificing entrepreneurial incentive. Prudent regulation will boost confidence, while misguided efforts will simply make markets less efficient. What I think all investors need to understand is that we're still working through the excess capacity and inflated demand forecasts that were created in the late `90s. This process has been painful, but it has helped to reorient expectations to levels that are more sustainable. Historically speaking, the late `90s were an aberration and will likely not be repeated soon. - -------------------------------------------------------------------------------- 3 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Economic and Market Update However, a more sober outlook need not be cause for special concern. We should all ask ourselves, "Have my goals changed in the last couple of years?" For many of us, the answer will be "no." If you're saving for long-term goals like retirement, I would still advise a substantial weighting in equities for your portfolio. Over time, stocks will probably continue to outperform bonds or other investments. And if you're in retirement or getting close, you may want to invest more heavily in bonds and cash, with a smaller portion devoted to equities. See your financial advisor or retirement plan administrator for more information about different types of securities and asset allocation. As always, thank you for investing with American Express Financial Advisors. William F. Truscott Key points - -- Economic fundamentals remain positive. - -- Credit "crunch" for business sector persists. - -- Re-evaluation of personal financial goals key. - -------------------------------------------------------------------------------- 4 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Fund Snapshot AS OF JULY 31, 2002 PORTFOLIO MANAGER Portfolio manager Gordon Fines Tenure/since 1/1/91 Years in industry 35 FUND OBJECTIVE For investors seeking long-term growth of capital. Inception dates A: 8/1/68 B: 3/20/95 C: 6/26/00 Y: 3/20/95 Ticker symbols A: INNDX B: INDBX C: ANDCX Y: IDNYX Total net assets $16.858 billion Number of holdings approximately 110 STYLE MATRIX Shading within the style matrix indicates areas in which the Fund generally invests. STYLE VALUE BLEND GROWTH X LARGE MEDIUM SIZE SMALL PORTFOLIO ASSET MIX Percentage of portfolio assets (pie graph) Common stocks 97.2% Preferred stocks 0.6% Cash equivalents 2.2% TOP FIVE SECTORS Percentage of portfolio assets Financial services 9.5% Retail 9.5 Health care 7.4 Multi-industry conglomerates 6.6 Health care services 6.3 TOP TEN HOLDINGS Percentage of portfolio assets Wal-Mart Stores 3.6% Citigroup 3.6 Microsoft 3.3 3M 3.0 Viacom Cl B 2.8 Bank of America 2.8 General Electric 2.7 Philip Morris 2.6 Exxon Mobil 2.6 Johnson & Johnson 2.6 Stock prices of established companies that pay dividends may be less volatile than the stock market as a whole. There are special risk considerations associated with international investing related to market, currency, economic, political and other factors. Fund holdings are subject to change. - -------------------------------------------------------------------------------- 5 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Questions & Answers WITH PORTFOLIO MANAGEMENT Q: How did the Fund perform for the 12-month period ended July 31, 2002? A: The past year was one in which a series of negative events took a toll on equity markets, hitting large company growth stocks especially hard. As a result, AXP New Dimensions Fund returned -21.14% for the year (Class A shares, excluding sales charges), still managing to outperform its benchmark, the S&P 500 Index, which returned -23.63%. By comparison, the Lipper Large-Cap Growth Funds Index returned -27.98% over the same time frame. Q: What factors significantly impacted performance? A: From the start of the period, equity markets have been facing an uphill battle. We began the period in the midst of a mild recession, which had already taken a significant toll on stocks. The situation grew even worse when the terrorist attacks of September 11, 2001 seized the nation's attention. Markets initially declined in dramatic fashion, but quickly rebounded in the closing months of 2001 as investors seemed to sense that the country and the economy were bouncing back quickly from the tragedy. The new year began with large-cap stocks again suffering from a loss of investor confidence, as fallout from disclosures related to the collapse of Enron began to take center stage. Similar problems quickly spread to several other prominent companies, and as 2002 progressed, enthusiasm for stocks was difficult to find. By the middle of summer, investor confidence reached a low point, and the stock market (as measured by the S&P 500 Index) dipped to its lowest level in four years. Except for a brief bounce at the end of July, investors found themselves facing significant losses, even in stocks of what are generally perceived as high-quality companies. (bar graph) PERFORMANCE COMPARISON For the year ended July 31, 2002 - -0% - -5% - -10% - -15% - -20% (bar 1) - -25% -21.14% (bar 2) (bar 3) - -30% -23.63% -27.96% (bar 1) AXP New Dimensions Fund Class A (excluding sales charge) (bar 2) S&P 500 Index (unmanaged) (bar 3) Lipper Large-Cap Growth Funds Index (see "The Fund's Long-term Performance" for Index descriptions) Past performance is no guarantee of future results. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart; if reflected, returns would be lower than those shown. The performance of Class B, Class C and Class Y may vary from that shown above because of differences in sales charges and fees. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. - -------------------------------------------------------------------------------- 6 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Questions & Answers (begin callout quote)> It is likely that we'll continue to see significant volatility in stock prices and possibly more downside movement before stocks are able to turn the corner. (end callout quote) Our approach throughout the period was to take a more conservative view of growth investing. That included reducing our exposure to more volatile segments of the market, including technology and telecommunications stocks. This proved to be a beneficial move, as both sectors were among the worst performing groups over the 12-month period. Weakness in energy stocks detracted from our performance. By contrast, we were able to capture better results by emphasizing more defensive areas of the market, including food, beverage and tobacco stocks, retail firms, banks and selected healthcare companies. Q: What changes did you make to the portfolio? A: Throughout the period, the changes we made tended to follow the theme of de-emphasizing the volatile technology and telecommunications sectors and putting greater focus on more defensive stocks. We also looked to add stocks of companies that paid reasonably attractive dividends to investors. Given the current state of the market where corporate profit growth has been modest at best, it seems that dividend-paying stocks have the potential to generate better returns in the near term. This is particularly
Average Annual Total Returns as of July 31, 2002 At Net Asset Value (NAV)(1) Class A Class B Class C Class Y 1 year -21.14% -21.71% -21.73% -21.00% 5 years +1.34% +0.58% N/A +1.47% 10 years +10.59% N/A N/A N/A Since inception N/A +9.71%(2) -21.14%(3) +10.70%(2)
With Sales Charge Class A Class B Class C Class Y 1 year -25.68% -24.84% -21.73% -21.00% 5 years +0.15% +0.43% N/A +1.47% 10 years +9.94% N/A N/A N/A Since inception N/A +9.71%(2) -21.14%(3) +10.70%(2)
(1) Excluding sales charge. (2) Inception date was March 20, 1995. (3) Inception date was June 26, 2000. Past performance is no guarantee of future results. Investment return and principal value will fluctuate, so that your shares, when redeemed, may be worth more or less than the original cost. The performance shown for each class of shares will vary due to differences in sales charges and fees. Short term performance may be higher or lower than the figures shown. Visit americanexpress.com for current information. - -------------------------------------------------------------------------------- 7 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Questions & Answers true in light of the recent accounting scandals that have rocked investor confidence in certain types of stocks that are highly dependent on growth in earnings to generate investor interest. Q: What is your outlook for the year ahead? A: A number of uncertainties are hovering over the market, ranging from the direction and impact of the war on terrorism to concerns about economic weakness to the fear of more disclosures of corporate accounting irregularities. Therefore, we remain cautious about the direction of the markets for the rest of 2002. It is likely that we'll continue to see significant volatility in stock prices and possibly more downside movement before stocks are able to turn the corner. However, at some point, we look for corporate earnings to begin to improve, and that should be reflected in better stock prices in 2003. Q: How are you positioning the Fund in light of your outlook? A: While the market continues in this transition period, we will maintain a more defensive approach to our stock selection process. As we begin to see signs that corporate profits are on the mend, we will seek to position the Fund to take advantage of the best growth opportunities that exist among large-cap stocks. In general, our focus will be on investing in healthy companies in a variety of industries, including many that are in a position to generate dividends for investors. - -------------------------------------------------------------------------------- 8 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT The Fund's Long-term Performance This chart illustrates the total value of an assumed $10,000 investment in AXP New Dimensions Fund Class A shares (from 8/1/92 to 7/31/02) as compared to the performance of two widely cited performance indices, Standard & Poor's 500 Index (S&P 500 Index) and the Lipper Large-Cap Growth Funds Index. In comparing the Fund's Class A shares to these indices, 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 indices. Returns for the Fund include the reinvestment of any distribution paid during each period. Past performance is no guarantee of future results. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Returns do not reflect taxes payable on distributions and redemptions. Also see "Past Performance" in the Fund's current prospectus. VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN AXP NEW DIMENSIONS FUND $50,000 $40,000 (solid line) AXP New Dimensions Fund $30,000 (dotted line) S&P 500 Index $20,000 (dashed line) Lipper Large-Cap Growth Funds Index $10,000 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '01 '02 (solid line) AXP New Dimensions Fund Class A $25,797 (dotted line) S&P 500 Index(1) $26,139 (dashed line) Lipper Large-Cap Growth Funds Index(2) $21,154 (1) Standard & Poor's 500 Index (S&P 500 Index), an unmanaged index 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 Fund invests. (2) The Lipper Large-Cap Growth Funds Index, published by Lipper Inc., includes the 30 largest funds that are generally similar to the Fund, although some funds in the index may have somewhat different investment policies or objectives. Average Annual Total Returns Class A with Sales Charge as of July 31, 2002 1 year -25.68% 5 years +0.15% 10 years +9.94% Since inception N/A Results for other share classes can be found on page 7. - -------------------------------------------------------------------------------- 9 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Investments in Securities Growth Trends Portfolio July 31, 2002 (Percentages represent value of investments compared to net assets) Common stocks (97.3%) Issuer Shares Value(a) Aerospace & defense (0.7%) Lockheed Martin 800,000 $51,288,000 United Technologies 1,000,000(f) 69,500,000 Total 120,788,000 Airlines (1.5%) Southwest Airlines 18,000,000 248,580,000 Automotive & related (0.3%) General Motors 1,000,000 46,550,000 Banks and savings & loans (5.0%) Bank of America 7,000,000 465,500,000 Washington Mutual 2,000,000 74,820,000 Wells Fargo 6,000,000 305,160,000 Total 845,480,000 Beverages & tobacco (4.0%) Anheuser-Busch 2,400,000 124,104,000 PepsiCo 2,600,000 111,644,000 Philip Morris 9,600,000 442,080,000 Total 677,828,000 Chemicals (1.7%) Air Products & Chemicals 2,500,000 110,625,000 du Pont (EI) de Nemours 2,200,000 92,202,000 Waste Management 3,200,000 75,744,000 Total 278,571,000 Communications equipment & services (1.1%) Motorola 5,000,000 58,000,000 Nokia ADR Cl A 2,000,000(c) 24,800,000 Verizon Communications 3,000,000 99,000,000 Total 181,800,000 Computer software & services (4.4%) Automatic Data Processing 2,500,000 93,225,000 Brocade Communications Systems 1,000,000(b) 18,750,000 Electronic Arts 500,000(b) 30,090,000 Microsoft 11,500,000(b) 551,425,000 SunGard Data Systems 1,700,000(b) 39,865,000 Total 733,355,000 Computers & office equipment (5.3%) Cisco Systems 15,000,000(b) 197,850,000 Dell Computer 5,500,000(b) 137,115,000 Fiserv 1,300,000(b) 44,733,000 Intl Business Machines 3,000,000 211,200,000 State Street 7,100,000 301,750,000 Total 892,648,000 Electronics (5.4%) Applied Materials 10,000,000(b) 148,700,000 Intel 11,000,000 206,690,000 Maxim Integrated Products 5,000,000(b) 175,900,000 Samsung Electronics 220,000(c) 61,569,410 Texas Instruments 13,600,000 314,840,000 Total 907,699,410 Energy (5.5%) ChevronTexaco 5,000,000 375,000,000 Exxon Mobil 12,000,000 441,120,000 Murphy Oil 500,000 41,575,000 Phillips Petroleum 1,500,000 77,625,000 Total 935,320,000 Energy equipment & services (1.5%) Schlumberger 4,200,000 180,264,000 Transocean 1,500,000 38,250,000 Weatherford Intl 1,000,000(b) 40,560,000 Total 259,074,000 Financial services (9.5%) Citigroup 18,000,000 603,720,000 Fannie Mae 4,000,000 299,560,000 MBNA 11,000,000 213,290,000 Morgan Stanley 5,000,000 201,750,000 Paychex 420,600 11,065,986 SLM 3,000,000 273,000,000 Total 1,602,385,986 Food (0.2%) General Mills 700,000 29,015,000 See accompanying notes to investments in securities. 10 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Common stocks (continued) Issuer Shares Value(a) Health care (7.4%) Amgen 2,500,000(b) $114,100,000 Forest Laboratories 1,100,000(b) 85,217,000 Johnson & Johnson 8,200,000 434,600,000 Medtronic 7,000,000 282,800,000 Pfizer 10,000,000 323,500,000 Quest Diagnostics 200,000(b) 12,078,000 Total 1,252,295,000 Health care services (6.3%) Cardinal Health 5,000,000 288,000,000 HCA 8,000,000 376,000,000 UnitedHealth Group 4,600,000 403,236,000 Total 1,067,236,000 Household products (2.0%) Gillette 1,700,000 55,896,000 Procter & Gamble 3,200,000 284,768,000 Total 340,664,000 Indexes (1.1%) Nasdaq-100 Index Tracking 8,000,000(b) 191,040,000 Industrial equipment & services (2.7%) Caterpillar 5,000,000 223,500,000 Deere & Co 750,000 31,515,000 Illinois Tool Works 3,000,000 197,970,000 Total 452,985,000 Insurance (3.4%) American Intl Group 4,000,000 255,680,000 Marsh & McLennan 6,800,000 325,720,000 Total 581,400,000 Leisure time & entertainment (3.6%) AOL Time Warner 2,000,000(b) 23,000,000 Intl Game Technology 1,000,000(b) 58,250,000 Mattel 3,000,000 56,430,000 Viacom Cl B 12,000,000(b) 467,040,000 Total 604,720,000 Media (2.6%) eBay 2,000,000(b) 114,180,000 Gannett 2,000,000 143,820,000 Grupo Televisa ADR 760,000(b,c) 22,990,000 USA Interactive 4,800,000(b) 105,835,200 USA Networks 2,200,000(b,e) 48,507,800 Total 435,333,000 Metals (1.1%) Alcoa 4,500,000 121,725,000 Nucor 1,200,000 66,996,000 Total 188,721,000 Multi-industry conglomerates (6.6%) 3M 4,000,000 503,320,000 Accenture Cl A 1,000,000(b,c) 16,500,000 Cendant 5,500,000(b) 76,010,000 General Electric 14,000,000 450,800,000 Robert Half Intl 3,000,000(b) 59,850,000 Total 1,106,480,000 Paper & packaging (0.5%) Intl Paper 2,000,000 79,640,000 Restaurants & lodging (1.0%) Marriott Intl Cl A 5,000,000 167,500,000 Retail (9.5%) Bed Bath & Beyond 1,200,000(b) 37,200,000 Best Buy 2,400,000(b) 78,960,000 Costco Wholesale 7,000,000(b) 244,090,000 Home Depot 5,000,000 154,400,000 Kohl's 500,000(b) 33,000,000 Target 10,500,000 350,175,000 Wal-Mart Stores 12,500,000 614,750,000 Walgreen 2,400,000 84,792,000 Total 1,597,367,000 Transportation (1.1%) Union Pacific 2,500,000 146,675,000 United Parcel Service Cl B 700,000 45,738,000 Total 192,413,000 Utilities-- electric (2.3%) Dominion Resources 6,500,000 386,360,000 Total common stocks (Cost: $16,162,405,499) $16,403,248,396 Preferred stock (0.6%) Issuer Shares Value(a) TXU 8.75% Cv 2,300,000 $107,249,000 Total preferred stock (Cost: $120,371,746) $107,249,000 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 11 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Option purchased (--%) Issuer Contracts Exercise Expiration Value(a) price date Call S&P 500 Index 3200 $950 Aug. 2002 $2,432,000 Total option purchased (Cost: $10,729,600) $2,432,000
Short-term securities (2.2%)(f) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity U.S. government agency (0.2%) Federal Home Loan Bank Disc Nts 10-02-02 1.71% $25,000,000 $24,926,500 10-09-02 1.74 2,400,000 2,392,226 10-11-02 1.73 9,500,000 9,468,337 Total 36,787,063 Commercial paper (2.0%) CAFCO 08-20-02 1.81 1,500,000(d) 1,498,442 09-06-02 1.80 4,200,000(d) 4,191,752 Charta 08-01-02 1.81 30,000,000(d) 29,998,021 CXC 08-22-02 1.81 25,000,000(d) 24,954,666 Edison Asset Securitization 08-16-02 1.88 25,000,000(d) 24,978,655 09-19-02 1.81 30,000,000(d) 29,888,114 10-16-02 1.81 25,000,000(d) 24,901,077 Fleet Funding 08-08-02 1.92 10,000,000(d) 9,991,956 09-03-02 1.81 2,000,000(d) 1,996,448 09-16-02 1.80 30,000,000(d) 29,927,152 GE Capital Intl Funding 08-13-02 1.92 9,100,000(d) 9,093,691 Goldman Sachs Group 08-05-02 1.93 22,300,000 22,294,022 Intl Lease Finance 08-02-02 1.79 12,300,000 12,298,645 Nordea North America 10-21-02 1.82 15,000,000 14,936,792 Park Avenue Receivables 08-07-02 1.79 5,000,000(d) 4,998,260 Preferred Receivables 08-29-02 1.81 25,000,000(d) 24,945,621 Receivables Capital 08-05-02 1.80 3,500,000(d) 3,499,062 08-12-02 1.80 25,000,000(d) 24,984,000 Sheffield Receivables 08-01-02 1.84 29,400,000(d) 29,398,497 Total 328,774,873 Total short-term securities (Cost: $365,663,563) $365,561,936 Total investments in securities (Cost: $16,659,170,408)(g) $16,878,491,332
See accompanying notes to investments in securities. 12 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. As of July 31, 2002, the value of foreign securities represented 0.7% of net assets. (d) 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. (e) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at July 31, 2002, is as follows: Security Acquisition Cost date USA Networks 05-02-02 $62,700,000 (f) At July 31, 2002, securities valued at $6,950,000 were held to cover open call options written as follows (see Note 5 to the financial statements): Issuer Contracts Exercise price Expiration date Value(a) United Technologies 1,000 $75 Aug. 2002 $40,000 At July 31, 2002, cash or short-term securities were designated to cover open put options written as follows (see Note 5 to the financial statements): Issuer Contracts Exercise price Expiration date Value(a) United Technologies 1,000 $60 Aug. 2002 $25,000 (g) At July 31, 2002, the cost of securities for federal income tax purposes was $16,659,170,408 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 1,953,523,275 Unrealized depreciation (1,734,202,351) -------------- Net unrealized appreciation $ 219,320,924 --------------- - -------------------------------------------------------------------------------- 13 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT
Financial Statements Statement of assets and liabilities Growth Trends Portfolio July 31, 2002 Assets Investments in securities, at value (Note 1)* (identified cost $16,659,170,408) $16,878,491,332 Foreign currency holdings (identified cost $28,088,520) (Note 1) 27,853,018 Dividends and accrued interest receivable 10,984,760 Receivable for investment securities sold 13,510,751 ---------- Total assets 16,930,839,861 -------------- Liabilities Disbursements in excess of cash on demand deposit 1,205,799 Payable for investment securities purchased 46,072,548 Payable upon return of securities loaned (Note 4) 25,000,000 Accrued investment management services fee 236,283 Other accrued expenses 137,478 Options contracts written, at value (premiums received $343,989) (Note 5) 65,000 ------ Total liabilities 72,717,108 ---------- Net assets $16,858,122,753 =============== * Including securities on loan, at value (Note 4) $ 23,880,000 ---------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 14 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT
Statement of operations Growth Trends Portfolio Year ended July 31, 2002 Investment income Income: Dividends $ 244,873,954 Interest 18,421,944 Less foreign taxes withheld (238,623) -------- Total income 263,057,275 ----------- Expenses (Note 2): Investment management services fee 127,492,321 Compensation of board members 89,206 Custodian fees 1,158,122 Audit fees 34,500 Other 287,977 ------- Total expenses 129,062,126 Earnings credits on cash balances (Note 2) (3,699) ------ Total net expenses 129,058,427 ----------- Investment income (loss) -- net 133,998,848 ----------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) (86,615,657) Foreign currency transactions (527,727) Options contracts written (Note 5) 8,417,627 --------- Net realized gain (loss) on investments (78,725,757) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (4,792,265,331) -------------- Net gain (loss) on investments and foreign currencies (4,870,991,088) -------------- Net increase (decrease) in net assets resulting from operations $(4,736,992,240) ===============
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 15 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT
Statements of changes in net assets Growth Trends Portfolio Year ended July 31, 2002 2001 Operations Investment income (loss) -- net $ 133,998,848 $ 140,932,561 Net realized gain (loss) on investments (78,725,757) (396,793,889) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (4,792,265,331) (6,106,460,902) -------------- -------------- Net increase (decrease) in net assets resulting from operations (4,736,992,240) (6,362,322,230) -------------- -------------- Proceeds from contributions 1,102,314,218 1,408,932,058 Fair value of withdrawals (3,241,842,538) (1,673,744,904) -------------- -------------- Net contributions (withdrawals) from partners (2,139,528,320) (264,812,846) -------------- ------------ Total increase (decrease) in net assets (6,876,520,560) (6,627,135,076) Net assets at beginning of year 23,734,643,313 30,361,778,389 -------------- -------------- Net assets at end of year $16,858,122,753 $23,734,643,313 =============== ===============
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 16 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Notes to Financial Statements Growth Trends Portfolio 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Growth Trends Portfolio (the Portfolio) is a series of Growth Trust (the Trust) and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. Growth Trends Portfolio invests primarily in common stocks of U.S. and foreign 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's significant accounting policies are summarized below: Use of estimates Preparing financial statements that conform to accounting principles generally accepted in the United States of America requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. 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. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board. 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 To produce incremental earnings, protect gains and facilitate buying and selling of securities for investments, the Portfolio may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends 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 as well as write cash-secured put options. The risk in writing a call option is that the Portfolio gives up the opportunity for 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 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 being unable to enter into a closing transaction if a liquid secondary market does not exist. - -------------------------------------------------------------------------------- 17 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT 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 when the option transaction expires or closes. 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 To gain exposure to or protect itself from market changes, the Portfolio may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Portfolio also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of 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. 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, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. As of July 31, 2002 foreign currency was comprised of Taiwan dollars. 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 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 its contract obligations. Illiquid securities As of July 31, 2002, investments in securities included issues that are illiquid which the Portfolio currently limits to 10% of net assets, at market value, at the time of purchase. The aggregate value of such securities as of July 31, 2002 was $48,507,800 representing 0.29% of net assets. These securities are valued at fair value according to methods selected in good faith by the board. According to board guidelines, certain unregistered securities are determined to be liquid and are not included within the 10% limitation specified above. - -------------------------------------------------------------------------------- 18 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT 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. As a "pass-through" entity, the Portfolio therefore 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 an Investment Management Services Agreement with AEFC to manage 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 0.48% annually. The fee may be adjusted upward or downward by a performance incentive adjustment based on a comparison of the performance of Class A shares of AXP New Dimensions Fund to the Lipper Large-Cap Growth Funds Index. The maximum adjustment is 0.12% of the Portfolio's average daily net assets after deducting 1% from the performance difference. If the performance difference is less than 1%, the adjustment will be zero. The adjustment increased the fee by $20,242,854 for the year ended July 31, 2002. Under the agreement, the Trust also pays taxes, brokerage commissions and nonadvisory expenses, which include custodian fees, audit and certain legal fees, fidelity bond premiums, registration fees for units, 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 and approved by the board. During the year ended July 31, 2002, the Portfolio's custodian fees were reduced by $3,699 as a result of earnings credits from overnight cash balances. The Portfolio also pays custodian fees to American Express Trust Company, an affiliate of AEFC. According to a Placement Agency Agreement, American Express Financial Advisors Inc. acts as placement agent of the Trust's units. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $5,484,438,329 and $6,764,788,949, respectively, for the year ended July 31, 2002. For the same period, the portfolio turnover rate was 27%. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with AEFC were $1,289,960 for the year ended July 31, 2002. - -------------------------------------------------------------------------------- 19 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT 4. LENDING OF PORTFOLIO SECURITIES As of July 31, 2002, securities valued at $23,880,000 were on loan to brokers. For collateral, the Portfolio received $25,000,000 in cash. Income from securities lending amounted to $154,118 for the year ended July 31, 2002. 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. 5. OPTIONS CONTRACTS WRITTEN Contracts and premiums associated with options contracts written are as follows: Year ended July 31, 2002 Puts Calls Contracts Premiums Contracts Premiums Balance July 31, 2001 -- $ -- 5,000 $ 777,500 Opened 16,800 2,412,707 62,500 8,492,564 Closed (6,800) (850,576) (23,500) (3,209,922) Expired (9,000) (1,375,137) (43,000) (5,903,147) ------ ---------- ------- ---------- Balance July 31, 2002 1,000 $ 186,994 1,000 $ 156,995 ----- ----------- ----- ----------- - -------------------------------------------------------------------------------- 20 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT 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, 2002, the related statement of operations for the year then ended and the statements of changes in net assets for each of the years in the two-year period ended July 31, 2002. These financial statements are the responsibility of portfolio management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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. Our procedures included confirmation of securities owned as of July 31, 2002, by correspondence with the custodian and brokers or by 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 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 Growth Trends Portfolio as of July 31, 2002, and the results of its operations and the changes in its net assets for each of the periods stated in the first paragraph above, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Minneapolis, Minnesota September 6, 2002 - -------------------------------------------------------------------------------- 21 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT
Financial Statements Statement of assets and liabilities AXP New Dimensions Fund July 31, 2002 Assets Investment in Portfolio (Note 1) $16,858,062,470 Capital shares receivable 859,498 ------- Total assets 16,858,921,968 -------------- Liabilities Capital shares payable 245,716 Accrued distribution fee 169,714 Accrued service fee 8,747 Accrued transfer agency fee 65,629 Accrued administrative services fee 14,750 Other accrued expenses 465,920 ------- Total liabilities 970,476 ------- Net assets applicable to outstanding capital stock $16,857,951,492 =============== Represented by Capital stock -- $.01 par value (Note 1) $ 8,494,944 Additional paid-in capital 17,374,453,280 Accumulated net realized gain (loss) (Note 5) (744,359,627) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 219,362,895 ----------- Total -- representing net assets applicable to outstanding capital stock $16,857,951,492 =============== Net assets applicable to outstanding shares: Class A $ 9,863,130,072 Class B $ 3,728,472,005 Class C $ 44,015,284 Class Y $ 3,222,334,131 Net asset value per share of outstanding capital stock: Class A shares 492,114,004 $ 20.04 Class B shares 195,044,945 $ 19.12 Class C shares 2,304,834 $ 19.10 Class Y shares 160,030,567 $ 20.14 ----------- ---------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 22 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT
Statement of operations AXP New Dimensions Fund Year ended July 31, 2002 Investment income Income: Dividends $ 244,873,140 Interest 18,417,086 Less foreign taxes withheld (238,622) -------- Total income 263,051,604 ----------- Expenses (Note 2): Expenses allocated from Portfolio 129,057,999 Distribution fee Class A 30,613,503 Class B 46,621,925 Class C 389,809 Transfer agency fee 29,132,095 Incremental transfer agency fee Class A 1,712,038 Class B 1,470,624 Class C 21,153 Service fee -- Class Y 4,078,144 Administrative services fees and expenses 6,562,461 Compensation of board members 148,705 Printing and postage 2,094,931 Registration fees 381,737 Audit fees 11,500 Other 74,003 ------ Total expenses 252,370,627 Earnings credits on cash balances (Note 2) (407,483) -------- Total net expenses 251,963,144 ----------- Investment income (loss) -- net 11,088,460 ---------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (86,606,677) Foreign currency transactions (527,725) Options contracts written 8,417,604 --------- Net realized gain (loss) on investments (78,716,798) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (4,792,258,031) -------------- Net gain (loss) on investments and foreign currencies (4,870,974,829) -------------- Net increase (decrease) in net assets resulting from operations $(4,859,886,369) ===============
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 23 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT
Statements of changes in net assets AXP New Dimensions Fund Year ended July 31, 2002 2001 Operations and distributions Investment income (loss) -- net $ 11,088,460 $ (3,797,962) Net realized gain (loss) on investments (78,716,798) (396,765,677) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (4,792,258,031) (6,106,468,726) -------------- -------------- Net increase (decrease) in net assets resulting from operations (4,859,886,369) (6,507,032,365) -------------- -------------- Distributions to shareholders from: Net investment income Class A (6,092,513) (4,684,288) Class B (2,401,369) -- Class C (18,358) (5,049) Class Y (2,048,495) (3,219,986) Excess distribution of net investment income Class A -- (8,000,002) Class C -- (8,099) Class Y -- (5,165,393) Net realized gain Class A -- (1,695,350,636) Class B -- (639,365,263) Class C -- (1,669,548) Class Y -- (608,065,587) Tax return of capital Class A (2,538,856) -- Class B (1,003,750) -- Class C (7,646) -- Class Y (854,555) -- -------- ------- Total distributions (14,965,542) (2,965,533,851) ----------- -------------- Capital share transactions (Note 3) Proceeds from sales Class A shares (Notes 2) 2,430,324,703 2,799,675,984 Class B shares 675,994,508 1,084,304,631 Class C shares 31,832,064 35,033,595 Class Y shares 1,040,580,252 1,444,980,459 Reinvestment of distributions at net asset value Class A shares 8,375,379 1,663,355,392 Class B shares 3,370,269 634,330,120 Class C shares 25,864 1,680,968 Class Y shares 2,894,340 616,450,966 Payments for redemptions Class A shares (3,608,500,396) (2,919,560,087) Class B shares (Note 2) (997,820,871) (738,588,995) Class C shares (Note 2) (7,489,197) (3,045,672) Class Y shares (1,580,185,126) (1,772,093,982) -------------- -------------- Increase (decrease) in net assets from capital share transactions (2,000,598,211) 2,846,523,379 -------------- ------------- Total increase (decrease) in net assets (6,875,450,122) (6,626,042,837) Net assets at beginning of year 23,733,401,614 30,359,444,451 -------------- -------------- Net assets at end of year $16,857,951,492 $23,733,401,614 =============== ===============
- -------------------------------------------------------------------------------- 24 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT See accompanying notes to financial statements. Notes to Financial Statements AXP New Dimensions Fund 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of AXP New Dimensions Fund, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. AXP New Dimensions Fund, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the board. The Fund offers Class A, Class B, Class C and Class Y shares. o Class A shares are sold with a front-end sales charge. o Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth calendar year of ownership. o Class C shares may be subject to a CDSC. o Class Y shares have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend and liquidation rights. The level of distribution fee, incremental transfer agency fee and service fee (class specific expenses) differ 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 The Fund invests all of its assets in the Growth Trends Portfolio (the Portfolio), a series of Growth Trust (the Trust), an open-end investment company that has the same objectives as the Fund. The 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 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 the value that is equal to the Fund's proportionate ownership interest in the Portfolio's net assets. The percentage of the Portfolio owned by the Fund as of July 31, 2002, was 99.99%. Valuation of securities held by the Portfolio is discussed in Note 1 of the Portfolio's "Notes to financial statements" (included elsewhere in this report). Use of estimates Preparing financial statements that conform to accounting principles generally accepted in the United States of America requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. - -------------------------------------------------------------------------------- 25 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Federal taxes The Fund's policy is to comply with all sections of the Internal Revenue Code that apply to regulated investment companies and to distribute substantially all of its taxable income to the shareholders. No provision for income or excise taxes is thus required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of deferred 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. On the statement of assets and liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been decreased by $527,725 and accumulated net realized loss has been decreased by $527,725. The tax character of distributions paid for the years indicated is as follows: Year ended July 31, 2002 2001 Class A Distributions paid from: Ordinary income $6,092,513 $ 12,684,290 Long-term capital gain -- 1,695,350,636 Tax return of capital 2,538,856 -- Class B Distributions paid from: Ordinary income 2,401,369 -- Long-term capital gain -- 639,365,263 Tax return of capital 1,003,750 -- Class C Distributions paid from: Ordinary income 18,358 13,148 Long-term capital gain -- 1,669,548 Tax return of capital 7,646 -- Class Y Distributions paid from: Ordinary income 2,048,495 8,385,379 Long-term capital gain -- 608,065,587 Tax return of capital 854,555 -- As of July 31, 2002, the components of distributable earnings on a tax basis are as follows: Undistributed ordinary income $ -- Accumulated gain (loss) $(730,857,694) Unrealized appreciation (depreciation) $ 205,860,962 - -------------------------------------------------------------------------------- 26 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Dividends to shareholders An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, 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: The Fund has an agreement with American Express Financial Corporation (AEFC) to provide administrative services. Under an Administrative Services Agreement, the Fund pays AEFC a fee for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.05% to 0.02% annually. A minor portion of additional administrative service expenses paid by the Fund are consultants' fees and fund office expenses. Under this agreement, the Fund also pays taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees and any other expenses properly payable by the Fund and approved by the board. Under a separate Transfer Agency Agreement, American Express Client Service Corporation (AECSC) maintains shareholder accounts and records. The incremental transfer agency fee is the amount charged to the specific classes for the additional expense above the fee for Class Y. The Fund pays AECSC an annual fee per shareholder account for this service as follows: o Class A $19.00 o Class B $20.00 o Class C $19.50 o Class Y $17.00 The Fund has agreements with American Express Financial Advisors Inc. (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund pays a distribution fee at an annual rate up to 0.25% of the Fund's average daily net assets attributable to Class A shares and up to 1.00% for Class B and Class C shares. Under a Shareholder Service Agreement, the Fund pays the Distributor a fee for service provided to shareholders by financial advisors and other servicing agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net assets attributable to Class Y shares. Sales charges received by the Distributor for distributing Fund shares were $23,219,973 for Class A, $5,084,683 for Class B and $17,144 for Class C for the year ended July 31, 2002. During the year ended July 31, 2002, the Fund's transfer agency fees were reduced by $407,483 as a result of earnings credits from overnight cash balances. - -------------------------------------------------------------------------------- 27 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT 3. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the years indicated are as follows:
Year ended July 31, 2002 Class A Class B Class C Class Y Sold 103,405,732 30,104,630 1,423,135 44,288,672 Issued for reinvested distributions 343,417 144,220 1,107 118,222 Redeemed (156,522,877) (46,677,982) (347,238) (67,710,202) ------------ ----------- -------- ----------- Net increase (decrease) (52,773,728) (16,429,132) 1,077,004 (23,303,308) ----------- ----------- --------- -----------
Year ended July 31, 2001 Class A Class B Class C Class Y Sold 93,773,746 37,048,347 1,209,696 47,427,537 Issued for reinvested distributions 59,624,370 23,558,366 62,467 22,063,387 Redeemed (98,821,564) (26,640,422) (112,649) (60,345,820) ----------- ----------- -------- ----------- Net increase (decrease) 54,576,552 33,966,291 1,159,514 9,145,104 ---------- ---------- --------- ---------
4. BANK BORROWINGS The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund must have asset coverage for borrowings not to exceed the aggregate of 333% of advances equal to or less than five business days plus 367% of advances over five business days. The agreement, which enables the Fund to participate with other American Express mutual funds, permits borrowings up to $200 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.05% per annum. The Fund had no borrowings outstanding during the year ended July 31, 2002. 5. CAPITAL LOSS CARRY-OVER For federal income tax purposes, the Fund has a capital loss carry-over of $730,857,694 as of July 31, 2002, that will expire in 2010 if not offset by capital gains. It is unlikely the board will authorize a distribution of any net realized capital gains until the available capital loss carry-over has been offset or expires. - -------------------------------------------------------------------------------- 28 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT 6. FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating the Fund's results.
Class A Per share income and capital changes(a) Fiscal period ended July 31, 2002 2001 2000 1999 1998 Net asset value, beginning of period $25.43 $36.26 $31.21 $27.59 $25.69 ------ ------ ------ ------ ------ Income from investment operations: Net investment income (loss) .05 .02 .02 .06 .13 Net gains (losses) (both realized and unrealized) (5.42) (7.37) 7.14 5.31 3.67 ----- ----- ---- ---- ---- Total from investment operations (5.37) (7.35) 7.16 5.37 3.80 ----- ----- ---- ---- ---- Less distributions: Dividends from net investment income (.02) (.01) (.05) (.06) (.17) Excess distributions from net investment income -- (.01) -- -- -- Distributions from realized gains -- (3.46) (2.06) (1.69) (1.73) ----- ----- ----- ----- ----- Total distributions (.02) (3.48) (2.11) (1.75) (1.90) ---- ----- ----- ----- ----- Net asset value, end of period $20.04 $25.43 $36.26 $31.21 $27.59 ------ ------ ------ ------ ------ Ratios/supplemental data Net assets, end of period (in millions) $9,863 $13,857 $17,777 $13,568 $10,559 Ratio of expenses to average daily net assets(c) 1.06% 1.00% .90% .86% .82% Ratio of net investment income (loss) to average daily net assets .19% .12% .19% .24% .55% Portfolio turnover rate (excluding short-term securities) 27% 29% 34% 34% 38% Total return(e) (21.14%) (21.10%) 23.16% 20.04% 16.19%
See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- 29 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT
Class B Per share income and capital changes(a) Fiscal period ended July 31, 2002 2001 2000 1999 1998 Net asset value, beginning of period $24.44 $35.22 $30.54 $27.19 $25.38 ------ ------ ------ ------ ------ Income from investment operations: Net investment income (loss) (.14) (.13) (.24) (.10) -- Net gains (losses) (both realized and unrealized) (5.16) (7.19) 6.98 5.14 3.57 ----- ----- ---- ---- ---- Total from investment operations (5.30) (7.32) 6.74 5.04 3.57 ----- ----- ---- ---- ---- Less distributions: Dividends from net investment income (.02) -- -- -- (.03) Distributions from realized gains -- (3.46) (2.06) (1.69) (1.73) ----- ----- ----- ----- ----- Total distributions (.02) (3.46) (2.06) (1.69) (1.76) ---- ----- ----- ----- ----- Net asset value, end of period $19.12 $24.44 $35.22 $30.54 $27.19 ------ ------ ------ ------ ------ Ratios/supplemental data Net assets, end of period (in millions) $3,728 $5,169 $6,252 $4,070 $2,515 Ratio of expenses to average daily net assets(c) 1.83% 1.76% 1.66% 1.63% 1.58% Ratio of net investment income (loss) to average daily net assets (.57%) (.65%) (.57%) (.53%) (.23%) Portfolio turnover rate (excluding short-term securities) 27% 29% 34% 34% 38% Total return(e) (21.71%) (21.69%) 22.20% 19.13% 15.31%
See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- 30 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT
Class C Per share income and capital changes(a) Fiscal period ended July 31, 2002 2001 2000(b) Net asset value, beginning of period $24.42 $35.23 $35.52 ------ ------ ------ Income from investment operations: Net investment income (loss) (.14) (.13) (.01) Net gains (losses) (both realized and unrealized) (5.16) (7.19) (.28) ----- ----- ---- Total from investment operations (5.30) (7.32) (.29) ----- ----- ---- Less distributions: Dividends from net investment income (.02) (.02) -- Excess distributions from net investment income -- (.01) -- Distributions from realized gains -- (3.46) -- Total distributions (.02) (3.49) -- ---- ----- ----- Net asset value, end of period $19.10 $24.42 $35.23 ------ ------ ------ Ratios/supplemental data Net assets, end of period (in millions) $44 $30 $2 Ratio of expenses to average daily net assets(c) 1.85% 1.76% 1.66%(d) Ratio of net investment income (loss) to average daily net assets (.60%) (.75%) (.74%)(d) Portfolio turnover rate (excluding short-term securities) 27% 29% 34% Total return(e) (21.73%) (21.70%) (.82%)
See accompanying notes to financial highlights. - -------------------------------------------------------------------------------- 31 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT
Class Y Per share income and capital changes(a) Fiscal period ended July 31, 2002 2001 2000 1999 1998 Net asset value, beginning of period $25.51 $36.33 $31.24 $27.62 $25.72 ------ ------ ------ ------ ------ Income from investment operations: Net investment income (loss) .09 .07 .05 .09 .15 Net gains (losses) (both realized and unrealized) (5.44) (7.38) 7.19 5.30 3.68 ----- ----- ---- ---- ---- Total from investment operations (5.35) (7.31) 7.24 5.39 3.83 ----- ----- ---- ---- ---- Less distributions: Dividends from net investment income (.02) (.02) (.09) (.08) (.20) Excess distributions from net investment income -- (.03) -- -- -- Distributions from realized gains -- (3.46) (2.06) (1.69) (1.73) ----- ----- ----- ----- ----- Total distributions (.02) (3.51) (2.15) (1.77) (1.93) ---- ----- ----- ----- ----- Net asset value, end of period $20.14 $25.51 $36.33 $31.24 $27.62 ------ ------ ------ ------ ------ Ratios/supplemental data Net assets, end of period (in millions) $3,222 $4,677 $6,328 $5,513 $4,575 Ratio of expenses to average daily net assets(c) .90% .84% .74% .77% .75% Ratio of net investment income (loss) to average daily net assets .36% .28% .35% .33% .62% Portfolio turnover rate (excluding short-term securities) 27% 29% 34% 34% 38% Total return(e) (21.00%) (20.97%) 23.35% 20.12% 16.28%
Notes to financial highlights (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Inception date was June 26, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge. - -------------------------------------------------------------------------------- 32 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Independent Auditors' Report THE BOARD AND SHAREHOLDERS AXP NEW DIMENSIONS FUND, INC. We have audited the accompanying statement of assets and liabilities of AXP New Dimensions Fund (a series of AXP New Dimensions Fund, Inc.) as of July 31, 2002, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period ended July 31, 2002, and the financial highlights for each of the years in the five-year period ended July 31, 2002. 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 auditing standards generally accepted in the United States of America. 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 AXP New Dimensions Fund as of July 31, 2002, and the results of its operations, changes in its net assets and the financial highlights for each of the periods stated in the first paragraph above, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Minneapolis, Minnesota September 6, 2002 - -------------------------------------------------------------------------------- 33 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT Board Members and Officers Shareholders elect a board that oversees the Fund's operations. The board appoints officers who are responsible for day-to-day business decisions based on policies set by the board. The following is a list of the Fund's board members. Each member oversees 15 Master Trust portfolios and 78 American Express mutual funds. Board members serve until the next regular shareholders' meeting or until he or she reaches the mandatory retirement age established by the board.
Independent Board Members - ---------------------------- ------------------------ ------------------- ------------------ Name, Position held with Principal Other address, Registrant and length occupations directorships age of service during past five years - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ H. Brewster Atwater, Jr. Board member Retired chair and 4900 IDS Tower since 1996 chief executive Minneapolis, MN 55402 officer, General Born in 1931 Mills, Inc. (consumer foods) - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Arne H. Carlson Chair of the Board Chair, Board 901 S. Marquette Ave. since 1999 Services Minneapolis, MN 55402 Corporation Born in 1934 (provides administrative services to boards), former Governor of Minnesota - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Lynne V. Cheney Board member since 1994 Distinguished The Reader's American Enterprise Fellow, AEI Digest Institute Association Inc. for Public Policy Research (AEI) 1150 17th St., N.W. Washington, D.C. 20036 Born in 1941 - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Livio D. DeSimone Board member Retired chair of Cargill, 30 Seventh Street East since 2001 the board and Incorporated Suite 3050 chief executive (commodity St. Paul, MN 55101-4901 officer, merchants and Born in 1936 Minnesota Mining processors), and Manufacturing Target (3M) Corporation (department stores), General Mills, Inc. (consumer foods), Vulcan Materials Company (construction materials/chemicals), Milliken & Company (textiles and chemicals) and Nexia Biotechnologies, Inc. - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Ira D. Hall Board member Private investor; Imagistics Texaco, Inc. since 2001 formerly with International, 2000 Westchester Avenue Texaco Inc., Inc. (office White Plains, NY 10650 treasurer, equipment), Born in 1944 1999-2001 and Reynolds & general manager, Reynolds Company alliance (information management services), TECO operations, Energy, Inc. 1998-1999. Prior (energy holding to that, company), The director, Williams International Companies, Inc. Operations IBM (energy Corp. distribution company) - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Heinz F. Hutter Board member Retired president P.O. Box 2187 since 1994 and chief Minneapolis, MN 55402 operating Born in 1929 officer, Cargill, Incorporated (commodity merchants and processors) - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Anne P. Jones Board member Attorney and Motorola, Inc. 5716 Bent Branch Rd. since 1985 consultant (electronics) Bethesda, MD 20816 Born in 1935 - ---------------------------- ------------------------ ------------------- ------------------
- -------------------------------------------------------------------------------- 34 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT
Independent Board Members (continued) - ---------------------------- ------------------------ ------------------- ------------------ Name, Position held with Principal Other address, Registrant and length occupations directorships age of service during past five years - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Stephen R. Lewis, Jr. Board member Retired president 901 S. Marquette Ave. since 2002 and professor of Minneapolis, MN 55402 economics, Born in 1939 Carleton College - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ William R. Pearce Board member RII Weyerhaeuser 2050 One Financial Plaza since 1980 World Timberfund, Minneapolis, MN 55402 L.P. (develops Born in 1927 timber resources) - management committee; former chair, American Express Funds - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Alan G. Quasha Board member President, Compagnie 720 Fifth Avenue since 2002 Quadrant Financiere New York, NY 10019 Management, Inc. Richemont AG Born in 1949 (management of (luxury goods) private equities) - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Alan K. Simpson Board member Former three-term Biogen, Inc. 1201 Sunshine Ave. since 1997 United States (bio-pharmaceuticals) Cody, WY 82414 Senator for Born in 1931 Wyoming - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ C. Angus Wurtele Board member Retired chair of Bemis 4900 IDS Tower since 1994 the board and Corporation Minneapolis, MN 55402 chief executive (packaging) Born in 1934 officer, The Valspar Corporation - ---------------------------- ------------------------ ------------------- ------------------
Board Members Affiliated with American Express Financial Corporation (AEFC) - ---------------------------- ------------------------ ------------------- ------------------ Name, Position held with Principal Other address, Registrant and length occupations directorships age of service during past five years - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ David R. Hubers Board member Retired chief Chronimed Inc. 50643 AXP Financial Center since 1993 executive officer (specialty Minneapolis, MN 55474 and director of pharmaceutical Born in 1943 AEFC distribution), RTW Inc. (manages workers compensation programs), Lawson Software, Inc. (technology based business applications) - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ John R. Thomas Board member Senior vice 50652 AXP Financial Center since 1987, president - Minneapolis, MN 55474 president information and Born in 1937 since 1997 technology of AEFC - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ William F. Truscott Board member Senior vice 53600 AXP Financial Center since 2001, president - chief Minneapolis, MN 55474 vice president investment Born in 1960 since 2002 officer of AEFC; former chief investment officer and managing director, Zurich Scudder Investments - ---------------------------- ------------------------ ------------------- ------------------
- -------------------------------------------------------------------------------- 35 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT The board has appointed officers who are responsible for day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the board. In addition to Mr. Thomas, who is president, and Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers - ---------------------------- ------------------------ ------------------- ------------------ Name, address, age Position held with Principal Other Registrant and length occupations directorships of service during past five years - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Jeffrey P. Fox Treasurer Vice president - 50005 AXP Financial Center since 2002 investment Minneapolis, MN 55474 accounting, AEFC, Born in 1955 since 2002; vice president - finance, American Express Company, 2000-2002; vice president - corporate controller, AEFC, 1996-2000 - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Leslie L. Ogg Vice president, President of 901 S. Marquette Ave. general counsel Board Services Minneapolis, MN 55402 and secretary Corporation Born in 1938 since 1978 - ---------------------------- ------------------------ ------------------- ------------------ - ---------------------------- ------------------------ ------------------- ------------------ Stephen W. Roszell Vice president Senior vice 50239 AXP Financial Center since 2002 president - Minneapolis, MN 55474 institutional Born in 1949 group of AEFC - ---------------------------- ------------------------ ------------------- ------------------
The SAI has additional information about the Fund's directors and is available, without charge, upon request by calling (800) 862-7919. - -------------------------------------------------------------------------------- 36 -- AXP NEW DIMENSIONS FUND -- 2002 ANNUAL REPORT American Express(R) Funds Growth Funds AXP(R) Emerging Markets Fund AXP Equity Select Fund AXP Focused Growth Fund AXP Global Growth Fund AXP Growth Fund AXP Growth Dimensions Fund AXP New Dimensions Fund(R) AXP Partners International Aggressive Growth Fund AXP Partners Small Cap Growth Fund AXP Strategy Aggressive Fund Blend Funds AXP Blue Chip Advantage Fund AXP Discovery Fund* AXP European Equity Fund AXP Global Balanced Fund AXP International Fund AXP International Equity Index Fund AXP Large Cap Equity Fund AXP Managed Allocation Fund AXP Mid Cap Index Fund AXP Nasdaq 100 Index(R) Fund AXP Partners Small Cap Core Fund AXP Research Opportunities Fund AXP S&P 500 Index Fund AXP Small Cap Advantage Fund AXP Small Company Index Fund AXP Stock Fund AXP Total Stock Market Index Fund Value Funds AXP Diversified Equity Income Fund AXP Equity Value Fund AXP Large Cap Value Fund AXP Mid Cap Value Fund AXP Mutual AXP Partners Fundamental Value Fund AXP Partners International Select Value Fund AXP Partners Select Value Fund AXP Partners Small Cap Value Fund AXP Partners Value Fund AXP Progressive Fund* Income/Tax-Exempt Income Funds AXP Bond Fund AXP Cash Management Fund** AXP Extra Income Fund AXP Federal Income Fund AXP Global Bond Fund AXP High Yield Tax-Exempt Fund AXP Insured Tax-Exempt Fund AXP Intermediate Tax-Exempt Fund AXP Selective Fund AXP State Tax-Exempt Funds AXP Tax-Exempt Bond Fund AXP Tax-Free Money Fund** AXP U.S. Government Mortgage Fund Sector Funds AXP Global Technology Fund AXP Precious Metals Fund AXP Utilities Fund These funds are also listed in the categories above. AXP(R) Partners Funds AXP Partners Fundamental Value Fund AXP Partners International Aggressive Growth Fund AXP Partners International Select Value Fund AXP Partners Select Value Fund AXP Partners Small Cap Core Fund AXP Partners Small Cap Growth Fund AXP Partners Small Cap Value Fund AXP Partners Value Fund International Funds AXP Emerging Markets Fund AXP European Equity Fund AXP Global Balanced Fund AXP Global Bond Fund AXP Global Growth Fund AXP International Fund AXP Partners International Aggressive Growth Fund AXP Partners International Select Value Fund * Closed to new investors. ** An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. For more complete information about our funds, including fees and expenses, please call (800) 862-7919 for prospectuses. Read them carefully before you invest. (9/02) AXP New Dimensions Fund 70100 AXP Financial Center Minneapolis, MN 55474 americanexpress.com American Express(R) Funds AMERICAN EXPRESS(R) 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 V (9/02) -----END PRIVACY-ENHANCED MESSAGE-----